Gold Mountain Limited
Annual Report 2020

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CORPORATE DIRECTORY GOLD MOUNTAIN LIMITED ABN 79 115 845 942 ASX: GMN Directors Share Register Sin Pyng “Tony” Teng Managing Director Boardroom Pty Limited Syed Hizam Alsagoff Non-executive Director Grosvenor Place, Level 12, 225 George Street, Pay Chuan Paul “Paul” Lim Non-executive Director SYDNEY NSW 2000, GPO Box 3993, SYDNEY NSW 2001 Telephone: 1300 737 760 Facsimile: 1300 653 459 Solicitor Bird & Bird Lawyers Level 11, 68 Pitt Street SYDNEY NSW 2000 Banker Management Tim Cameron Chief Executive Officer Eric Kam Company Secretary & Chief Financial Officer Registered and Principal Office Suite 2501, Level 25 31 Market Street Telephone: +61 2 9261 1583 info@goldmountainltd.com.au SYDNEY NSW 2000 Australia Westpac Banking Corporation Limited Australia and New Zealand Banking Group Limited www.goldmountainltd.com.au Auditor KS Black & Co. Chartered Accountants Level 1, 251 Elizabeth Street, SYDNEY NSW 2000 GOLD MOUNTAIN LIMITED ANNUAL REPORT 1 REPORT TO SHAREHOLDERS Dear Shareholders, year to 30 June 2020. On behalf of the Board of Gold Mountain Limited, I am pleased to present to you our Annual Report for the There have been unquestionably significant changes in the business of the Company during FY2020 since the joining of new board members and the appointment of the Chief Executive Officer Tim Cameron, along with a technical team of experts engaged in the Wabag Project operations. During the year, the company concentrated on continued regional exploration programmes and the drill testing of the Monoyal copper-molybdenum-gold porphyry prospect with five holes being drilled at that prospect. The geochemistry interpretation along with core and other sampling results that drilling is on the periphery of the main mineralised core of a large porphyry system. The Monoyal prospect is positioned to become the major focus going forward. Drilling was paused at Monoyal in April 2020 due to the COVID-19 challenges which impacted logistics and helicopter availability to service an operating rig. With recent easing of certain restrictions in Papua New Guinea, drilling at Monoyal is expected to resume this coming October 2020. In the years ahead, the company will continue exploration within its Wabag tenements. In addition to Monoyal, exploration commenced on the prospective Mt Wipi tenement in August 2020 will continue in the FY2021 with the aim of identifying high quality targets for soil sampling, trenching and drill testing. I extend my thanks to those shareholders that have continued to help fund the Company throughout the year and in recent capital raise. I would also like to welcome new investors and shareholders to participate in the coming new placement initiatives to support the continuing flagship development of the Monoyal Prospect, Wabag Project in Papua New Guinea. I would also like to thank my fellow directors Syed Hizam Alsagoff and Pay Chuan (Paul) Lim for their support and encouragement in setting the Company on an exciting pathway to success. To all shareholders of the Company, I thank you for your support and I genuinely believe Gold Mountain Limited is at the beginning of a new growth momentum period and the next year will be one to look forward to. Tony Teng Managing Director Dated this 30th day of September 2020 GOLD MOUNTAIN LIMITED ANNUAL REPORT 2 TABLE OF CONTENTS CORPORATE DIRECTORY ............................................................................................................................................... 1 LETTER TO SHAREHOLDERS .......................................................................................................................................... 2 DIRECTORS’ REPORT ...................................................................................................................................................... 4 INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY ............................................................................ 6 OPERATIONS REPORT ................................................................................................................................................ 9 REMUNERATION REPORT (Audited) ......................................................................................................................... 20 SCHEDULE OF TENEMENTS ......................................................................................................................................... 26 AUDITOR’S INDEPENDENCE DECLARATION ............................................................................................................... 27 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME .......................................................... 28 STATEMENT OF FINANCIAL POSITION ......................................................................................................................... 29 STATEMENT OF CHANGES IN EQUITY ......................................................................................................................... 30 STATEMENT OF CASHFLOWS ....................................................................................................................................... 31 NOTES TO THE FINANCIAL STATEMENTS ................................................................................................................... 32 DIRECTORS’ DECLARATION .......................................................................................................................................... 61 INDEPENDENT AUDITORS REPORT ............................................................................................................................. 62 ADDITIONAL SHAREHOLDER INFORMATION .............................................................................................................. 66 GOLD MOUNTAIN LIMITED ANNUAL REPORT 3 DIRECTORS’ REPORT Your Directors submit the annual financial report of Gold Mountain Limited for the financial year ended 30 June 2020. In order to comply with the provisions of the Corporations Act, the Directors’ report as follows: KEY MANAGEMENT PERSONNEL DISCLOSURES DIRECTORS The names of Directors who held office during or since the end of the year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Sin Pyng “Tony” Teng Syed Hizam Alsagoff (appointed 2/9/2019) Pay Chuan “Paul” Lim (appointed 14/10/2019) Graham Kavanagh (resigned 14/10/2019) Douglas Smith (ceased 23/8/2019) Names, qualifications, experience and special responsibilities Sin Pyng “Tony” Teng Managing Director Qualifications B. Econ. Dip. Fin. Mangt. CPA, FAICD, AFAIM Experience Mr Teng has had experience as a management consultant and with merger and acquisitions, corporate restructuring and public company capital raising. He was co-founder and former director of Coalworks Limited that was acquired by Whitehaven in 2012 in a $200m takeover bid. Interest in Shares and 700,000 ordinary shares Options 17,143,333 ordinary shares (indirect interest) 4,166,667 unlisted options exercisable at $0.10 and expiring on 3 December 2020 (indirect interest) (GMNAC) interest) (GMNAC) 4,166,667 unlisted options exercisable at $0.15 and expiring on 3 December 2021 (indirect 1,000,000 unlisted options exercisable at $0.15 and expiring on 26 July 2021 subject to vesting conditions (indirect interest) (GMNAD) 3,000,000 unlisted options granted under the Employee Share Option Plan exercisable at $0.15 and expiring on 26 July 2021 (indirect interest) (GMNAE) Syed Hizam Alsagoff Non-Executive Director (appointed 2 September 2019) Qualifications B.Sc (Finance/Economics) Experience Mr Alsagoff has extensive network and experience in investment and corporate strategies in Asia and globally, of over 20 years’ experience in senior operational and corporate leadership roles in diverse sector operations across several countries including distribution of industrial, electronic components and satellite manufacturing, engineering, construction, property and infra-structure development. He is on the board of several public and private companies and currently serves as the Group Chief Financial Officer with Cahya Mata Sarawak Berhad (CMS:MK). Interest in Shares and 4,333,333 ordinary shares Options 1,166,667 unlisted options exercisable at $0.15 and expiring on 28 August 2021 (GMNAC) 15,582,000 ordinary shares (indirect interest) Directorships held in No directorships held of ASX listed entities in the past three years other listed entities GOLD MOUNTAIN LIMITED ANNUAL REPORT 4 Pay Chuan “Paul” Lim Non-Executive Director (appointed 14 October 2019) Qualifications B.S.E.E., M.Eng., PEPC, FIEM, PMP, ACPE, APEC Eng., IntPE(MY), AER Experience Paul Lim is an entrepreneur and a Chartered Professional Engineer of more than 20 years’ experience in multi-disciplinary organisations in the engineering industry; in power generation, transmission, distribution and automation systems, and telecommunications. He is the current Executive Director and Group Chief Executive Officer of Pestech International Berhad, a global integrated electrical power technology company listed in the Kuala Lumpur Stock Exchange (PEST:MK). Interest in Shares and 30,000,000 ordinary shares Options 20,000,000 ordinary shares (indirect interest) 15,000,000 unlisted options exercisable at $0.10 and expiring on 3 December 2020 15,000,000 unlisted options exercisable at $0.15 and expiring on 3 December 2021 Directorships held in No directorships held of ASX listed entities in the past three years other listed entities Graham Kavanagh Non-Executive Chairman (appointed 5 June 2014, resigned 14 October 2019) Douglas Smith Director Exploration (appointed 29 December 2016, ceased 23 August 2019) MANAGEMENT Tim Cameron Chief Executive Officer operations. Eric Kam Company Secretary Mr Cameron is an experienced mining executive with sound leadership, technical, corporate and financial skills underpinned by a reputation of innovation, integrity and determination. Mr Cameron's expertise encompasses strategic direction, acquisitions and business and project management. With experience in both domestic (Australia) and international (North America and Asia) operations, he has played an integral part in several successful exploration and open cut mining Qualifications: FCPA, FCMA, MBA, MAICD Mr Kam has extensive experience in finance and operations management across diverse businesses and industries in engineering, construction, mining & resources, technology, finance, marketing and distribution. He is involved in corporate change and listing of companies and is also on the board of several other companies. Mr Kam has had extensive experience as Company Secretary in several public listed and unlisted companies. GOLD MOUNTAIN LIMITED ANNUAL REPORT 5 INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY DIRECTORS’ SHAREHOLDINGS As at the date of this report, the interests of the Directors in the securities of Gold Mountain Limited are: Director Name Shares and Options Shares and Options Direct Indirect Sin Pyng “Tony” Teng 700,000 ordinary shares 17,143,333 ordinary shares 4,166,667 unlisted options exercisable at $0.10 and expiring on 3 December 2020 (GMNAC) 4,166,667 unlisted options exercisable at $0.15 and expiring on 3 December 2021 (GMNAC) 1,000,000 unlisted options exercisable at $0.15 subject to vesting conditions and expiring on 26 July 2021 (GMNAD) 3,000,000 unlisted options granted under the Employee Share Option Plan exercisable at $0.15 and expiring on 26 July 2021 (GMNAE) Syed Hizam Alsagoff 4,333,333 ordinary shares 15,582,000 ordinary shares Pay Chuan “Paul” Lim 30,000,000 ordinary shares 20,000,000 ordinary shares 1,666,667 unlisted options exercisable at $0.15 and expiring on 28 Aug 2021 (GMNAC) 15,000,000 unlisted options exercisable at $0.10 and expiring on 3 December 2020 (GMNAC) 15,000,000 unlisted options exercisable at $0.15 and expiring on 3 December 2021 (GMNAC) Movement in equity instruments (other than options and rights) Details of the movement in equity instruments (other than options and rights) held directly, indirectly or beneficially by Directors and Key Management Personnel and their related parties are as follows: Balance at Granted as Exercise of Other changes Balance at beginning of the remuneration Options during during the end of the Year during the Year the Year Year Year Issued on 30 June 2020 Sin Pyng “Tony” Teng 9,510,000 Syed Hizam Alsagoff Pay Chuan “Paul” Lim Graham Kavanagh Douglas Smith Tim Cameron Total - - - - - - - - - - - - - - - 8,333,333 17,843,333 19,915,333 19,915,333 50,000,000 50,000,000 - - 9,510,000 - 78,248,666 87,758,666 - - - 6 GOLD MOUNTAIN LIMITED ANNUAL REPORT Sin Pyng “Tony” Teng 9,410,000 100,000 9,510,000 30 June 2019 Graham Kavanagh Douglas Smith Balance at Granted as Exercise of Other changes Balance at beginning of the remuneration Options during the during the end of the Year during the Year Year Year Year Issued on - - - - - - - - - - - - - - Total 9,410,000 100,000 9,510,000 No ordinary shares were issued by the Company during and/or since the end of the financial year as a result of the exercise of options by Directors and Key Management Personnel and their related parties. There are no unpaid amounts Exercise of Options on the shares issued. Options and Rights Holdings Details of movements in options and rights held directly, indirectly or beneficially by Directors and Key Management Personnel and their related parties are as follows: 30 June 2020 Balance at beginning of period Granted as remuneration Options exercised or vested Net change Other Balance at end of period Sin Pyng “Tony” Teng 9,000,000 Syed Hizam Alsagoff Pay Chuan “Paul” Lim Graham Kavanagh Douglas Smith Tim Cameron - - - 2,500,000 5,000,000 Sin Pyng “Tony” Teng 9,000,000 Graham Kavanagh Douglas Smith Total 2,500,000 5,000,000 16,500,000 - - - - - - - - - - - - - - - - - - - - - - 3,333,334 12,333,334 3,333,334 3,333,334 30,000,000 30,000,000 (2,500,000) (5,000,000) - - - - - - - - 9,000,000 2,500,000 5,000,000 16,500,000 Total 16,500,000 29,166,678 45,666,668 30 June 2019 Balance at beginning of period Granted as remuneration Options exercised or vested Net change Other Balance at end of period GOLD MOUNTAIN LIMITED ANNUAL REPORT 7 Options on issue at the date of this report are: Issue Date Number Expiry Date Exercise price ASX Code Number of holders 26 Sep 2017 2,000,000 26 Jul 2021 26 Sep 2017 7,800,000 26 Jul 2021 28 Feb 2019 10,148,462 01 Mar 2021 24 May 2019 7,138,461 27 May 2021 30 Aug 2019 9,866,669 28 Aug 2021 3 Dec 2019 31,616,667 3 Dec 2020 3 Dec 2019 56,616,667 3 Dec 2021 15 Mar 2020 7,911,539 16 Mar 2021 15 Mar 2020 12,911,539 16 Mar 2022 5 Jun 2020 8,666,154 5 Jun 2021 5 Jun 2020 11,131,539 5 Jun 2022 3 Jul 2020 5,911,924 3 Jul 2021 3 Jul 2020 23,411,924 3 Jul 2022 $0.154 $0.155 $0.15 $0.15 $0.15 $0.10 $0.15 $0.10 $0.15 $0.10 $0.15 $0.10 $0.15 2 6 6 13 11 16 20 5 6 5 6 4 5 GMNAD GMNAE GMNAC GMNAC GMNAC GMNAC GMNAC GMNAC GMNAC GMNAF GMNAG GMNAC GMNAC GMNAD options are exercisable at $0.15 until expiry date 26/07/2021 and subject to vending condition that the total options granted shall be vested over 3 periods of 12 months per period. GMNAE ESOP options are exercisable at $0.15 until expiry date 26/07/2021 and subject to vending condition that the total options granted shall be vested over 3 periods of 12 months per period. Dividends No dividends have been paid or declared since the start of the financial year and/or the Directors do not recommend the payment of a dividend in respect of the financial year. GOLD MOUNTAIN LIMITED ANNUAL REPORT 8 The principal activity of the Company during the financial period was to acquire, explore and develop areas that are highly prospective for gold and other precious and base metals and minerals in Australia and Papua New Guinea. OPERATIONS REPORT Principal Activities Operating and Financial Review (i) Operations Gold Mountain is an exploration company operating in Australia and Papua New Guinea to acquire, explore and develop areas that are highly prospective for gold and other precious and base metals and minerals. The Company creates value for shareholders, through exploration activities which develop and quantify mineral assets. Once an asset has been developed and quantified within the framework of the JORC guidelines the Company may elect to move to production, to extract and refine ore which will then be available for sale as a primary product. The Company is actively exploring and developing the Wabag Gold Project in Papua New Guinea. Please refer to the Review of Operations for more information on the status of the projects. (ii) Financial Performance & Financial Position The financial results of the Company for the five (5) years to 30 June 2020 are: 30 June 2020 30 June 2019 30 June 2018 30 June 2017 30 June 2016 Cash and cash equivalents 1,835,586 54,070 2,985,066 2,693,337 1,189,947 Net assets 25,434,816 20,296,725 19,275,974 12,420,975 3,404,265 Revenue & financial income 105,844 48,529 119,426 32,874 3,178 Net loss after tax (1,569,877) (1,401,021) (1,484,473) (1,279,915) (1,515,979) EBITDAX (1,569,877) (1,401,021) (1,257,241) (840,424) (1,351,697) Share price at 30 June Loss per share (cents) $0.066 (0.25) $0.066 (0.27) $0.100 (0.32) $0.086 (0.35) $0.036 (0.69) a) Financial Performance The net loss after tax of the Company for the financial year after tax amounted to $1,569,877 (2019: Loss $1,401,024). The Company is creating value for shareholders through its exploration expenditure and currently has no revenue generating operations. Revenue and financial income are generated from interest income from funds held on deposit and miscellaneous income. As the average funds held on deposit and prevailing low interest on deposits have decreased during the year, accordingly interest income has further decreased from $3,063 to $1,471 when compared to the prior year. The Company also received $51,007 as rental income in FY 2020 (FY 2019: $43,134) from sub- leasing unused office space at its Sydney CBD office. In addition, the Company received the Government support during COVID-19 of Cash Boost and wages subsidy JobKeeper payments of $16,000 towards the end of FY 2020. During the year, the operations relating to the Papua New Guinea gold project continued and expanded as the Company undertook its exploration program, accordingly deferred exploration expenditure increased from $15,868,988 at 30 June 2019 FY to $19,722,600 at 30 June 2020. Personnel and external consulting requirements and legal and professional costs have increased in FY 2020 to $176,777 (FY 2019 $128,079). There was an increase in public and investor relations expense from $322,838 in the 2019 FY to $495,545 in the FY 2020. GOLD MOUNTAIN LIMITED ANNUAL REPORT 9 b) Financial Position (2019: $15,868,988). The Company’s main activity during the year was the investment of cash of $1,835,586 (2019: $54,070). The carrying value of the exploration assets and the capitalised exploration assets increased by $3,853,612 or 24% to $19,722,600 The 30 June 2020 financial report has been prepared on the going concern basis that contemplates the continuity of normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of business. For the year ended 30 June 2020, the Company recorded a loss after tax of $1,569,877 (2019: Loss $1,401,024) and had a net working capital deficit of $737,437 (30 June 2019: deficit of $873,113). As the Company is an exploration and development entity, ongoing exploration and development activities are reliant on future capital raisings. Based on these facts, the Directors consider the going concern basis of preparation to be appropriate for this financial report. (iii) Business Strategies and Prospects for future financial years The Company actively evaluates the prospects of each project as results from each program become available, these results are available via the ASX platform for shareholders information. The Company then assesses the continued exploration expenditure and further asset development. The Company will continue the evaluation of its mineral projects in the future and undertake generative work to identify and acquire new resource projects. There are specific risks associated with the activities of the Company and general risks which are largely beyond the control of the Company and the Directors. The risks identified below, or other risk factors, may have a material impact on the future financial performance of the Company and the market price of the Company’s shares. a) Operating Risks The operations of the Company may be affected by various factors, including failure to locate or identify mineral deposits, failure to achieve predicted grades in exploration and mining, operational and technical difficulties encountered in mining, sovereign risk difficulties in commissioning and operating plant and equipment, mechanical failure or plant breakdown, unanticipated metallurgical problems which may affect extraction costs, adverse weather conditions, industrial and environmental accidents, industrial disputes and unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment. b) Environmental Risks The operations and proposed activities of the Company are subject to the laws and regulations of Australia and Papua New Guinea concerning the environment. As with most exploration projects and mining operations, the Company’s activities are expected to have an impact on the environment, particularly if advanced exploration or mine development proceeds. It is the Company’s intention to conduct its activities to the highest standard of environmental obligation, including compliance with all environmental laws. General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company’s exploration, development and production activities, as well as on its ability to fund c) Economic those activities. d) Market conditions Share market conditions may affect the value of the Company’s quoted securities regardless of the Company’s operating performance. Share market conditions are affected by many factors such as: (i) (ii) (iii) (iv) (v) (vi) general economic outlook; introduction of tax reform or other new legislation; interest rates and inflation rates; changes in investor sentiment toward particular market sectors; the demand for, and supply of, capital; and terrorism or other hostilities. The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and resource exploration stocks in particular. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company. GOLD MOUNTAIN LIMITED ANNUAL REPORT 10 e) Additional requirements for capital The Company’s capital requirements depend on numerous factors. Depending on the Company’s ability to generate income, the Company will require further financing. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations and scale back its exploration programs as the case may be. There is however no guarantee that the Company will be able to secure any additional funding or be able to secure funding on terms favourable to the Company. f) Speculative investment The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the Company’s shares. Potential investors should consider that the investment in the Company is speculative and should consult their professional advisers before deciding whether to invest. m. 5. Significant Changes in the State of Affairs On 8 July 2019, the Company announced an update to its exploration program at its flagship Wabag project in Papua New Guinea, with the focus on Mongae Creek. Trench results at Mongae provide a strong case to drill high-quality porphyry targets with significant intercepts including Mongae NW Trench 1 66 m @ 0.13% Cu and Mongae NW Trench 4 intercepted 154 m @ 0.19% Cu including 142 m @ 0.20% Cu and 0.11 ppm Au and and 13 m @ 0.44% Cu from 68 On 30 July 2019, the Company announced it had received commitments for a placement raising $2.5 million. The funds from this placement were used to complete the initial diamond drilling programme at the Mongae NW prospect at the Company’s Wabag Project in Papua New Guinea and for general working capital. For every Share issued to a subscriber in the placement an unlisted option over a Share at no additional cost will also be issued. One half of the options issued pursuant to the placement will have an expiry date of 12 months from the date of their issue, each with an exercise price of $0.10 per option and the remaining half of the options will have an expiry date of 24 months from the date of their issue, with an exercise price of $0.15 per option. The managing director, Mr Sin Pyng (Tony) Teng is proposing to participate in the $2.5 million placement to the amount of $500,000.00. The Company sought approval from holders of ordinary securities for this placement and the placement to Mr Teng at its 2019 annual general meeting. On 28 August 2019, the Company was in suspension under ASX Listing Rule 17.2, pending the appointment of sufficient directors to comply with section 201A(2) of the Corporations Act 2001 (Cth). On 30 August 2019, the Company lodged Appendix 3B for the issue of 21,733,333 new fully paid ordinary shares (Shares) in the company along with 19,733,338 options (Options) for the placement of shares (Placement Shares) at an issue price of $0.06 per share. The issue of Shares raised a total of $1,314,000 for purpose of general working capital. The Placement Shares include 19,733,333 Shares with accompanying options of one (1) option at exercise price $0.10 expiring 28/8/2020 and one (1) option at exercise price $0.15 expiring 28/8/2021 for every two (2) issued Placement Shares. Director of the Company. On 2 September 2019, the Company announced the appointment of Mr Syed Hizam Alsagoff as a Non-Executive On 3 September 2019, the Company was reinstated for Official Quotation following the appointment of an additional director meeting the minimum number of directors required under section 201A(2) of the Corporations Act 2001 (Cth). On 4 September 2019, the Company lodged Appendix 3B for the issue of 30,000,000 new fully paid ordinary shares (Shares) in the company for the placement of shares (Placement Shares) at a price of $0.06 per share. The sum of $1,800,000 raised represents part of the proposed share placement announced to the market on 31 July 2019. The Placement Shares has accompanying entitlement of unlisted options for every two (2) Shares issued, of one (1) share option exercisable at $0.10 within 12 months and another one (1) share option exercisable at $0.15 within 24 months respectively from date of issue (Placement Options). The Company expects to issue the Placement Options after the 2019 Annual General Meeting. The Placement Options shall provide the Company additional capital funding of $3,750,000 over the next 24 months. On 9 October 2019, the Company announced that due to unforeseen delays in the process of obtaining regulatory approvals, the Placement Investors who previously made commitments to participate in the placement as announced on 4 March 2019, would not be able to complete the transaction and cancelled the subscription for the placement of 100 million shares at the issue price of $0.10 per share. On 11 October 2019, the Company initiated an Investor Presentation with emphasis on the current status and the continuing value creation through exploration at its flagship Wabag Project. The presentation unveiled a short-term expenditure commitment for the pre-drilling and drilling phases of $4 million for expected completion in December 2019. On 14 October 2019, the Company announced the resignation of Graham Kavanagh following his decision to retire from the Board as Director and Chairman of the Company. Pay Chuan “Paul” Lim accepted the invitation to join the Board as Non-executive Director of the Company. GOLD MOUNTAIN LIMITED ANNUAL REPORT 11 On 15 October 2019, the Company announced that after a successful capital raising, the Company commenced on a 1,250 m diamond drilling programme at the Mongae Northwest Cu-Mo porphyry prospect (referred to its local name as the ‘Monoyal’ prospect). It was expected that the programme would take two months to complete with results to be announced to the market. On 24 October 2019, the Company lodged Appendix 3B for the issue of 8,400,000 new fully paid ordinary shares (Shares) at an issue price of $0.06 per share. The issue of these Placement Shares raised a total of $504,000 to be used for the purpose of general working capital supporting the next stage of planned exploration programme. The Shares has accompanying entitlement of unlisted options for every two (2) Shares issued, of one (1) share option exercisable at $0.10 within 12 months and another one (1) share option exercisable at $0.15 within 24 months respectively from date of issue. On 28 October 2019, the Company announced the appointment of Tim Cameron as its Chief Executive Officer along with the key terms of appointment consistent with ASX Listing Rule 3.16.4. On 14 October 2019, the Company announced the completion of the first hole drilled at the Monoyal Prospect targeted at an area of anomalous copper geochemistry. This was followed by a further announcement on 21 November 2019 clarifying the visual results on the nature of sulphide mineral occurrences along with JORC Table 1. On 2 December 2019, the Company lodged Appendix 3B for the issue of 24,833,333 new fully paid ordinary shares along with 31,616,667 options exercisable at $0.10 within 12 months and 56,616,667 options exercisable at $0.15 within 24 months respectively from date of issue. The shares and options issued are consistent to the approved resolutions by shareholders at the annual general meeting held on 28 November 2019. On 28 January 2020, the Company advised that the nine-hole drill programme at Monoyal Prospect has resumed on 21 January 2020 and the third hole in the programme, MCD005 has reached down to the depth of 105.20 m. On 13 February 2020, the Company announced the assay results of the first hole drilled at Monoyal Prospect, MCD003 to contain Cu mineralisation averaging 850 ppm Cu over a 500 m interval from surface with the best intercept 101 m @ 0.14% Cu and 76 ppm Mo from 398 m. MCD003 has also indications to contain elevated Au and Ag. On 19 February 2020, the Company announced the granting of EL2563 – Kompian to its subsidiary Abundance Valley (PNG) Limited (100% owned by GMN). The new tenement covers an area of 225 km2. It has been granted for a two- year period to 22 January 2022. On 28 February 2020, the Company announced the assay results of the second diamond drill hole MCD004 which showed to contain highly anomalous copper (to 0.45% Cu), gold (to 1.24 g/t Au) and molybdenum (to 0.28% Mo) mineralisation with the best intercept recorded 124 m @ 0.12% Cu, 105 ppm Mo and 0.06 g/t Au, and from 125 m, includes a zone of 12.4 m @ 0.19% Cu, 494 ppm Mo and o.28 g/t Au from 169.6 m, and within the 12.4 m zone is a narrower high-grade interval which grades 8.4 m @ 0.23% Cu, 689 ppm Mo and 0.4 g/t Au. On 16 March 2020, the Company announced the proposed issue of securities of 15,823,077 shares and 20,823,078 share options. The shares were issued under ASX Listing Rule 7.1A at issue price of $0.065 raising a total of $1,028,500. The shares issued have an accompanying entitlement of unlisted options for every two (2) shares issued, of one (1) share option exercisable at $0.10 within 12 months and another one (1) share option exercisable at $0.15 within 24 months respectively from date of issue. Included in the total proposed share options, 5,000,000 options exercisable at $0.15 within 24 months were issued to Promoters for the provision of services. The share options were issued under ASX Listing Rule 7.1. On 26 March 2020, the Company announced an introduction of a new performance-based option plan to align the incentives of Directors and Management of the Company. As part of the remuneration package of the Chief Executive Officer, Tim Cameron shall be entitled to 20 million performance options and the other three directors are entitled to 20 million performance in aggregate with an additional 5 million performance option to be allocated to Consultants. The new Performance Options Plan and the issue of options to directors are subject to shareholders’ approval at a general meeting. On 8 April 2020, the Company announced a corporate update in response to the COVID-19 pandemic. The Company has taken precautionary measures to ensure all its staff and consultants remain safe and where capable work from home to minimise risk of infections. All non-essential travel has been cancelled and to adopt the use of teleconferencing for meetings. The Company has also taken steps to scale down the level of exploration being undertaken on its Wabag Project, to reduce discretionary spending and services of associated personnel, and to review existing data to optimise its exploration programme once restrictions during the current crisis have been lifted. On 14 April 2020, the Company provided an update of its drilling programme at the Monoyal Prospect. Initial observations for the holes show strong indications of a porphyry system with core from hole MCD005 indicates higher levels of fracturing and veining than observed in previous drill holes while hole MCD006 has shown highest level of brecciation and alteration encountered in the drill programme. Chalcopyrite (copper sulphide) and molybdenum mineralisation is also present in both holes on fracture surfaces and in discrete veins. On 4 May 2020, the Company provided an update on drill hole MCD007 which drilling was suspended on 30 March 2020 when it reached a depth of 409 m due to COVID-19 related logistical issues. Initial observations of mineralisation, alteration and fracture density indicate possibly to contain high levels of copper and or gold mineralisation intersect, with its style of mineralisation similar to previous holes. Preliminary portable XRF results include a 21m interval averaging 0.54% Cu, which contained a 2m interval recording of 1.54% Cu. GOLD MOUNTAIN LIMITED ANNUAL REPORT 12 On 22 May 2020, the Company provided an update on the ongoing exploration at the Monoyal Prospect. Recent heavy rain and subsequent flooding has exposed fresh mineralised outcrop at the Monoyal Prospect in and around three streams draining to the NW, revealing copper mineralisation in fractures, veins and as disseminations in the rock mass. The additional mapping of Monoyal Prospect aided by the flooding event has resulted in a better understanding of the prospect geology. On 4 June 2020, the Company advised a funding update to have raised an additional $626,000 in the proposed placement of shares. The total sum $1.12 million are raised by issue of shares at $0.065 per share with entitlement of unlisted options of every two (2) shares issued, of one (1) share option exercisable at $0.10 within 12 months (10c- Options) and another one (1) share option exercisable at $0.15 within 24 months (15c-Options) respectively from date of issue. The proposed issue of securities shall include 2,465,385 15c-Options to various Introducers and Promoters for their assistance in the placement services. On 5 June 2020, the Company lodged the Proposed issue of securities along with Appendix 2A Application for quotation of 17,332,308 shares. The total issue raised $1,126,600 for working capital purposes. In addition, 8,666,154 10c- Options and 11,131,539 15c-Options were issued as entitlement of unlisted options related to the issued shares, including 2,465,385 15c-Options allocation to the Introducers and Promoters. On 5 June 2020, the Company advised that the core samples from the fifth hole MCD007 have arrived at the ALS Laboratory in Townsville. The inevitable delays are due to challenges of getting samples out of the remote drilling site at Monoyal, the impact of COVID-19 restrictions and the implementation of the State of Emergency in PNG that has affected the transport and logistics network. On 11 June 2020, the Company announced that Matt Liddy has agreed to join the Company as Advisor to provide his expertise in corporate strategy & project development. On 15 June 2020, the Company announced the appointment of a porphyry expert Phil Jones, a senior consultant to assist with the delineation of the Monoyal porphyry target. Review of Operations Wabag Project - Papua New Guinea (PNG) During the reporting period the Company continued exploration at its Wabag Project in Papua New Guinea. Exploration activity was primarily focused on drilling the highly anomalous copper geochemistry identified by detailed soil sampling and subsequent trenching which was completed on EL2306 in May 2019. Between October 2019 and April 2020, GMN drilled five diamond holes (MCD003 to MCD007) for a total of 2,225 m at the Monoyal prospect located within EL2306. The holes were drilled to depths of between 372m to 500m. All five holes intersected anomalous copper and molybdenum over wide intervals with the mineralization confined to fracture surfaces and minor veinlets. This has been interpreted that the initial five holes at Monoyal were drilled on the periphery of the main mineralized core of a large porphyry system. In addition to the drilling programme at Monoyal, GMN has also initiated soil sampling programs at Lombokai Creek, which is located immediately north of the Monoyal prospect and it covers both EL’s 2306 and 2532. Highly anomalous rock chip samples with skarn alteration characteristics have been collected from Lombokai Creek, these samples contain elevated copper, gold and silver mineralization. Soil sampling also commenced in the postulated structural corridor which links the Monoyal prospect to Sak Creek in EL1966. A summary of the sampling statistics for the various exploration leases held by GMN and which comprise part of the Wabag Project is included as Table 1. In October 2019, the Company attended a series of Wardens’ hearings for the renewal of tenements and for the grant of one additional tenement to increase the area of the Company’s exploration grounds in this highly prospective region. No objections were raised by the community who encouraged GMN to start or continue exploration on their land. GOLD MOUNTAIN LIMITED ANNUAL REPORT 13 Table 1: FY2020 Sample Statistics EL Number EL2306 EL2306 EL2306 EL2306 EL2306 EL1968 EL1968 EL1966 EL2532 Project Monoyal Monoyal Monoyal Monoyal Lombokai / Laialam Crown Ridge Crown Ridge Sak Creek / K- Lam Mt Wipi Sample Type Drill samples Trench samples -80 mesh soil samples -80 mesh soil samples Rock samples Rock samples Rock samples Rock samples Rock samples No. of Samples 2,124 342 257 339 7 249 13 273 11 Exploration Programme The focus of exploration undertaken by the Company over the last twelve months has been the diamond drilling programme at the Monoyal prospect, which is located in the north-east corner of EL2306. The aim of the drilling programme was to test the strong copper in soil anomaly identified in FY2019. The drilling programme commenced in Q2 of FY20 and comprised 5 diamond drill holes, MCD003 to MCD007, for 2,252m. Table 2 details the drill hole parameters and the drill hole locations are presented in Figure 1. The drilling successfully intersected wide intervals of anomalous copper and molybdenum mineralization over wide intervals, with the mineralization primarily located on fracture surfaces and in minor veinlets. Highlights from the drilling included 101m @ 0.11% Cu, 76ppm Mo and 0.03g/t Au from 398 m in MCD003 and 124 m @ 0.12% Cu, 105 ppm Mo and 0.06 g/t Au, from 125 m in MCD004. om MCD003. Narrower high-grade zones were intersected in both holes, with the highest intercept being recorded in MCD004 which returned a 12.40m intercept which assayed 0.19% Cu, 494ppm Mo and 0.28 g/t Au from 169.60m. is scheduled to restart in Q2 of FY21. Drilling was paused in the fourth quarter for FY20 due to logistical issues associated with COVID-19 restrictions. Drilling Table 2. Monoyal – Completed Drill Hole Parameters Proposed Hole ID Easting Northing RL Dip Azimuth Planned Current Depth (m) Depth (m) MCD003 810,142 9,419,803 MDC004 809,861 9,419,773 MCD005 809,733 9,419,965 MCD006 809,179 9,419,861 MCD007 810,141 9,419,670 1,737 1,654 1,574 1,609 1,735 450 475 400 400 400 500.50 EOH 450.20 EOH 372.20 EOH 419.40 EOH 409.60 EOH -65 -60 -60 -60 -60 275 220 282 255 330 *coordinates in UTM (WGS 84) Zone 54S projection, # as of 30th March 2020 GOLD MOUNTAIN LIMITED ANNUAL REPORT 14 Figure 1: Monoyal Prospect EL2306 Table 3. Monoyal Drilling Programme - Significant Intercepts Hole Number MCD003 MCD003 MCD004 MCD004 MCD005 MCD006 MCD007 From (m) 11 398 1.50 125.00 65 281 170 30.00 To (m) 84 499 249 127 288 202 Interval (m) 73 101 28.50 124 62 7 32 Cu (ppm) 0.106 0.112 0.12 0.120 1,267 2,006 1,006 Mo (ppm) 105 31 76 6 91 5 49 Au (g/t) 0.04 0.03 0.05 0.06 0.03 0.04 0.03 Ag (g/t) 1.02 0.48 0.56 0.97 2.1 1.24 0.65 All intercepts calculated using 700 ppm Cu COG with 3 m internal dilution. In addition to the drilling programme, regional exploration continued on EL2306. Ten rock chip samples (LMBK001 to LMBK010) with distinct skarn characteristic and which are highly anomalous in gold, copper and silver were collected from Lombokai Creek, which is located immediately north of the Monoyal Prospect. Seven of the ten samples assayed over 0.10% Cu with one sample assaying 10.0% Cu, whilst gold to 1.36 g/t Au and silver to 73 g/t Ag were also recorded. The rock chip locations are presented on Figure 2 and the results are presented in Table 2. In FY21 the Mongae / Monoyal soil grid will be extended to the north and east to cover the Lombokai Creek area to determine if a drillable target can be identified quickly. If a suitable target is identified, it will be tested while the drill rig is working at the Monoyal Prospect. GOLD MOUNTAIN LIMITED ANNUAL REPORT 15 Figure 2. Lombokai Creek Rock chip Locations Table 4. Rock Chip Results – Lombokai Creek Rock Chip Description Cu (ppm) 1085 178 244 6350 Sample No. Au (ppm) Ag (ppm) LMBK001 LMBK002 LMBK003 LMBK004 LMBK005 LMBK006 LMBK007 LMBK008 LMBK009 LMBK010 0.06 0.01 0.09 0.06 0.18 0.51 0.14 1.36 0.13 0.02 0.22 1.13 22.1 1.67 20.3 73.5 1.32 57.8 5.57 2.36 12 x 10cm vein, highly siliciecous vein hosting disseminated chalcopyrite and pyrite Fine to medium grained tonalite with disseminated pyrite 1.40% Dull green calcareous diorite, rich outcrop with chalcopyrite and bornite Fine to medium grained tonalite with disseminated pyrite and chalco Grey brown, partially oxidized, calcareous pyritized outcrop sample 10.00% Black grey magnetite skarn, hosting chalcopyrite, bornite and chalcoite 279 Greyish brown, oxidized tonalite with qz-ser-py alteration, qz-py veining noted 5.91% Black grey magnetite skarn, hosting chalcopyrite, bornite and chalcoite 3900 Dull green calcereous diorite, rich outcrop with chalcopyrite and bornite 1395 White-grey fine grained tonalite, hosting cpy-mal-bn as fracture controlled Sample Type Float Float Outcrop Outcrop Outcrop Outcrop Outcrop Outcrop Outcrop Outcrop Warden Hearings and 2306 are pending. Wardens Hearing for the renewal of four tenements and for the grant of one additional tenement were held in October 2019. The outcomes from the hearings have not been communicated to the Company in full, however the new tenement EL 2632, Mt Wipi was granted in Q1 FY21 and EL1966 is with the minister pending grant. Tenements EL1967, 1968 GOLD MOUNTAIN LIMITED ANNUAL REPORT 16 Capital Raisings and sophisticated investors. During the financial year and until the date of signing this report, the Company completed seven placements to institutional The first placement in FY 2020 was the issue of 2,000,000 and 19,733,333 shares on 30 August 2019 at a price of $0.065 and $0.060 per share respectively raised a total $1,314,000. The 19,733,333 shares issued were part of the proposed share placement (Placement) announced to the market on 31 July 2019. Consistent with the terms of the Placement, the Company granted one option at exercise price $0.10 expiring 28/8/2020 and one option at exercise price $0.15 expiring 28/8/2021 for every two (2) shares issued under the terms of Placement. The issue of 30,000,000 shares on 4 September 2019 at a price of $0.06 per share raised a total $1,800,000 and represents part of the proposed share placement announced to the market on 31 July 2019. The Placement Shares have the accompanying entitlement of unlisted options for every two (2) Shares issued, of one (1) share option exercisable at $0.10 within 12 months and another one (1) share option exercisable at $0.15 within 24 months respectively from date of issue (Placement Options). The Company expects to issue the Placement Options after the 2019 Annual General Meeting. The Placement Options provides the Company with additional capital funding of $3,750,000 over the next 24 months. On 24 October 2019, the Company issued 8,400,000 shares (Placement Shares) at a price of $0.06 per share raising a total of $504,000. The Placement Shares has accompanying entitlement of unlisted options for every two (2) Shares issued, of one (1) share option exercisable at $0.10 within 12 months and another one (1) share option exercisable at $0.15 within 24 months respectively from date of issue. The fourth placement on 2 December 2019 was the issue of 24,833,333 shares (Placement Shares) at $0.06 per share along with 31,616,667 options exercisable at $0.10 within 12 months and 56,616,667 options exercisable at $0.15 within 24 months respectively from date of issue. The shares and options issued are consistent with the approved resolutions by shareholders at the annual general meeting held on 28 November 2019. On 16 March 2020, the issue of 15,823,077 shares (Placement Shares) at $0.065 per share along with 20,823,078 share options raised a total of $1,028,500. The options were accompanying entitlement of unlisted options for every two (2) shares issued, of one (1) share option exercisable at $0.10 within 12 months and another one (1) share option exercisable at $0.15 within 24 months respectively from date of issue. Included were options issued to Promoters for provision of services, 5,000,000 options exercisable at $0.15 within 24 months. On 5 June 2020, 17,332,308 shares were issued raised $1,126,600 for working capital purposes. In addition, 8,666,154 10c-Options and 11,131,539 15c-Options were issued as entitlement of unlisted options to the issued shares, including 2,465,385 15c-Options allocation to the Introducers and Promoters. Most recent placement was on 3 July 2020 with the issue of 11,823,847 shares at $0.065 per share raised $768,550 for working capital purposes. In addition, 5,911,924 10c-Options and 23,411,924 15c-Options were issued as entitlement of unlisted options to the issued shares, including 17,500,000 15c-Options allocation to an Introducer and Promoter for past services rendered. The funds raised are to be used in support of its planned exploration programs of the Wabag Project located in Papua New Guinea and general working capital requirements. Capital Raising Issue of shares Issue of shares Issue of shares Issue of shares Issue of shares Issue of shares Issue of shares Total Date Shares Issued Price Amount Raised 30-08-2019 30-08-2019 04-09-2019 24-10-2019 16-03-2020 05-06-2020 03-07-2020 2,000,000 19,733,333 30,000,000 8,400,000 24,833,333 15,823,077 17,332,308 11,824,847 129,946,898 $0.065 $0.060 $0.060 $0.060 $0.060 $0.065 $0.065 $0.065 130,000 1,184,000 1,800,000 504,000 1,490,000 1,028,500 1,126,600 768,550 $8,031,650 Issue of shares approved at 2019 AGM 02-12-2019 GOLD MOUNTAIN LIMITED ANNUAL REPORT 17 Details of the Company’s Risk Management policies are contained within the Corporate Governance Statement. Risk management Corporate Governance A statement disclosing the extent to which the Company has followed the best practice recommendations set by the ASX Corporate Governance Council during the period is displayed on the Company’s website. Subsequent events after balance date On 2 July 2020, the Company advised that it has further raised $760,000 via the continuing share placement program at $0.065 per share to sophisticated investors. The share placement has accompanying entitlement of unlisted options for every two (2) shares issued, of one (1) share option exercisable at $0.10 within 12 months (10c-Options) and another one (1) share option exercisable at $0.15 within 24 months (15c-Options) respectively from date of issue. The Company’s Chief Executive Officer Tim Cameron and the recently appointed Advisor Matt Liddy have both participated in the placement giving support the ongoing drill program at the Monoyal Prospect. On 3 July 2020, the Company lodged the Proposed issue of securities along with Appendix 2A Application for quotation of +securities of 11,823,847 shares. The total issue raised $768,550 for working capital purposes. In addition, 5,911,924 10c-Options and 23,411,924 15c-Options were issued as entitlement of unlisted options to the issued shares, including 17,500,000 15c-Options allocation to an Introducer and Promoter for past services rendered. On 17 July 2020, the Company announced the assay results of the fifth diamond hole MCD007 drilled at the Monoyal Prospect. The results contain anomalous copper zones, gold and molybdenum mineralisation over 1m intervals with best intercepts recorded 32m @ 0.10% Cu 49ppm Mo 0.03 g/t Au from 170m, 13m @ 0.13% Cu 63ppm Mo 0.04 g/t Au from 176m, 3m @ 0.14% Cu 96ppm Mo 0.06 g/t Au from 285m and 3m @ 0.10% Cu 511ppm Mo 0.04 g/t Au. On 28 July 2020, the Company provided an update in relation to its drilling program at Wabag and reported the assay results of MCD005 and MCD006. Both holes intersected broad zones of elevated copper and molybdenum mineralisation, with anomalous gold and silver values. MCD005 intersected a narrow fault breccia between 93m and 94m, which assayed 0.81% Cu 0.26% Mo 1,175ppm Ag and contained elevated Zn (955ppm Zn). Assay results to 0.66% Cu 68 ppm Mo 0.26 g/t Au and 5.5 g/t Ag were recorded over 1m intervals in MCD006. On 27 August 2020, the Company announced that the Mineral Resources Authority (MRA) has granted GMN 6768 (PNG) Limited (100% owned subsidiary) the exploration licence EL2632 Mt. Wipi for a period of two years to 13 August 2022. The tenement was granted after successful Warden’s hearing in October 2019. On 15 September 2020, the Company announced that drilling at the Wabag Project is to resume in October 2020 following the easing of restrictions surrounding COVID-19. The focus in the drilling resumption will be testing Cu-Mo porphyry system at depth. On 23 September 2020, the Company reported the assay results of float and rock samples collected at the southern end drainage areas of the newly granted EL2632 Mt Wipi tenement. The results from total of 28 samples are highly encouraging with copper values ranging from 100ppm Cu to 9.64% Cu, gold from 0.01 g/t to 1.96 g/t Au and silver 0.14 g/t to 144 g/t Ag. Airborne magnetic data has also identified several targets with exploration programme to follow-up. There has not been any other matter or circumstance that has arisen after balance date that has significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial periods. GOLD MOUNTAIN LIMITED ANNUAL REPORT 18 Environmental legislation The Company is subject to significant environmental and monitoring requirements in respect of its natural resource exploration activities. The Directors are not aware of any significant breaches of these requirements during the period. Indemnification and insurance of Directors and Officers The Company has agreed to indemnify all the Directors of the Company for any liabilities to another person (other than the Company or related entity) that may arise from their position as Directors of the Company, except where the liability arises out of conduct involving a lack of good faith. During the financial year, GMN paid a premium in respect of a contract insuring the Directors and officers of the Company against any liability incurred in the course of their duties to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. Options The maximum terms of options granted during the year and until the date of this report are as follows: On 30 August 2019 the Company granted 19,733,338 free unlisted options to participants in the share placement of 19,733,333 shares on the same date in two separate tranches of options. One tranche of 9,866,669 options is at exercise price of $0.10 expiring on 28/08/2020 and the other tranche of 9,866,669 options is at exercise price of $0.15 expiring 28/08/2021 with no vesting conditions. On 2 December 2019, the Company granted 88,233,334 free unlisted options to participants related to the Share Placement program including those placement shares issued previously of 30 August 2019 and 4 September 2019, with approval of shareholders at the 2019 AGM. Participants of the Share Placement were entitled to one (1) option exercisable at $0.10 and another one (1) option exercisable at $0.15 within 12 months and 24 months from date of issue respectively for every two (2) placement shares issued. A total of 63,233,334 options were granted in relation the placement shares issued. The remaining balance of 25,000,000 options exercisable at $0.15 within 24 months were issued to the Promoters. On 16 March 2020, the Company granted 20,823,078 free unlisted options to participants in the share placement of 15,823,077 shares on the same date in two separate tranches of options. One option tranche is at an exercise price of $0.10 expiring on 16 March 2021 and the other option tranche is at an exercise price of $0.15 expiring on 16 March 2022 with no vesting conditions. The grant of 5,000,000 options exercisable at $0.15 expiring 16 March 2020 was made to a Promoter for services rendered. On 5 June 2020 the Company granted 19,797,693 free unlisted options to participants in the share placement of 17,332,308 shares on the same date in two separate tranches of options. One option tranche is at an exercise price of $0.10 expiring on 5 June 2021 and the other option tranche is at an exercise price of $0.15 expiring 5 June 2022 with no vesting conditions. Of the options of exercise price $0.15 expiry 5 June 2022, 2,465,385 options were granted to various promoters and introducers for their services rendered. On 3 July 2020 the Company granted 29,323,848 free unlisted options to participants in the share placement of 11,823,847 shares on the same date in two separate tranches of options. One option tranche is at an exercise price of $0.10 expiring on 3 July 2021 and the other option tranche is at an exercise price of $0.15 expiring 3 July 2022 with no vesting conditions. Of the options of exercise price $0.15 expiry 3 July 2022, 17,500,000 options were granted to a Promoter for past services rendered. The options must be exercised on or before the expiry date in cash. GOLD MOUNTAIN LIMITED ANNUAL REPORT 19 REMUNERATION REPORT (AUDITED) The Board, in consultation with the Remuneration Committee, is responsible for determining and reviewing compensation arrangements for the directors and executive management. The Board assesses the appropriateness of the nature and amount of remuneration of key personnel on an annual basis. In determining the amount and nature of officers’ packages, the Board takes into consideration the Company’s financial and operational performance along with industry and market conditions. The Committee has the authority to retain any outside advisor at the expense of the Company, without the Board’s approval, at any time and has the authority to determine any such advisor’s fees and other retention terms. In setting corporate goals and objectives relevant to Senior Executives’ compensation, the Committee considers both short- term and long-term compensation goals and the setting of criteria around this. In relation to setting Directors’ remuneration the Committee looks at and considers comparative data from similar companies. This report outlines the remuneration arrangements in place for Directors and Key Management Personnel of Gold Mountain Limited (the “Company”) for the financial year ended 30 June 2020. The following persons acted as Directors during or since the end of the financial year: Sin Pyng “Tony” Teng Syed Hizam Alsagoff (appointed 2/9/2019) Pay Chuan “Paul” Lim (appointed 14/10/2019) Graham Kavanagh (resigned 14/10/2019) Douglas Smith (ceased 23/8/2019) The term ‘Key Management Personnel’ is used in this remuneration report to refer to the following persons. Except as noted, the named persons held their current position for the whole of the financial year and since the end of the financial year: Sin Pyng “Tony” Teng Eric Kam Tim Cameron (w.e.f. 25/10/2019) Remuneration Philosophy The performance of the Company depends upon the quality of the Directors and executives. The philosophy of the Company in determining remuneration levels is to:   set competitive remuneration packages to attract and retain high calibre employees; link executive rewards to shareholder value creation; and  establish appropriate, demanding performance hurdles for variable executive remuneration Remuneration Committee The Remuneration Committee of the Board of Directors of the Company is responsible for determining and reviewing compensation arrangements for the Directors and the Senior Management team. The Remuneration Committee assesses the appropriateness of the nature and amount of remuneration of Directors and senior executives on a periodic basis by reference to relevant employment market conditions with an overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team. Remuneration Structure remuneration is separate and distinct. In accordance with best practice Corporate Governance, the structure of Non-Executive Director and executive GOLD MOUNTAIN LIMITED ANNUAL REPORT 20 Non-Executive Director Remuneration The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders. Each Director is entitled to such remuneration from the Company as the Directors decide, but the total amount provided to all non-executive directors must not exceed in aggregate the amount fixed by the Company in a general meeting. The aggregate remuneration for all non-executive directors has been set at an amount of $300,000 per annum. The ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors shall be determined from time to time by a general meeting. The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst Directors is reviewed annually. The Board considers advice from external shareholders as well as the fees paid to Non-Executive Directors of comparable companies when undertaking the annual review process. Each Director is entitled to receive a fee for being a Director of the Company. The remuneration of Non-Executive Directors for the year ended 30 June 2020 is detailed in the Remuneration of Directors and named executives section of this report on the following pages of this report. Senior Manager and Executive Director Remuneration Remuneration consists of fixed remuneration and Company options (as determined from time to time). In addition to the Company employees and Directors, the Company has contracted key consultants on a contractual basis. These contracts stipulate the remuneration to be paid to the consultants. Fixed Remuneration Fixed remuneration is reviewed annually by the Independent Directors’ Committee (which assumes the role of the Remuneration Committee). The process consists of a review of relevant comparative remuneration in the market and internally and, where appropriate, external advice on policies and practices. The Committee has access to external, independent advice where necessary. Fixed remuneration is paid in the form of cash payments. The fixed remuneration component of the five most highly remunerated Company executives is detailed in Table 1. Employment Contracts During the year and to the date of this report there is one new employment contract with the Company. GOLD MOUNTAIN LIMITED ANNUAL REPORT 21 Remuneration of Directors and named executives Table 1: Directors’ and named executives remuneration for the year ended 30 June 2020 Short-term employee benefits Post-employment benefits Equity Other Total % Salary & Fees Bonuses Non- Monetary Benefits Super- annuation Prescribed Benefits Options Shares Deferred Benefits Performance Related Graham Kavanagh 1 22,000 Sin Pyng “Tony” Teng 2 114,000 Douglas Smith 3 Eric Kam 4 David Clark 5 Tim Cameron 6 Total - - - - - - - - - - - - 8,400 108,000 24,000 133,336 409,736 30,000 75,000 173,400 102,000 30,000 410,400 Graham Kavanagh 1 Sin Pyng “Tony” Teng 2 Douglas Smith 3 Eric Kam 4 David Clark 5 Total - - - - - - - - - - - - 1,710 - - - - 1,710 285 285 - - - 570 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 22,000 115,710 8,400 108,000 24,000 133,336 - 411,446 30,000 75,285 173,685 102,000 30,000 410,970 0% 0% 0% 0% 0% 0% - 0% 0% 0% 0% 0% - Table 2: Directors’ and named executives remuneration for the year ended 30 June 2019 Short-term employee benefits Post-employment benefits Equity Other Total % Salary & Fees Bonuses Non- Monetary Benefits Super- annuation Prescribed Benefits Options Shares Deferred Benefits Performance Related GOLD MOUNTAIN LIMITED ANNUAL REPORT 22 1. Paid to Drumcliffe Investments Pty Ltd for corporate advisory services of which Mr Kavanagh is a director and shareholder. 2. Paid to Rodby Holdings Pty Ltd for corporate advisory services of which Mr Teng is a director. 3. Paid to of Dougnic Pty Ltd for geological services which Mr Smith is a director and shareholder and Dougie Downunder which Mr Smith is principal. 4. Paid to Useful Ways Pty Ltd for corporate advisory services of which Mr Kam is a director and shareholder and Ekam Commercial of which Mr Kam is principal. 5. Paid to D.W. Clark & Co., Chartered Accountant for corporate advisory services of which Mr Clark is principal. 6. Paid to Esplanade Consultancy ATF Voice Works 2 Trust for executive services of which Tim Cameron is related to the discretionary services management trust. GOLD MOUNTAIN LIMITED ANNUAL REPORT 23 Other Key Management Personnel Transactions The Company has established the Gold Mountain Limited Employee Share Option Plan (ESOP) and a summary of the terms and conditions of the Plan are set out below: i. ii. v. vi. ix. x. xi. All employees (full time and part time) will be eligible to participate in the Plan. Options are granted under the Plan at the discretion of the board and if permitted by the board, may be issued to an employee’s nominee. iii. Each option is to subscribe for one ordinary share in the Company and will expire 5 years from its date of issue. An option is exercisable at any time from its date of issue provided all relevant vesting conditions, if applicable, have been met. Options will be issued free. The exercise price of options will be determined by the board. The total number of shares the subject of options issued under the Plan, when aggregated with issues during the previous 5 years pursuant to the Plan and any other employee share plan, must not exceed 5% of the Company’s issued share capital. iv. If, prior to the expiry date of options, a person ceases to be an employee of the Company for any reason other than retirement at age 60 or more (or such earlier age as the board permits), permanent disability, redundancy or death, the options held by that person (or that person’s nominee) automatically lapse on the first to occur of a) the expiry of the period of 30 days from the date of such occurrence, and b) the expiry date. If a person dies, the options held by that person will be exercisable by that person’s legal personal representative. Options cannot be transferred other than to the legal personal representative of a deceased option holder. The Company will not apply for official quotation of any options. vii. Shares issued as a result of the exercise of options will rank equally with the Company’s previously issued shares. viii. Option holders may only participate in new issues of securities by first exercising their options. Options are granted under the plan for no consideration. Each share options converts into one ordinary shares of Gold Mountain Limited. 7,800,000 unlisted options granted on 29 December 2017 pursuant to the Company’s Employee Share Option Plan have an exercise price of $0.15 and are subject to the vending condition that the total granted options shall be vested over 3 periods of 12 months per period. The unlisted options granted under the Employee Share Option Plan are exercisable at $0.15 expire on 26 July 2021. The Board may amend the terms and conditions of the plan subject to the requirements of the Listing Rules. There have been no other transactions involving equity instruments other than those described in the tables above. For details of other transactions with Key Management Personnel, refer to Note 18: Related Party Disclosures. (End of Remuneration Report) GOLD MOUNTAIN LIMITED ANNUAL REPORT 24 Directors’ Meetings Director Sin Pyng “Tony” Teng Syed Hizam Alsagoff Pay Chuan “Paul” Lim Graham Kavanagh Douglas Smith Auditor Independence Non-Audit Services The number of meetings of Directors (including meetings of committees of Directors) held during the year and the number of meetings attended by each Director was as follows: Board Meetings Attended Eligible to Attend 5 3 1 4 2 5 3 1 4 2 In addition, 12 circular resolutions were signed by the Board during the period. Section 307C of the Corporations Act 2001 requires our auditors to provide the Directors of the Company with an Independence Declaration in relation to the audit of the annual report. This Independence Declaration is set out on page 27, and forms part of this Directors’ report for the year ended 30 June 2020. Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 22 to the financial statements. The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are of the opinion that the services do not compromise the auditor’s independence as all non-audit services have been reviewed to ensure that they do not impact the integrity and objectivity of the auditor and none of the services undermine the general principles relating to auditor independence. Signed in accordance with a resolution of the Directors. Tony Teng Managing Director Dated this 30th day of September 2020 GOLD MOUNTAIN LIMITED ANNUAL REPORT 25 SCHEDULE OF TENEMENTS Holder GMN Interest Location Area (km2) EL No. EL1966 Sak Creek EL1967 Poket Creek EL1968 Crown Ridge EL2426 Keman EL2430 Meriamanda EL2522 Wapenamanda EL2565 Londol EL2306 Alakula EL2563 Kompiam EL2632 Mt Wipi Viva No.20 Limited Viva No.20 Limited Viva No.20 Limited 70% 70% 70% Enga Province, PNG Enga Province, PNG Enga Province, PNG GMN 6768 (PNG) Limited 100% Enga Province, PNG GMN 6768 (PNG) Limited 100% Enga Province, PNG GMN 6768 (PNG) Limited 100% Enga Province, PNG Viva Gold (PNG) Limited 100% Enga Province, PNG Khor Eng Hock & Sons (PNG) Registration of Enga Province, PNG Limited / Abundance Valley (PNG) Limited Abundance Valley (PNG) Limited transfer pending 100% Enga Province, PNG GMN 6768 (PNG) Limited 100% Enga Province, PNG Expiry 26/06/2019 (Renewal pending) 27/11/2019 (Renewal submitted) 27/11/2019 (Renewal submitted) 27/05/2020 (Renewal submitted) 27/05/2020 (Renewal submitted) 24/02/2021 26/05/2021 13/12/2019 (Renewal submitted 22/01/2022 13/8/2022- 103 103 103 48 154 839 535` 164 225 537 Figure 3 – Suite of tenements located at the Enga Province in Papua New Guinea GOLD MOUNTAIN LIMITED ANNUAL REPORT 26 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2020 Other income Administration costs Depreciation and amortisation expense Employment costs Exploration expense Impairments expense Investor and public relations expense Legal and professional costs Other expenses Income tax expense Net loss for the period Other comprehensive income Foreign currency translation Loss per share Basic loss per share (cents) Diluted loss per share (cents) Loss before income tax expense (1,569,877) (1,401,021) Attributable to the owners of Gold Mountain Limited (1,569,877) (1,401,021) Total other comprehensive income for the year, net of tax Total comprehensive loss for the period Attributable to the owners of Gold Mountain Limited (1,569,877) (1,401,024) The statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. Note 3 5 20 2020 $ 2019 $ 105,844 105,844 48,529 48,529 (568,558) (488,078) (210,785) (127,000) (41,710) (62,280) (45,528) - (20,000) (405,545) (322,838) (176,777) (128,079) (226,819) (301,275) - - (3) (3) - 0 0 (0.25) N/A (0.27) N/A GOLD MOUNTAIN LIMITED ANNUAL REPORT 28 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020 Note 2020 $ 2019 $ Deferred exploration and evaluation expenditure ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and equipment Right of Use Asset Intangibles Investments Other assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Other current liabilities TOTAL CURRENT LIABILITIES NON CURRENT LIABILITIES Other non-current liabilities TOTAL NON CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses Non-controlling interest TOTAL EQUITY 6 7 8 8 9 10 11 12 13 14 14 1,835,586 118,130 54,070 60,509 1,953,716 114,579 285,821 125,807 418,780 - 19,722,600 15,868,988 5,996,150 5,995,970 50,555 35,545 50,555 35,545 26,216,477 22,369,838 28,170,193 22,484,417 1,855,824 437,692 835,329 1,300,000 2,691,153 1,737,692 44,223 44,223 450,000 450,000 2,735,377 2,187,692 25,434,816 20,296,725 15 16 36,487,484 30,006,334 924,044 697,225 (11,976,814) (10,406,897) 102 63 25,434,816 20,296,725 Total equity attributable to equity holders of the Company 25,434,816 20,296,662 The statement of financial position should be read in conjunction with the accompanying notes. GOLD MOUNTAIN LIMITED ANNUAL REPORT 29 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2020 Issued Capital Reserves Accumulated Non Total $ $ $ $ Losses Controlling Interest $ Balance at 1 July 2018 27,885,834 395,953 (9,005,876) 63 19,275,974 (1,401,021) (1,401,021) (3) (1,401,021) (1,401,024) Comprehensive Income Net loss for the period Other comprehensive income Total comprehensive income for the year Transactions with owners in their capacity as owners Issue of share capital Share issue costs Options expense Total transactions with owners in their capacity as owners Comprehensive Income Net loss for the period Other comprehensive income Total comprehensive income for the year Transactions with owners in their capacity as owners Issue of share capital Share issue costs Options expense Total transactions with owners in their capacity as owners - - - - - - - - - - (3) - - - - - - - - 2,247,300 (126,800) - 301,275 2,120,500 301,275 7,263,100 (781,950) - 226,819 6,481,150 226,819 - - - - - - - - - - - - Balance at 30 June 2019 30,006,334 697,225 (10,406,897) 63 20,296,725 Balance at 1 July 2019 30,006,334 697,225 (10,406,897) 63 20,296,725 (1,569,877) (1,569,877) (1,569,877) (1,569,877) - - - - - - - - - - - - - - - - 2,247,300 (126,800) 301,275 2,421,775 - (3) - - 7,263,100 (781,950) 226,819 6,707,969 Balance at 30 June 2020 36,487,484 924,044 (11,976,774) 63 25,434,817 The statement of changes in equity should be read in conjunction with the accompanying notes. GOLD MOUNTAIN LIMITED ANNUAL REPORT 30 STATEMENT OF CASHFLOWS FOR YEAR ENDED 30 JUNE 2020 Cash flows from operating activities Payments to suppliers and employees Interest received Other receipts Cash flows from investing activities Payments for plant and equipment Receipt of tenement security deposits Cash flows from financing activities Proceeds from issue of shares Payments for share issue costs Proceeds from borrowings Net cash provided by (used in) financing activities Net (decrease) / increase in cash and cash equivalents Net cash (used in) provided by operating activities 27 (1,442,923) (742,709) Payments for other investments 14 (300,000) (450,000) Payments for exploration and evaluation 9 (4,122,965) (4,052,804) Net cash (used in) provided by investing activities (4,407,061) (4,558,787) Note 2020 $ 2019 $ 1,471 3,063 (1,511,401) (801,000) 67,007 55,228 - - (55,983) - 7,913,450 2,247,300 (781,950) (126,800) 500,000 250,000 7,631,500 2,370,500 1,781,516 (2,930,996) Cash and cash equivalents at beginning of financial year 54,070 2,985,066 Cash and cash equivalents at end of financial year 6 1,835,585 54,070 The statement of cashflows should be read in conjunction with the accompanying notes. GOLD MOUNTAIN LIMITED ANNUAL REPORT 31 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 This financial report includes the financial statements and notes of Gold Mountain Limited. Number Notes to the Financial Statements Summary of significant accounting policies Non-current assets – Deferred exploration and evaluation expenditure 1 2 3 4 5 6 7 8 9 10 11 12 13 14 16 17 18 19 20 21 22 23 24 25 26 27 Operating segments Revenue & other income Loss for the year Income tax expense Current assets - Cash and cash equivalents Current assets - Trade and other receivables Non-current assets – Plant and equipment Non-current assets – Intangible assets Non-current assets – Investments Non-current assets – Other assets Current liabilities – Trade and other payables Current and non-current liabilities – Other Key management personnel compensation Reserves Share based payments Related party disclosures Loss per share Financial Risk Management Auditor’s remuneration Parent Entity Information Dividends Events subsequent to reporting date Controlled entities Cash flow information 15 Contributed equity GOLD MOUNTAIN LIMITED ANNUAL REPORT 32 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES a. Basis of Preparation The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in financial statements containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards as issued by the IASB. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless otherwise stated. The financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. When the Company applies an accounting policy retrospectively, makes a retrospective restatement or reclassifies items in its financial statements, financial statements as at the beginning of the earliest comparative liabilities b. Comparative Figures period will be disclosed. c. Principles of consolidation Business combinations For every business combination, the Company identifies the acquirer, which is the combining entity that obtains control over the other combining entities. An investor controls an investee when it is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. In assessing control, the Company takes into consideration potential voting rights that are currently exercisable. The acquisition date is the date on which control is transferred from the acquirer. Interests in equity-accounted investees The Company’s interests in equity-accounted investees comprise the interest in a joint venture. A joint venture is a joint arrangement, whereby the Group and other parties have joint control and have rights to the net assets of the arrangement. The interest in the joint venture is accounted for using the equity method. It is recognised initially at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Company’s share of the profit or loss and other comprehensive income of equity-accounted investees, until the date on which significant influence or joint control ceases. Joint arrangements Under AASB 11, the Company has classified its interests in joint arrangements as either joint operations (if the Group has rights to the assets, and obligations for the liabilities, relating to an arrangement) or joint ventures (if the Group has rights only to the net assets of an arrangement). When making this assessment, the Company considered the structure of the arrangements, the legal form of any separate vehicles, the contractual terms of the arrangements and other facts and circumstances. The Company did not have any joint arrangements at the start of the financial year. GOLD MOUNTAIN LIMITED ANNUAL REPORT 33 On 16 August 2016, the Company completed the acquisition of an additional 50% of the issued capital of Viva No. 20 Limited (“Viva”) through the issue of 60,000,000 shares at $0.08 each to the Vendors. Simultaneously, the Vendors issued 125 ordinary shares to GMN comprising 50% of the entire issued capital of Viva held by the Vendors. On completion of this acquisition, the Company now holds a controlling interest of 70% in Viva. As a result of the acquisition and in accordance with AASB 11, this new arrangement has been recognised on a consolidated basis. On 18 July 2017, the Company announced that it had entered a binding agreement for the acquisition of the EL2306 Interest from the EL2306 Vendor for purchase price of $5,200,000 comprising 22 million Shares at a notional price of $0.10 per Share and $3,000,000 in cash. The cash consideration of $3,000,000 is payable in instalments. An exclusivity fee of $150,000 was also paid and capitalised as Deferred Expenditure in FY 2016. On 19 February, 2018 the Company issued 22,000,000 shares at the issue price of $0.10 to raise $2,200,000 as part consideration for the acquisition of a 70% interest in EL2306 as approved by Shareholders at the Annual General Meeting held on 28 November 2017. Instalment costs of $2,250,000 were paid by the Company in FY 2017, FY 2018, FY 2019 and FY 2020. The remaining instalment costs of $750,000 has been extended and is payable by 31 December 2020. As a result of the acquisition and in accordance with AASB 11, this new arrangement has been recognised as a joint arrangement. See Note 14 for further information. d. Impairment of Assets At the end of each reporting period, the Company assesses whether there is any indication that an asset may be impaired. The assessment will include the consideration of external and internal sources of information. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, to the asset’s carrying amount. Any excess of the asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with another Standard (eg in accordance with the revaluation model in AASB 116). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that Standard. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Cash and cash equivalents include cash on hand, deposits available on demand with banks and other short-term highly liquid investments with original maturities of three months or less. Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of e. Cash and Cash Equivalents f. Provisions the reporting period. g. Trade and other payables h. Income Tax expense (income). Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the Company during the reporting period which remain unpaid. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability. The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses. GOLD MOUNTAIN LIMITED ANNUAL REPORT 34 Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. i. Exploration and Development Expenditure Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied: (i) The rights to tenure of the area of interest are current; and (ii) at least one of the following conditions is also met: (a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or (b) exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset 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 in previous years. development. Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to Costs of site restoration are provided over the life of the project from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with local laws and regulations and clauses of the permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis. GOLD MOUNTAIN LIMITED ANNUAL REPORT 35 Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site. j. Revenue and Other Income Revenue is measured at the fair value of the consideration received or receivable. When the inflow of consideration is deferred, it is treated as the provision of financing and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. The difference between the amount initially recognised and the amount ultimately received is interest revenue. All revenue is stated net of the amount of goods and services tax (GST). k. Earnings (Loss) per share Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share is calculated as net profit attributable to members, adjusted for: (i) costs of servicing equity (other than dividends); (ii) the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and (iii) other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. 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). Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts from customers or payments to suppliers. Each class of plant and equipment is carried at cost or fair value as indicated less, where applicable, any m. Plant and Equipment accumulated depreciation and impairment losses. Plant and equipment Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated impairment. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a revalued asset. A formal assessment of recoverable amount is made when impairment indicators are present. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. GOLD MOUNTAIN LIMITED ANNUAL REPORT 36 Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of profit or loss and other comprehensive income during the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets is depreciated on a straight-line basis over the asset’s useful life to the Company commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Depreciation Rate Plant and equipment 20%-32% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of profit or loss and other comprehensive income. When revalued assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to retained earnings. Leases (the Group as lessee) At inception of a contract, the Group assesses if the contract contains or is a lease. If there is a lease present, a right-of-use asset and a corresponding lease liability is recognised by the Group where the Group is a lessee. However, all contracts that are classified as short-term leases (lease with remaining lease term of 12 months or less) and leases of low-value assets are recognised as an operating expense on a straight-line basis over the term of the lease. Initially, the lease liability is measured at the present value of the lease payments still to be paid at the commencement date. The lease payments are discounted at the interest rate implicit in the lease. If this rate cannot be readily determined, the Group uses the incremental borrowing rate. Lease payments included in the measurement of the lease liability are as follows: fixed lease payments less any lease incentives; – – – – – – variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; the amount expected to be payable by the lessee under residual value guarantees; the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; lease payments under extension options if lessee is reasonably certain to exercise the options; and payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease. Subsequently, the lease liability is measured by a reduction to the carrying amount of any payments made and an increase to reflect any interest on the lease liability. The right-of-use assets is an initial measurement of the corresponding lease liability less any incentives and initial direct costs. Subsequently, the measurement is the cost less accumulated depreciation (and impairment if applicable). shortest. underlying asset. Right-of-use assets are depreciated over the lease term or useful life of the underlying asset whichever is the Where a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group anticipates to exercise a purchase option, the specific asset is depreciated over the useful life of the GOLD MOUNTAIN LIMITED ANNUAL REPORT 37 h. Financial Instruments Initial recognition and measurement Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions to the instrument. For financial assets, this is the date that the Group commits itself to either the purchase or sale of the asset (ie trade date accounting is adopted). Financial instruments (except for trade receivables) are initially measured at fair value plus transaction costs, except where the instrument is classified "at fair value through profit or loss", in which case transaction costs are expensed to profit or loss immediately. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted. Trade receivables are initially measured at the transaction price if the trade receivables do not contain a significant financing component or if the practical expedient was applied as specified in AASB 15.63. Classification and subsequent measurement Financial liabilities Financial liabilities are subsequently measured at: amortised cost; or fair value through profit or loss. – – – – – – – – A financial liability is measured at fair value through profit or loss if the financial liability is: a contingent consideration of an acquirer in a business combination to which AASB 3: Business Combinations applies; held for trading; or initially designated as at fair value through profit or loss. All other financial liabilities are subsequently measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest expense in profit or loss over the relevant period. The effective interest rate is the internal rate of return of the financial asset or liability, that is, it is the rate that exactly discounts the estimated future cash flows through the expected life of the instrument to the net carrying amount at initial recognition. A financial liability is held for trading if it is: incurred for the purpose of repurchasing or repaying in the near term; part of a portfolio where there is an actual pattern of short-term profit taking; or a derivative financial instrument (except for a derivative that is in a financial guarantee contract or a derivative that is in an effective hedging relationship). Any gains or losses arising on changes in fair value are recognised in profit or loss to the extent that they are not part of a designated hedging relationship. The change in fair value of the financial liability attributable to changes in the issuer's credit risk is taken to other comprehensive income and is not subsequently reclassified to profit or loss. Instead, it is transferred to retained earnings upon derecognition of the financial liability. If taking the change in credit risk in other comprehensive income enlarges or creates an accounting mismatch, then these gains or losses should be taken to profit or loss rather than other comprehensive income. A financial liability cannot be reclassified. Financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are initially measured at fair value (and if not designated as at fair value through profit or loss and do not arise from a transfer of a financial asset) and subsequently measured at the higher of: – the amount of loss allowance determined in accordance to AASB 9.3.25.3; and GOLD MOUNTAIN LIMITED ANNUAL REPORT 38 – the amount initially recognised less accumulative amount of income recognised in accordance with the revenue recognition policies. Financial asset Financial assets are subsequently measured at: amortised cost; fair value through other comprehensive income; or fair value through profit or loss on the basis of the two primary criteria: – – – – – – – – – – – loss. the contractual cash flow characteristics of the financial asset; and the business model for managing the financial assets. A financial asset is subsequently measured at amortised cost if it meets the following conditions: the financial asset is managed solely to collect contractual cash flows; and the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates. A financial asset is subsequently measured at fair value through other comprehensive income if it meets the following conditions: the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates; and the business model for managing the financial asset comprises both contractual cash flows collection and the selling of the financial asset. By default, all other financial assets that do not meet the conditions of amortised cost and the fair value through other comprehensive income's measurement condition are subsequently measured at fair value through profit or The Group initially designates a financial instrument as measured at fair value through profit or loss if: it eliminates or significantly reduces a measurement or recognition inconsistency (often referred to as “accounting mismatch”) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases; it is in accordance to the documented risk management or investment strategy and information about the groupings was documented appropriately, so as the performance of the financial liability that was part of a group of financial liabilities or financial assets can be managed and evaluated consistently on – it is a hybrid contract that contains an embedded derivative that significantly modifies the cash flows a fair value basis; and otherwise required by the contract. The initial designation of the financial instruments to measure at fair value through profit or loss is a one-time option on initial classification and is irrevocable until the financial asset is derecognised. At initial recognition, as long as the equity instrument is not held for trading or is not a contingent consideration recognised by an acquirer in a business combination to which AASB 3 applies, the Group made an irrevocable election to measure any subsequent changes in fair value of the equity instruments in other comprehensive income, while the dividend revenue received on underlying equity instruments investments will still be recognised Regular way purchases and sales of financial assets are recognised and derecognised at settlement date in accordance with the Group's accounting policy. Equity instruments in profit or loss. Derecognition Derecognition refers to the removal of a previously recognised financial asset or financial liability from the statement of financial position. Derecognition of financial liabilities A liability is derecognised when it is extinguished (ie when the obligation in the contract is discharged, cancelled or expires). An exchange of an existing financial liability for a new one with substantially modified terms, or a substantial modification to the terms of a financial liability, is treated as an extinguishment of the existing liability and recognition of a new financial liability. GOLD MOUNTAIN LIMITED ANNUAL REPORT 39 The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. Derecognition of financial assets A financial asset is derecognised when the holder's contractual rights to its cash flows expires, or the asset is transferred in such a way that all the risks and rewards of ownership are substantially transferred. All the following criteria need to be satisfied for the derecognition of a financial asset: the right to receive cash flows from the asset has expired or been transferred; all risk and rewards of ownership of the asset have been substantially transferred; and the Group no longer controls the asset (ie it has no practical ability to make unilateral decisions to sell the asset to a third party). On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. On derecognition of a debt instrument classified as fair value through other comprehensive income, the cumulative gain or loss previously accumulated in the investment revaluation reserve is reclassified to profit or On derecognition of an investment in equity which was elected to be classified under fair value through other comprehensive income, the cumulative gain or loss previously accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings. loss. Impairment The Group recognises a loss allowance for expected credit losses on: financial assets that are measured at amortised cost or fair value through other comprehensive income; lease receivables; contract assets (eg amount due from customers under contracts); loan commitments that are not measured at fair value through profit or loss; and financial guarantee contracts that are not measured at fair value through profit or loss. Loss allowance is not recognised for: financial assets measured at fair value through profit or loss; or equity instruments measured at fair value through other comprehensive income. Expected credit losses are the probability-weighted estimate of credit losses over the expected life of a financial instrument. A credit loss is the difference between all contractual cash flows that are due and all cash flows expected to be received, all discounted at the original effective interest rate of the financial instrument. The Group use the following approaches to impairment, as applicable under AASB 9: the general approach; the simplified approach; the purchased or originated credit impaired approach; and low credit risk operational simplification. – – – – – – – – – – – – – – Under the general approach, at each reporting period, the Group assessed whether the financial instruments are – the credit risk of the financial instrument increased significantly since initial recognition, the Group measured the loss allowance of the financial instruments at an amount equal to the lifetime expected – there was no significant increase in credit risk since initial recognition, the Group measured the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. General approach credit impaired, and if: credit losses; and Simplified approach The simplified approach does not require tracking of changes in credit risk at every reporting period, but instead requires the recognition of lifetime expected credit loss at all times. This approach is applicable to: – trade receivables or contract assets that results from transactions that are within the scope of AASB 15: Revenue from Contracts with Customers, that contain a significant financing component; and GOLD MOUNTAIN LIMITED ANNUAL REPORT 40 – – – – – – – – – lease receivables. In measuring the expected credit loss, a provision matrix for trade receivables was used taking into consideration various data to get to an expected credit loss (ie diversity of its customer base, appropriate groupings of its historical loss experience, etc). Purchased or originated credit impaired approach For a financial asset that is considered to be credit impaired (not on acquisition or originations), the Group measured any change in its lifetime expected credit loss as the difference between the asset’s gross carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. Any adjustment is recognised in profit or loss as an impairment gain or loss. Evidence of credit impairment includes: significant financial difficulty of the issuer or borrower; a breach of contract (eg default or past due event); where a lender has granted to the borrower a concession, due to the borrower's financial difficulty, that the lender would not otherwise consider; it is probable the borrower will enter bankruptcy or other financial reorganisation; and the disappearance of an active market for the financial asset because of financial difficulties. Low credit risk operational simplification approach If a financial asset is determined to have low credit risk at the initial reporting date, the Group assumed that the credit risk has not increased significantly since initial recognition and, accordingly, can continue to recognise a loss allowance of 12-month expected credit loss. In order to make such determination that the financial asset has low credit risk, the Group applied its internal credit risk ratings or other methodologies using a globally comparable definition of low credit risk. A financial asset is considered to have low credit risk if: there is a low risk of default by the borrower; the borrower has strong capacity to meet its contractual cash flow obligations in the near term; and adverse changes in economic and business conditions in the longer term, may, but not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations. A financial asset is not considered to carry low credit risk merely due to existence of collateral, or because a borrower has a lower risk of default than the risk inherent in the financial assets, or lower than the credit risk of the jurisdiction in which it operates. Recognition of expected credit losses in financial statements At each reporting date, the Group recognised the movement in the loss allowance as an impairment gain or loss in the statement of profit or loss and other comprehensive income. The carrying amount of financial assets measured at amortised cost includes the loss allowance relating to that asset. Assets measured at fair value through other comprehensive income are recognised at fair value with changes in fair value recognised in other comprehensive income. The amount in relation to change in credit risk is transferred from other comprehensive income to profit or loss at every reporting period. For financial assets that are unrecognised (eg loan commitments yet to be drawn, financial guarantees), a provision for loss allowance is created in the statement of financial position to recognise the loss allowance. GOLD MOUNTAIN LIMITED ANNUAL REPORT 41 i. Impairment of Assets At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The assessment will include considering external sources of information and internal sources of information, including dividends received from subsidiaries, associates or joint ventures deemed to be out of pre- acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs of disposal and value in use, to the asset’s carrying amount. Any excess of the asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with another Standard (eg in accordance with the revaluation model in AASB 116: Property, Plant and Equipment). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that other Standard. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Impairment testing is performed annually for goodwill, intangible assets with indefinite lives and intangible assets not yet available for use. When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so 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 (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. o. Employee Benefits Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to the end of the reporting period. Employee benefits that are expected to be settled within one (1) year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one (1) year have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wages increases and the probability that the employee may satisfy vesting requirements. Those cash flows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows. p. Rounding of Amounts The parent entity has applied the relief available to it under ASIC Class Order 98/100 and accordingly, amounts in the financial statements and directors’ report have been rounded off to the nearest one dollar ($1). q. Critical Accounting Estimates and Judgments The directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Company. Key estimates (i) Impairment Key judgments (i) Exploration and evaluation expenditure The Company assesses impairment at the end of each reporting period by evaluating conditions and events specific to the Company that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions. The Company capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage that permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been GOLD MOUNTAIN LIMITED ANNUAL REPORT 42 extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded. r. Going concern The financial statements have been prepared on the going concern basis, the validity of which depends upon the positive cash position. The Company’s existing projections show that further funds will be required to be generated, either by capital raisings, sales of assets or other initiatives, to enable the Company to fund its currently planned activities for at least the next twelve months from the date of signing these financial statements. Should new opportunities present that require additional funds the Directors will take action to reprioritise activities, dispose of assets and or raise further funds. Notwithstanding this issue, accordingly the Directors have prepared the financial statements of the Company on a going concern basis. In arriving at this position, the Directors have considered the following pertinent matter: - Australian Accounting Standard, AASB 101 “Accounting Policies”, states that an entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. In the Directors’ opinion, at the date of signing the financial report, there are reasonable grounds to believe that the matters set out above will be achieved and therefore the financial statements have been prepared on a going concern basis. s. Issued capital t. Segment reporting u. Associates Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of Gold Mountain Limited. Associates are entities over which the Company has significant influence but not control or joint control. Investments in associates are accounted for using the equity method. Under the equity method, the share of the profits or losses of the associate is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in associates are carried in the statement of financial position at cost plus post-acquisition changes in the Company’s share of net assets of the associates. Dividends received or receivable from associates reduce the carrying amount of the investment. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivables, the consolidated entity does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. v. Joint Ventures A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. The Company’s interest in joint venture entities are accounted for using the proportionate consolidation method of accounting. The Company recognises its interest in the assets that it controls and the liabilities that it incurs and the expenses that it incurs and its share of the income that it earns from the sale of goods or services by the joint venture, classified according to the nature of the assets, liabilities, income or expense. Profits or losses on transactions establishing the joint venture entities and transactions with the joint venture are eliminated to the extent of the Company’s ownership interest until such time as they are realised by the joint venture entity on consumption or sale, unless they relate to an unrealised loss that provides evidence of the impairment of an asset transferred. The Company discontinues the use of proportionate consolidation from the date on which it ceases to have joint control over a jointly controlled entity. GOLD MOUNTAIN LIMITED ANNUAL REPORT 43 w. Fair Value of Assets and Liabilities Equity Instruments the reporting date. Trade and Other Receivables The fair value of available-for-sale financial assets is determined by reference to their quoted closing bid price at The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes. Due to the short-term nature of other receivables, their carrying value is assumed to approximate their fair value. Non-Derivative Financial Liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. x. 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 Company for the annual reporting period ended 30 June 2020. The Company’s assessment of the impact of these new or amended Accounting Standards and Interpretations are that they will have no material effect. GOLD MOUNTAIN LIMITED ANNUAL REPORT 44 NOTE 2: OPERATING SEGMENTS Segment Information Identification of reportable segments During the year, the Company operated principally in one business segment being mineral exploration and in two geographical segments being Australia and Papua New Guinea. The Company’s revenues and assets and liabilities according to geographical segments are shown below. June 2020 Total Australia $ $ PNG $ Total $ June 2019 Australia $ PNG $ Total segment revenue 105,844 105,844 105,844 105,844 48,529 48,529 48,529 48,529 Net loss before income tax (1,569,877) (1,513,982) (55,895) (1,401,021) (1,348,298) (52,723) - - - - (1,569,877) (1,513,982) (55,895) (1,401,021) (1,348,298) (52,723) - - - - - - REVENUE Revenue RESULTS Income tax Net loss Assets Liabilities ASSETS AND LIABILITIES 28,170,193 11,237,409 16,852,987 22,484,417 149,407 22,335,010 2,735,377 1,697,934 1,037,443 2,187,692 417,783 1,769,909 NOTE 3: REVENUE AND OTHER INCOME a. Revenue Other income Interest received 1 Rental income Foreign exchange gains Government grants and cash boost Total other income Total revenue 1 Interest received from: Bank 2020 $ 2019 $ 1,471 51,007 37,366 16,000 3,063 43,134 2,332 - 105,844 48,529 105,844 48,529 1,471 3,063 GOLD MOUNTAIN LIMITED ANNUAL REPORT 45 NOTE 4: LOSS FOR THE YEAR Loss before income tax includes the following specific expenses: Consultants fees Legal costs Rental expense on operating leases Significant expenses — — — a. — — The following significant expense items are relevant in explaining the financial performance: Exploration expense Impairments Write Off expense - - 6,045 20,000 2020 $ 2019 $ 171,675 169,750 69,520 17,846 16,969 101,533 NOTE 5: INCOME TAX EXPENSE The prima facie tax on the loss before income tax is reconciled to income tax as follows: Loss before income tax expense Prima facie tax benefit on the loss before income tax at 27.5% (2019: 27.5%) Add: Tax effect of: Less: Tax effect of: Other non-allowable items Other deductible expenses Future tax benefits not brought to account Income tax attributable to the Company 2020 $ 2019 $ (1,569,877) (1,401,021) (431,716) (385,281) 108,652 141,031 108,652 141,031 (57,966) (116,245) 381,030 360,495 - - The Company has tax losses arising in Australia of $9,032,513 (2019: $8,651,483) that are available indefinitely to offset against future taxable profits. out in Note 1(h) occur. Deferred tax assets not brought to account, the benefits of which will only be realised if the conditions for deductibility set GOLD MOUNTAIN LIMITED ANNUAL REPORT 46 NOTE 6: CASH AND CASH EQUIVALENTS Cash at bank Short-term bank deposits 2020 $ 611,474 1,224,112 1,835,586 2019 $ 12,243 41,827 54,070 Reconciliation of cash Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of financial position as follows: Cash and cash equivalents 1,835,586 54,070 Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rates. NOTE 7: TRADE AND OTHER RECEIVABLES Current PNG Project Advance Other receivables Total current trade and other receivables NOTE 8: PLANT AND EQUIPMENT Plant and equipment – at cost Accumulated depreciation Carrying amount at beginning of the year Additions Depreciation expense Carrying amount at end of the year Right of Use Asset Depreciation expense Carrying amount at end of the year GOLD MOUNTAIN LIMITED ANNUAL REPORT Reconciliation of the carrying amount of plant and equipment at the beginning and end of the current and previous financial year: 2020 $ 2019 $ - 118,130 118,130 - 60,509 60,509 2020 $ 2019 $ 604,978 614,278 (319,157) (195,498) 285,821 418,780 418,780 489,797 (6,045) 55,983 (126,913) (127,000) 285,821 418,780 209,679 (83,871) 125,807 - - - 47 NOTE 9: DEFERRED EXPLORATION AND EVALUATION EXPENDITURE Assets in Development Balance at the beginning of the year Expenditure incurred Impairment loss on existing tenements Net carrying value Expenditure incurred on acquisition of 70% interest in EL2306 2020 $ 2019 $ 15,868,988 11,816,184 3,853,612 4,052,804 - - - - 19,722,600 15,868,988 Recoverability of the carrying amount of deferred exploration and evaluation expenditure is dependent on the successful development and commercial exploitation or sale of the areas of interest. Management reassess the carrying value of the Company’s tenements at each half year, or at a period other than that should there be an indication of impairment. During the year to 30 June 2020, no impairment of exploration expense (2019: $nil was recognised). This impairment of exploration expense refers to past costs incurred in maintaining the Company’s NSW exploration projects. NOTE 10: INTANGIBLE ASSETS Intangible assets Goodwill on acquisition Total intangible assets Additions Disposals Movement in foreign exchange Carrying amount at 30 June 2020 Goodwill on acquisition Movements in Carrying Amounts Movement in the carrying amounts for intangible assets between the beginning and the end of the current financial year: Carrying amount at 30 June 2019 5,995,970 6,002,733 On 16 August 2016, the Company completed the acquisition of an additional 50% of the issued capital of Viva through the issue of 60,000,000 shares at $0.08 each to the Vendors. Simultaneously, the Vendors issued 125 ordinary shares to GMN comprising 50% of the entire issued capital of Viva held by the Vendors. On completion of this acquisition, the Company now holds a controlling interest of 70% in Viva. 2020 $ 2019 $ 5,996,150 5,996,150 5,995,970 5,995,970 2020 $ - - 180 2019 $ - - (6,763) 5,996,150 5,995,970 GOLD MOUNTAIN LIMITED ANNUAL REPORT 48 NOTE 11: INVESTMENTS Non-Current Gold nuggets NOTE 12: OTHER ASSETS Non-Current Security deposits NOTE 13: TRADE AND OTHER PAYABLES Current Unsecured liabilities: Trade payables and accrued expenses Amounts payable to Director and related entities Shareholders loan and accrued interest Unissued share liability Rental deposit received Current Lease Liability Borrowings Instalment costs - EL2306 Total other current liabilities Non-current Lease Liability Instalment costs - EL2306 Total other non-current liabilities NOTE 14: OTHER CURRENT AND NON CURRENT LIABILITIES 2020 $ 2019 $ 50,555 50,555 50,555 50,555 2020 $ 2019 $ 35,545 35,545 35,545 35,545 2020 $ 2019 $ 419,494 364,200 4,299 45,892 754,081 650,350 27,600 27,600 1,855,824 437,692 2020 $ 2019 $ 85,329 - 250,000 750,000 1,050,000 835,329 1,300,000 44,223 - 450,000 44,223 450,000 - - - - GOLD MOUNTAIN LIMITED ANNUAL REPORT 49 Instalment costs - EL2306 On 18 July 2017, the Company announced that it had entered a binding agreement for the acquisition of the EL2306 Interest from the EL2306 Vendor for purchase price of $5,200,000 comprising 22 million Shares at a notional price of $0.10 per Share and $3,000,000 in cash. The cash consideration of $3,000,000 is payable in instalments. An exclusivity fee of $150,000 was also paid and capitalised as Deferred Expenditure in FY 2016. On 19 February 2018, the Company issued 22,000,000 shares at the issue price of $0.10 to raise $2,200,000 as part consideration for the acquisition of a 70% interest in EL2306 as approved by Shareholders at the Annual General Meeting held on 28 November 2017. Instalment costs of $2,250,000 were paid by the Company in FY 2017, FY 2018, FY 2019 and FY 2020. The remaining instalment costs of $750,000 has been extended and is payable by 31 December 2020. NOTE 15: CONTRIBUTED EQUITY (a) Ordinary shares Ordinary Shares, issued Share issue costs Total issued capital 2020 Number of shares 2020 $ 2019 Number of shares 2019 $ 667,838,577 39,061,510 549,716,526 31,798,410 (2,574,026) 36,487,484 (1,792,076) 30,006,334 Ordinary shares carry one vote per share and carry the rights to dividends. Ordinary shares participate in dividends and the proceeds on winding-up of the parent entity in proportion to the number of shares held. At the shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. (b) Movements in ordinary shares on issue Number of Issue Price $ shares Date Particulars At 30 June 2018 28-02-19 Placement to professional and sophisticated investors 20,296,923 $0.065 1,319,300 24-05-19 Placement to professional and sophisticated investors 14,276,923 $0.065 928,000 515,142,680 27,885,834 30-06-19 Share issue costs At 30 June 2019 549,716,526 30-08-19 Placement to professional and sophisticated investors 21,733,333 04-09-19 Placement to professional and sophisticated investors 30,000,000 24-10-19 Placement to professional and sophisticated investors 8,400,000 02-12-19 Placement to professional and sophisticated investors 24,833,333 16-03-20 Placement to professional and sophisticated investors 15,823,077 05-06-20 Placement to professional and sophisticated investors 17,332,308 30-06-20 Share Issue Costs At 30 June 2020 (d) Capital Management Information on options is included in Note 17: Share Based Payments. (126,800) 30,006,334 1,314,000 1,800,000 504,000 1,490,000 1,028,500 1,126,600 (781,950) 667,838,577 36,487,484 The Directors’ objectives when managing capital are to safeguard the Company’s ability to continue as a going concern, so that they may continue to provide returns for shareholders and benefits for other stakeholders. The Group’s overall strategy remains unchanged from the 2020 financial year. GOLD MOUNTAIN LIMITED ANNUAL REPORT 50 The focus of the Company’s capital risk management is the current working capital position against the requirements of the Company to meet exploration programs and corporate overheads. The Company’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required. The Company’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets. There are no externally imposed capital requirements. Management effectively manages the Company’s capital by assessing the Company’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, There have been no changes in the strategy adopted by management to control the capital of the Company since the prior budgeting and share issues. year. NOTE 16: RESERVES Reserves Foreign currency translation reserve Share based payments reserve Movements in the Foreign Currency Translation Reserve At 1 July 2019 Foreign Currency Translation At 30 June 2020 At 1 July 2019 Options expense amortised At 30 June 2020 Movements in options over ordinary shares on issue NOTE 17: SHARE BASED PAYMENTS (a) Share-based payments Expense arising from the grant of options Total Share Based Payments (b) Movements in unlisted options The following table details the number, weighted average exercise prices (WAEP) and movements in share options issued as capital raising purposes, employment incentives or as payments to third parties for services during the year. 2020 2020 2019 Number WAEP Number Outstanding at the beginning of the year 59,173,249 $0.173 85,837,300 Options granted during the year 158,735,605 $0.129 34,573,246 Options lapsed during the year (21,938,461) $0.235 (61,237,300) Options exercised during the year - - - Outstanding at the end of the year 175,674,366 $0.133 59,173,249 $0.173 GOLD MOUNTAIN LIMITED ANNUAL REPORT 51 2020 $ (4) 924,048 924,044 (1) (3) (4) 697,229 226,819 924,048 2020 $ 226,819 226,819 2019 $ (4) 697,229 697,225 (1) (3) (4) 395,954 301,275 697,229 2019 $ 301,275 301,275 2019 WAEP $0.176 $0.125 $0.150 - (c) Options exercisable at reporting date Unlisted options expiring 28 November 2019 Unlisted options expiring 26 July 2021 Unlisted options expiring 26 July 2021 Unlisted options expiring 01 March 2020 Unlisted options expiring 27 May 2020 Unlisted options expiring 01 March 2021 Unlisted options expiring 27 May 2021 Unlisted options expiring 28 August 2020 Unlisted options expiring 03 December 2020 Unlisted options expiring 04 June 2021 Unlisted options expiring 28 August 2021 Unlisted options expiring 03 December 2021 Unlisted options expiring 16 March 2022 Unlisted options expiring 05 June 2022 2020 Exercise 2019 Exercise Number Price Number Price 14,800,000 2,000,000 7,800,000 10,148,162 7,138,461 10,148,162 7,138,461 $0.300 $0.150 $0.150 $0.100 $0.100 $0.150 $0.150 2,000,000 7,800,000 $0.15 $0.15 - - 10,148,162 7,138,461 9,866,669 7,911,539 8,666,154 9,866,669 56,616,667 12,911,539 11,131,539 $0.15 $0.15 $0.10 $0.10 $0.10 $0.10 $0.15 $0.15 $0.15 $0.15 Unlisted options expiring 03 December 2020 31,616,667 Exercisable at reporting date 175,674,366 59,173,246 (d) Options issued during the year The maximum terms of options granted during the year are as follows: On 30 August 2019 the Company granted 19,733,338 free unlisted options to participants in the share placement of 19,733,333 shares on the same date in two separate tranches of options. One tranche of 9,866,669 options is at exercise price of $0.10 expiring on 28/08/2020 and the other tranche of 9,866,669 options is at exercise price of $0.15 expiring 28/08/2021 with no vesting conditions. On 2 December 2019, the Company granted 88,233,334 free unlisted options to participants related to the Share Placement program including those placement shares issued previously of 30 August 2019 and 4 September 2019, with approval of shareholders at the 2019 AGM. Participants of the Share Placement were entitled to one (1) option exercisable at $0.10 and another one (1) option exercisable at $0.15 within 12 months and 24 months from date of issue respectively for every two (2) placement shares issued. A total of 63,233,334 options were granted in relation the placement shares issued. The remaining balance of 25,000,000 options exercisable at $0.15 within 24 months were issued to the Promoters. On 16 March 2020, the Company granted 20,823,078 free unlisted options to participants in the share placement of 15,823,077 shares on the same date in two separate tranches of options. One option tranche is at an exercise price of $0.10 expiring on 16 March 2021 and the other option tranche is at an exercise price of $0.15 expiring on 16 March 2022 with no vesting conditions. The grant of 5,000,000 options exercisable at $0.15 expiring 16 March 2020 was made to a Promoter for services rendered. On 5 June 2020 the Company granted 19,797,693 free unlisted options to participants in the share placement of 17,332,308 shares on the same date in two separate tranches of options. One option tranche is at an exercise price of $0.10 expiring on 5 June 2021 and the other option tranche is at an exercise price of $0.15 expiring 5 June 2022 with no vesting conditions. Of the options of exercise price $0.15 expiry 5 June 2022, 2,465,385 options were granted to various promoters and introducers for their services rendered. On 3 July 2020 the Company granted 29,323,848 free unlisted options to participants in the share placement of 11,823,847 shares on the same date in two separate tranches of options. One option tranche is at an exercise price of $0.10 expiring on 3 July 2021 and the other option tranche is at an exercise price of $0.15 expiring 3 July 2022 with no vesting conditions. Of the options of exercise price $0.15 expiry 3 July 2022, 17,500,000 options were granted to a Promoter for past services rendered. The options must be exercised on or before the expiry date in cash. GOLD MOUNTAIN LIMITED ANNUAL REPORT 52 (e) Fair value of unlisted options The fair value of the options granted is estimated as at the date of grant using a Black-Scholes model taking into account the terms and conditions upon which the options were granted. The following tables list the inputs to the model used for the year ended 30 June 2020. 1 2 3 4 5 6 7 Financial year of grant 2018 2018 2019 2019 2020 2020 2020 ASX Code Grant date Expiry date Option term GMNAD GMNAE GMNAC GMNAC GMNAC GMNAC GMNAC 26 Sep 17 26 Sep 17 01 Mar 19 27 May 19 29 Aug 19 29 Aug 19 03 Dec 19 26 Jul 21 26 Jul 21 01 Mar 21 27 May 21 28 Aug 20 28 Aug 21 03 Dec 21 3.8 years 3.8 years 24 months 24 months 12 months 24 months 24 months Number of options issued 2,000,000 7,800,000 10,148,462 7,138,461 9,866,669 9,866,669 56,616,667 Share price at grant date Exercise price Expected volatility Expected dividends $0.090 $0.150 68% Nil $0.090 $0.150 68% Nil $0.066 $0.150 68% Nil $0.058 $0.150 68% Nil $0.051 $0.100 68% Nil $0.051 $0.150 68% Nil $0.075 $0.150 68% Nil Risk-free interest rate 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% Fair value $8,125 $31,687 $16,975 $21,760 $6,115 $45,681 $357,018 Financial year of grant 2020 2020 8 9 10 2020 11 2020 12 2020 ASX Code Grant date Expiry date Option term GMNAC GMNAC GMNAC GMNAF GMNAG 03 Dec 19 15 Mar 20 15 Mar 20 05 Jun 20 05 Jun 20 03 Dec 20 16 Mar 21 16 Mar 22 05 Jun 21 05 Jun 22 12 months 12 months 24 months 12 months 24 months Number of options issued 31,616,667 7,911,539 12,911,539 8,666,154 11,131,539 Share price at grant date Exercise price Expected volatility Expected dividends $0.075 $0.100 68% Nil $0.055 $0.100 68% Nil $0.055 $0.150 68% Nil $0.05 $0.05 $0.100 $0.150 68% Nil 68% Nil Risk-free interest rate 0.25% 0.25% 0.25% 0.25% 0.25% Fair value $106,353 $49,432 $104,107 $72,026 $104,770 GMNAD options are exercisable at $0.15 until expiry date 26/07/2021 and subject to vending condition that the total options granted shall be vested over 3 periods of 12 months per period. GMNAE ESOP options are exercisable at $0.15 until expiry date 26/07/2021 and subject to vending condition that the total options granted shall be vested over 3 periods of 12 months per period. GOLD MOUNTAIN LIMITED ANNUAL REPORT 53 NOTE 18: RELATED PARTY DISCLOSURES Related Parties a. The Company’s main related parties are as follows: i. Key management personnel: Any person(s) having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any director (whether executive or otherwise), are considered key management personnel. The directors in office during the year were as follows: Sin Pyng “Tony” Teng Syed Hizam Alsagoff (Appointed 2/9/2019) Pay Chuan “Paul” Lim (Appointed 14/10/2019) Graham Kavanagh (Appointed 5/6/2014, Resigned 14/10/2019) Douglas Smith (Appointed 29/12/2016, Ceased 23/8/2019) For details of disclosures relating to key management personnel, refer to Key Management Personnel disclosures Directors and Remuneration Report. b. Transactions with related parties: Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. The following transactions occurred with related parties: i. Other related parties: Purchase of goods and services: Corporate advisory fees paid to Drumcliff Investment Pty Ltd as Directors Fees, an entity associated with Mr Graham Kavanagh. Corporate advisory fees paid to Rodby Holdings Pty Ltd as Directors Fees and Consulting Fees, an entity associated with Mr Sin Pyng “Tony” Teng. Corporate advisory fees paid to Dougnic Pty Ltd and Dougie Downunder as Directors and Consulting Fees, entities associated with Mr Doug Smith. c. Amounts payable to related parties: Trade and other payables: 8,800 45,892 Amounts payable to Directors and related entities, as follows: Directors fees Reimbursement of expenses Corporate advisory services Total trade and other payable related party amounts NOTE 19: KEY MANAGEMENT PERSONNEL COMPENSATION Short-term employee benefits Post-employment benefits Share based payments Non-Executive Directors Fees Balance at the end of year GOLD MOUNTAIN LIMITED ANNUAL REPORT 2020 $ 2019 $ 22,000 30,000 96,000 72,000 8,400 180,369 8,800 - - 8,800 2020 $ - - - - - 9,000 1,692 35,200 45,892 2019 $ 404,400 570 - 6,000 410,970 54 2020 $ 2019 $ NOTE 20: LOSS PER SHARE a. Basic Loss per share I ii. iii. Basic Loss (cents per share) (0.25) (0.27) Net loss used to calculate basic loss per share (1,569,877) (1,401,021) Weighted average number of ordinary shares outstanding during the year used in calculating basic loss per share 618,561,268 523,468,830 No. No. b. Diluted loss per share The Company’s potential ordinary shares, being its options granted, are not considered dilutive as the conversion of these options would result in a decrease in the net loss per share. Not applicable Not applicable NOTE 21: FINANCIAL RISK MANAGEMENT The Company’s financial instruments consist mainly of deposits with banks, local money market instruments, short-term investments, accounts receivable and payable, loans to and from related parties, bills and leases. The following table details the expected maturities for the Company’s non-derivative financial assets. These have been drawn up based on undiscounted contractual maturities of the financial assets including interest that will be earned on those assets except where the Company anticipates that the cash flow will occur in a different period. Financial Risk Management Policies The Board has overall responsibility for the establishment and oversight of the risk management framework. The Board reviews and agrees policies for managing each of these risks as summarised below. The Audit and Risk Committee (ARC) has been delegated responsibility by the Board of Directors for, among other issues, monitoring and managing financial risk exposures of the Company. The ARC monitors the Company’s financial risk management policies and exposures and approves financial transactions within the scope of its authority. It also reviews the effectiveness of internal controls relating to commodity price risk, counterparty credit risk, currency risk, financing risk and interest rate risk. The ARC’s overall risk management strategy seeks to assist the Company in meeting its financial targets, while minimising potential adverse effects on financial performance. Its functions include the review of the use of hedging derivative instruments, credit risk policies and future cash flow requirements. Specific Financial Risk Exposures and Management The main risks the Company is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of interest rate risk. This note presents the information about the Company’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. a. Credit risk Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the Company. Credit risk is managed through the maintenance of procedures (such procedures include the utilisation of systems for the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring of the financial stability of significant customers and counterparties), ensuring to the extent possible, that customers and counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables for impairment. Depending on the division within the Company, credit terms are generally 14 to 30 days from the invoice date. GOLD MOUNTAIN LIMITED ANNUAL REPORT 55 Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating, or in entities that the FRMC has otherwise cleared as being financially sound. Where the Company is unable to ascertain a satisfactory credit risk profile in relation to a customer or counterparty, the risk may be further managed through title retention clauses over goods or obtaining security by way of personal or commercial guarantees over assets of sufficient value which can be claimed against in the event of any default. Credit risk exposures The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period excluding the value of any collateral or other security held, is equivalent to the carrying value and classification of those financial assets (net of any provisions) as presented in the statement of financial position. The Company has no significant concentrations of credit risk with any single counterparty or company of counterparties. Details with respect to credit risk of trade and other receivables are provided in Note 7. Trade and other receivables that are neither past due nor impaired are considered to be of high credit quality. b. Liquidity risk mechanisms: Liquidity risk arises from the possibility that the Company might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Company manages this risk through the following preparing forward-looking cash flow analysis in relation to its operational, investing and financing activities; using derivatives that are only traded in highly liquid markets; - monitoring undrawn credit facilities; - obtaining funding from a variety of sources; - maintaining a reputable credit profile; - managing credit risk related to financial assets; - - only investing surplus cash with major financial institutions; and comparing the maturity profile of financial liabilities with the realisation profile of financial assets. Cash flows realised from financial assets reflect management’s expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates and does not reflect management’s expectations that banking facilities will be rolled forward. 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 Company’s income or value of the holdings of financial instruments. The Company is exposed to movements in market interest rates on short term deposit. The policy is to monitor the interest rate yield curve out to 120 days to ensure a balance is maintained between the liquidity of cash assets and the interest rate return. The Company does not have short or long term debt, and therefore this risk is minimal. The Company limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have acceptable credit ratings. d. Interest rate risk Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The Company is also exposed to earnings volatility on floating rate instruments. The Company is exposed to interest rate risk as the Company deposits the bulk of its cash reserves in Term Deposits. The risk is managed by the Company by maintaining an appropriate mix between short term and medium-term deposits. The Company’s exposures to interest rate on financial assets and financial liabilities are detailed in the liquidity risk management section of this note. GOLD MOUNTAIN LIMITED ANNUAL REPORT 56 Interest rate sensitivity At 30 June 2020, the effect on loss and equity as a result of changes in the interest rate, with all other variable remaining constant would be as follows: Increase in interest rate by 1% Decrease in interest rate by 1% Interest rate risk is not material to the Company. 2020 $ 18,356 (18,356) 2019 $ 541 (541) The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows: Note 2020 2019 Floating Interest Rate Non- interest bearing Fixed Interest Rate Total 2020 Floating Interest Rate Non- interest bearing Fixed Interest Rate Total 2019 6 1,835,586 - - 1,835,586 54,070 - - 54,070 7 12 118,130 35,545 - - 118,130 35,545 60,509 35,545 60,509 35,545 Total financial assets 1,835,586 153,675 - 1,989,594 54,070 96,054 150,124 Financial Assets Cash and cash equivalents Trade and other receivables Other financial assets Financial liabilities at amortised cost: Financial Liabilities - Trade and other payables 13 1,105,824 750,000 1,855,824 - Other financial liabilities 14 879,552 - 879,552 Total financial liabilities 1,985,376 750,000 2,735,376 437,692 250,000 687,692 437,692 250,000 687,692 Net Financial Assets 1,835,586 (1,831,701) 750,000 745,782 54,070 (591,638) (537,568) - - - - - - - - - - - - - - - - - NOTE 22: AUDITOR'S REMUNERATION Remuneration of the auditor of the Company for: Auditing or reviewing the financial statements 2020 $ 2019 $ 32,207 32,207 33,905 33,905 GOLD MOUNTAIN LIMITED ANNUAL REPORT 57 NOTE 23: PARENT ENTITY INFORMATION The following information relates to the parent entity, Gold Mountain Limited. The information presented has been prepared using accounting policies that are consistent with those presented in Note 1. 2020 $ 2019 $ 1,953,716 114,579 26,216,477 22,369,983 28,170,193 22,484,562 2,691,153 987,692 44,223 1,200,000 2,753,377 2,187,692 25,434,816 20,296,870 36,487,484 30,006,334 924,044 697,229 (11,976,712) (10,406,693) 25,434,816 20,296,870 (1,569,877) (1,401,021) - - (1,569,877) (1,401,021) ASSETS Current assets Non –current assets TOTAL ASSETS LIABILITIES Current liabilities Non current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY FINANCIAL PERFORMANCE Profit (loss) for the year Other comprehensive income/(loss) for the year Total comprehensive profit/(loss) Remuneration Commitments Guarantees Contingent liabilities There are no contingent liabilities as at 30 June 2020. Exploration licence expenditure requirements There are no remuneration commitments apart from ongoing director and management fees incurred on a monthly basis. Gold Mountain Limited did not commit to nor make guarantees of any form as at 30 June 2020. The Company holds ten (10) exploration licences covering an area of about 2,811 sq km in the Enga province, Papua New Guinea (collectively termed the Wabag Project). The expenditure commitment for the ensuing 12 months period over 2020- 2021 on the development and maintenance of these licences are in the order of PGK2.13 million (AUD830,000). GOLD MOUNTAIN LIMITED ANNUAL REPORT 58 NOTE 24: DIVIDENDS The Directors of the Company have not declared any dividends for the year ended 30 June 2019. NOTE 25: EVENTS SUBSEQUENT TO REPORTING DATE On 2 July 2020, the Company advised that it has further raised $760,000 via the continuing share placement program at $0.065 per share to sophisticated investors. The share placement has accompanying entitlement of unlisted options for every two (2) shares issued, of one (1) share option exercisable at $0.10 within 12 months (10c-Options) and another one (1) share option exercisable at $0.15 within 24 months (15c-Options) respectively from date of issue. The Company’s Chief Executive Officer Tim Cameron and the recently appointed Advisor Matt Liddy have both participated in the placement giving support the ongoing drill program at the Monoyal Prospect. On 3 July 2020, the Company lodged the Proposed issue of securities along with Appendix 2A Application for quotation of +securities of 11,823,847 shares. The total issue raised $768,550 for working capital purposes. In addition, 5,911,924 10c- Options and 23,411,924 15c-Options were issued as entitlement of unlisted options to the issued shares, including 17,500,000 15c-Options allocation to an Introducer and Promoter for past services rendered. On 17 July 2020, the Company announced the assay results of the fifth diamond hole MCD007 drilled at the Monoyal Prospect. The results contain anomalous copper zones, gold and molybdenum mineralisation over 1m intervals with best intercepts recorded 32m @ 0.10% Cu 49ppm Mo 0.03 g/t Au from 170m, 13m @ 0.13% Cu 63ppm Mo 0.04 g/t Au from 176m, 3m @ 0.14% Cu 96ppm Mo 0.06 g/t Au from 285m and 3m @ 0.10% Cu 511ppm Mo 0.04 g/t Au. On 28 July 2020, the Company provided an update in relation to its drilling program at Wabag and reported the assay results of MCD005 and MCD006. Both holes intersected broad zones of elevated copper and molybdenum mineralisation, with anomalous gold and silver values. MCD005 intersected a narrow fault breccia between 93m and 94m, which assayed 0.81% Cu 0.26% Mo 1,175ppm Ag and contained elevated Zn (955ppm Zn). Assay results to 0.66% Cu 68 ppm Mo 0.26 g/t Au and 5.5 g/t Ag were recorded over 1m intervals in MCD006. On 27 August 2020, the Company announced that the Mineral Resources Authority (MRA) has granted GMN 6768 (PNG) Limited (100% owned subsidiary) the exploration licence EL2632 Mt. Wipi for a period of two years to 13 August 2022. The tenement was granted after successful Warden’s hearing in October 2019. On 15 September 2020, the Company announced that drilling at the Wabag Project is to resume in October 2020 following the easing of restrictions surrounding COVID-19. The focus in the drilling resumption will be testing Cu-Mo porphyry system at depth. On 23 September 2020, the Company reported the assay results of float and rock samples collected at the southern end drainage areas of the newly granted EL2632 Mt Wipi tenement. The results from total of 28 samples are highly encouraging with copper values ranging from 100ppm Cu to 9.64% Cu, gold from 0.01 g/t to 1.96 g/t Au and silver 0.14 g/t to 144 g/t Ag. Airborne magnetic data has also identified several targets with exploration programme to follow-up. There has not been any other matter or circumstance that has arisen after balance date that has significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial periods. GOLD MOUNTAIN LIMITED ANNUAL REPORT 59 Controlled Entities Consolidated Country of Incorporation Percentage Owned (%) Papua New Guinea Papua New Guinea Papua New Guinea Papua New Guinea 70% 100% 100% 100% Unless otherwise stated, the subsidiary listed above has share capital consisting solely of ordinary shares, which are held directly by the group, and the proportion of ownership interests held equals to the voting rights held by the group. The country of incorporation or registration is also their principal place of business. Reconciliation of Net Cash (used in) provided by operating activities with Loss NOTE 26: CONTROLLED ENTITIES Subsidiaries of Gold Mountain Limited: Viva No. 20 Limited GMN 6768 (PNG) Limited Viva Gold (PNG) Limited Abundance Valley (PNG) Limited NOTE 27: CASH FLOW INFORMATION after Income Tax Loss Non-cash flows in profit: Options expense Exploration expense Impairments expense Unrealised Foreign Exchange Loss Depreciation expense Changes in assets and liabilities 2020 $ 2019 $ (1,569,877) (1,401,021) 226,819 301,275 - - - - 20,000 6,760 210,785 127,000 (Increase)/decrease in trade and other receivables (108,176) 21,730 Increase/(decrease) in trade payables and other payables (202,474) 181,547 Net Cash (used in) provided by operating activities (1,442,923) (742,709) GOLD MOUNTAIN LIMITED ANNUAL REPORT 60 DIRECTORS’ DECLARATION In the opinion of the Directors of Gold Mountain Limited (the Company): 1. The financial statements and notes thereto, as set out on pages 28 to 60 are in accordance with the Corporations Act 2001 including: a. giving a true and fair view of the Company’s financial position as at 30 June 2020 and of its performance for the year then ended; and b. complying with Accounting Standards and Corporations Regulations 2001; and there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due 2. 3. and payable. The financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2020. This declaration is signed in accordance with a resolution of the Board of Directors. Tony Teng Managing Director Dated this 30th day of September 2020 GOLD MOUNTAIN LIMITED ANNUAL REPORT 61 Independent Auditors Report GOLD MOUNTAIN LIMITED ANNUAL REPORT 62 ADDITIONAL SHAREHOLDER INFORMATION AS AT 18 SEPTEMBER 2020 A. Corporate Governance A statement disclosing the extent to which the Company has followed the best practice recommendations set by the ASX Corporate Governance Council during the period is contained within the Directors’ Report. B. Shareholding 1. Substantial Shareholders Shareholders 1 2 Citicorp Nominees Pty Limited HSBC Custody Nominees (Australia) Limited Substantial Holding 102,465,570 50,704,900 % of Issued Capital 15.076 7.460 2. Number of holders in each class of equity securities and the voting rights attached (as at 18 September 2020) In accordance with the Company’s Constitution, on a show of hands every number present in person or by proxy or attorney or duly authorised representative has one vote. On a poll every member present in person or by proxy or attorney or duly authorised representative has one vote for every fully paid ordinary share held. Ordinary Shares Options There were thirteen (13) classes of options and 105 holders of options at 18 September 2020. Option Code Holders Units GMNAD - $0.15 expiry 26/7/2021 GMNAE - $0.15 expiry 26/7/2021 GMNAC – various $0.10 expiry 3/7/2021 $0.10 expiry 16/3/2021 $0.10 expiry 3/12/2020 $0.15 expiry 16/3/2022 $0.15 expiry 28/8/2021 $0.15 expiry 27/5/2021 $0.15 expiry 1/3/2021 $0.15 expiry 3/12/2021 $0.15 expiry 3/7/2022 GMNAF - $0.10 expiry 5/6/2021 GMNAG - $0.15 expiry 5/6/2022 2 6 4 5 16 6 11 13 6 20 5 5 6 2,000,000 7,800,000 5,911,924 7,911,539 31,616,667 12,911,539 9,866,669 7,138,461 10,148,461 56,616,667 23,411,924 8,666,154 11.131,539 Total on Register 105 195,131,545 3. Distribution schedule of the number of holders in each class of equity security as at close of business on 18 September 2020. Ordinary Shares Spread of Holdings Holders 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001+ Total on Register 37 19 156 386 356 954 Units 6,062 69,716 1,432,046 16,446,813 661,707,787 679,662,424 % of Issued Capital < 0.01 0.01 0.21 2.42 97.36 100% GOLD MOUNTAIN LIMITED ANNUAL REPORT 67 Marketable Parcel There are 226 non-marketable parcels at 18 September 2020, representing 1,659,676 shares. 4. Twenty largest holders of each class of quoted equity security The names of the twenty largest holders of each class of quoted security, the number of equity security each holds and the percentage of capital each holds (as at 18 September 2020) is as follows: Ordinary Shares Top 20 holders and percentage held Shareholder CITICORP NOMINEES PTY LIMITED Holding 102,465,570 % of Issued Capital 15.076% HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 50,704,900 7.460% PAY CHUAN LIM 30,000,000 4.414% THE SUMMIT HOTEL BONDI BEACH PTY LTD 26,875,694 3.954% MR GAK SAN SEAH 17,450,770 2.568% BNP PARIBAS NOMS PTY LTD 15,294,082 2.250% 10 RODBY HOLDINGS PTY LTD 11,343,333 1.669% 11 MR GHINAN MOHAMED SANI 10,171,667 1.497% 1 2 3 4 5 6 7 8 9 DOXY PTY LTD RASHIDAH MOHD SANI MS SIOW KWEE HENG 12 MR SUWEI CHEN 13 G H A DEVELOPMENT PTY LTD 14 MINPAX RESOURCES LIMITED 15 MR JIMMY CHENG HWEE TAY 16 MISS YOKE LAN GAN DRP> TOP 20 TOTAL Other shareholders TOTAL ISSUED CAPITAL 15,000,000 2.207% 13,350,000 1.964% 12,000,000 1.766% 9,910,000 1.458% 9,070,562 1.335% 9,000,000 1.324% 8,250,000 1.214% 8,050,000 1.184% 372,522,282 54.81% 307,140,142 45.19% 679,662,424 100% 17 CATHEDRAL FRONT PTY LTD 7,796,804 1.147% 18 ASLAN EQUITIES PTY LTD 5,481,490 0.807% 19 DR PETER ASLAN 5,177,341 0.762% 20 BNP PARIBAS NOMS PTY LTD

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