ANNUAL REPORT 2020 GREAT WESTERN EXPLORATION LIMITED ABN 53 123 631 470 CORPORATE DIRECTORY DIRECTORS Kevin Clarence Somes (Chairman) AUDITOR Bentleys Grey Egerton-Warburton (Director) London House, 216 St George’s Terrace Ross Williams (Director) Perth Western Australia 6000 COMPANY SECRETARY Anthony Walsh PRINCIPAL OFFICE Level 2, 160 St Georges Terrace Perth Western Australia 6000 Telephone (08) 6311 2852 SHARE REGISTRY SOLICITORS Steinepreis Paganin 16 Milligan Street Perth Western Australia 6000 STOCK EXCHANGE The Company’s shares are listed by the Australian Securities Exchange Limited Computershare Investor Services Pty Limited The home exchange is Perth ASX Codes - Fully paid shares GTE - Options GTEOA Level 11 172 St Georges Terrace Perth Western Australia 6000 Telephone: 1300 787 272 Facsimile: (08) 9323 2033 WEBSITE: www.greatwesternexploration.com.au CONTENTS Review of Operating and Corporate Activities ..................... 1 Directors’ Report ...............................................................12 Corporate Governance Statement ....................................22 Consolidated Statement of Financial Position ................... 23 Consolidated Statement of Profit or Loss and other Comprehensive Income ....................................24 Consolidated Statement of Changes in Equity .................. 25 Consolidated Statement of Cash Flows ............................. 26 Notes to the Consolidated Financial Statements .............. 27 Directors’ Declaration ....................................................... 58 Auditor’s Independence Declaration ................................. 59 Independent Auditor’s Report ............................................61 Additional Information ...................................................... 65 GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 1 EXECUTIVE SUMMARY Great Western Exploration Limited (ASX: GTE) (“the Company”, “Great Western”) is pleased to provide a review of its operating and corporate activities for the year ended 30 June 2020. Summary • In June and July 2020 a Share Consolidation (60:1) and Capital Raising was successfully completed, raising proceeds of $813,175 (before costs) by way of a Placement of $200,000 and an Entitlements Issue for $613,175. Proceeds from the Entitlements Issue were received post year end • • • • • • • Finance and mining industry professionals Grey Egerton-Warburton and Ross Williams joined Kevin Somes on the Board in June 2020 Corporate overheads subsequently rationalised significantly, with all Directors working at no cost, and office leasing costs terminated In the June 2020 Quarter and subsequent to year end, extensive work has been undertaken to deepen the Company’s understanding of its existing very high quality Western Australian projects, and to plan the execution of field activities. The Company looks forward to continuing to keep shareholders updated during what it anticipates will be a forthcoming period of very high activity Great Western holds the strong belief that the Company’s forthcoming exploration activities have the potential to deliver a material increase in shareholder value Subsequent to the end of the year, the Company provided updates in relation to its 100% owned Finlayson Gold Target and Golden Corridor Project (ASX Releases 27 July 2020 and 4 August 2020) In August 2020, the Company completed a $2.52 million placement to fund exploration on the Company’s assets On 25 August 2020, the Company made an announcement with respect to the Atley Gold Project Finlayson Gold Target & the Golden Corridor Project (100% Great Western) Subsequent to the end of June 2020, the Company has provided updates on its 100% owned Finlayson Gold Target and Golden Corridor Project (ASX Releases 27 July 2020 and 4 August 2020). The Golden Corridor Project comprises some 60km strike of the Agnew-Wiluna greenstone belt, located in the northwest of the Kalgoorlie Terrane and along strike to the north of the Wiluna Mining Centre. The Kalgoorlie Terrane or “Golden Corridor” extends from as far south as Kambalda, through Kalgoorlie to as far north as Plutonic (see Figure 1) and is host to many of the largest gold deposits in Australia and the majority of Western Australia’s past and present gold production. While the vast majority of the Golden Corridor’s greenstone belt has been extensively drill tested, Great Western’s 60km long terrane is practically untested. Initial aeromagnetic and geophysical analysis undertaken by Great Western’s consultant, Newexco, has accorded with the Company’s interpretation that the Wiluna fault zone continues from Wiluna through to the Finlayson gold target within Great Western’s Golden Corridor project. Within the Wiluna fault zone, five new high priority bedrock gold targets have been identified to the south of Great Western’s Finlayson gold target (see Figure 1a). 1 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 REVIEW OF OPERATING AND CORPORATE ACTIVITIES Figure 1. The Golden Corridor Project is located within the Kalgoorlie Terrane (“Golden Corridor”), Australia’s most prolific gold belt. Figure 1a. The Wiluna Fault Zone has been interpreted to extend through the Golden Corridor project. Within this highly prospective area 5 gold targets have been identified GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 2 Figure 2. Finlayson gold target showing target area to be drilled. The Wiluna Gold Mine main pits are overlayed (blue dashed lines) to demonstrate that the Finlayson gold target is similar in scale and geometry. The Wiluna Gold Mine is located approximately 70km along strike to the southeast. 3 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 REVIEW OF OPERATING AND CORPORATE ACTIVITIES Atley Gold Project (100% Great Western) The Atley Gold Project (refer ASX Release 25 August 2020) is located in the Youanmi district of Western Australia. The project areas were accumulated by application between June 2019 and August 2020 (Atley North) and subsequent to June 2020 (Atley South) (Figure 3). Figure 3. Location of the Atley Gold project within the Youanmi District, WA. Atley North contains the Youanmi fault, located within the Sandstone – Youanmi greenstone belt, along strike from both Spectrum Metals’ high grade Penny West discovery now owned by Ramelius Resources (ASX: RMS) and Rox Resources’ (ASX: RXL) recent high grade Grace discovery. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 4 At Atley North Great Western has identified six structural gold targets it considers to be favourable settings for gold mineralisation similar to the Penny West and Youanmi gold deposits, including the Grace gold discovery, located along strike to the southwest. In addition to these structural targets, Atley North contains some 13km strike of untested Youanmi fault under shallow cover (Figure 4). Figure 4. Six interpreted structural targets located along strike of the Youanmi and Penny West gold deposits at Atley North. Atley South comprises at least 23km strike of a complex structural setting where the neighbouring Yuinmery fault transitions through a sequence of migmatites and gneiss that Great Western believes to be prospective for gold mineralisation (Figure 5). 5 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 REVIEW OF OPERATING AND CORPORATE ACTIVITIES Figure 5. The initial interpretation completed on the northern area of Atley South has identified at least 23km strike of a complex structural setting where the regional Yuinmery fault transitions through migmatites and gneiss GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 6 Lake Way Potash Project (100% Great Western) The Company’s Lake Way Potash Project comprises a total area of 415km2 covering the south eastern extension of the Lake Way Salt Lake located near Wiluna, Western Australia. Great Western’s Lake Way Potash project is the downstream continuation of the main basal channel that Salt Lake Potash Limited (ASX: SO4) is currently developing and that it has mapped to extend well within Great Western’s Project area (see Figure 6 below). Historic test work indicates that the potash brine within the paleo channel remains high grade as it enters Great Western’s Project area. Figure 6. Interpreted continuation of the Lake Way high grade potash basal channel into GTE’s Lake Way Potash Project. 7 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 REVIEW OF OPERATING AND CORPORATE ACTIVITIES Yerrida North JV (Sandfire earning 70%) During the March 2020 Quarter, Sandfire Resources Limited (ASX: SFR) (“Sandfire”) provided Great Western with formal notification of their intention to continue with the Yerrida North JV (see Figure 7 below), having reached the minimum expenditure commitment by spending $1.7 million over three years. Great Western looks forward to the continued exploration being undertaken by Sandfire under the JV, where field works continue prior to potential drill testing. Sandfire has completed a high resolution airborne electromagnetic (‘airborne EM’) survey and detailed mapping over the area and is now in the process of adapting the GSWA map for use on a lag sampling program over the volcanic sequences. During the current financial year, Sandfire is also planning to recommence mapping over the northern portion of the tenure in order to provide an updated geological and stratigraphical interpretation along with geochemical sampling and petrology to assist with further target generation. Under the terms of the JV, Sandfire can earn a 70% interest by sole funding exploration to define a mineral resource of at least 50,000 tonnes of contained copper or copper equivalent under the JORC 2012 code. Great Western is free carried until that time. Figure 7. Yerrida North JV (Sandfire earning 70%). GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 8 Yerrida South Project (100% Great Western) Great Western Exploration Limited Yerrida South Project (100% Great Western) Great Western owns a large Project area to the south of the Yerrida North Project where Sandfire is earning 70%. Great Western believes that its 100% owned Project area is prospective for copper mineralisation, and other metals (see Figure 8 below). Great Western owns a large Project area to the south of the Yerrida North Project where Sandfire is earning 70%. Great Western believes that its 100% owned Project area is prospective for copper mineralisation, The Company is currently in the process of planning to infill and extend the soil sampling programme and other metals (see Figure 5 below). completed last year. The Company is currently in the process of planning to infill and extend the soil sampling programme completed last year. Base Metal Deposit Gold Deposit Yerrida Base Metal Project Golden Corridor Project Yerrida North JV Collier Basin Earaheedy Basin Bryah Basin Yerrida Basin Greenstone Basement Granite 6 Figure 5. Yerrida South Project Figure 8. Yerrida South Project. 9 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 REVIEW OF OPERATING AND CORPORATE ACTIVITIES Yandal West Gold Project The Yandal West Gold Project is located within Western Australia’s world-class Yandal gold belt. The project is 55km along strike to the northwest of Northern Star’s Bronzewing gold deposit and 60km southeast of Northern Star’s Jundee gold deposit. The project comprises the 100% owned Ives Find, May Queen, and the 80% owned Harris Find tenements (see Figure 9 below). Figure 9. Location of the Ives Find and May Queen Prospects at the Yandal West Gold Project. The Company has identified three large gold shears in drilling to date, being May Queen, Harris Find and Ives Find (Figure 9). All three shear zones contain high-grade gold mineralisation and strong alteration. The scale of these shear zones indicates they are large gold fluid pathways. This Project is currently the subject of geologic interpretation to determine the extent of the Company’s future exploration effort and budget. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 10 Corporate On 5 February 2020 Mr Jordan Luckett moved from the position of Managing Director to Technical Director and on 14 February 2020 Non-Executive Chairman Mr Kevin Somes was appointed Executive Chairman. Company Secretary Mr Justin Barton acted as Chief Executive Officer for the intervening period. On 31 March 2020 the Company announced that a Renounceable Entitlements Issue launched on 28 February 2020 had been withdrawn due to market conditions and termination of the associated underwriting agreement. On 20 May 2020 the Company announced with great sadness the passing of Director Mr Terry Grammer. Terry was a much admired and loved personality within the West Australian mining industry and a great friend of those involved with Great Western. In June and July 2020, the Company completed a Share Consolidation (1 share for every 60 held) and Capital Raising which raised $813,175 (before costs) by way of a Placement for $200,000 and Entitlements Issue of $613,175. Following shareholder approval on 27 May 2020, mining and finance industry executives Grey Egerton-Warburton and Ross Williams joined Executive Chairman Kevin Somes on the Board on 4 June 2020, succeeding long serving Directors Jordan Luckett and the late Terry Grammar. The Board would like to acknowledge the efforts of Jordan Luckett who has subsequently accepted the position of Geology Manager. Also in June 2020, Mr Tony Walsh was appointed Company Secretary, replacing Mr Justin Barton, who remains with the Company as Financial Controller. In August 2020, the Company completed a $2.52 million Placement to sophisticated and professional investors to fund exploration on the Company’s assets. 14,000,000 ordinary shares at 18 cents per share were issued on 13 August 2020 pursuant to this placement. Competent Person Statement The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Jordan Luckett who is a member of the Australian Institute of Mining and Metallurgy. Mr Luckett is an employee of Great Western Exploration Limited and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Luckett consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. 11 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 REVIEW OF OPERATING AND CORPORATE ACTIVITIES DIRECTORS’ REPORT The Directors of Great Western Exploration Limited submit herewith the annual report of Great Western Exploration Limited and subsidiaries (“the Group”) for the financial year ended 30 June 2020. Information on Directors: The names and details of the Company’s directors in office during the financial year and up to the date of this report are as follows. Directors were in office for the entire year unless otherwise stated. Kevin Somes Grey Egerton-Warburton (Appointed on 4 June 2020) Ross Williams (Appointed 4 June 2020) Jordan Luckett (Resigned 4 June 2020) Justin Barton (Appointed 20 May 2020: Resigned 4 June 2020) Terry Grammer (Ceased 20 May 2020) Rimas Kairaitis (Resigned 29 November 2019) MR KEVIN CLARENCE SOMES FCA Executive Chairman Experience and expertise Mr Somes is a fellow of the Institute of Chartered Accountants and was a partner of Somes & Cooke Chartered Accountants for over 25 years. Mr Somes has extensive experience in the management of exploration companies, with Somes & Cooke being the auditors of a number of ASX listed mining companies during his tenure. Other current directorships None. Former directorships in last three years None. Share and Option holding in the Company 4,267,233 Ordinary Shares 211,234 options GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 12 MR GREY EGERTON-WARBURTON Non-Executive Director Grey Egerton-Warburton has a strong background in corporate finance, with extensive experience in equity capital markets, acquisitions, divestments and domestic and international change of control transactions. Grey has led a substantial number of capital raisings and led many successful takeovers and mergers for ASX listed companies, across many sectors. Other current directorships None. Former directorships in last three years S2 Resources Limited until 3 April 2020 Share and Option holding in the Company 20,000,000 Ordinary Shares MR ROSS WILLIAMS Non-Executive Director Mr Ross Williams is a highly experienced Company Director and businessman, having co-founded a Mining Services business from start up through to ASX listing and a market capitalisation over $400m with revenues in excess of $500m. Ross held the role of Finance Director for 12 years and during this time was responsible for capital management, finance, financial reporting, corporate strategy and investor relations before retiring to a Non-Executive role. Mr Williams started his career in Banking and Finance and his listed company roles have also included Non-Executive Director of a successful Mining Company and Chairman of a listed investment Company. Other current directorships None Former directorships in last three years Emerald Resources NL until 12 June 2020 Share and Option holding in the Company 20,030,260 Ordinary Shares COMPANY SECRETARY The Company Secretary is Mr Anthony Walsh. Mr Walsh was appointed company secretary on 4 June 2020. Mr Walsh has over 30 years’ experience in dealing with listed companies, ASX, ASIC and corporate transactions including 14 years with the ASX in Perth where he acted as ASX liaison with the JORC committee, four years as Chairman of an ASX listed mining explorer and as a director of a London AIM listed explorer. Mr Walsh is also currently Company Secretary of Battery Minerals Mining Ltd, Magmatic Resources Limited and Legend Mining Limited, and was a Director of XCD Energy Limited until 22 July 2020. Mr Walsh is a member of the Australian Institute of Company Directors, a Fellow of the Governance Institute of Australia, the Institute of Chartered Secretaries and the Institute of Chartered Accountants in Australia. He is currently a non-executive director of the not-for-profit Women’s and Infants Research Foundation. 13 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 DIRECTORS’ REPORT PRINCIPAL ACTIVITIES The principal activity during the year to 30 June 2020 was mineral exploration for gold and base metals. OPERATING AND FINANCIAL REVIEW REVIEW The principal activity of the Company is mineral exploration. The objective of the Group, in the event of the discovery of a mineral resource, would be the successful exploration and development of the resource. Please refer Operating and Corporate Activities on page 1 for further information relating to the Company’s Operating Activities. FINANCIAL POSITION At the end of the financial year the Group had cash reserves of $133,000 (2019: $1,014,442) and incurred expenditure on exploration and evaluation of $909,569 (2019: $1,303,722) before write offs during the year. Subsequent to the year end, in July and August 2020 respectively, the Company completed an Entitlements Issue raising $613,175 and a $2.52 million placement (both before costs). RESULTS OF OPERATIONS The operating loss for the year, after providing for income tax was $1,807,673 (2019: $728,968). RISKS AND RISK MANAGEMENT The Company attempts to mitigate risks that may affect its future performance through a systematic process of identifying, assessing, reporting and managing risks of corporate significance. Key operational risks and their management are recurring items for discussion at Board meetings. The following discusses the Company’s most significant business risks. a) Exploration Whilst considered highly prospective, the Company’s tenements are early stage exploration tenements with limited exploration undertaken on them to date. Exploration is a high risk undertaking. The Company’s joint venture projects for copper, nickel and gold prospects in Australia are in the preliminary stages of exploration and no assurance is given that exploration of its current projects or any future projects will result in the delineation or discovery of a significant mineral resource. Even if a significant mineral resource is identified, there can be no guarantee that it can be economically exploited. b) Commodity prices As an explorer for copper, gold, nickel and potentially other minerals, any successes of the Company are expected to be closely related to the price of those and other commodities. Fluctuating prices in those commodities make market prices for securities in the Company more volatile than for other investments. Commodities prices are affected by numerous factors beyond the control of the Company. These factors include worldwide and regional supply and demand for commodities, general world economic conditions and the outlook for interest rates, inflation and other economic factors on both a regional and global basis. These factors may have a positive or negative effect on the Company’s exploration, project development and production plans and activities, together with the ability to fund those plans and activities. c) Environmental The Company’s projects are subject to rules and regulations regarding environmental matters and the discharge of hazardous wastes and materials. As with all mineral projects, the Company’s projects are expected to have a variety of environmental impacts should development proceed. Development of any of the Company’s projects will be dependent on the Company satisfying environmental guidelines and, where required, being approved by government authorities. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 14 The Company intends to conduct its activities in an environmentally responsible manner and in accordance with all applicable laws, but may still be subject to accidents or other unforeseen events which may compromise its environmental performance and which may have adverse financial implications. a) Future capital needs The Company’s ability to raise further capital (equity or debt) within an acceptable time of a sufficient amount and on terms acceptable to the Company will vary according to a number of factors, including prospectivity of projects (existing and future), the results of exploration, subsequent feasibility studies, development and mining, stock market and industry conditions and the price of relevant commodities and exchange rates. No assurance can be given that future funding will be available to the Company on favourable terms (or at all). If adequate funds are not available on acceptable terms, the Company may not be able to further develop its projects and it may impact on the Company’s ability to continue as a going concern. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There has been no significant change in the state of affairs of the Company during the financial year. DIVIDENDS No dividends have been recommended by the Directors. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR • On 7 July 2020, the Company announced the completion of the non-renounceable, underwritten entitlement issue, raising $613,175 (before costs). This entitlement issue was completed on 10 July 2020. • • On 5 August 2020, the Company announced that it had received commitments from professional and sophisticated investors to raise approximately $2.52 million (before costs) by way of a placement of 14,000,000 new fully paid shares at 18 cents each. This $2.52 million placement was completed on 13 August 2020. The Company made project announcements with respect to the Finlayson Gold Target and Golden Corridor Project (25 July 2020 and 4 August 2020) and the Atley Gold Project (25 August 2020). LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS The Directors are not aware of any developments that might have a significant effect on the operations of the Company in subsequent financial years not already disclosed in this report. ENVIRONMENTAL REGULATIONS Great Western Exploration Limited conducts its exploration activities in an environmentally sensitive manner, and believes it has adequate systems in place for the management of environmental requirements. The Company is not aware of any breach of statutory conditions or obligations. The Directors have considered the enacted National Greenhouse and Energy Reporting Act 2007 (the NGER Act) which introduces a single national reporting framework for the reporting and dissemination of information about the greenhouse gas emissions, greenhouse gas projects, and energy use and production of corporations. At the current stage of development, the Directors have determined that the NGER Act will have no effect on the Company for the current, nor subsequent, financial year. The Directors will reassess this position as and when the need arises. 15 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 DIRECTORS’ REPORT DIRECTORS’ MEETINGS The Directors attended the following director meetings during the year and up to the date of this report: Meetings Eligible to Attend Meetings Attended Kevin Somes Grey Egerton-Warburton Ross Williams Jordan Luckett Terry Grammer Rimas Kairaitis Justin Barton 9 1 1 8 7 2 - 9 1 1 8 7 2 - DIRECTORS’ INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY The particulars of Directors’ interest in shares and options are as at the date of this report. Kevin Somes Grey Egerton-Warburton Ross Williams Ordinary Shares 4,267,233 20,000,000 20,030,260 Options 211,234 - - DIRECTORS AND OFFICERS INSURANCE The Company has made an agreement to indemnify all the Directors and Officers against all indemnifiable losses or liabilities incurred by each Director and Officer in their capacities as Directors and Officers of the Company to the extent permitted by the Corporations Act 2001. The Company has taken out an insurance policy at a premium of $15,290 in relation to Directors and Officers indemnity. PROCEEDINGS ON BEHALF OF COMPANY No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings. The company was not a party to any such proceedings during the year. NON-AUDIT SERVICES Bentleys did not provide any non-audit services during the year ended 30 June 2020. Details of the amounts paid or payable to the auditor for audit during the year are set out in Note 24. AUDITOR’S INDEPENDENCE DECLARATION A copy of the Auditor’s Independence Declaration, as required under section 307C of the Corporations Act 2001, is set out on page 59. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 16 Remuneration Policy This Remuneration Report outlines the director and executive remuneration arrangements of the Company in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report Key Management Personnel (KMP) of the Company are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Company, directly or indirectly, including any director (whether executive or otherwise) of the Company. For the purposes of this report, the term “executive” encompasses the Chief Executive and senior executives. i) Directors Kevin Somes Grey Egerton-Warburton Ross Williams Jordan Luckett Justin Barton T R Grammer R Kairaitis Chairman Director (Appointed 4 June 2020) Director (Appointed 4 June 2020) Managing Director (Executive) (Resigned 4 June 2020) Director (Interim) (Appointed 20 May 2020: Resigned 4 June 2020) Director (Non-executive) (Deceased 20 May 2020) Director (Non-executive) (Resigned 29 November 2020) There were no other changes of key management personnel after reporting date and before the financial report was authorised for issue. Since the current Board was formed on 4 June 2020 with the appointment of Messrs Williams and Egerton-Warburton, no remuneration has been paid to any directors, however this will be reviewed in the future. The Company has established a Remuneration Committee, assumed by the Board, as a whole, which is responsible for determining and reviewing the remuneration arrangements of the directors and executives. The Board assesses the appropriateness of the nature and amount of emoluments of such Directors and executives on an annual basis by reference to market and industry conditions. In order for the Company to prosper, thereby creating shareholder value, the Company must be able to attract and retain the highest calibre executives. Executive and non-executive directors, other key management personnel and other senior employees have been granted options over ordinary shares under the Company’s Employee Share Option Plan. The recipients of options are responsible for growing the Company and increasing shareholder value. If they achieve this goal the value of the options granted to them will also increase. Therefore the options provide an incentive to the recipients to remain with the Company and to continue to work to enhance the Company’s value. Due to the nature of the Company’s operations the current remuneration policy is not linked to the performance of the Company. NON-EXECUTIVE DIRECTORS REMUNERATION The Board seeks to set remuneration levels that provide the Company with the ability to attract and retain the highest calibre professionals. Fees and payments to non-executive Directors reflect the demands that are made on and the responsibilities of the Directors from time to time. Directors’ fees are determined by the Board within the aggregate Directors fee limit approved by shareholders. The maximum currently approved by the Constitution stands at $250,000. As stated above, the non-executive directors have not been paid any remuneration since 4 June 2020, however this will be reviewed in the future. 17 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 REMUNERATION REPORT (AUDITED) Remuneration in the form of share options issued under the Company’s Employee Share Option Plan is designed to reward Directors and executives in a manner aligned to the creation of shareholder wealth. Subject to shareholders’ approval non-executive directors may participate in the Company’s Employee Share Option Plan. The Board considers the grant of options to be reasonable given the necessity to attract and retain the highest calibre professionals to the Company. Non-executive Directors receive superannuation benefits in accordance with the Superannuation Guarantee Legislation. Non-executive directors are permitted to salary sacrifice all or part of their fees. Due to the nature of the Company’s operation i.e. mineral exploration and development, the remuneration of directors and executives, at present, does not include performance-based incentives. EXECUTIVE REMUNERATION (INCLUDING EXECUTIVE DIRECTORS) The Board aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities to align the interests of executives with those of shareholders and to ensure that remuneration is market competitive. Remuneration consists of: • • Fixed Remuneration. Being base salary, non-monetary benefits and superannuation. Fixed remuneration is reviewed annually. Variable remuneration – Long term incentives. Being share options issued under the Company’s Employee Share Option Plan. The options do not have any vesting conditions other than service conditions. Remuneration issued in the form of share options issued under the Company’s Employee Share Option Plan is designed to reward directors and executives in a manner aligned to the creation of shareholder wealth. Due to the nature of the Company’s operation i.e. mineral exploration and development, the remuneration of directors and executives, at present, does not include performance-based incentives. The Company has entered into standard contracts with Directors. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 18 Remuneration of Key Management Personnel Short term benefits Salary & Wages Other long term employee benefits Superannuation Remuneration/ entitlements forgiven Performance related % Total 2020 Name of Director Executive director Jordan Luckett(1) $185,331 $7,831 Kevin Somes(2) $32,083 Non-executive director Grey Egerton- Warburton(3) Ross Williams(4) - - Terry Grammer(5) $20,417 Rimas Kairaitis(6) $12,500 Justin Barton(7) 4,333 - - - - - - $17,607 $3,048 (167,027) $43,744 (10,038) $25,093 - - $1,940 $1,188 412 - - - - (15,699) $6,658 - - $13,688 $4,745 0.0% 0.0% - - 0.0% 0.0% 0.0% Totals $254,666 $7,831 $24,195 (192,764) $93,928 Short term benefits Salary & Wages Other long term employee benefits Superannuation Total Performance related % 2019 Name of Director Executive director Jordan Luckett $250,000 $10,586 $23,750 $284,336 0.0% Non-executive director Kevin Somes Terry Grammer Rimas Kairaitis Totals $55,000 $35,000 $30,000 - - - $5,225 $60,225 $3,325 $38,325 $2,850 $32,850 0.0% 0.0% 0.0% $370,000 $10,586 $35,150 $415,736 (1) Jordan Luckett resigned on 4 June 2020. The group entered into a deed of resignation and release with Jordan Luckett on 16 April 2020. Per the deed, a settlement sum of $22,000 net of tax. This amount is included within the short term benefits salary & wages. (2) Kevin Somes appointed Executive Chairman on 14 February 2020. (3) Grey Egerton-Warburton was appointed a Director on 4 June 2020. (4) Ross Williams was appointed a Director on 4 June 2020. (5) Terry Grammer ceased being a Director on 20 May 2020. The group entered into a deed of resignation and release with Terry Grammer on 16 April 2020. Per the deed, no payment is to be made in satisfaction of any outstanding amounts. (6) Rimas Kiaraitis resigned on 29 November 2019. (7) Justin Barton was appointed an interim Director on 20 May 2020 and resigned on 4 June 2020. Remuneration for services whilst not a key management personnel is excluded from the above. 19 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 REMUNERATION REPORT (AUDITED) Options granted as part of remuneration No options were granted to Directors during the year ended 30 June 2020 or 30 June 2019.For details on the valuation of options, including models and assumptions used, refer to Note 19. There were no alterations to the terms and conditions of options granted as remuneration since their grant date. Option Holding of Key Management Personnel 30 June 2020 Directors Balance at 1 July 2019(8) Granted Expired Other Balance at 30 June 2020 Vested Kevin Somes 12,150,297 Grey Egerton- Warburton(2) Ross Williams(3) - - Jordan Luckett(1) 6,681,500 Terry Grammer(4) 2,400,000 Rimas Kairaitis(5) 2,600,000 Justin Barton(6) - 23,831,797 - - - - - - - - (2,000,000) (9,939,063) (7) 211,234 100% - - - - (2,000,000) (4,603,475) (7) (2,000,000) (393,333) (7) (2,000,000) (590,000) (7) - - - - 78,025 6,667 10,000 - (8,000,000) (15,525,871) 305,926 n/a n/a 100% 100% 100% n/a 30 June 2019 Directors Balance at 1 July 2018 (8) Granted Exercised/ Cancelled Expired/ Other Balance at 30 June 2019 (8) Vested Jordan Luckett 4,000,000 Kevin Somes 4,000,000 Terry Grammer 4,000,000 Rimas Kairaitis 4,000,000 16,000,000 - - - - - - - - - - 2,681,500 6,681,500 8,150,297 12,150,297 (1,600,000) 2,400,000 (1,400,000) 2,600,000 7,831,797 23,831,797 100% 100% 100% 100% (1) Jordan Luckett resigned on 4 June 2020. (2) Grey Egerton-Warburton was appointed a Director on 4 June 2020. (3) Ross Williams was appointed a Director on 4 June 2020. (4) Terry Grammer ceased being a Director on 20 May 2020. (5) Rimas Kiaraitis resigned on 29 November 2019. (6) Justin Barton was appointed an interim Director on 20 May 2020 and resigned on 4 June 2020. During this period, Mr Barton had 552,538 shares (post consolidation) and 50,000 options (post consolidation). (7) One for sixty consolidation of capital completed in June 2020. (8) Pre-consolidation. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 20 Shareholdings of Key Management Personnel 30 June 2020 Directors Balance 1 July 2019(8) Granted as Remuneration On exercise of Options Net Change Other Balance 30 June 2020 Kevin Somes 76,043,595 Grey Egerton- Warburton(2) Ross Williams(3) - - Jordan Luckett(1) 36,427,333 Terry Grammer(4) 2,400,000 Rimas Kairaitis(5) 3,600,000 Justin Barton(6) - 118,470,928 - - - - - - - - - - - - - (74,776,200) (7) 1,267,395 8,000,000 8,000,000 8,012,104 8,012,104 (35,820,210) (7) (2,360,000) (7) (3,540,000) (7) - 607,123 40,000 60,000 - (100,484,306) 17,986,622 30 June 2019 Directors Balance 1 July 2018(8) Granted as Remuneration On exercise of Options Net Change Other Balance 30 June 2019(8) Jordan Luckett 31,745,833 Kevin Somes 55,269,658 Terry Grammer Rimas Kairaitis 2,000,000 3,000,000 92,015,491 - - - - - (1) Jordan Luckett resigned on 4 June 2020. (2) Grey Egerton-Warburton was appointed a Director on 4 June 2020. (3) Ross Williams was appointed a Director on 4 June 2020. (4) Terry Grammer ceased being a Director on 20 May 2020. (5) Rimas Kiaraitis resigned on 29 November 2019. - - - - - 4,681,500 36,427,333 20,773,937 76,043,595 400,000 600,000 2,400,000 3,600,000 26,455,437 118,470,928 (6) Justin Barton was appointed an interim Director on 20 May 2020 and resigned on 4 June 2020. During this period, Mr Barton had 552,538 shares (post consolidation) and 50,000 option (post consolidation). (7) One for sixty consolidation of capital completed in June 2020. (8) Pre-consolidation. END OF REMUNERATION REPORT (AUDITED) This Report of Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of the Directors. Dated this 11 day of September 2020 K C Somes Chairman 21 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 REMUNERATION REPORT (AUDITED) CORPORATE GOVERNANCE STATEMENT For the year ended 30 June 2020 Great Western Exploration Limited and the Board are committed to achieving and demonstrating the highest standards of corporate governance. Great Western Exploration has reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (4th edition) published by the ASX Corporate Governance Council. The 2020 Corporate Governance Statement was approved by the Board on 4 September 2020 and is current as at 4 September 2020. A description of the Group’s current corporate governance practices is set out in the Group’s Corporate Governance Statement which along with the 2020 Appendix 4G can be viewed on the Company’s website, www.greatwesternexploration.com.au. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 22 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2020 Note 2020 $ 2019 $ ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other financial assets TOTAL CURRENT ASSETS NON CURRENT ASSETS Property, plant and equipment Mineral exploration expenditure TOTAL NON CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY 8 9 10 11 12 13 14 15 133,000 84,770 400 1,014,442 343,555 200,362 218,170 1,558,359 11,528 7,825 9,490,884 9,868,392 9,502,412 9,876,217 9,720,582 11,434,576 294,910 294,910 328,427 328,427 294,910 328,427 9,425,672 11,106,149 30,580,106 30,452,910 898,866 898,866 (22,053,300) (20,245,627) 9,425,672 11,106,149 The above statement of financial position should be read in conjunction with the accompanying notes. 23 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For The Year Ended 30 June 2020 Interest received Other income Other income – Government Grant Employee benefit expense Administration expenses Directors’ fees Depreciation Right of use asset depreciation Compliance and regulatory expenses Share based payments Mineral exploration written off Loss before income tax Income tax expense Loss for the year Other comprehensive income Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign controlled entities Note 5 12 6 2020 $ 1,077 891 17,394 (108,123) (194,971) (132,056) (2,785) (14,835) (87,188) - (1,287,077) 2019 $ 19,895 718 - (135,837) (341,915) (170,000) (3,355) - (77,250) (12,986) (8,238) (1,807,673) (728,968) - - (1,807,673) (728,968) - - Total comprehensive income for the year (1,807,673) (728,968) Basic and diluted loss per share (cents per share) 7 (8.11) (4.61) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 24 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For The Year Ended 30 June 2020 30 June 2020 Balance At 1 July 2019 Loss for the year Total comprehensive income for the year Option issues Sale of unmarketable securities Shares issued Transaction costs Issued Capital Share Option Reserve Accumulated Losses $ $ $ Total Equity $ 30,452,910 898,866 (20,245,627) 11,106,149 - - - 879 200,000 (73,683) - - - - - - (1,807,673) (1,807,673) (1,807,673) (1,807,673) - - - - - 879 200,000 (73,683) Balance at 30 June 2020 30,580,106 898,866 (22,053,300) 9,425,672 30 June 2019 Balance At 1 July 2018 Loss for the year Total comprehensive income for the year Option issues Shares issued for tenement acquisitions Shares issued Transaction costs Issued Capital Share Option Reserve Accumulated Losses $ $ $ Total Equity $ 29,178,726 864,237 (19,516,659) 10,526,304 - - - 270,000 1,150,000 (145,816) - - (728,968) (728,968) 34,629 - - - - - - - (728,968) (728,968) 34,629 270,000 1,150,000 (145,816) Balance at 30 June 2019 30,452,910 898,866 (20,245,627) 11,106,149 The above statement of changes in equity should be read in conjunction with the accompanying notes. 25 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF CASH FLOWS For The Year Ended 30 June 2020 Cash flows from operating activities Cash payments to suppliers and employees (531,452) (603,910) Note 2020 $ 2019 $ Government grant received Termination of lease paid Interest received Interest and other finance costs paid 17,394 (17,267) 1,077 - - - 19,895 (400) Net cash used in operating activities 16 (530,248) (584,415) Cash flows from investing activities Refund on withdrawal of tenement applications Deposits paid on exploration Receipt on maturity/(investment) in term deposit Purchase of property, plant and equipment Payments for exploration and evaluation expenditure Net cash used in/(used from) investing activities Cash flows from financing activities Proceeds from issue of shares and options Share issue costs Repayment of lease liabilities Net cash provided by financing activities 265,385 (41,962) 199,962 (6,488) - (16,358) 800,038 - (879,526) (1,452,098) (462,629) (668,418) 200,879 (73,683) (15,761) 111,435 1,150,000 (145,816) - 1,004,184 Net increase (decrease) in cash held (881,442) (248,649) Cash at the beginning of the financial year 1,014,442 1,263,091 Cash at the end of the financial year 8 133,000 1,014,442 The above statement of cash flows should be read in conjunction with the accompanying notes. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 26 These financial statements and notes represent those of Great Western Exploration Limited (‘the Company’) and its controlled entities (‘the Group’). The financial statements were authorised for issue on 11 September 2020 by the Directors of the Company. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. 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 stated otherwise. Except for cash flow information, 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 liabilities. a) Going Concern The financial report has been prepared on the going concern basis, which contemplates the continuity of normal business activity, and the realisation of assets and the settlement of liabilities in the ordinary course of business. The Group incurred a loss for the year of $1,807,673 (2019: $728,968). During the year the company raised $127,196 after issue costs, by the way of share placements in June 2020. The Group has a working capital deficit of $76,740 at 30 June 2020 (working capital surplus at 30 June 2019: $1,229,932). Since year end, the Group has raised a further $613,190, by way of non-renounceable entitlements issue on 9 July 2020 and a further $2.5m via a share placement on 10 August 2020. The directors have prepared a cash flow forecast, which indicates that the Group will have sufficient cash flows to meet all commitments (including those at Note 22) and working capital requirements for the 12 month period from the date of signing this financial report. The Directors believe that at the date of signing of the financial statements that the Group has sufficient funds to meet its obligations as and when they fall due and continue to proceed with the Group’s objectives beyond the currently committed expenditure for the 12-month period from the date of signing this financial report. b) Principles of Consolidation The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Great Western Exploration Limited at the end of the reporting period. A controlled entity is any entity over which Great Western Exploration Limited has the ability and right to govern the financial and operating policies so as to obtain benefits from the entity’s activities. Where controlled entities have entered or left the Group during the year, the financial performance of those entities is included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 21 to the financial statements. In preparing the consolidated financial statements, all intragroup balances and transactions between entities in the consolidated group have been eliminated in full on consolidation. 27 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor The Year Ended 30 June 2020 Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are reported separately within the equity section of the consolidated statement of financial position and statement of comprehensive income. The non-controlling interests in the net assets comprise their interests at the date of the original business combination and their share of changes in equity since that date. Business combinations Business combinations occur where an acquirer obtains control over one or more businesses. A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions). When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured in each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date. All transaction costs incurred in relation to business combinations are expensed to the Statement of Profit or Loss and Other Comprehensive income. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase. Goodwill i) The consideration transferred; ii) Any non-controlling interest, and iii) The acquisition date fair value of any previously held equity interest over the acquisition date fair value of net identifiable assets acquired. The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate financial statements. Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of comprehensive income. Where changes in the value of such equity holdings had previously been recognised in other comprehensive income, such amounts are recycled to profit or loss. The amount of goodwill recognised on acquisition of each subsidiary in which the Company holds less than a 100% interest will depend on the method adopted in measuring the non-controlling interest. The Company can elect in most circumstances to measure the non-controlling interest in the acquire either at fair value (full goodwill method) or at the non-controlling interest’s proportionate share of the subsidiary’s identifiable net assets (proportionate interest method). In such circumstances, the Company determines which method to adopt for each acquisition and this is stated in the respective notes to these financial statements disclosing the business combination. Under the full goodwill method, the vair value of the non-controlling interests is determined using valuation techniques which make the maximum use of market information where available. Under this method, goodwill attributable to the non-controlling interests is recognised in the consolidated financial statements. Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates. Goodwill is tested for impairment annually and is allocated to the Company’s cash-generating units or groups of cash-generating units, representing the lowest level at which goodwill is monitored not larger than an operating segment. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity disposed of. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 28 c) Application of New and Revised Accounting Standards New and amended standards adopted by the Group The Group has adopted all the new, revised or amending Accounting Standards and Interpretations issued by the AASB that are relevant to its operations and effective for the current annual reporting period. New and revised Standards and amendments thereof and Interpretations effective for the current year that are relevant to the Group include: • AASB 16 Leases; AASB 16 Leases AASB 16 Leases requires lessees to account for all leases under a single on-balance sheet model. The standard includes two recognition exemptions for lessees namely leases of ’low-value’ assets and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset. The Group has adopted AASB 16 Leases from 1 July 2019 retrospectively but has not restated comparatives for the 2019 reporting period as permitted under the specific provision in the standard. The effect of adoption of this standard is disclosed in Note 25. d) Cash and Cash Equivalents Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term deposits with an original maturity of six months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. e) Trade and Other Receivables Trade receivables, which generally have 30 day terms, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for impairment. Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off when identified. An impairment provision is recognised when there is objective evidence that the Company will not be able to collect the receivable. f) Financial Instruments i) Classification of financial instruments The Group classifies its financial assets into the following measurement categories: • • those to be measured at fair value (either through other comprehensive income, or through profit or loss); and those to be measured at amortised cost. The classification depends on the Group’s business model for managing financial assets and the contractual terms of the financial assets’ cash flows. The Group classifies its financial liabilities at amortised cost unless it has designated liabilities at fair value through profit or loss or is required to measure liabilities at fair value through profit or loss such as derivative liabilities. ii) Financial assets measured at amortised cost Debt instruments Investments in debt instruments are measured at amortised cost where they have: • contractual terms that give rise to cash flows on specified dates, that represent solely payments of principal and interest on the principal amount outstanding; and 29 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor The Year Ended 30 June 2020 • are held within a business model whose objective is achieved by holding to collect contractual cash flows. These debt instruments are initially recognised at fair value plus directly attributable transaction costs and subsequently measured at amortised cost. The measurement of credit impairment is based on the three-stage expected credit loss model described below in note (c) Impairment of financial assets. (a) Financial assets measured at fair value through other comprehensive income Equity instruments Investment in equity instruments that are neither held for trading nor contingent consideration recognised by the Group in a business combination to which AASB 3 “Business Combination” applies, are measured at fair value through other comprehensive income, where an irrevocable election has been made by management. Amounts presented in other comprehensive income are not subsequently transferred to profit or loss. Dividends on such investments are recognised in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. (b) Items at fair value through profit or loss Items at fair value through profit or loss comprise: • • • items held for trading; items specifically designated as fair value through profit or loss on initial recognition; and debt instruments with contractual terms that do not represent solely payments of principal and interest. Financial instruments held at fair value through profit or loss are initially recognised at fair value, with transaction costs recognised in the income statement as incurred. Subsequently, they are measured at fair value and any gains or losses are recognised in the income statement as they arise. Where a financial asset is measured at fair value, a credit valuation adjustment is included to reflect the credit worthiness of the counterparty, representing the movement in fair value attributable to changes in credit risk. Financial instruments held for trading A financial instrument is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing in the near term, or forms part of a portfolio of financial instruments that are managed together and for which there is evidence of short-term profit taking, or it is a derivative not in a qualifying hedge relationship. Financial instruments designated as measured at fair value through profit or loss Upon initial recognition, financial instruments may be designated as measured at fair value through profit or loss. A financial asset may only be designated at fair value through profit or loss if doing so eliminates or significantly reduces measurement or recognition inconsistencies (i.e. eliminates an accounting mismatch) that would otherwise arise from measuring financial assets or liabilities on a different basis. A financial liability may be designated at fair value through profit or loss if it eliminates or significantly reduces an accounting mismatch or: • • if a host contract contains one or more embedded derivatives; or if financial assets and liabilities are both managed and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy. Where a financial liability is designated at fair value through profit or loss, the movement in fair value attributable to changes in the Group’s own credit quality is calculated by determining the changes in credit spreads above observable market interest rates and is presented separately in other comprehensive income. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 30 (c) Impairment of financial assets The Group applies a three-stage approach to measuring expected credit losses (ECLs) for the following categories of financial assets that are not measured at fair value through profit or loss: • • • debt instruments measured at amortised cost and fair value through other comprehensive income; loan commitments; and financial guarantee contracts. No ECL is recognised on equity investments. Determining the stage for impairment At each reporting date, the Group assesses whether there has been a significant increase in credit risk for exposures since initial recognition by comparing the risk of default occurring over the remaining expected life from the reporting date and the date of initial recognition. The Group considers reasonable and supportable information that is relevant and available without undue cost or effort for this purpose. This includes quantitative and qualitative information and also, forward- looking analysis. An exposure will migrate through the ECL stages as asset quality deteriorates. If, in a subsequent period, asset quality improves and also reverses any previously assessed significant increase in credit risk since origination, then the provision for doubtful debts reverts from lifetime ECL to 12-months ECL. Exposures that have not deteriorated significantly since origination are considered to have a low credit risk. The provision for doubtful debts for these financial assets is based on a 12-months ECL. When an asset is uncollectible, it is written off against the related provision. Such assets are written off after all the necessary procedures have been completed and the amount of the loss has been determined. Subsequent recoveries of amounts previously written off reduce the amount of the expense in the income statement. The Group assesses whether the credit risk on an exposure has increased significantly on an individual or collective basis. For the purposes of a collective evaluation of impairment, financial instruments are Grouped on the basis of shared credit risk characteristics, taking into account instrument type, credit risk ratings, date of initial recognition, remaining term to maturity, industry, geographical location of the borrower and other relevant factors. (d) Recognition and derecognition of financial instruments A financial asset or financial liability is recognised in the balance sheet when the Group becomes a party to the contractual provisions of the instrument, which is generally on trade date. Loans and receivables are recognised when cash is advanced (or settled) to the borrowers. Financial assets at fair value through profit or loss are recognised initially at fair value. All other financial assets are recognised initially at fair value plus directly attributable transaction costs. The Group derecognises a financial asset when the contractual cash flows from the asset expire or it transfers its rights to receive contractual cash flows from the financial asset in a transaction in which substantially all the risks and rewards of ownership are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability. A financial liability is derecognised from the balance sheet when the Group has discharged its obligation or the contract is cancelled or expires. (e) Offsetting Financial assets and liabilities are offset and the net amount is presented in the balance sheet when the Group has a legal right to offset the amounts and intends to settle on a net basis or to realise the asset and settle the liability simultaneously. 31 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor The Year Ended 30 June 2020 g) Property, Plant and Equipment Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows: Plant and Equipment – over 6 to 15 years Motor Vehicles – over 4 years Computer Equipment – over 3 years The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. h) Exploration and Evaluation Expenditure Exploration and evaluation costs are capitalised as exploration and evaluation assets on a project by project basis pending determination of the technical feasibility and commercial viability of the project. The capitalised costs are presented as either tangible or intangible exploration and evaluation assets according to the nature of the assets acquired. When a licence is relinquished or a project abandoned, the related costs are recognised in the Statement of Comprehensive Income immediately. Exploration and evaluation assets shall be assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. When facts and circumstances suggest that the carrying amount exceeds the recoverable amount an impairment loss is recognised in the Statement of Comprehensive Income. i) Interests in Joint Ventures The Company’s shares of the assets, liabilities, revenue and expenses of jointly controlled operations have been included in the appropriate line items of the consolidated financial statements. j) Impairment of Assets Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount exceeds its recoverable amount. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds it recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are Group at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or Group of assets (cash –generating units). Non-financial assets other than goodwill that suffered an impairment are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed. k) Trade and other Payables Trade and other payables are carried at amortised cost; due to their short term nature they are not discounted. They represent liabilities for goods and services provided to the Company prior to the end of the financial year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 32 l) Provisions and Employee Leave Benefits Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of the provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the Statement of Comprehensive Income net of any reimbursement. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the time value of money and the risks specific to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs. Employee Leave Benefits (i) Wages, salaries, annual leave and sick leave Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Expenses for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. (ii) Long service leave The liability for long service leave is recognised and measured as the present level of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. m) Share Based Payment Transactions (i) Equity settled transaction: The Company provides benefits to its employees (including key management personnel) in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). The Company has in place the Great Western Exploration Limited Employee Share Option Plan to provide benefits to directors and senior executives. The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an external valuer using a binomial model. In valuing equity-settled transactions, no account is taken of any vesting conditions other than conditions linked to price of the shares of the Company (market conditions) if applicable. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the vesting date). At each subsequent reporting date until vesting the cumulative charge to the Statement of Comprehensive Income is the produce of: i) the grant date fair value of the award; 33 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor The Year Ended 30 June 2020 ii) the current best estimate of the number of awards that will vest, taking into account such factors as the likelihood of employee turnover during the vesting period and the likelihood of non-market performance conditions being met; and iii) the expired portion of the vesting period. The charge to the Statement of Comprehensive Income for the year is the cumulative amount as calculated above less the amounts already charged in previous years. There is a corresponding credit to equity. Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated to do so. Any award subject to a market condition is considered to vest irrespective of whether or not that market condition is fulfilled, provided that all other conditions are satisfied. If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share. n) Issued Capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. o) Revenue Recognition Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised. i) Interest Income Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant year using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. p) Income Tax and other Taxes Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current year’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date. Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: • When the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in the transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 34 • when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: • when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not • a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. Other Taxes Revenues, expenses and assets are recognised net of the amount of GST except: • when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and • receivables and payables, which are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as part of operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. q) Earnings 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 of the parent, adjusted for: 35 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor The Year Ended 30 June 2020 • • • costs of servicing equity (other than dividends); the after tax effect of dividends and interest associated with dilutive potential ordinary shares; and other non-discretionary changes in revenues or expenses during the year 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. r) Fair Value of Assets and Liabilities The Company measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the applicable Accounting Standard. Fair value is the price the Company would receive to sell an asset or would have to pay to transfer a liability in an orderly (i.e. unforced) transaction between independent, knowledgeable and willing market participants at the measurement date. As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs). For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use. The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial instruments, by reference to observable market information where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective note to the financial statements. Valuation techniques In the absence of an active market for an identical asset or liability, the Company selects and uses one or more valuation techniques to measure the fair value of the asset or liability, The Company selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset or liability being measured. The valuation techniques selected by the Company are consistent with one or more of the following valuation approaches: Market approach: valuation techniques that use prices and other relevant information generated by market transactions for identical or similar assets or liabilities. Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a single discounted present value. Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service capacity. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 36 Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the asset or liability, including assumptions about risks. When selecting a valuation technique, the Company gives priority to those techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly available information on actual transactions) and reflect the assumptions that buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for which market data is not available and therefore are developed using the best information available about such assumptions are considered unobservable. Fair value hierarchy AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level that an input that is significant to the measurement can be categorised into as follows: Level 1 Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly Level 3 Measurements based on unobservable inputs for the asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant inputs are not based on observable market data, the asset or liability is included in Level 3. The Company would change the categorisation within the fair value hierarchy only in the following circumstances: i) ii) if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa; or if significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa. When a change in the categorisation occurs, the Company recognises transfers between levels of the fair value hierarchy (i.e. transfers into and out of each level of the fair value hierarchy) on the date the event or change in circumstances occurred. 2. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Equally, the Company continually employs judgement in the application of its accounting policies. Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions. Those which may materially affect the carrying amounts of assets and liabilities reported in future years are discussed below. a) Significant accounting estimates and judgements (i) Impairment of non-financial assets 37 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor The Year Ended 30 June 2020 The Company assesses impairment on all assets at each reporting date by evaluating conditions specific to the Company and to the particular asset that may lead to impairment. These include technology and economic environments. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves value-in-use calculations, which incorporate a number of key estimates and assumptions. (ii) Share-based payment transactions The Company measures the cost of equity settled transactions with directors and employees by reference to the fair value of the equity instruments at the date at which they are granted. Equity settled transactions comprise only options. Their fair value is determined using the Binomial Options Pricing model. The accounting estimates and assumptions relating to equity settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting year but may impact expenses and equity. Refer to Note 19. (iii) Estimation of useful lives of assets The estimation of useful lives of assets has been based on historical experience. Adjustments to useful lives are made when considered necessary. Depreciation and amortisation charges as well as estimated useful lives are included in Note 1(g). (iv) Exploration and evaluation costs Acquisition, exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are carried forward in respect of an area that has not at balance sheet 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 relating to, the area of interest are continuing. Refer to Note 12. (v) Environmental issues Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental legislation, and the Directors understanding thereof. At the current stage of the Company’s development and its current environmental impact, the Directors believe such treatment is reasonable and appropriate. (vi) Taxation Balances disclosed in the financial statements and the notes thereto, related to taxation, and are based on the best estimates of Directors. These estimates take into account both the financial performance and position of the Company as they pertain to current income taxation legislation, and the Directors understanding thereof. No adjustment has been made for pending or future taxation legislation. The current income tax position represents that Directors best estimate, pending an assessment by the Australian Taxation Office. Refer to Note 6. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 38 3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Company’s financial instruments consist mainly of deposits with banks, accounts receivable and payable. 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: Financial Assets Cash and cash equivalents Receivables Financial assets Financial Liabilities Trade and payables Note 8 9 10 13 2020 $ 133,000 84,770 400 218,170 294,910 294,910 2019 $ 1,014,442 343,555 200,362 1,558,359 328,427 328,427 FINANCIAL RISK MANAGEMENT POLICIES The Company attempts to mitigate risks that may affect its future performance through a systematic process of identifying, assessing, reporting and managing risks of corporate significance. The management and the Board discuss the principal risks of our businesses, particularly during the strategic planning and budgeting processes. The board sets policies for the implementation of systems to manage and monitor identifiable risks. The Board Risk Committee is responsible for the oversight of risk management. The Company’s principal financial instruments comprise cash and short term deposits. The Company has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. The main purpose of these financial assets and liabilities is to raise finance for the Company’s operations. It is, and has been throughout the entire year under review, the Company’s policy that no trading in financial instruments shall be undertaken. The main risks arising from the Group’s financial instruments are cash flow interest rate risk. Other minor risks are either summarised below or disclosed in Note 9 in the case of credit risk and Note 14 in the case of capital risk management. The Board reviews and agrees policies for managing each of these risks. (a) Credit Risk The Company minimises credit risk by undertaking a review of its potential customers’ financial position and the viability of the underlying project prior to entering into material contracts. Financial instruments other than receivables that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. The Company places its cash deposits with high credit-quality financial institutions, being in Australia only the major Australian (big four) banks. Cash holdings in other countries are generally not significant. The Company’s cash deposits all mature within twelve months and attract a rate of interest at normal short-term money market rates. The maximum amount of credit risk the Company considers it would be exposed to would be $133,000 (2019: $1,214,804) being the total of its cash and cash equivalents and financial assets. 39 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor The Year Ended 30 June 2020 (b) Cash Flow Interest Rate Risk The Company’s exposure to the risks of changes in market interest rates relates primarily to the Company’s short term deposits with a floating interest rate. All other financial assets and liabilities in the form of receivables and payables are non-interest bearing. The Company does not engage in any hedging or derivative transactions to manage interest rate risk. The following table sets out the Company’s exposure to interest rate risk and the effective weighted average interest rate for each class of these financial instruments. Floating Interest Rate Non-Interest Bearing Total Carrying Amount Note 8 9 10 Financial Assets Cash and cash equivalents Trade and other Receivables Other Financial assets Weighted average interest rate Financial Liabilities Trade and other Payables 2020 2019 2020 2019 2020 $ $ $ 2019 $ $ - - $ - - - - 133,000 1,014,442 133,000 1,014,442 84,770 343,556 84,770 343,556 199,962 400 400 400 200,362 0.81 13 - - 294,910 328,427 294,910 328,427 The effect on profit and equity, after tax, if interest rates at that date had been 10% higher or 10% lower with all other variables held constant as a sensitivity analysis would be a +/- change to profit and equity of nil (2019: $2,000). A sensitivity of 10% has been selected as this is considered by management to be reasonable in the current environment. The Company constantly analyses its interest rate exposure to ensure the appropriate mix of fixed and variable rates. The Company has not entered into any hedging activities to cover interest rate risk. In regard to its interest rate risk, the Company continuously analyses its exposure. Within this analysis consideration is given to potential renewals of existing positions, alternative investments and the mix of fixed and variable interest rates. (c) Price Risk The Company is not exposed to equity securities price risk. There is no active market for available for sale investments. (d) Liquidity Risk The Company’s objective is to match the terms of its funding sources to the terms of the assets or operations being financed. The Company uses a combination of trade payables and operating leases to provide its necessary debt funding. The Company aims to hold sufficient reserves of cash or cash equivalents to help manage the fluctuations in working capital requirements and provide the flexibility for investment into long-term assets without the need to raise debt. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 40 CONTRACTED MATURITIES OF PAYABLES AT BALANCE DATE Payable - Less than 6 months - 6 to 12 months - 1 to 5 years (e) Commodity Price Risk 2020 $ 294,910 - - 2019 $ 226,376 102,051 - 294,910 328,427 Due to the early stage of the Company’s operations its exposure is considered minimal. Risk arises as its operations are involved in exploration and development of mineral commodities, changes in the price of commodities for which the Group is exploring and developing may result in changes to the Company’s market price. The Company entity does not hedge any of its exposures. (f) Foreign currency exchange rate A risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency other than the Company’s functional currency. At present, the Company is not considered to be exposed to any significant foreign currency risk. (g) Net fair values The Company has no financial assets or liabilities where the carrying value amount exceeds fair value at balance date. The directors consider that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair value. The Company’s financial assets at fair value through profit or loss are listed investments (Note 10) and are categorised as Level 1, meaning fair value is determined from quoted prices in active markets for identical assets. 4. OPERATING SEGMENTS SEGMENT INFORMATION Identification of reportable segments The Company has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The Company’s principal activities are mineral exploration. Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics. Types of products and services by segment The Company’s segments consist of: • Mineral exploration • Finance and administration Basis of accounting for purposes of reporting by operating segments Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker with respect to operating segments are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Company. 41 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor The Year Ended 30 June 2020 Segment assets Segment assets are clearly identifiable on the basis of their nature and physical location. Unless indicated otherwise in the segment assets note, investments in financial assets, deferred tax assets and intangible assets have not been allocated to operating segments. Segment liabilities Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the segment. Segment liabilities include trade and other payables and certain direct borrowings. Unallocated items Items of revenue, expense, assets and liabilities are not allocated to operating segments if they are not considered part of the core operations of any segment. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 42 Mineral Exploration ($) Finance and Administration ($) - - - - - - - - - (1,287,077) - 1,077 17,394 891 19,362 (108,123) (194,971) (132,056) (2,785) (14,835) (87,188) - - - Total ($) 1,077 17,394 891 19,362 (108,123) (194,971) (132,055) (2,785) (14,835) (87,187) - (1,287,077) - (1,287,077) (520,596) (1,807,673) Mineral Exploration ($) Finance and Administration ($) - - - - - - - - - (8,238) (4,905) (13,143) 19,895 718 20,613 (135,837) (337,010) (170,000) (3,355) (77,250) (12,986) - - Total ($) 19,895 718 20,613 (135,837) (337,010) (170,000) (3,355) (77,250) (12,986) (8,238) (4,905) (715,825) (728,968) (i) Segment performance 30 June 2020 Interest received Other income – Government Grant Other income Total segment revenue Employee benefit expense Administration expenses Directors fees Depreciation Right of use asset depreciation Compliance and regulatory expenses Share based payments Mineral exploration written-off Other costs Net profit/ (loss) before tax from operations 30 June 2019 Interest received Other income Total segment revenue Employee benefit expense Administration expenses Directors fees Depreciation Compliance and regulatory expenses Share based payments Mineral exploration written-off Other costs Net profit/ (loss) before tax from operations 43 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor The Year Ended 30 June 2020 (ii) Segment assets 30 June 2020 Current assets Cash and cash equivalents Trade and other receivables Other Non-current assets Exploration and evaluation expenditure Plant & Equipment Total assets 30 June 2019 Current assets Cash and cash equivalents Trade and other receivables Other Non-current assets Exploration and evaluation expenditure Plant & Equipment Total assets (iii) Segment liabilities 30 June 2020 Current liabilities Mineral Exploration ($) Finance and Administration ($) - 61,850 - 9,490,884 11,384 9,564,118 133,000 22,920 400 - 144 156,464 Mineral Exploration ($) Finance and Administration ($) - 302,953 - 9,868,392 4,929 10,176,274 1,014,442 40,602 200,362 - 2,896 2,385,733 Mineral Exploration ($) Finance and Administration ($) Trade and other payables Total liabilities from operations 100,392 100,392 194,518 194,518 30 June 2020 Current liabilities Mineral Exploration ($) Finance and Administration ($) Trade and other payables Total liabilities from operations 129,020 129,020 199,407 199,407 (iv) Revenue by geographical region The Company’s revenue is received from sources within Australia. Total ($) 133,000 84,770 400 9,490,884 11,528 9,720,582 Total ($) 1,014,442 343,555 200,362 9,868,392 7,825 11,434,576 Total ($) 294,910 294,910 Total ($) 328,427 328,427 GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 44 (v) Assets by geographical region The geographical location of all assets are in Australia. (vi) Major customers Due to the nature of its current operations, the Company does not provide products and services. 5. EXPENSES Employee benefits Salaries Superannuation Other Employee Benefits 6. INCOME TAX 2020 $ 212,217 22,721 (101,811) 133,127 2020 $ 2019 $ 101,639 23,611 10,587 135,837 2019 $ a) The prima facie tax on profit/(loss) from ordinary activities before income tax is reconciled to the income tax expense as follows: Accounting loss before income tax (1,807,673) (728,968) Income tax benefit at the statutory income tax rate of 27.5% (2019: 27.5%) (497,110) (200,466) Expenditure not allowable for income tax purposes Capitalised mineral exploration expenditure Other deductible expenditure Capital raising costs Under/over from prior year 359,866 (250,489) (14,187) (20,263) - 17,886 (358,524) (16,203) (83,258) - Benefit of tax losses not brought to account as an asset 422,182 640,565 Income Tax expense reported in the Statement of Profit or Loss and Other Comprehensive Income - - b) As at 30 June 2020, the Company has estimated tax losses of approximately $25,697,172 (2019: $24,085,000), which may be available to be offset against deferred tax liabilities and taxable income in future years. The availability of these losses is subject to satisfying Australian taxation legislative requirements. The deferred tax asset attributable to tax losses has not been brought to account in these financial statements as the Directors believe it is not presently appropriate to regard realisation of the future income tax benefits as probable. c) Deferred Tax Liability With regard to Mineral Exploration Expenditure of $9,492,184 (2018: $9,868,392) the tax liability in respect of the book value has not been brought to account as it is offset by the tax losses set out in 6(b) above. 45 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor The Year Ended 30 June 2020 7. EARNINGS PER SHARE 2020 $ 2019 $ Loss used in the calculation of basic EPS (1,807,673) (728,968) Weighted average number of ordinary shares used in calculation of basic earnings per share(1) 22,299,089 15,819,637 (1) On 4 June 2020, the Company undertook a share consolidation of 1 share for every 60 shares held. 8. CASH AND CASH EQUIVALENTS Cash at bank Cash on deposit 2020 $ 2019 $ 133,000 1,014,442 - - 133,000 1,014,442 The effective interest rate on short term bank deposits on average was 0.75% (2019: 0.81%), with an average maturity of 6 months. 9. TRADE AND OTHER RECEIVABLES Current Tenement applications and deposits GST receivable Other receivables Prepayments 2020 $ 41,962 23,226 16,551 3,031 84,770 2019 $ 265,385 75,134 - 3,036 343,555 ALLOWANCE FOR IMPAIRMENT LOSS Trade and other receivables do not contain impaired assets and are not past due. It is expected that these other balances will be received when due. FAIR VALUE AND CREDIT RISK Due to the short term nature of the receivables, their carrying value is assumed to approximate their fair value. Given the nature of the receivables the Company’s exposure to risk is not considered material. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 46 10. OTHER FINANCIAL ASSETS Current Financial assets Other 4 Month term deposit Changes in fair value are included in the statement of comprehensive income. 11. PROPERTY, PLANT AND EQUIPMENT Plant and Equipment – at cost Less: accumulated depreciation Reconciliation of the carrying amount of property, plant and equipment Carrying amount at beginning of year Additions Disposals Depreciation for the year Carrying amount at end of financial year 12. MINERAL EXPLORATION EXPENDITURE Balance at beginning of the year Acquisition of tenements Deferred exploration expenditure Mineral expenditure written off Balance at end of financial year 2020 $ 400 - 400 2020 $ 111,870 (100,342) 11,528 2020 $ 7,825 6,488 - (2,785) 11,528 2020 $ 9,868,392 - 909,569 (1,287,077) 9,490,884 2019 $ 400 199,962 200,362 2019 $ 105,382 (97,557) 7,825 2019 $ 11,181 0 - (3,356) 7,825 2019 $ 8,207,648 365,260 1,303,722 (8,238) 9,868,392 The Company wrote off $1,287,077 of expenditure in relation to tenements relinquished during the year. The value of the Company’s interest in exploration expenditure is dependent upon: • • • the continuance of the Company’s rights to tenure of the areas of interest; the results of future exploration; and The recoupment of costs through successful development and exploitation of the areas of interest or, alternatively, by their sale. 47 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor The Year Ended 30 June 2020 13. TRADE AND OTHER PAYABLES Current Trade payables Sundry payables and accruals PAYG Withholding 2020 $ 227,315 30,499 37,096 294,910 2019 $ 105,248 165,586 57,593 328,427 Due to the short-term nature of these payables, their carrying value is assumed to approximate fair value. Trade payables are non-interest bearing and are generally settled within 30 days. 14. ISSUED CAPITAL Ordinary Shares Movements Ordinary Shares Balance 1 July 2020 $ 2019 $ 30,580,106 30,452,910 2020 Number 2019 Number 2020 $ 2019 $ 1,252,699,442 920,199,310 30,452,910 29,178,726 Share issue - Exercise of options Sale of unmarketable parcel - - Share consolidation 60:1(1) (1,231,820,379) Placement - June 2020 - June 2019 Issue costs At 30 June 20,000,000 - - 45,000,000 - 270,000 - - - 287,500,132 879 - 200,000 - - (73,683) - - - 1,150,000 (145,816) 40,879,063 1,252,699,442 30,580,106 30,452,910 (1) On 4 June 2020, the Company undertook a shareholder approved share consolidation of 1 share for every 60 held. The Company at 30 June 2020 has issued share capital amounting to 40,879,063 (2019: 1,252,699,442) ordinary shares with no par value. Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 48 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. Capital Risk Management The Company’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they may continue to provide returns for shareholders and benefits for other stakeholders. Due to the nature of the Company’s activities, being mineral exploration, the Company does not have ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Company’s capital risk management is the current working capital position against the requirements of the Company to meet exploration programmes and corporate overheads. The Company’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required. The working capital position of the Company at 30 June 2020 is as follows: Cash and cash equivalents Trade and other receivables Other assets Trade and other payables Working capital position 2020 $ 133,000 84,770 400 (294,911) (76,741) 2019 $ 1,014,442 343,555 200,362 (328,427) 1,229,932 On 7 July 2020, the Company announced the completion of the non-renounceable, underwritten entitlement issue, raising $613,190 (before costs). On 12 August 2020, the Company announced that it had raised $2.5m (before costs). 15. RESERVES Share Option Reserve a) Share Option Reserve 2020 $ 898,866 898,866 2020 $ 2020 No. 2019 No. Balance at 1 July 72,000,000 76,500,000 898,866 Issued during the year - 16,000,000 Expired during the year (41,000,000) (20,500,000) Exercised during the year - - Option consolidation at 60:1 (30,483,333) - - - 2019 $ 898,866 898,866 2019 $ 864,237 34,629 - - Balance at 30 June 516,667 72,000,000 898,866 898,866 The share based payments reserve is used to record the value of share based payments provided to employees, including key management personnel, as part of their remuneration. Refer to Note 19 for further details of these plans. The Group operates an Employee Share Option Plan under which Options to subscribe for the Company’s shares have been granted to directors, senior executives and employees. 49 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor The Year Ended 30 June 2020 16. CASH FLOW STATEMENT RECONCILIATION Reconciliation of net loss after tax to net cash flows from operations Loss for the year Depreciation Right of use depreciation Share based payments Other Interest on lease liabilities – Rights of use asset Other income – gain on disposal on termination of lease Director’s and employee remuneration – release on deed and resignation Mineral exploration expenditure written off Changes in assets and liabilities (Increase)/Decrease in trade and other receivables and prepayments Increase/(Decrease) in trade and other payables Increase /(Decrease) in provisions 2020 $ 2019 $ (1,807,673) (728,968) 2,785 14,835 - - 1,817 (891) (172,245) 1,287,077 35,362 108,685 - 3,355 - 12,986 29,765 8,238 23,112 33,686 33,411 17. RELATED PARTY DISCLOSURE (a) Transactions with Directors and Directors Related Entities There were no related party transactions during the year ended 30 June 2020 or 30 June 2019. (530,248) (584,415) GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 50 18. KEY MANAGEMENT PERSONNEL (a) Compensation for Key Management Personnel Short term employee benefits Post employment benefits Other long term benefits Reversal of remuneration – Deed of resignation and release Share based payments 2020 $ 254,666 24,195 7,831 (192,764) - 93,928 2019 $ 370,000 35,150 10,586 - - 415,736 19. SHARE BASED PAYMENTS (a) Recognised share based payment The share based payment expense recognised for employee services, consultants and tenement acquisition received during the year is shown in the table below: Expense arising from equity share-based payment transactions settled via options Expense arising from equity share-based payment transactions settled via Shares Total expense arising from share-based payment transactions 2020 $ - - - 2019 $ 12,986 - 12,986 The share-based payment plans are described below. There have been no cancellations or modifications to any of the plans during 2020 and 2019. 51 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor The Year Ended 30 June 2020 (b) Types of Share based payment plans Great Western Exploration Limited, Employee Share Option Plan Share options are granted to senior executives and designed to provide executives an incentive and participate along with shareholders by increasing the value of the Company’s shares. The options are issued by the Board having regard, in each case to: i) the contribution to the Company which has been made by the Participant; ii) the period of employment of the Participant with the Company, including (but not limited to) the years of service by that Participant; iii) the potential contribution of the Participant to the Company; and iv) any other matters which the Board considers in its absolute discretion, to be relevant. The options are issued to participants at a price the Board considers appropriate, but in any event, no more than nominal consideration. Details of options expiry date and exercise price are set out in Note 19 (c) below. (c) Summary of Options on issue 2020 2019 No. Exercise Price No. Exercise Price Outstanding at beginning of financial year 359,500,132 76,500,000 Granted during the year - unlisted options expiring 31 Dec 2021 - unlisted options expiring 31 Dec 2021 - listed options expiring 21 June 2021 Forfeited during the year - - - - Expired during the year (41,000,000) Exercised during the year - Option consolidation 60:1 (313,191,916) - - - - - - - 10,000,000 6,000,000 287,500,132 - (20,500,000) - - $0.02 $0.02 $0.01 - - - - Outstanding at end of financial year 5,308,456 359,500,132 GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 52 The following share-based payment arrangements were in existence during the current and prior reporting periods: Grant Date No of Options Grant Date Fair Value Exercise Price Expiry Date Vesting Date Expired at 30 June 2020 29 November 2016 200,000 $0.00805 $0.06 31 December 2019 29 November 2016 24 March 2017 416,667 $0.01280 $1.20 30 June 2020 24 March 2017 3 October 2017 33,333 $0.005333 $0.06 31 December 2019 3 October 2017 On issue at 30 June 2020 12 October 2017 250,000 $0.008761 $1.32 12 October 2020 12 October 2017 14 December 2018 266,667 $0.00216 $1.20 31 December 2021 14 December 2018 The total number of options exercisable at year end was 516,667. No options were exercised during the year. (d) Option pricing model Equity-settled transactions The fair value of the equity-settled share options granted under the Employee Share Option Plan is estimated as at the date of the grant using a Monte Carlo Pricing Model as part of the term of the issued options, the options will vest immediately when the Share Price Equals or exceeds the Exercise Price of the respective shares after the date of issues of the options. Monte Carlo Price Model Grant Date 29/11/16 Dividend yield (%) Expected volatility (%) Risk free interest rate (%) Expected life of options (yrs) Option exercise price ($) Grant Date Share Price 0 131 1.91 3.1 0.06 0.015 53 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor The Year Ended 30 June 2020 Binomial Model Pricing Model taking into account the terms and conditions upon which the options were granted options included in relation to acquisition of tenements and corporate advisory services during the period. Binomial Model Pricing Model Grant Date Dividend yield (%) Expected volatility (%) Risk free interest rate (%) Expected life of options (yrs) Option exercise price ($) Weighted average share price at measurement date ($) 24/3/17 14/12/18 - 132 1.74 3.3 0.02 0.017 - 109 1.98 3.1 0.02 0.006 (e) Share issued in lieu of services 2020 No shares were issued in lieu of services during the year ended 30 June 2020. 2019 Grant Date/entitlement Shares issued for acquisition of tenements Options issued for acquisition of tenements Number of Instruments Grant and Vesting Date Fair Value at grant date $ 750,000 14/12/2018 166,667 14/12/2018 0.06 0.002 GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 54 20. PARENT INFORMATION The following information has been extracted from the books and records of the parent and has been prepared in accordance with Australian Accounting Standards. STATEMENT OF FINANCIAL POSITION 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 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Total loss 2020 $ 2019 $ 217,402 9,508,544 9,725,946 1,547,058 9,609,135 11,156,193 289,307 322,824 - - 289,307 322,824 9,436,639 10,833,369 30,294,940 30,167,745 898,867 898,867 (21,757,168) (20,233,243) 9,436,639 10,833,369 (1,523,925) (727,680) Total comprehensive income (1,523,925) (727,680) Guarantees Great Western Exploration Limited has not entered into any guarantees, in the current or previous financial year, in relation to the debts of its subsidiaries. Contingent Liabilities At 30 June 2020, there were no contingent liabilities in relation to the subsidiaries. Contractual commitments At 30 June 2020, Great Western Exploration Limited had not entered into any contractual commitments for the acquisition of property, plant and equipment (2019: Nil). 55 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor The Year Ended 30 June 2020 21. CONTROLLED ENTITIES Interests are held in the following: Name Principal Activity Country of Incorporation Shares Vanguard Exploration Limited Mineral Exploration Australia Ordinary 22. COMMITMENTS AND CONTINGENCIES COMMITMENTS a) Exploration Tenement Leases In order to maintain current rights of tenure to exploration tenements, the Group is required to outlay lease rentals and to meet the minimum expenditure requirements of the Western Australian Department of Mines & Petroleum. Within one year CONTINGENCIES There were no contingencies at the end of the financial year. Ownership Interest 2020 100% 2019 100% 2020 $ 2019 $ 1,077,500 1,278,000 23. EVENTS AFTER BALANCE DATE The Directors are not aware of any matter or circumstance that has arisen since 30 June 2020 which has significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years, other than: • • • On 7 July 2020, the Company announced the completion of the non-renounceable, underwritten entitlement issue, raising $613,190. On 10 August 2020, the Company announced that it had raised $2.5 million by way of a placement of new fully paid shares. The Company made project announcements with respect to the Finlayson Gold Target and Golden Corridor Project (25 July 2020 and 4 August 2020) and the Atley Gold Project (25 August 2020). GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 56 24. AUDITORS REMUNERATION The Auditor of Great Western Exploration Limited is Bentleys Amounts received or due and receivable for • • an audit or review of the financial report of the Group other services in relation to the Group – other services 25. RIGHTS OF USE ASSET AND LEASE LIABILITIES Rights of use assets Opening At inception Depreciation expense Termination of lease Lease liabilities Opening At inception Interest expense Principal repaid Termination of lease 2020 $ 2019 $ 33,632 - 33,632 33,431 - 33,431 2020 2019 $ - 89,582 (14,835) (74,747) - 2020 $ - 89,582 1,817 (15,761) (75,638) - $ - - - - - 2019 $ - - - - - On the 24 April 2020, the group entered into a termination of lease agreement with the landlord. The landlord had agreed that the last date of lease was at 1 May 2020. Pursuant to termination of the lease, the group had to pay the landlord a total of $44,323 as the termination fee. $25,325 is being paid through the security deposit and the remainder payable on the 31 May 2020. The termination of lease was paid on the 26 May 2020. 57 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor The Year Ended 30 June 2020 Directors’ Declaration In accordance with a resolution of the directors of Great Western Exploration Limited, the Directors of the Company declare that: 1. the financial statements and notes, as set out on pages 23 to 57, are in accordance with the Corporations Act 2001 and: a. comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes compliance with International Financial Reporting Standards (IFRS); and b. give a true and fair view of the financial position as at 30 June 2020 and of the performance for the year ended on that date of the Company; 2. in the Directors’ opinion, subject to the matters mentioned in Note 1(a) to the financial statements, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and 3. the Directors have been given the declarations required by s 295A of the Corporations Act 2001 for the financial year ended 30 June 2020. Dated this 11 day of September 2020 K C Somes Chairman GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 58 AUDITOR’S INDEPENDENCE DECLARATION 59 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 To The Board of DirectorsAuditor’s Independence Declaration under Section 307C of the Corporations Act 2001As lead audit partnerfor the audit of the financial statements of Great Western Exploration Limited for the financial year ended 30 June 2020, I declare that to the best of my knowledge and belief, there have been no contraventions of:−the auditor independence requirements of the Corporations Act 2001in relation to the audit; and−any applicable code of professional conduct in relation to the audit.Yours Faithfully,BENTLEYSDOUG BELL CAChartered AccountantsPartnerDated at Perth this 10thday of September 2020 INDEPENDENT AUDITOR’S REPORT Independent Auditor's Report To the Members of Great Western Exploration Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Great Western Exploration Limited (“the Company”) and its subsidiaries (“the Consolidated Entity”), which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion: a. the accompanying financial report of the Consolidated Entity is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2020 and of its financial performance for the year then ended; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 1. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Consolidated Entity in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 60 Independent Auditor’s Report To the Members of Great Western Exploration Limited (Continued) Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How our audit addressed the key audit matter Mineral Exploration Expenditure $9,490,884 Our audit procedures included but were not limited to: (Refer to note 12) Mineral exploration expenditure is a key audit matter due to: The significance of the balance to the Consolidated Entity’s financial position; The level of judgement required in evaluating management’s application of the requirements of AASB 6 Exploration for and Evaluation of Mineral Resources (“AASB 6”). AASB 6 is an industry specific accounting standard requiring the application of significant judgements, estimates and industry knowledge. This includes specific requirements for expenditure to be capitalised as an asset and subsequent requirements which must be complied with for capitalised expenditure to continue to be carried as an asset; and The assessment of impairment of mineral exploration expenditure being inherently difficult. Assessing management’s determination of its areas of interest for consistency with the definition in AASB 6 Exploration and Evaluation of Mineral Resources (“AASB 6”); Assessing the Consolidated Entity’s rights to tenure for a sample of tenements; Testing the Consolidated Entity’s additions to mineral exploration expenditure for the year by evaluating a sample of recorded expenditure for consistency to underlying records, the capitalisation requirements of the Consolidated Entity’s accounting policy and the requirements of AASB 6; By testing the status of the Consolidated Entity’s tenure and planned future activities, reading board minutes and discussions with management we assessed each area of interest for one or more of the following circumstances that may indicate impairment of the mineral exploration expenditure: The licenses for the rights to explore expiring in the near future or are not expected to be renewed; Substantive expenditure for further exploration in the area of interest is not budgeted or planned; Decision or intent by the Consolidated Entity to discontinue activities in the specific area of interest due to lack of commercially viable quantities of resources; and Data indicating that, although a development in the specific area is likely to proceed, the carrying amount of the exploration asset is unlikely to be recorded in full from successful development or sale. We also assessed the appropriateness of the related disclosures in note 12 to the financial statements. 61 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 INDEPENDENT AUDITOR’S REPORT Independent Auditor’s Report To the Members of Great Western Exploration Limited (Continued) Other Information The directors are responsible for the other information. The other information comprises the information included in the Consolidated Entity’s annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report complies with International Financial Reporting Standards. In preparing the financial report, the directors are responsible for assessing the Consolidated Entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Consolidated Entity or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our responsibility is to express an opinion on the financial report based on our audit. Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: − Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 62 Independent Auditor’s Report To the Members of Great Western Exploration Limited (Continued) − − − − − Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Consolidated Entity’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Consolidated Entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Consolidated Entity to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Consolidated Entity to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Consolidated Entity audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2020. The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with s 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. 63 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 INDEPENDENT AUDITOR’S REPORT GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 64 Independent Auditor’s ReportTo the Members of Great Western ExplorationLimited(Continued)Auditor’s OpinionIn our opinion, the Remuneration Report of the Company, for the year ended 30 June 2020, complies with section 300A of the Corporations Act 2001.BENTLEYSDOUG BELLCAChartered AccountantsPartnerDated at Perth this 10thday of September2020 1. SHAREHOLDER INFORMATION 1.1. VOTING RIGHTS In accordance with the Company’s constitution, on a show of hands every member 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. 1.2. SUBSTANTIAL SHAREHOLDERS (AND ASSOCIATES) AS AT 28 August 2020 Shareholder Seascape Capital Pty LtdBudworth Capital Pty Ltd Westgate Capital Pty Ltd 1.3. DISTRIBUTION OF HOLDERS AS AT 28 August 2020 Number of Holders Distribution is: 1 – 1000 1001 – 5,000 5001 – 10,000 10,001 – 100,000 100,001 – and over 973 shareholders hold less than a marketable parcel. No of Shares 20,011,320 20,000,000 7,033,334 Fully Paid Ordinary Shares 1,736 826 337 140 319 114 1,736 65 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 ADDITIONAL INFORMATION 1.4. TOP TWENTY HOLDERS (a) Ordinary Shares The names of the twenty largest ordinary fully paid shareholders as at 28 August 2020 are as follows: Name Units % Units 1 SEASCAPE CAPITAL PTY LTD 2 BUDWORTH CAPITAL PTY LTD 20,011,320 20,000,000 3 WESTGATE CAPITAL PTY LTD 4 SIMON LEE 5 QUICKSILVER ASSET PTY LTD 6 COVENTINA HOLDINGS PTY LTD 7 MR JORDAN LUCKETT 8 NINAN PTY LTD 9 MRS JANE ELIZABETH SOMES + MS AMY JANE SOMES 10 SUNDEN PTY LTD 11 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 12 ESM LIMITED 13 BT PORTFOLIO SERVICES LIMITED 14 WOODLANDS ASSET MANAGEMENT PTY LTD 15 KCS SUPERANNUATION PTY LTD 16 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 17 CITICORP NOMINEES PTY LIMITED 18 MR IAN KERR 19 BAM NR 1 PTY LTD 20 THIRD REEF PTY LTD Totals: Top 20 holders of ORDINARY SHARE CLASS (Total) Total Remaining Holders Balance 7,033,334 4,166,667 1,895,290 1,894,093 1,864,087 1,794,138 1,491,120 1,408,335 1,183,201 1,151,667 1,113,298 1,113,158 1,098,745 1,085,075 1,075,884 1,050,000 1,022,912 1,007,811 72,460,135 43,737,926 62.36 37.64 17.22 17.21 6.05 3.59 1.63 1.63 1.60 1.54 1.28 1.21 1.02 0.99 0.96 0.96 0.95 0.93 0.93 0.90 0.88 0.87 GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 66 (b) Quoted Options The names of the 21 largest listed option holders as at 28 August 2020 are as follows: Name 1 GAZUMP RESOURCES PTY LTD 2 MRS MEENA MAHANTY KUMAR 3 HOLDREY PTY LTD 4 COVENTINA HOLDINGS PTY LTD Units 568,090 400,437 208,334 174,167 5 DILKARA NOMINEES PTY LTD 166,667 6 ROOKHARP CAPITAL PTY LIMITED 7 F & A PANIZZA SUPERANNUATION PTY LTD 8 ARIS NOMINEES PTY LTD 9 ETA LOGISTICS SOLUTIONS PTY LTD 10 DR KENNETH WILLIAM HEDLEY 11 MRS JANE ELIZABETH SOMES + MS AMY JANE SOMES 12 SUNDEN PTY LTD 13 JL AND RA ROBERTS PTY LTD 14 ESM LIMITED 15 FIRST INVESTMENT PARTNERS PTY LTD 16 MERRITS PTY LTD 17 SORIA NOMINEES PTY LTD 18 MR ZHIFENG CHEN 19 PLOUTOS CAPITAL PTY LTD 20 MRS ZI JUAN QI 21 MRS YAN WANG 166,667 118,334 104,167 104,167 100,000 99,408 93,889 84,813 83,334 83,334 83,334 68,334 66,667 66,667 66,667 66,667 Totals: Top 21 holders of LISTED OPTIONS EXPIRING 30/06/2021 @ $0.60 (Total) 2,974,144 Total Remaining Holders Balance 1,817,645 % Units 11.86 8.36 4.35 3.63 3.48 3.48 2.47 2.17 2.17 2.09 2.07 1.96 1.77 1.74 1.74 1.74 1.43 1.39 1.39 1.39 1.39 62.07 37.93 1.5. LISTED OPTION HOLDERS Number of Holders Distribution is: 1 – 1000 1001 – 5,000 5001 – 10,000 10,001 – 100,000 100,001 – and over 67 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 Listed Option 276 113 68 24 62 9 276 ADDITIONAL INFORMATION 2. SCHEDULE OF MINERAL TENEMENTS Details of Mineral Tenements held by the Company as at 7 September 2020. Tenement Status Holder Ownership Comments Project Fairbairn Fairbairn E 69/3443 E 69/3810 Live Vanguard Exploration Ltd Pending Great Western Exploration Limited Lake Way Potash E 53/1949 Live Great Western Exploration Limited Lake Way Potash E 53/2017 Lake Way Potash E 53/2026 Lake Way Potash E 53/2146 Golden Corridor Golden Corridor E 51/1855 E 53/1713 Golden Corridor E 53/1983 Golden Corridor E 53/2124 Golden Corridor E 53/2138 Golden Corridor E 53/2139 Golden Corridor E 53/2141 Golden Corridor E 53/2142 Yandal West E 53/1369 Yandal West E 53/1612 Yandal West E 53/1816 Yerrida Yerrida Yerrida Yerrida Yerrida Yerrida Yerrida Yerrida Yerrida Yerrida E 51/1727 E51/1732 E51/1733 E51/1734 E 51/1807 E 51/1856 E53/1894 E 53/1917 E 53/2027 E 53/2077 Yerrida North JV E 51/1324 Yerrida North JV E 51/1330 Yerrida North JV E 51/1560 Yerrida North JV E 51/1712 Yerrida North JV E 51/1723 Yerrida North JV E 51/1724 Yerrida North JV E 51/1728 Yerrida North JV E 51/1746 Yerrida North JV E 51/1747 Yerrida North JV E 51/1819 Yerrida North JV E 51/1827 E57/1130 E57/1131 E57/1160 E57/1161 E57/1162 E57/1164 E57/1165 E57/1166 Atley Atley Atley Atley Atley Atley Atley Atley Forrestania South Pending Pending Pending Live Live Live Pending Pending Pending Pending Pending Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Pending Pending Pending Pending Pending Pending Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Vanguard Exploration Ltd Diversified Asset Holdings Pty Ltd Diversified Asset Holdings Pty Ltd Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited Great Western Exploration Limited 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 80% 80% 100% 100% 100% 100% 90% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 10% 100% owned subsidiary Diversified free carried to BFS Diversified free carried to BFS Westex Resources free carried to BFS Sandfire earning 70% Sandfire earning 70% Sandfire earning 70% Sandfire earning 70% Sandfire earning 70% Sandfire earning 70% Sandfire earning 70% Sandfire earning 70% Sandfire earning 70% Sandfire earning 70% Sandfire earning 70% Western Areas Ltd JV - GTE free carried to BFS E74/603 Live Great Western Exploration Limited GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 || 68 69 || GREAT WESTERN EXPLORATION ANNUAL REPORT 2020 TELEPHONE (08) 6311 2852 ADDRESS Level 2, 160 St Georges Terrace Perth WA 6000 Australia GREATWESTERNEXPLORATION.COM.AU