Great Panther Mining
Annual Report 2020

Plain-text annual report

FOR THE YEAR ENDED 31 DECEMBER 2020 CONTENTS CHAIRMAN’S REPORT REVIEW OF OPERATIONS ORE RESERVES AND MINERAL RESOURCES DIRECTORS’ REPORT REMUNERATION REPORT AUDITOR’S INDEPENDENCE DECLARATION INDEPENDENT AUDITOR’S REPORT DIRECTORS’ DECLARATION 1 3 17 19 27 44 45 51 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 52 CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION TENEMENT DETAILS 54 55 56 57 108 112 CORPORATE DIRECTORY Geopacific Resources Limited Public listed Company (ASX Code: GPR) incorporated in New South Wales in 1986 Australian Business Number (ABN) 57 003 208 393 Directors & Secretary in Office Ian Clyne Non-Executive Chairman Non-Executive Chairman Colin Gilligan Ian Murray Non-Executive Chairman Sir Charles Lepani Non-Executive Chairman Matthew Smith Chief Financial Officer & Company Secretary Company Secretary Mike Meintjes Registered Office Level 1 278 Stirling Highway Claremont WA 6010 Auditor Ernst & Young The Ernst & Young Building 11 Mounts Bay Road Perth WA 6000 Share Registry Boardroom Pty Ltd Grosvenor Place Level 12, 225 George Street Sydney NSW 2000 Woodlark Registered Office Level 6, PwC Haus Harbour City, Port Moresby, NCD Papua New Guinea appointed 29 July 2020 appointed 1 February 2021 Postal Address PO Box 439 Claremont WA 6910 Banker ANZ Banking Group Ltd Corner of Hay Street & Outram Street West Perth WA 6005 Stock Exchange ASX Limited Level 4, Central Park 152-158 St Georges Terrace Perth WA 6000 ASX Code: GPR CHAIRMAN’S REPORT 2020 can only be described as a year of challenges, changes and positive progress for Geopacific Resources Limited (Geopacific) and the Woodlark Gold Project. The challenges mostly relate to COVID-19, how it would impact the Woodlark Gold Project and Papua New Guinea (PNG) generally. An early outcome resulted from our withdrawal of Management off Woodlark Island after which we received negative feedback on the quality of the initial phase of the “Community Relocation Program”. Geopacific clearly failed to understand and address local community concerns on several aspects of the program and was at fault. Geopacific accepted full responsibility for all shortcomings and committed to the Community, Regulators and Government to work with all stakeholders to find a positive outcome. Due to COVID-19 travel restrictions, Geopacific was initially unable to send a senior team to Woodlark Island or Port Moresby. In response, we immediately recruited senior PNG based Community Relationship Consultants who travelled frequently to Woodlark Island to co-ordinate an open, frank and productive dialogue with the impacted Communities, Local & Milne Bay Governments, Regulators and National PNG Government. As Chairman I take this opportunity on congratulating the Management Team and our PNG based Consultants who did an outstanding job in resolving this extremely important issue. This program culminated in the execution of a revised Relocation Agreement with the Community, which has been duly registered with the Mining Regulator. The significantly enhanced houses are currently under construction and receiving very positive community feedback. In early June 2020, Mr Ron Heeks resigned as Geopacific’s longstanding Managing Director. The Board continues to acknowledge Mr Heeks positive contributions to Geopacific and the Woodlark Gold Project. As a result of this executive management “change” the Board initiated a full technical review of all aspects of Geopacific’s operations, project development planning, and project execution preparedness. Mr Sim Lau, an experienced Senior Executive with considerable sector expertise was contracted to undertake this in-depth review and add resources as required to ensure accuracy and completeness. Sim worked with the Management Team to develop a detailed, integrated and achievable “Project Execution Update” which was completed in November 2020. In July 2020, we recruited Mr Tim Richards as our new CEO with an October 2020 commencement date. Tim brings with him a wealth of operational experience with 6 years of recent PNG experience. Tim is highly regarded by PNG Regulators and colleagues within the sector in PNG. He understands the importance of working with the local communities, Local and Provincial Governments, Regulators and the National Government. Tim also recognises the capacity and talent of Papua New Guineans generally, and Woodlark Islanders specifically when given the appropriate opportunities and training. 2020 ANNUAL REPORT Tim also led our ongoing engagement within PNG to negotiate the Memorandum of Agreement (MOA) with the local landowners, Provincial Government and National Government at a stakeholder meeting held in Alotau in October 2020. With the support of Sir Charles Lepani, the MOA was agreed and signed at a stakeholder level in 4 days. Geopacific is now ready to build, subject to achieving full funding and the Board views Tim’s performance to date as extremely positive. Sir Charles Lepani one of PNG’s most distinguished former diplomats agreed to join the GPR Board in July 2020. Sir Charles is a Senior Stateman in PNG who has worked with, mentored or supported nearly every senior Papua New Guinean - Parliamentarians, Government Senior Executive, Business or Community Leader. Sir Charles was born in the Trobriand Islands, Milne Bay Province (same Island Group as Woodlark). As Chairman I wish to acknowledge the significant contributions of all the Directors: • Mr Colin Gilligan has worked tirelessly with Tim and the Project Review Team/Management Team, to ensure the accuracy, completeness, and robustness of the Project Execution Update. Colin continues to support Tim and our team with the development and negotiation of all key contracts. • Mr Ian Murray as Chair of the Remuneration Committee lead our very successful CEO Recruitment process and continues to support the Board and Management with the development of competitive short-term and long- term Incentive Packages to ensure we attract, motivate and retain an experienced, capable Management Team committed to delivering a successful build, commissioning and operation of the Woodlark Gold Project. Ian is also Chairman of the Audit and Risk Committee. • Sir Charles Lepani as the sole PNG based Board Member has allowed Geopacific to work extremely closely with PNG Regulators, Government, and Local Communities on Woodlark Island. Sir Charles love of the Milne Bay Province, and PNG has demonstrated to all PNG stakeholders our commitment to delivering the Woodlark Gold Project. Sir Charles leads our commitment to safeguarding the social and environmental needs of the Woodlark Island communities, and developing local employment and business opportunities, technical education, community health improvements and site safety initiatives. 1 CHAIRMAN’S REPORT Throughout 2020 we have been focused on demonstrating to the international debt and equity markets the viability, readiness, and execution capability of Geopacific. The Woodlark Gold Project simply deserves to get funded and built, and continues to hold considerable upside potential through exploration. Following significant demand, the Placement was oversubscribed and Geopacific accepted $140 million of subscriptions. The SPP closed in February and raised a further $1.87 million. From an equity perspective Geopacific is now fully funded, and once debt funding is finalised the Woodlark Gold Project will be “Fully Funded”. In October 2020, Sprott Resource Lending was selected as our preferred Project Financier, and the terms of a US$100 million two-part facility were agreed, subject to final due diligence processes and credit committee approval. Sprott and Geopacific continue to work in good faith to advance the technical and legal due diligence processes and we believe that the funding will be concluded in Q2 2021. Sprott Capital Partners and Petra Capital were appointed Joint Lead Managers in November 2020 to strategise, market raising execute Geopacific’s and requirements. equity Tim Richards, Ian Murray and myself with the support of extremely capable teams from Sprott Capital and Petra Capital initiated an aggressive and comprehensive round of video marketing conferences over several weeks in late November, early December 2020 to Australian and internationally based shareholders and potential investors. Based on extremely positive feedback and conducive market conditions, the Board approved a two-tranche placement (Placement) to raise $130 million from sophisticated and professional investors. This was complemented by a Share Purchase Plan (SPP) which was extended to eligible retail shareholders. To achieve these debt and equity funding outcomes, to analyse and tabulate all the inputs in the Project Execution Plan, run financial models, put together an Online Data- room, negotiate with lawyers and advisors takes enormous time and commitment, and attention to detail. I must sincerely thank our Chief Financial Officer Matt Smith and his team for their exceptional achievements and ongoing efforts. Finally, I would like to sincerely thank all our existing Shareholders for their unwavering support. To date the markets have not recognised the potential of this Woodlark Gold Project both in terms of its base economics and its exploration upside. Tim and his new Team have the knowledge and expertise to build, commission and operate a successful Woodlark Gold Project, they are fully supported by the Board. Geopacific is committed to delivering the Woodlark Gold Project for the benefit of Shareholders and all Stakeholders. Ian Clyne Chairman 2 2020 ANNUAL REPORTREVIEW OF OPERATIONS REVIEW OF OPERATIONS The 2020 financial year was transformative for Geopacific Resources Ltd (Geopacific or the Company; ASX:GPR) which resulted in significant advancements across all key aspects of the business designed to progress the Woodlark Gold Project to a high level of execution readiness by the end of 2020. The formation of a high calibre Senior Management Team, supported by a highly experienced Board now has the Company well placed to deliver the Woodlark Gold Project for the benefit of all stakeholders. 2020 Group Highlights Successful $140 million capital raise A $140 million share placement (Placement) was finalised in February 2021 providing the equity funding component of the development capital required for the Company’s Woodlark Gold Project. A further $1.87 million was raised via a Share Purchase Plan (SPP). Significant Project Funding Milestone Sprott Private Resource Lending II L.P. (Sprott) was selected as preferred financier for the development of the Woodlark Gold Project. The Company is well advanced on a full funding solution. Tim Richards was appointed as Chief Executive Officer (CEO) bringing a wealth of operational experience in Papua New Guinea. Restructured Board and Management Team Sir Charles Lepani was appointed as a Non-executive Director, Sir Charles Lepani is a distinguished diplomat and advisor from the Trobriand Islands, Milne Bay Province in Papua New Guinea. Other key management roles were filled with highly experienced personnel. Woodlark Project Execution Update Delivered A technical review was initiated by the Board and undertaken by highly experienced team culminating in the release of the Project Execution Update1 to the market The Project Execution Update presents a compelling, shovel ready development project with significant economic enhancements over the November 2018 Definitive Feasibility Study (2018 DFS) 2 across key metrics including project payback, net present value (NPV) and internal rate of return (IRR). Advanced Detailed Engineering Design GR Engineering Services (GRES) continued to advance the process plant front end engineering design (FEED), which was over 20% complete by year end. Selection of Preferred Key Contractors Preferred suppliers were selected and the terms of all key contracts are being negotiated. Communities Relocation Program Community concerns relating to the relocation housing were addressed in September 2020 quarter following upgrades to house designs and execution of a revised relocation agreement The Memorandum of Agreement (MoA) was agreed at stakeholder level in the December 2020 quarter, pending ratification of the Papua New Guinea (PNG) National Executive Council. Key Project Permits in place The Woodlark Mining Lease is in place and valid until 2034. An application for extension of the construction and commissioning deadline was submitted in the September 2020 quarter and is pending approval. The environment permit is in place including approval for the Deep Sea Tailing Placement (DSTP). 1 Refer to the ASX announcement on 30 November 2020. All material assumptions underpinning the production target and forecast financial information continue to apply and have not changed materially. 2 Refer to the ASX announcement on 7 November 2018. 3 2020 ANNUAL REPORT REVIEW OF OPERATIONS CORPORATE Project Funding - $140 million Placement and SPP Formation of High Calibre Senior Management Team In December 2020, the Company announced a successful $140 million Placement which was finalised in February 2021. The Placement was strongly supported by existing institutional shareholders and was complemented by significant demand from new major domestic and international investors. The Placement was cornerstoned by two of Geopacific’s substantial shareholders, Tembo and DELPHI, and several leading domestic and international institutions. In addition, there was strong support from Sprott Resource Lending and its affiliates, along with members of the Geopacific Board and Management. This transformational capital raising will provide the equity funding component of the development capital required for the Company’s Woodlark Gold Project. The Placement consisted of two tranches at an Issue Price of $0.42 per share which comprised the issue of 333.3 million shares: • Tranche 1: 43.7 million shares issued in December 2020 to raise $18.4 million pursuant to the Company’s placement capacity under Listing Rule 7.1 and Listing Rule 7.1A; and • Tranche 2: 289.6 million shares issued in February 2021 to raise $121.6 million. Tranche 2 of the Placement was subject to shareholder approval under Listing Rules 7.1 and 10.11 which was obtained in February 2021 at an Extraordinary General Meeting of the Company. The Company also extended an SPP offer to existing eligible shareholders to acquire up to $30,000 worth of Geopacific shares at $0.42 per share, the same price as the Placement, with a cap of $10 million. The SPP Offer closed on 10 February 2021 and raised a further $1.87 million (4,461,821 Shares). Sprott Selected as preferred financier In October 2020, Geopacific announced the selection of Sprott as its preferred financier for the development of the Woodlark Gold Project. The Company entered into a period of exclusivity with Sprott Resource Lending to finalise a US$85 million Project Finance Facility and a US$15 million Callable Gold Stream for development of the Woodlark Gold Project. The Project Finance Facility and the Gold Stream remain subject to usual conditions including Sprott committee approval and final documentation (among other things). Sprott has been in discussions with the Company to fund the development of the Woodlark Project since 2018. This exclusivity arrangement with Sprott follows the positive results of extensive technical due diligence on the Woodlark Gold Project by Sprott and its advisors. Sprott’s ongoing commitment to the Woodlark Gold Project provides strong validation of robust project economics that have been further enhanced by the strong gold price. During the year, the Board and new CEO Mr Tim Richards assembled a highly experienced Senior Management Team with the capacity to deliver the Woodlark Gold Project. In hiring key positions, emphasis was placed not only on industry experience and technical skills but also experience working in PNG. The following positions were filled during the year. Tim Richards - Chief Executive Officer During October 2020, Tim Richards commenced his role with Geopacific as CEO. Mr Richards is a mining engineer with broad experience in open pit mining ranging from scoping and feasibility studies, site technical services, through to operations and mine management. Mr Richards has extensive mining experience both in Australia and in the expatriate environment across PNG, Europe, Africa, and the Caucasus. Mr Richards was most recently General Manager Technical Services of St Barbara Limited (St Barbara) and was General Manager Simberi Operations in PNG from 2013 to 2019 for St Barbara Limited. During this period, Mr Richards was instrumental in the turnaround of the Simberi Gold Mine, delivering five record years of gold production and cashflow performance. Mr Richards replaced Mr Ron Heeks who stepped down from his role as Managing Director & CEO in June 2020. Sir Charles Lepani - Non-Executive Director During July 2020, the Company appointed Sir Charles Lepani, KBE, CBE, OBE, PHD (Hon) as a Non-Executive Director. Sir Charles Lepani was born in the Trobriand Islands, Milne Bay Province in PNG. Sir Charles Lepani has over 40 years’ experience in both the public and private sectors representing PNG as a Senior Diplomat and Advisor with great success and distinction. His most recent roles were High Commissioner of PNG in Australia 2005-2017, and Director General of PNG APEC 2017-2018. Sir Charles Lepani bought to the team a substantial degree of insight, understanding and expertise in the following areas: • PNG Policy formulation, especially in the Mining & Petroleum Sectors; • PNG Diplomatic and International Relations; • Bi-lateral and Multilateral Development Assistance; • Debt and Equity Capital Markets; and • Papua New Guinea small and medium enterprise, domestic and international supply chains. Sir Charles Lepani has been an advisor and consultant to successive PNG National Government Departments, including the Prime Minister’s Department, Treasury, Finance, and the Law and Justice Sector. 4 2020 ANNUAL REPORTREVIEW OF OPERATIONS He has also worked alongside United Nations Development Programme, United Nations Centre for Transnational Corporations and Asian Development Bank. He is a graduate of the University of Papua New Guinea with an Arts Degree (Economics), and a Fulbright Scholarship recipient attending the John F Kennedy School of Government at Harvard University, in Boston, United States of America and graduating with a Masters of Public Administration. Susan Scheepers - General Manager People and Performance During the year Susan Scheepers was appointed as General Manager People and Performance. Mrs Scheepers is an accomplished, team orientated Human Resource professional, providing strong leadership in a wide range of human resource initiatives. She has extensive resources industry experience with over 17 years’ experience with major resource companies in site, corporate and offshore roles. Mrs Scheepers holds a Master of Business Administration and a Bachelor of Business Administration in Human Resources, she is also a qualified High School Teacher. Prior to joining Geopacific, Mrs Scheepers was the Group Human Resources Manager for St Barbara. During her time with St Barbara she assisted with the turn-around of the Simberi Gold Mine and implemented the Gender Smart Safety Project. She is passionate about people development and has established a team in PNG to upskill the local workforce and community members. Graeme Rapley - Project Director During February 2021, Graeme Rapley was appointed as Project Director for the Woodlark Gold Project. Mr Rapley is a Civil Engineer with over 20 years’ experience in Construction and Project Manager level roles. Previous roles include Project Director for Centerra Gold at the Oksut Project in Turkey, Project Manager for True Gold at the Karma Mine in Burkina Faso, Project Manager for the Sadiola Hill Mine in Mali and Project Manager for the Tongon Gold Mine in Cote d’Ivoire. Key Management Positions To ensure a smooth transition into the construction phase of the Woodlark Gold Project, the Company undertook a recruitment campaign to fill key positions. The team assembled have already commenced, with a number already located on site. Positions filled include the following. Table 1: Senior Management Positions Filled During the Year Position Responsibilities Manager Mining Manager Construction Manager Environment and Community Responsible for the bulk earthworks and all mining, mobile equipment maintenance and technical services. Responsible for all engineering, plant and infrastructure construction as well as maintenance areas other than mobile equipment maintenance. Responsible for all site responsibilities in relation to Environment and Community. Manager Contracts and Procurement Responsibility for development and management of all Owner’s contracts and procurement packages for construction and operations. Manager Project Controls Responsible for the overall project program cost, schedule management, forecasting and reporting. 5 2020 ANNUAL REPORTREVIEW OF OPERATIONS WOODLARK ISLAND, PNG Background – Woodlark Gold Project Geopacifi c and its controlled entities (the Group or Consolidated entity) is focused on developing and expanding the 1.6Moz Woodlark Gold Project3. The project is situated in the ‘pacifi c ring of fi re’ and surrounded by world-class gold mines. Two neighbouring mines, also located on islands, are Newcrest Mining Limited’s Lihir containing 66 million ounces of gold and St Barbara Limited’s Simberi containing 6 million ounces. The 100% owned Woodlark Gold Project is located on Woodlark Island in the Milne Bay Province of PNG. In November 2020, the Company released a comprehensive Project Execution Update4, marking a signifi cant step forward in the development of the Woodlark Gold Project. The document was the culmination of a multifaceted work program which compiled information from all functional disciplines associated with the construction and operation of the Woodlark Gold Project. 3 For details relating to the Mineral Resource, refer to page 17 and PFS announcement released on 12 March 2018. 4 Refer to ASX announcement on 30 November 2020 titled ‘Project Execution Update”. 6 2020 ANNUAL REPORT REVIEW OF OPERATIONS Project Execution Update A key part of the Project Execution Update was the revalidation of the 2018 DFS5 to ensure that project execution strategies aligned with prevailing market conditions. The Project Execution Update incorporated updated operating assumptions resulting from a review of the resource model, mine plan, mine contracting strategies and mine pit optimisation and schedules. Amendments to the project timeline were also incorporated to reflect delays caused by the COVID-19 pandemic. The Project Execution Update identified significant economic enhancements over the 2018 DFS with improvements across key metrics including project payback, NPV and IRR. Table 2: Financial Metrics Comparison6 Financial Metrics - Post-tax Unit 2018 DFS Free Cashflow (post-tax) NPV @ 8% IRR Project Paybackt A$ Million (M) A$ Million (M) % Years 344 197 29% 2.2 Execution Update 575 347 34% 1.8 Variance 231 67% 150 76% 5% 18% 0.4 18% Project Execution Strategy The project execution strategy was reviewed by the Company during 2019 and 2020 taking into consideration the project schedule, the Company’s capability to manage and mitigate the construction and operational risks and the overall allocation of risk across the project. An Engineering Procurement and Construct (EPC) contract model was identified as the preferred approach for the design, supply and construction of the process plant and associated facilities, whilst the design, supply and construction of the infrastructure facilities will be managed by the Owner’s team. To mitigate the risk of building and developing a mining operations team, a mining execution strategy was developed that utilises a contract miner to carry out load and haul activities during the pre-strip period and for the first three years of operation, before transitioning to owner operating for the remainder of the mine life. A similar contracting approach has been adopted for the drilling works associated with grade control, blasting and exploration, with Woodlark Gold Project personnel limited to technical services and oversight. 5 Refer to ASX announcement on 7 November 2018 titled “Woodlark DFS confirms high margin development project”. 6 The 2018 DFS was based on a gold price of $1,650/oz and the Project Execution Update was based on a gold price of $2,200/oz. 7 2020 ANNUAL REPORTREVIEW OF OPERATIONS Project Execution Update Findings In November 2020, the Company released the Project Execution Update which demonstrated that the Woodlark Gold Project represents a compelling, shovel ready development project with an experienced Board and Management Team capable of delivering the Woodlark Gold Project for the benefit of all stakeholders. The Project Execution Update was based on a robust financial model underpinned by costs provided by reputable and experienced contractors. Table 3: Execution Update Highlights KEY WOODLARK GOLD PROJECT METRICS High Margin Rapid Project Payback Average All-in Sustaining Costs (AISC) of $1,239/oz (US$904/oz) providing 43% margin at $2,200/oz (US$1,606/oz). Near surface mineralisation and low strip ratio in the early production years to facilitate strong up-front cashflow profile resulting in a rapid post-tax project payback period of 1.8 years. +1 Moz of gold in Ore Reserves +1 million ounce mine plan underpinned by Measured and Indicated Ore Reserves. +10 Year Project Current Ore Reserves provides 13 years of process plant feed – while the project remains heavily leveraged to further exploration success across the under explored substantial and highly prospective tenement package. Simple Mining and Process Route Conventional open pit mining of near surface mineralisation and proven industry Shovel Ready standard 2.4 Mtpa carbon in leach (CIL) gold process plant. Geopacific is poised to develop, with all key project permits in place, preferred project financier selected, community commitment acknowledged and execution readiness beyond industry norms. The updated capital cost estimate of A$254.8 million7 (US$186 million) is reflective of the advanced stage of execution readiness and Geopacific’s increased commitment to support community development which is imperative to the success of the Woodlark Gold Project. Untapped Exploration Potential Three phase exploration strategy developed to target high value opportunities. Economics highly leveraged to further exploration success. 7 Establishment capital estimate completed to a -2%/+8% level of accuracy. 8 2020 ANNUAL REPORTREVIEW OF OPERATIONS Project Execution Update - Key Information Summary The key production metrics, financial model inputs and Woodlark Gold Project economic outputs associated with the Project Execution Update are summarised below. Table 4: Key information summary Unit (x) (kt) (kt) (g/t Au) (koz Au) (kt) (g/t Au) (%) (koz Au) Unit /oz Au A$ : US$ /t mined /t processed /t processed Million (M) Million (M) Million (M) Million (M) Million (M) /oz Au /oz Au /oz Au /oz Au /oz Au /oz Au /oz Au /oz Au /oz Au OPERATIONAL PHYSICALS Strip Ratio Total Material Mined Ore Mined Grade Mined Contained Gold Ore Processed Grade Recovery Gold Produced KEY INPUTS Gold Price Foreign Exchange Mining Cost Processing Cost General & Admin Cost CASHFLOW* Cashflow from Operations (inc. pre-strip) Less: Capital Expenditure (excl. pre-strip) Free Cashflow (Pre-tax) Less: income Tax (at 30%) Free Cashflow (Post-tax) * Represents 100% of the Woodlark Gold Project UNIT COSTS - C1 & AISC Mining Processing G&A Refining Costs Total C1 Costs Royalties (at 2.5%) Sustaining Capital Corporate Overheads Total AISC FINANCIAL METRICS - POST-TAX** NPV @ 8% IRR Project Payback (Years) ** Represents 100% of the Woodlark Gold Project Life of Mine 4.1 156,694 30,848 1.11 1,099 30,848 1.11 89.2% 980 US$ 1,606 1.37 2.14 9.93 5.23 US$ 727 (196) 530 (111) 420 US$ 325 312 164 5 807 40 28 29 904 US$ M 253 34% 1.8 A$ 2,200 0.73 2.94 13.60 7.16 A$ 995 (269) 727 (152) 575 A$ 446 428 225 7 1,106 55 38 40 1,239 A$ M 347 34% 1.8 9 2020 ANNUAL REPORTREVIEW OF OPERATIONS Table 5: Key Milestones from Preliminary Project Execution Schedule Key Indicative Milestones Date Commence construction of process plant and infrastructure June 2021 Quarter Commence mine pre-strip and haul road construction December 2021 Quarter Power plant complete and permanent power supply available June 2022 Quarter Complete DSTP facilities Commence commissioning and plant start up Commence fi rst gold production September 2022 Quarter September 2022 Quarter End December 2022 Quarter Implementation of Project Cost Control System A project cost control system for managing and reporting against the construction budget was selected and implemented during the year. The selected software, CMS – Construction Management System supplied by GTS Software Pty Ltd is an industry recognised software with the primary function of providing accurate cost forecast and project progress to project cost control and management decision making. Integrated Project Management Schedule To ensure that Geopacifi c successfully achieves the key milestones required to move the Woodlark Gold Project into production, alignment throughout the organisation is crucial. In order to maintain a disciplined approach to project execution, an Integrated Project Management Schedule (IPMS) was developed during the year. The IPMS is an invaluable tool in guiding the focus and efforts of the project execution team and the wider organisation. The Company has a clear line of sight on critical path activities that impact key milestones required to commence targeted fi rst gold production at end of December 2022 quarter. A high-level indicative schedule outlining key project milestones was prepared during the year. It is based on the assumption that the COVID-19 border closures and travel restrictions in place at 31 December 2020 remain unchanged. Any adverse change to the restriction in Papua New Guinea and/or Australia may impact this indicative schedule. Front End Engineering Design (FEED) In 2019, following a rigorous evaluation process a conditional letter of intent was issued to GRES for the construction of the Woodlark Gold Project’s 2.4 Mtpa CIL process plant. During 2020, GRES progressed the FEED, fi nalising the plant layout and continuing progress on the process plant model, producing process fl ow diagrams, piping and instrumentation diagrams and fi nalising the process design criteria. By the end of the year, GRES had completed 20% of the process plant engineering design. Figure 1: Elution and Gold Room Area 2020 ANNUAL REPORT 10 REVIEW OF OPERATIONS During the March 2020 quarter, geotechnical test work was completed at the Woodlark Gold Project indicating that ground improvement work would be required prior to the commencement of plant site construction. Data gathered from the geotechnical drilling program was used in a ground improvement study which was completed by internationally recognised Knight Piésold and formed the basis of a comprehensive ground improvement solution developed in conjunction with GRES. Development of a contract and procurement plan and strategy A project contracting strategy was developed during the year aligning with the IPMS to ensure that the Company was well placed to engage third party services providers as and when the project required. The following contracts are currently in place in relation to the Woodlark Gold Project. A project procurement strategy was also developed during the year to identify long lead critical path items, while GRES commenced procurement of vendor data to progress design of the process plant. Work Scope FEED design Bulk Earthworks Ground Improvement Design Wharf Design Table 6: Contracts Awarded Contract Awarded GRES HBS Machinery (HBS) Knight Piésold Madsen Giersing Table 7: Preferred Suppliers selected Work Scope Preferred Supplier Award Date* Woodlark Power Station Contract Power Australia Pty Ltd June 2021 Quarter Engineering, Procurement and Construction (EPC) GRES June 2021 Quarter Mining Services (load and haul activities during the pre-strip period and for the first three years of operation) HBS June 2021 Quarter Drilling Services (grade control, blasting and exploration) Permanent Camp *Estimated award dates Quest Exploration Drilling June 2021 Quarter Pacific Rim Constructors Limited March 2021 Quarter Woodlark Gold Project Site Works COVID-19 As 2020 commenced, two major contractors were executing work programs on site. HBS was on site building and repairing road infrastructure and undertaking bulk earthworks operations at the plant site in preparation for the process plant build, while Rhodes (PNG) Limited (Rhodes) was onsite overseeing a local team to build the necessary housing and infrastructure required to enable the relocation of the existing communities. Late in the March 2020 quarter, the COVID-19 pandemic forced the Company to implement a COVID-19 management plan. The management plan was designed to ensure the health and safety of all Geopacific staff and contractors as well mitigate the risk of COVID-19 being introduced to Woodlark Island. As part of the management plan, earthworks were temporarily put on hold and a notice of suspension was issued to HBS. All HBS staff were repatriated from Woodlark Island to ensure a safe passage to their point of hire. In late September 2020, HBS was able to remobilise personnel and equipment to the island and continue executing their work program, albeit with all incoming staff and contractors subject to strict COVID-19 safety protocols. The Woodlark Island community relocation program continued throughout the year with Rhodes personnel who were on Woodlark Island prior to the COVID-19 outbreak, supported by labour from the local Woodlark Island community. The Board and Senior Management Team continues to monitor the COVID-19 pandemic so that it can respond in the best interests of the various stakeholders associated with the project. 11 2020 ANNUAL REPORTREVIEW OF OPERATIONS Communities Relocation Program – Woodlark An important aspect of the Woodlark Gold Project is the relocation of the Kulumadau community. This small community is the most culturally diverse on Woodlark Island as it consists of the relatives of the previous mine workers who moved to the area in the late 1800’s to mine the small underground operation located at Kulumadau. Construction of the relocation houses commenced in the March 2020 quarter with the materials for the houses shipped in bulk via barge from Lae. Bulk shipping as a logistical solution is both simple and cost effective and is a significant advantage for island-based projects in contrast to operations in the highlands. Use of local labour was prioritised not only to ensure that the primary stakeholders in the project receive tangible benefits, but to promote “ownership” of the build process and resultant dwellings, with upskilling of the local community developing skills locally which will allow the community to maintain and expand houses in the future. In June 2020, Geopacific undertook a comprehensive review of the Woodlark Island communities relocation program. Whilst extensive community consultation had been undertaken over a period of approximately ten years, a number of community concerns were raised once construction commenced which were primarily focussed on the design of the smaller dwellings. Following community feedback and after extensive consultation with all stakeholders, the house designs were revised. The fundamental change was that the minimum house size was increased to three bedrooms, while other modifications included elevating all houses to allow for future expansion and the addition of a separate cook house for each dwelling. Upon review by all stakeholders, including the community, regulator and government officials the substantially improved relocation package was approved and ratified as a registered relocation agreement under the auspices of the Mineral Resources Authority formalised (MRA). Registration of these documents Figure 2: Three room deluxe house community acceptance and allowed the relocation program to move forward with Government support. Construction of the redesigned houses commenced in late September 2020 following a period of extensive social and community engagement completed by a specialist consultant and the on-site Community Affairs team and by the end of December 2020 construction had fully re- commenced on the houses and community facilities. Pre-Construction Works By the end of December 2020, approximately 60% of the plant site area had been cleared. The clearing allowed Knight Piésold to complete a geotechnical drilling program which was used to facilitate the design of the foundations of the 2.4 Mtpa gold process plant. Land clearing activities in preparation for the construction of community relocation houses continued in 2020. At the end of December 2020, 131 housing sites had been cleared. In addition to the house clearing, ground preparation works were completed at the new community school site and on the community church site. Figure 3: Plant site Land Clearing 12 2020 ANNUAL REPORTREVIEW OF OPERATIONS Figure 4: Construction of Road Infrastructure The construction of new roads, repair of existing roads, and construction of a wharf causeway continued during the year. The wharf road is being constructed to considerably shorten the distance from the new wharf location to the plant site. Investment in this new road infrastructure will reduce the disturbance to the local residents and will leave the existing wharf available for community use. By the end of the year over 6.2 kilometres of road clearing had been completed. A key focus during the year was the development and implementation of a new health and safety management system which included: • Board endorsement of an updated Health and Safety Policy; • Roll out of a new site induction and Health and Safety training program; • Appointment of a Health and Safety Manager (commencing in April 2021); and Occupational Health and Safety • Appointment of a Senior Site Safety Officer (commenced it the Woodlark Gold Project advances towards As construction, is crucial that safety management processes and procedures on site appropriately reflect the level and type of activity on site that the next phase of the Woodlark Gold Project will bring. in January 2021). Figure 5 and 6: Community Health and Safety Programs 13 2020 ANNUAL REPORTREVIEW OF OPERATIONS Woodlark Gold Project Permits Memorandum of Agreement (MoA) In October 2020, an updated MoA was initialled by the Woodlark Gold Project area landowners, the National, Provincial and Local Level Governments and Woodlark Mining Limited. The MoA is designed to define the distribution of project royalties once production commences, and outlines the commitments of all stakeholders to ensure that the economic benefits flow to the people of Woodlark Island and the broader region, including employment and business opportunities and appropriate management of environmental and social impacts. Figure 7: CEO Tim Richards meets with stakeholder leaders to agree the Memorandum of Agreement - October 2020 Mining License Environmental Permit The Woodlark Gold Project is well advanced from a permitting perspective, with mining permits in place. In August 2020, an application was submitted to the MRA seeking an extension to Condition 7 of the Woodlark Mining Lease which specified that construction and commissioning must be completed by January 2021 and construction and commissioning of the process plant by July 2022. The extension was sought as a result of the uncertainties caused by COVID-19 and related travel and supply restrictions the development schedule Management are confident that the requirements. extension will be approved in a reasonable time frame. to extend Environmental approval for the Woodlark Gold Project was granted in 2014 with a validity of 20 years. Geopacific has developed strong working relationships with Papua New Guinea Authorities, which continue to express their support for the development of the Woodlark Gold Project. in the Environment Permit Geopacific submitted an application to amend a number of conditions including improvements made in relation to reduced land clearing requirements and water management strategies. These amendments were approved and the amended Environment Permit was issued in May 2020. 14 2020 ANNUAL REPORTREVIEW OF OPERATIONS Figure 8: Geopacific Enjoys and Active and Strong Relationship with the Local Community Community Relations Extensive and ongoing community engagement has taken place over a number of years to ensure familiarity and understanding of potential impacts and benefits of the Woodlark Gold Project on the local community. Geopacific enjoys an active and strong relationship with the communities living on Woodlark Island and is committed to maximising local training and employment as well as local business development. An extensive survey commenced in the June 2021 quarter to provide valuable information around the existing skill set and potential of the local workforce, while specialist Papua New Guinea based consultants have been engaged to assist and provide training to local landowners in relation to business establishment, management and governance. OTHER PROJECT ACTIVITIES Kou Sa Project, Cambodia In January 2015, the Company’s subsidiary, Royal Australia Resources Ltd, entered into an agreement to acquire 100% of the issued capital of Golden Resource Development Co Ltd (the Kou Sa Project) for US$14 million. US$7.7 million of the acquisition price was paid as required under the agreement. An amendment to the original agreement was executed in September 2016 which revised the acquisition payment schedule for the remaining US$6.3 million.  The amendment resulted in the remaining acquisition payments being due for payment as follows: • US$1.575 million due at completion of a bankable feasibility study for the Kou Sa Project, or by 21 September 2019, whichever is earlier; and • US$4.725 million to be paid in equal instalments over three years following payment of the above US$1.575 million. The Group have been in negotiation with the vendors of the Kou Sa Project during 2019 and 2020 to restructure the deferred consideration payments. No mutually satisfactory resolution could be agreed and a termination notice was subsequently received from the vendors in December 2020. On receipt of the termination notice, management concluded that it no longer controlled the Kou Sa Project assets and they were, therefore, derecognised. On that basis, the related deferred consideration payable was also treated as extinguished. As a result, the Group has reflected the derecognition of the Kou Sa project assets and related deferred consideration liability in the reporting period ended 31 December 2020 which resulted in a gain on derecognition of $1,884,834, as detailed in Note 6. This gain included recognising a final settlement of US$0.5 million payable to the vendors under the termination provisions of the original agreement to acquire the Kou Sa project. Fijian Gold and Copper Projects, Fiji All licences associated with the exploration projects in Fiji have been relinquished and the Group commenced a process of recovering the bonds associated with the exploraion licences. The office in Fiji has been closed and Geopacific is investigating options to wind up the Fijian entities. 15 2020 ANNUAL REPORTREVIEW OF OPERATIONS Financial Review The Group recorded a net loss after tax for the year ended 31 December 2020 of $4,567,311 (2019: 7,337,714). This included $208,345 (2019: $1,501,751) of exploration costs that were expensed for the period. At 31 December 2020, the Group’s total assets were $85,690,886 (2019: $80,518,692) and net assets were $78,500,958 (2019: $70,478,375). The increase in the Group’s total assets and net assets relates to expenditure on mine property development during the the 2020 year. Loss After Tax Loss Per Share (Cents)1 Table 8: Key Financial Metrics 2016 $ 2017 $ 2018 $ 2019 $ 2020 $ (4,144,977) (4,042,911) (53,750,659) (7,337,714) (4,567,311) (0.45) (0.27) (2.49) (6.43) (2.59) Cash and Cash Equivalents 11,469,015 6,765,343 3,059,221 37,505,067 34,639,855 Exploration and Evaluation Asset - Additions (excluding transfer) Mine Properties Under Development Expenditure - Additions (excluding transfer) 12,140,869 15,219,583 8,447,600 442,022 65,098 - - - 860,265 11,697,347 Total Assets Net Assets 64,554,032 80,720,300 42,103,633 80,518,692 85,690,886 57,717,361 73,334,855 34,685,715 70,478,375 78,500,958 1 Earnings per share from 2016 to 2018 have not been adjusted to reflect the 25:1 share consolidation conducted in December 2019. 16 2020 ANNUAL REPORT REVIEW OF OPERATIONS ORE RESERVES AND MINERAL RESOURCES Woodlark Global Mineral Resources Woodlark Ore Reserves The Woodlark Mineral Resource is 47Mt @ 1.04g/t Au for 1.57Moz of gold8 including 222,000oz of gold in the Inferred category (Table 9). An updated Ore Reserves estimate was released in November 2018 and was completed by independent consultants, Mining Plus. The updated Ore Reserves estimate of 28.9Mt @ 1.12g/t Au for 1,037,600oz9 of gold is detailed in Table 10. Table 9: Woodlark Global Mineral Resource Estimate – March 2018 Category (>0.4g/t lower cut) Measured Indicated Inferred Total Total by deposit Busai Kulumadau Woodlark King Total Ore Reserve Tonnes (Mt) 21.24 18.94 6.80 47.00 Grade (g/t Au) 1.10 0.98 1.00 1.04 Table 10: Woodlark Ore Reserves Estimate – November 2018 Category (>0.4g/t lower cut) Tonnes (Mt) Grade (g/t Au) Proven Probable Proven Probable Proven Probable Proven Probable Total 9.3 4.3 7.4 5.2 1.9 0.8 18.6 10.4 28.9 1.03 0.87 1.37 1.17 1.06 0.84 1.17 1.02 1.12 Ounces (Koz) 754 597 222 1,573 Ounces (oz) 307,300 120,900 324,700 196,900 65,000 22,800 697,000 340,600 1,037,600 8 Refer to March 2018 Pre-feasibility Study – ‘Robust Woodlark Gold project PFS Supports Development.’ 9 Refer to ‘Woodlark Ore Reserve Update’ announced on 7 November 2018. 17 2020 ANNUAL REPORTREVIEW OF OPERATIONS Competent Person’s Statement Forward Looking Statements All statements other than statements of historical fact included in this announcement including, without limitation, statements regarding future plans and objectives of Geopacific are forward-looking statements. When used in this announcement, forward-looking statements can be identified by words such as ‘may’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’ or ‘intends’ and other similar words that involve risks and uncertainties. These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this announcement, are expected to take place. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the company, its directors and management of Geopacific that could cause Geopacific’s actual results to differ materially from the results expressed or anticipated in these statements. Geopacific cannot and does not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this announcement will actually occur and investors are cautioned not to place undue reliance on these forward- looking statements. Geopacific does not undertake to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this announcement, except where required by applicable law and stock exchange listing requirements. The Woodlark Gold Project is permitted by the Papua New Guinea Government, subject to meeting the conditions of the licence. The information in this announcement that relates to the Woodlark Mineral Resources is based on information compiled and reviewed by Mr Nicholas Johnson, a Competent Person who is a Member of the Australian Institute of Geoscientists and a full-time employee of MPR Geological Consultants Pty Ltd. Mr Johnson has sufficient experience which is relevant to the style of mineralization and type of deposits under consideration and to the activity which he has undertaken to qualify as a Competent Person as defined in the JORC Code 2012 and is a qualified person for the purposes of NI43-101. Mr Johnson has no economic, financial or pecuniary interest in the company and consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. The information in this announcement that relates to the Woodlark Ore Reserves is based on information compiled and reviewed by Mr John Battista, a Competent Person who is a Member and Chartered Professional of the Australian Institute of Mining and Metallurgy (AusIMM) and a full-time employee of Mining Plus Pty Ltd. Mr Battista has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which he has undertaken to qualify as a Competent Person as defined in the JORC Code 2012 and is a qualified person for the purposes of NI43-101. Mr Battista has no economic, financial or pecuniary interest in the company and consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. In relation to the Mineral Resources and Ore Reserves, the Company confirms that all material assumptions and technical parameters that underpin the ASX announcements made on 12 March 2018 (‘Robust Woodlark Gold project PFS Supports Development) and 7 November 2018 (‘Woodlark Ore Reserve Update) (Historical Announcements) continue to apply and have not materially changed. The Ore Reserves estimate underpinning the production targets in this announcement is based on information compiled and reviewed by Mr Battista who is a Competent Person in accordance with the JORC Code 2012. Where the Company refers to the Mineral Resources and Ore Reserves in this report (referencing the Historical Announcements), it confirms that it is not aware of any new information or data that materially affects the information included in the Historical Announcements and all material assumptions and technical parameters underpinning the Mineral Resources estimate and Ore Reserves estimate in those announcements continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Persons findings are presented have not materially changed from the Historical Announcements. All information relating to the Mineral Resources and Ore Reserves were prepared and disclosed under the JORC Code 2012. 18 2020 ANNUAL REPORTDIRECTORS’ REPORT DIRECTORS’ REPORT The Directors present their report together with the financial report of the Geopacific Group, being Geopacific Resources Limited (Geopacific or the Company) and its controlled entities (the Group or consolidated entity) for the financial year ended 31 December 2020, and the auditor’s report thereon. 1. DIRECTORS AND COMPANY SECRETARY The names of the Company’s Directors and Company Secretary in office during the financial year and until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated. Name, Position Held & Qualification Experience, Special Responsibilities & Other Directorships Ian Clyne Non-Executive Chairman Assumed Role: 8 May 2019 Non-Executive Director Appointed: 6 October 2016 B. Bus (Management) Mr Clyne has over 35 years’ experience in international banking having worked in senior executive positions in ten countries in Asia, Oceania, Australia and Europe. He has specialised in emerging markets and has held roles of President, Director, Managing Director and Chief Executive Officer with universal banking operations that have extensive branch networks and large employee bases. Mr Clyne has successfully re-engineered banks in Indonesia, Italy, Poland and Papua New Guinea. Mr Clyne held the role of Managing Director and Group CEO of Bank South Pacific (BSP), based in Port Moresby (2008 – 2013). He undertook a major transformation program changing BSP from a typical emerging economy banking institution into an innovative, technology driven, modern bank. Under his leadership, the bank grew from having 400,000 accounts to over 1 million in Papua New Guinea and 1.5 million across the Pacific, including Fiji and the Solomon Islands, with a market capitalisation of $1.7 billion at the end of his term. Mr Clyne is also a member of the Audit and Risk Committee and the Remuneration and Nomination Committee. Mr Clyne is currently a Non-Executive Director of Union Bank of Nigeria. Mr Clyne has not held any other directorships in the past three years. Mr Clyne has the following interest in shares in the Company as at the date of this report – 925,568 ordinary shares. 19 2020 ANNUAL REPORTDIRECTORS’ REPORT Name, Position Held & Qualification Experience, Special Responsibilities & Other Directorships Colin Gilligan Non-Executive Director Appointed: 26 June 2018 B. Sc Engineering (Mining) Hons National Diploma - Coal Mining Mr Gilligan is a mining engineer with over 25 years’ experience in the resources sector, in Australia, South Africa, North America and Asia. He has held technical, executive and director roles with a number of companies throughout his career including Mitsui, Thiess, Anglo, Coalspur Mines and Resource Generation. During his career Mr Gilligan has provided leadership to a number of operations, EPC contracts, mining contracts and development projects across a range of commodities. He has also successfully contributed to raising development funding in various forms. Mr Gilligan brings a successful background in organisational leadership, project development and delivery, predominantly achieved through a focus on people, culture and optimal efficiency. Mr Gilligan also contributes significant board level experience at private and public company level, particularly on technical matters, governance, funding, risk management, strategy and leadership. Mr Gilligan is a member of the Audit and Risk Committee. Mr Gilligan is currently an Independent Non-Executive Director at Resource Generation Limited. Mr Gilligan has not held any other directorships for the past three years. Mr Gilligan has the following interest in shares in the Company as at the date of this report – 119,048 ordinary shares. 20 2020 ANNUAL REPORTDIRECTORS’ REPORT Name, Position Held & Qualification Experience, Special Responsibilities & Other Directorships Ian Murray Non-Executive Director Appointed: 9 September 2019 B. Com Graduate Diploma in Accounting (GDA) Advanced Taxation Certificate Member of the Australian Institute of Company Directors (MAICD) Mr Murray is a Chartered Accountant with over 25 years’ of mining experience in senior leadership positions, including the position of Chairman then Managing Director of Gold Road Resources Limited (Gold Road) and Chief Financial Officer then Managing Director of DRDGold Ltd. He has also held executive positions with international Big Four accounting firms. Mr Murray brings a wealth of financial, corporate, project development and operational experience to the Board. Most recently he held the role of Managing Director of Gold Road and was instrumental in taking the Gruyere Project from an exploration play through to a fully funded 8.2mtpa gold operation that is set to produce 300koz per annum in joint venture with Gold Fields Ltd. Oxford Advanced Management & Leadership Programme (OAMLP) Mr Murray is the Chairman of the Audit and Risk Committee and the Remuneration and Nomination Committee. Fellow of the Australia & New Zealand Institute of Chartered Accountants (FCA) Mr Murray is currently an Independent Non-Executive Director at Black Rock Mining Ltd and Todd River Resources Ltd, Executive Chairman of Matador Mining Ltd, as well as a Non-Executive Director of non-for-profit Miners Promise Ltd and charity Miners Promise Australia Ltd. During the past three years, Mr Murray has also served as a director of the following listed entities: • Gold Road Resources Limited (retired January 2019); and • Gascoyne Resources Limited (resigned October 2018) Mr Murray has the following interest in shares in the Company as at the date of this report – 238,095 ordinary shares. 21 2020 ANNUAL REPORTDIRECTORS’ REPORT Name, Position Held & Qualification Experience, Special Responsibilities & Other Directorships Sir Charles Lepani Non-Executive Director Appointed: 29 July 2020 B. Arts (Economics) Masters of Public Administration Matthew Smith Chief Financial Officer & Company Secretary Appointed: 1 December 2016 B. Com (Accounting) Member of the Australia & New Zealand Institute of Chartered Accountants (CA) Sir Charles Lepani was born in the Trobriand Islands in the Milne Bay Province of Papua New Guinea. He is a graduate of the University of Papua New Guinea with a Bachelor of Arts (Economics), and won a Fulbright Scholarship to attend the John F Kennedy School of Government at Harvard University, Boston, where he graduated with a Masters of Public Administration. Sir Charles has over 40 years’ experience in both the public and private sectors representing Papua New Guinea as a Senior Diplomat and Advisor. Prior to joining the Board, his most recent roles were as High Commissioner of PNG in Australia from 2005-2017, and as Director General of PNG APEC 2017-2018. Sir Charles has been an advisor and consultant to successive Prime Ministers of PNG as well as the departments of Treasury, Finance, and the Law and Justice Sector. He has also worked alongside the United Nations Development Programme (UNDP), the United Nations Centre for Transnational Corporations (UNCTC) and the Asian Development Bank. Sir Charles will bring a substantial degree of insight, understanding, and local expertise to the management of our Woodlark Gold Project. Sir Charles was appointed as a member of the Remuneration and Nomination Committee on 3 February 2021. Mr Lepani held no interest in shares in the Company as at the date of this report. Mr Smith has over 15 years’ experience in the resource industry across a broad range of commodities including precious metals, industrials and bulk commodities. Mr Smith has worked for a range of companies operating in the Asia Pacific region and most recently held the role of Chief Financial Officer at ASX listed Kingsrose Mining Limited, with gold operations in Indonesia. Mr Smith is a Chartered Accountant with relevant industry experience being involved in a number of project funding transactions across debt and equity markets. Mr Smith also brings specialist knowledge in the areas of international taxation, corporate structuring, accounting and corporate governance. Mr Smith has previously held the role of Company Secretary at Straits Resources Limited. During the past three years, Mr Smith has also served as a director of Kula Gold Limited (resigned 2 July 2019). Mr Smith has the following interest in shares in the Company as at the date of this report – 333,317 ordinary shares. 22 2020 ANNUAL REPORTDIRECTORS’ REPORT Name, Position Held & Qualification Experience, Special Responsibilities & Other Directorships Mike Meintjes Company Secretary Appointed: 1 February 2021 B. Com (Hons) (Financial Accounting) F.Fin (FINSIA) Member of the Australia & New Zealand Institute of Chartered Accountants (CA) Ron Heeks Managing Director Appointed: 28 March 2013 B. App. Sc (Geology) Member of AusIMM Resigned: 4 June 2020 Mr Meintjes is an experienced governance specialist having first qualified as a Chartered Accountant and worked for over 30 years with a Big Four accounting firm. During this period he spent three and a half years with Ernst & Young in Papua New Guinea based in Port Moresby. Since 2012, Mr Meintjes has held a number of part-time roles principally in the resource sector where he has acted as Company Secretary. Mr Meintjes is currently the company secretary for Alligator Energy Limited (ASX: AGE) and recently resigned as company secretary for Resource Generation Limited (ASX: RES). Mr Meintjes held no interest in shares in the Company as at the date of this report. With 30 years’ mining industry experience, Mr Heeks was a founder of Exploration and Mining Consultants and has had previous experience with Western Mining Corporation, Newcrest, Newmont (US) and RSG Consulting. Mr Heeks has held senior roles in both mine management and exploration and is a former General Manager – Technical for Straits Asia Indonesian Operations and Chief Technical Officer for Adamus Resources Southern Ashanti Gold Operation. He has lived and worked in various countries around the world gaining extensive experience in South-East Asia and Indonesia in particular. Mr Heeks was appointed Managing Director of the Company on 28 March 2013 after the takeover of Worldwide Mining Projects Ltd. During the past three years, Mr Heeks has also served as a director of Kula Gold Limited (resigned 2 July 2019). Mr Heeks held 449,832 ordinary shares in shares in the Company as at the date of his resignation. 23 2020 ANNUAL REPORTDIRECTORS’ REPORT 2. PRINCIPAL ACTIVITY The Group is principally engaged in the development of the Woodlark Gold Project in Papua New Guinea. There were no significant changes in the nature of this activity of the Group during the financial year. 3. OPERATING AND FINANCIAL REVIEW A review of the operations and financial position of the Group during the year ended 31 December 2020, including details of the results of operations, changes to the state of affairs, and likely developments in the operation of the Group in subsequent financial years is set out in the Review of Operations. 4. 5. DIVIDENDS No dividends were paid or declared during the financial year (2019: nil). STATE OF AFFAIRS There have not been any significant changes in the state of affairs of the Group during the financial year, other than those noted in the financial report. 6. EVENTS SUBSEQUENT TO REPORTING DATE The financial statements have been prepared based upon conditions existing at 31 December 2020 and due consideration has been given to events that have occurred subsequent to 31 December 2020 that provide evidence of conditions that existed at the end of the reporting period. In December 2020, the Company announced a successful $140 million Placement which was finalised in February 2021. The Placement was strongly supported by existing institutional shareholders and was complemented by significant demand from new major domestic and international investors and was cornerstoned by two of Geopacific’s substantial shareholders, Tembo and DELPHI, and several leading domestic and international institutions. In addition, there was strong support from Sprott Resource Lending and its affiliates, along with members of the Geopacific Board and Management. This transformational capital raising will provide the equity funding component of the development capital required for the Company’s Woodlark Gold Project. The Placement consisted of two tranches at an Issue Price of $0.42 per share which comprised the issue of 333.3 million shares: • Tranche 1: 43.7 million shares issued in December 2020 to raise $18.4 million pursuant to the Company’s placement capacity under Listing Rule 7.1 and Listing Rule 7.1A; and • Tranche 2: 289.6 million shares issued in February to raise $121.6 million. Tranche 2 of the Placement was subject to shareholder approval under Listing Rules 7.1 and 10.11 which was obtained in February 2021 at an Extraordinary General Meeting of the Company. The Company also extended an SPP Offer to existing eligible shareholders to acquire up to $30,000 worth of Geopacific shares at $0.42 per share, the same price as the Placement, with a cap of $10 million. The SPP Offer closed on 10 February 2021 and raised a further $1.87million (4,461,821 Shares). Other than the matter discussed above, no other matters or circumstances haves arisen since the end of the financial period year which 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. 24 2020 ANNUAL REPORTDIRECTORS’ REPORT 7. DIRECTORS’ INTERESTS AND BENEFITS The relevant interest of each Director in the share capital as notified by the Directors to the Australian Securities Exchange in accordance with section 205G(1) of the Corporations Act 2001, at the date of this report is as follows: Name I Clyne C Gilligan I Murray C Lepani Shares 748,190 - - - Direct Options Rights - - - - - - - - Shares 177,378 119,048 238,095 - Indirect Options Rights - - - - - - - - 8. DIRECTORS’ MEETINGS The number of Directors’ meetings (including meetings of committees) and the number of meetings attended by each of the Directors of the Company during the financial year are set out below: Name I Clyne C Gilligan I Murray C Lepani R Heeks(i) Directors Meetings Audit and Risk Committee Meetings Attended* Eligible to Attend Attended* Eligible to Attend 13 13 13 4 4 13 13 13 5 4 2 2 2 - - 2 2 2 - - * Either in person, or by electronic means. (i) Mr R Heeks resigned on 4 June 2020 The Board of Directors takes ultimate responsibility for corporate governance. This includes the establishment of compensation arrangements for the Company’s Executive Directors and senior executives. It also includes the appointment and retirement of Non-Executive Directors, appointment of Auditors, monitoring key areas of business risk, maintenance of ethical standards and Audit and Risk Committees. The Board seeks independent professional advice as necessary in carrying out its duties and responsibilities. 9. LIKELY DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES The Group will continue to advance its development and exploration portfolio and seek to increase its tenement holdings by acquiring further projects. 10. ENVIRONMENTAL REGULATIONS Entities in the Group are subject to normal environmental regulations in areas of operations in Papua New Guinea, Cambodia and Fiji. There were no breaches of these regulations during the financial year, or in the period subsequent to the end of the financial year and up to the date of this report. 25 2020 ANNUAL REPORTDIRECTORS’ REPORT 11. SHARE OPTIONS There were 5,113,308 Options over unissued shares unexercised at 31 December 2020 (2019: 4,700,324). During the 2020 reporting period, the Company issued 520,132 shares on the exercise of unlisted Options. Since the end of the 2020 reporting period and up to the date of this report, no unlisted Options have been cancelled or exercised. Details of unlisted Options over unissued shares in the Company as at the date of this report are presented in the following table: Options on Issue Exercise Price Expiry Date 32,000 8,000 970,638 30,307 808,740 1,296,965 1,063,850 526,262 376,546 $62.50 $125.00 $0.00 $0.00 $1.02 $0.00 $0.58 $0.00 $0.93 Not later than 5-years after defining a JORC compliant ore reserve of over 200,000oz Au on the Faddy’s Gold Deposit Not later than 10-years after defining a JORC compliant ore reserve of over 1,000,000oz Au on the Faddy’s Gold Deposit 10 July 2021 21 August 2021 10 July 2022 19 July 2022 19 July 2023 21 August 2023 21 August 2024 Option holders do not have any rights to participate in any issues of shares or other interest in the Company or any other entity. 12. SHARE APPRECIATION RIGHTS There were 2,430,722 share appreciation rights over unissued shares unexercised at 31 December 2020 (2019: 2,023,706). During the 2020 reporting period, the Company did not issue any shares on the exercise of unlisted share appreciation rights. Since the end of the 2020 reporting period and up to the date of this report, no unlisted share appreciation rights have been cancelled or exercised. Details of unlisted share appreciation rights over unissued shares in the Company as at the date of this report are presented in the following table: Share appreciation rights on Issue Exercise Price 894,605 1,129,101 407,016 $0.71 $0.40 $0.65 Expiry Date 10 July 2022 19 July 2023 21 August 2024 13. INSURANCE OF OFFICERS The Company has paid a premium to insure the Directors, Company Secretary and Executives of the Group in respect of certain legal liabilities, including costs and expenses in successfully defending legal proceedings, whilst they remain as Directors or Officers and for seven years thereafter. The insurance contract prohibits the disclosure of the total amount of the premiums and a summary of the nature of the liabilities insured. 14. PROCEEDINGS ON BEHALF OF COMPANY No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. 26 2020 ANNUAL REPORTDIRECTORS’ REPORT 15. AUDITOR’S INDEPENDENCE DECLARATION The auditor’s independence declaration for the year ended 31 December 2020 is set out on page 44. 16. AUDITOR The Company’s auditor is Ernst & Young. The Company has agreed with Ernst & Young, as part of its terms of engagement, to indemnify Ernst & Young against certain liabilities to third parties arising from the audit engagement. The indemnity does not extend to any liability resulting from a negligent, wrongful or wilful act or omission by Ernst & Young. During the financial year the Company has not paid any premium in respect to any insurance for Ernst & Young or a body corporate related to Ernst & Young. During the year, the following fees were paid or payable to the auditors of the Company for services provided by the auditor of the Company and its subsidiaries, its related practices and non related audit firms: Audit Services Consolidated Ernst & Young Audit and review of the financial report for Geopacific and its controlled subsidiaries and other audit work under the Corporations Act 2001 Total 17. NON-AUDIT SERVICES 2020 $ 65,100 65,100 2019 $ 57,500 57,500 There were no non-audit services provided by the auditor during the period of this report. 18. REMUNERATION REPORT - AUDITED This report outlines the remuneration arrangements of the Group pursuant to the requirements of the Corporations Act 2001 and its regulations. This information has been audited as required under section 308(3)(c) of the Corporations Act 2001. This report details the remuneration arrangements of the Group’s key management personnel (KMP), who are defined as those persons who have the authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any Director of Geopacific. Details of the KMP of the Group during the reporting period are set out in the table below: Name Non-Executive Directors Ian Clyne Colin Gilligan Ian Murray Position Non-Executive Chairman Non-Executive Director Non-Executive Director Sir Charles Lepani Appointed 29 July 2020 Non-Executive Director Executives Tim Richards Matthew Smith Glenn Zamudio Ron Heeks Appointed 6 October 2020 Chief Executive Officer Chief Financial Officer & Company Secretary General Manager - Projects Resigned 4 June 2020 Managing Director There were no changes to KMP other than those noted above after the reporting date and before the date the financial report was authorised for issue. 27 2020 ANNUAL REPORTDIRECTORS’ REPORT 18. REMUNERATION REPORT - AUDITED (CONTINUED) Remuneration Governance In preparation for the development of the Woodlark Gold Project, the Board decided to establish a Remuneration and Nomination Committee during the 2020 reporting period. The Remuneration and Nomination Committee was responsible for reviewing and recommending the remuneration arrangements of the Group KMP and ensuring that the Group’s remuneration structures are aligned with the interests of the Company and its shareholders. This includes an annual remuneration review of base salary (including superannuation), short-term incentives (STI) and long-term incentives (LTI), including the appropriateness of performance hurdles. Remuneration Consultants During the 2017 reporting period, BDO Chartered Accountants developed a comprehensive remuneration framework for the Company to provide recommendations as defined in section 9B of the Corporations Act 2001. The remuneration framework was approved by shareholders at the Annual General Meeting (AGM) held on 30 May 2018. During the 2020 reporting period, the Company engaged BDO Chartered Accountants to complete a benchmarking exercise to update the position from the 2017 report. This exercise incorporated an update to the comparison peer group of companies and a refresh of the underlying peer group remuneration data. A total of $28,500 was paid to remuneration consultants during 2020. Remuneration Overview and Strategy The objective of the Group’s remuneration framework is to support the delivery of sustained shareholder value and to ensure rewards accurately reflect achievements in line with general market conditions. The strategy is designed to attract, motivate and retain high calibre individuals through the provision of remuneration packages that incorporate a balance of fixed and variable remuneration. In accordance with sound corporate governance practices, the structure of Non-Executive and Executive remuneration is separate and distinct. There is no direct relationship between remuneration and the financial performance of the Group. The following table shows the Group’s performance over the reporting period and the previous four financial years and against overall remuneration for these years: 2016 $ 2017 $ 2018 $ 2019 $ 2020 $ Loss Per Share (Cents) (i) 0.45 0.27 2.49 Year-end share price (Cents) (i) 0.036 0.027 0.016 Market capitalisation ($ million) 41.6 48.7 33.3 6.43 0.50 87.3 2.59 0.43 94.1 Total KMP remuneration ($) 1,011,937 1,468,516 2,196,274 2,127,902 3,012,188 (i) The loss per share and year-end share price from 2016 to 2018 has not been adjusted to reflect the 25:1 share consolidation conducted in December 2019. 28 2020 ANNUAL REPORTDIRECTORS’ REPORT 18. REMUNERATION REPORT - AUDITED (CONTINUED) Executive Remuneration Framework The Board’s objective is to reward Executives with a quantum and mix of remuneration commensurate with their position and responsibilities and that is competitive within the marketplace. The Company remunerates its Executives with a mix of both fixed and at risk, or variable, remuneration. Variable remuneration incorporates a balance of short, medium and long-term incentives. Fixed remuneration for Executives consists of base salary, Zero Exercise Price Options (ZEPO’s), superannuation and other non-cash benefits. It is designed to provide a base level of remuneration which is appropriate for the Executives’ position, reflecting the individual’s skills, level of experience and responsibilities. Variable remuneration, or performance linked remuneration, includes a combination of short, medium and long- term incentives designed to provide an “at risk” reward in a manner which aligns with the creation of sustained shareholder value. All Executives are eligible to receive short, medium and long-term incentives which can be issued in accordance with the Company’s Securities Incentive Plan (Incentive Plan) that was approved by shareholders at the AGM held on 30 May 2018. The Incentive Plan incorporates a 5% cap on the total shares that can be issued to Executives pursuant to the plan. The following table provides a high-level summary of the Company’s remuneration framework: Fixed remuneration Remuneration linked to market rate of the role. Total fixed remuneration Variable remuneration Incentive Remuneration for delivering on key milestones which are designed to create value for shareholders. Short-term incentive Medium-term incentive Variable remuneration Reward Remuneration for the creation of value for shareholders - directly linked to shareholder returns. Long-term incentive Remuneration for meeting role requirements. Incentive for the achievement of annual objectives. Incentive for the achievement of sustained business value. Reward for performance over the long-term. The Incentive Plan provides for the use of a range of equity based instruments to deliver incentives which focus participants on the delivery of sustained shareholder value and minimise the cash outlay associated with total remuneration. The various components of the Incentive Plan are outlined below. Fixed Remuneration Correction Plan The fixed remuneration correction plan was designed to align total fixed remuneration with market rates using a share based payment rather than cash. In order to determine appropriate market rates, a peer group consisting of fourteen development and exploration companies across a range of commodities was selected on the basis of: • Company size by reference to market capitalisation; • Scale and stage of development of projects; and • Geographic operating locations. Independent analysis completed by BDO Chartered Accountants determined that a gap existed between the total fixed remuneration of the Company’s executives in comparison to the Peer Group for given roles. In order to ameliorate the gap, Class A Options (ZEPO’s) are issued for the difference between: • the 50th percentile of peer group total fixed remuneration for their given role; and • the participants’ total cash based annual fixed remuneration. Class A Options are issued annually in advance, for no consideration and have an exercise price of nil. As the Class A Options are issued as part of the fixed remuneration correction plan, no vesting conditions are attached other than the continuation of service, which can be waived at the discretion of the Board. The value of any Class A Options is included in the Executives’ total fixed remuneration for the period. During the year, Class A Options were issued with a one year vesting period in relation to services performed for the 2020 financial year. 29 2020 ANNUAL REPORTDIRECTORS’ REPORT 18. REMUNERATION REPORT - AUDITED (CONTINUED) Incentive Plan The Incentive Plan is linked to the achievement of milestones that are set each calendar year by the Board. The Board selects milestones that are intended to drive sustained returns for shareholders. Following the completion of each calendar year, the Board determines which performance milestones were satisfied in the prior year in order to calculate the quantum of instruments to be issued. The total incentive plan opportunity, which represents the maximum incentive that could be issued is determined as follows: • 190% of total fixed remuneration for the Managing Director; and • 160% of total fixed remuneration for all other participants. The total incentive plan opportunity is divided up between a cash based bonus and a range of equity based instruments. Each element is given a weighting designed to provide an appropriate mix of short, medium and long-term incentives for participants. During the reporting period, instruments were issued under the Incentive Plan in relation to milestones that were achieved during the 2019 calendar year. The Board determined that three out of the five performance milestones had been satisfied, resulting in the award of up to 60% of the total incentive opportunity. The milestones in respect of the 2019 reporting period are outlined in the following table: 2019 Milestone Weighting Board Assessment 1. Raise sufficient funding from capital markets to commence development at the Woodlark Gold Project. 2. Restructure the Group via corporate transaction/s to secure 100% direct ownership of Woodlark Mining Limited (the owner of the Woodlark Gold Project). 3. Rebalance the Company’s share registry through the attraction of new institutional shareholders representing greater than 20% of the issued capital. 4. Board acceptance and implementation of a restructure or divestment of the Group’s non-core assets in Fiji and Cambodia. 5. Board acceptance of a financing solution for the development of the Woodlark Gold Project (Stretch Target). 20% 20% 20% 20% 20% Achieved. Achieved. Achieved. Not achieved. Not achieved. 30 2020 ANNUAL REPORTDIRECTORS’ REPORT 18. REMUNERATION REPORT - AUDITED (CONTINUED) Incentive Plan (Continued) The table below outlines the maximum percentages available for each element of the incentive plan, along with the percentages awarded based on the 2019 milestones that were satisfied: Managing Director Other Participants Plan Element Instrument Maximum Available Incentive Awarded Maximum Available Incentive Awarded Vesting Period Exercise Price Conditions Short-term incentive Cash based bonus 11% Nil 11% Nil N/A N/A N/A Medium- term incentive Long-term incentive Long-term incentive Total Class B Options – ZEPO’s Class C Options – PEPO’s 45% 27% 45% 26% 3 years Nil 21% 13% 19% 11% 4 years 143% of the Company’s share price at grant date (i) SAR’s 23% 100% 14% 40% 24% 14% 3 years Nil (ii) 100% 39% Continuation of service Continuation of service Continuation of service (i) The exercise price was adjusted for the 25:1 share consolidation in December 2019. (ii) Exercise price of SAR’s - theoretical exercise price is the Company’s share price at grant date. The Board, in exercising its discretion, determined that cash based bonuses would not be paid in respect of the 2019 reporting period. No incentives milestones were set in respect of the 2020 reporting period. Non Executive Directors Fees and payments to Non Executive Directors reflect the demands, which are made on, and the responsibilities of the Directors. A review of Non Executive Directors’ fees and payments is conducted annually. The Board may from time to time seek the advice of independent remuneration consultants to ensure Non Executive Directors’ fees and payments are appropriate in the market setting. The Chairman’s fees are determined independently to the fees of Non Executive Directors based on comparative roles in market. The Chairman is not present at any discussions relating to determination of his own remuneration. Directors’ fees Non Executive Directors’ fees are determined within an aggregate Directors’ fee pool limit, which is periodically recommended for approval by shareholders. The pool limit currently stands at $400,000 per year in aggregate as agreed at the 2012 AGM. A Director may also be paid fees or other amounts if special duties are performed outside the scope of normal duties of a Director. During the 2020 reporting period the Chairman assumed additional responsibilities in order to accommodate a smooth transition of management. For undertaking these additional services, the Chairman was paid a total of $326,903 outside of the normal director fees. A Director may also be reimbursed for out of pocket expenses incurred as a result of their directorship or any special duties. 31 2020 ANNUAL REPORTDIRECTORS’ REPORT 18. REMUNERATION REPORT - AUDITED (CONTINUED) Details of Remuneration The tables below set of the details of the remuneration of the Group’s KMP, as required by Section 308(3C) of the Corporations Act 2001. Short Term Benefits Post Employment Benefits Share Based Payments Long Term Benefits Performance Related 2020 Salaries & Fees Annual Leave Bonus Super- annuation Termination Payments Options & Rights Long Service Leave $ $ $ $ $ $ $ Non-Executive Directors (NED) I Clyne(i) C Gilligan C Lepani(ii) I Murray 47,500 60,000 27,807 60,000 NED Sub total 195,307 Executive Directors 298,542 255,000 553,542 I Clyne(i) R Heeks(iii) Executive Directors Sub total Other KMP - - - - - - - - T Richards(iv) 103,899 8,391 M Smith 258,214 21,075 G Zamudio 217,937 18,265 Other KMP Sub total 580,050 47,731 - - - - - - - - - - - - 4,513 5,700 - 5,700 15,913 28,361 - - - - - - - - - - - - - 399,996 740,735 28,361 399,996 740,735 - - - - - - - - Total $ 52,013 65,700 27,807 65,700 211,220 326,903 1,395,731 1,722,634 10,364 25,331 22,439 58,134 - - - - - - 122,654 193,701 7,681 506,002 185,846 5,191 449,678 379,547 12,872 1,078,334 % - - - - - - 53 - 38 41 TOTAL 1,328,899 47,731 - 102,408 399,996 1,120,282 12,872 3,012,188 (i) Mr I Clyne worked in an executive capacity from 1 July 2020 through to 31 December 2020 (ii) Sir C Lepani commenced on 29 July 2020 (iii) Mr R Heeks resigned on 4 June 2020. Mr Heeks continued to work as a consultant until 4 September 2020 and was paid $100,000 for the period from 5 June 2020 until 4 September 2020. This amount is included as salaries and wages in the above table (iv) Mr T Richards commenced on 6 October 2020 32 2020 ANNUAL REPORTDIRECTORS’ REPORT 18. REMUNERATION REPORT - AUDITED (CONTINUED) Details of Remuneration (Continued) Short Term Benefits Post Employment Benefits Share Based Payments Long Term Benefits Performance Related 2019 Salaries & Fees Annual Leave Bonus Super- annuation Termination Payments Options & Rights Long Service Leave $ $ $ $ $ $ $ Total $ 36,676 27,375 102,066 65,700 20,602 252,419 % - - 11 - - 473,606 30 473,606 - - 11,553 - - 11,553 143,606 143,606 - - - - - - - - Non-Executive Directors M Jerkovic(i) M Bojanjac(ii) I Clyne C Gilligan I Murray(iii) 33,494 25,000 82,660 60,000 18,815 NED Sub total 219,969 Executive Directors R Heeks 330,000 330,000 Executive Directors Sub total Other KMP - - - - - - - - M Smith 206,731 17,692 G Zamudio 178,462 26,538 J Kerr(iv) 75,000 - Other KMP Sub total 460,193 44,230 TOTAL 1,010,162 44,230 - - - - - - - - - - - - - 3,182 2,375 7,853 5,700 1,787 20,897 - - 20,900 19,475 - - - - - - - - - - 183,498 2,817 431,638 183,498 3,045 411,018 43 45 82 7,125 20,769 456,327 - 559,221 47,500 20,769 823,323 5,862 1,401,877 68,397 20,769 978,482 5,862 2,127,902 (i) Mr M Jerkovic resigned on 8 May 2019 (ii) Mr M Bojanjac resigned on 29 May 2019 (iii) Mr I Murray commenced on 9 September 2019 (iv) Mr J Kerr resigned on 31 May 2019. On this date, the Board approved that Mr J Kerr would be entitled to his unvested Options and Rights, waiving the service period normally required as at the date he ceased employment. This resulted in an accelerated expensing profile relating to share based payments. Geopacific’s share price on that date was $0.013. The fair value of these grants was not changed at the date of modification and the remaining vesting conditions assigned to his options and rights were not modified on this date 33 2020 ANNUAL REPORTDIRECTORS’ REPORT 18. REMUNERATION REPORT - AUDITED (CONTINUED) Service Agreements A summary of the key terms of the Director contracts with the Company are set out below: Ian Clyne - Non-Executive Chairman • Directors Fees of $95,000 per annum pro-rata from 1 January 2020 to 30 June 2020; • Directors Fees of $2,500 per day while working in an executive capacity from 1 July 2020 to 31 December 2020; • Statutory superannuation contributions; • Eligible to participate in the long-term incentive schemes offered by the Company; and • No Notice Period. Colin Gilligan - Non-Executive Director • Directors Fees of $60,000 per annum; • Statutory superannuation contributions; • Eligible to participate in the long-term incentive schemes offered by the Company; and • No Notice Period. Ian Murray - Non-Executive Director • Directors Fees of $60,000 per annum; • Statutory superannuation contributions; • Eligible to participate in the long-term incentive schemes offered by the Company; and • No Notice Period. Sir Charles Lepani - Non-Executive Chairman (appointed 29 July 2020) • Directors Fees of $60,000 per annum; • Statutory superannuation contributions; • Eligible to participate in the long-term incentive schemes offered by the Company; and • No Notice Period. Ron Heeks - Managing Director (resigned 4 June 2020) • Consulting Fees of $330,000 per annum; • Eligible to participate in the long-term incentive schemes offered by the Company; and • Six month notice period plus an additional one month for each year of service. Short-term Incentives No bonus payments were made to Directors of the Company or other KMP of the Group during the period and all potential benefits under the short-term incentive plan were forfeited. 34 2020 ANNUAL REPORTDIRECTORS’ REPORT 18. REMUNERATION REPORT - AUDITED (CONTINUED) Long-term Incentives - Share based Compensation Options Options over ordinary shares in the Company were provided as remuneration to Directors of the Company and KMP of the Group during the year as per the Securities Incentive Plan, which was approved by shareholders at the Company’s AGM held on 30 May 2018. The following table outlines the Options granted or vested during the 2020 reporting period to the Directors of the Company and other KMP of the Group. Options granted during the year Grant date Fair value per option at grant date Value of option at grant date ($) Vesting date Exercise price Expiry date 2020 Instru- ment Year Executive Directors R Heeks ZEPO 2020 5,231 28-Jul-20 $0.680 3,557 28-July-21 $0.000 21-Aug-21 R Heeks ZEPO 2020 244,662 28-Jul-20 $0.680 166,370 28-July-23 $0.000 21-Aug-23 R Heeks PEPO 2020 182,344 28-Jul-20 $0.430 78,408 28-July-24 $0.972 21-Aug-24 Other KMP M Smith ZEPO 2020 12,538 11-Aug-20 $0.625 7,836 11-Aug-21 $0.000 21-Aug-21 M Smith ZEPO 2020 168,960 11-Aug-20 $0.625 105,600 11-Aug-23 $0.000 21-Aug-23 M Smith PEPO 2020 116,521 11-Aug-20 $0.393 45,793 11-Aug-24 $0.894 21-Aug-24 G Zamudio ZEPO 2020 12,538 11-Aug-20 $0.625 7,836 11-Aug-21 $0.000 21-Aug-21 G Zamudio ZEPO 2020 112,640 11-Aug-20 $0.625 70,400 11-Aug-23 $0.000 21-Aug-23 G Zamudio PEPO 2020 77,681 11-Aug-20 $0.393 30,529 11-Aug-24 $0.894 21-Aug-24 Options vested/ lapsed during the year - - - - - - - - - All instruments issued during the 2020 reporting period were issued on 31 August 2020. The grant date differs for the directors to comply with the accounting standards. 35 2020 ANNUAL REPORTDIRECTORS’ REPORT 18. REMUNERATION REPORT - AUDITED (CONTINUED) Long-term Incentives - Share based Compensation (Continued) The following table outlines the Options granted or vested during the 2019 reporting period to the Directors of the Company and other KMP of the Group. Options granted during the year Grant date Fair value per option at grant date Value of option at grant date ($) Vesting date Exercise price Expiry date Options vested/ lapsed during the year 2019 Instru- ment Year Executive Directors R Heeks ZEPO 2019 261,538 30-May-19 $0.014 3,662 19-Jul-20 $0.000 19-Jul-20 R Heeks ZEPO 2019 9,174,808 30-May-19 $0.014 128,448 19-Jul-22 $0.000 19-Jul-22 R Heeks PEPO 2019 7,951,500 30-May-19 $0.008 63,612 19-Jul-23 $0.023 19-Jul-23 Other KMP M Smith ZEPO 2019 4,838,462 12-Jul-19 $0.016 77,416 19-Jul-20 $0.000 19-Jul-20 M Smith ZEPO 2019 6,336,000 12-Jul-19 $0.016 101,376 19-Jul-22 $0.000 19-Jul-22 M Smith PEPO 2019 5,081,143 12-Jul-19 $0.009 45,730 19-Jul-23 $0.023 19-Jul-23 G Zamudio ZEPO 2019 4,838,462 12-Jul-19 $0.016 77,416 19-Jul-20 $0.000 19-Jul-20 G Zamudio ZEPO 2019 6,336,000 12-Jul-19 $0.016 101,376 19-Jul-22 $0.000 19-Jul-22 G Zamudio PEPO 2019 5,081,143 12-Jul-19 $0.009 45,730 19-Jul-23 $0.023 19-Jul-23 J Kerr J Kerr J Kerr ZEPO 2019 2,016,026 12-Jul-19 $0.016 32,257 19-Jul-20 $0.000 19-Jul-20 ZEPO 2019 5,441,852 12-Jul-19 $0.016 87,070 19-Jul-22 $0.000 19-Jul-22 PEPO 2019 4,364,083 12-Jul-19 $0.009 39,277 19-Jul-23 $0.023 19-Jul-23 - - - - - - - - - - - - The fair value of the Options is measured at grant date and allocated equally over the period from grant date to vesting date, unless Directors of the Company and KMP of the Group resign during the vesting period in which case the fair value of the Options is expensed immediately. This allocation is reflected in the Share Based Payments column of the remuneration tables above. The fair value at grant date was determined by a combination of internal and external sources using a Black- Scholes option pricing model and independent third party valuations. 36 2020 ANNUAL REPORTDIRECTORS’ REPORT 18. REMUNERATION REPORT - AUDITED (CONTINUED) Long-term Incentives - Share based Compensation (Continued) Share Appreciation Rights Share Appreciation Rights over ordinary shares in the Company were granted as remuneration to Directors of the Company and KMP of the Group during the year as per the Securities Incentive Plan, which was approved by shareholders at the Company’s AGM held on 30 May 2018. The following table outlines the Share Appreciation Rights granted or vested to the Directors of the Company and other KMP of the Group during the 2020 reporting period. Rights granted during the year Fair value per right at grant date Value of right at grant date ($) Grant date Vesting date Exercise price Expiry date 2020 Instru- ment Year Executive Directors R Heeks SAR 2020 182,656 28-Jul-20 $0.468 85,483 28-July-23 $0.680 21-Aug-24 Other KMP M Smith G Zamudio SAR SAR 2020 134,616 11-Aug-20 $0.429 57,750 11-Aug-23 $0.625 21-Aug-24 2020 89,744 11-Aug-20 $0.429 38,500 11-Aug-23 $0.625 21-Aug-24 Rights vested/ lapsed during the year - - - All 2020 Share Appreciation Rights were issued on 31 August 2020. The grant date differs for the directors to comply with the accounting standards. Rights granted during the year Fair value per right at grant date Value of right at grant date ($) Grant date Vesting date Exercise price Expiry date 2019 Instru- ment Year Executive Directors R Heeks SAR 2019 7,620,188 30-May-19 $0.009 68,582 19-Jul-22 $0.014 19-Jul-23 Other KMP M Smith G Zamudio J Kerr SAR SAR SAR 2019 5,616,000 12-Jul-19 $0.010 56,160 19-Jul-22 $0.016 19-Jul-23 2019 5,616,000 12-Jul-19 $0.010 56,160 19-Jul-22 $0.016 19-Jul-23 2019 4,823,460 12-Jul-19 $0.010 48,235 19-Jul-22 $0.016 19-Jul-23 Rights vested/ lapsed during the year - - - - The fair value of the Share Appreciation Rights is measured at grant date and allocated equally over the period from grant date to vesting date, unless Directors of the Company and KMP of the Group resign during the vesting period in which case the fair value of the Share Appreciation Rights is expensed immediately. This allocation is reflected in the Share Based Payments column of the remuneration tables above. The fair value at grant date was independently determined by a third party. 37 2020 ANNUAL REPORTDIRECTORS’ REPORT 18. REMUNERATION REPORT - AUDITED (CONTINUED) Equity Instrument Disclosures Relating to KMP Options Options over Ordinary Shares in the Company held during the financial year by Directors of the Company and other KMP of the Group. Granted During the Year Exercised During the Year Net Change Other Held at Resignation Closing Balance 31 December 2020 Options Exercisable at 31 December 2020(i) Opening Balance 1 January 2020 - - 2020 Directors I Clyne C Gilligan R Heeks(ii) 1,111,690 C Lepani(iii) I Murray Sub total - - 1,111,690 Other KMP T Richards(iv) - - - - - - - - - - - - - - - - - - - - - - - - - - - - (1,111,690) - - (1,111,690) - - - - - - - - - - - 1,032,039 936,879 1,968,918 (1,111,690) 1,968,918 - - - - - - - - - - M Smith 927,559 298,019 (193,539) G Zamudio 927,559 202,859 (193,539) Sub total 1,855,118 500,878 (387,078) TOTAL 2,966,808 500,878 (387,078) (i) Options exercisable at 31 December 2020 have not yet vested (ii) Mr R Heeks resigned on 4 June 2020 (iii) Sir C Lepani commenced on 29 July 2020 (iv) Mr T Richards commenced on 6 October 2020 38 2020 ANNUAL REPORTDIRECTORS’ REPORT 18. REMUNERATION REPORT - AUDITED (CONTINUED) Equity Instrument Disclosures Relating to KMP (Continued) Granted During the Year Exercised During the Year Net Change Other (i) Held at Resignation (ii) Closing Balance 31 December 2019 Options Exercisable at 31 December 2019 (iii) Opening Balance 1 January 2019 - - 2019 Directors M Jerkovic M Bojanjac I Clyne 750,000 C Gilligan - - - - - - - (750,000) - - - - - R Heeks 10,593,263 17,387,846 (188,888) (26,680,531) I Murray - - - - Sub total 11,343,263 17,387,846 (938,888) (26,680,531) Other KMP M Smith 10,427,777 16,255,625 (3,494,444) (22,261,399) G Zamudio 10,427,777 16,255,625 (3,494,444) (22,261,399) - - - - - - - - - - - - - - - - - 1,111,690 1,111,690 - - 1,111,690 1,111,690 927,559 927,559 - 927,559 927,559 - J Kerr 10,427,777 11,822,025 (3,494,444) - (18,755,358) Sub total 31,283,331 44,333,275 (10,483,332) (44,522,798) (18,755,358) 1,855,118 1,855,118 TOTAL 42,626,594 61,721,121 (11,422,220) (71,203,329) (18,755,358) 2,966,808 2,966,808 (i) Net Change Other includes the adjustments for the share consolidation on a 25:1 basis (ii) Held at Resignation does not factor in the 25:1 share consolidation as the consolidation occurred after the resignation (iii) Options exercisable at 31 December 2019 have not yet vested 39 2020 ANNUAL REPORTDIRECTORS’ REPORT 18. REMUNERATION REPORT - AUDITED (CONTINUED) Equity Instrument Disclosures Relating to KMP (Continued) Share Appreciation Rights Share Appreciation Rights over Ordinary Shares in the Company held during the financial year by Directors of the Company and other KMP of the Group. Granted During the Year Exercised During the Year Net Change Other Held at Resignation Closing Balance 31 December 2020 Rights Exercisable at 31 December 2020(i) Opening Balance 1 January 2020 - - 498,337 - - 498,337 2020 Directors I Clyne C Gilligan R Heeks(ii) C Lepani(iii) I Murray Sub total Other KMP T Richards(iv) - M Smith 367,269 134,616 G Zamudio 367,269 89,744 Sub total 734,538 224,360 TOTAL 1,232,875 224,360 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (498,337) - - (498,337) - - - - - - - - - - - - - - - - - 501,885 457,013 958,898 501,885 457,013 958,898 (498,337) 958,898 958,898 (i) Share Appreciation Rights exercisable at 31 December 2020 have not yet vested (ii) Mr R Heeks resigned on 4 June 2020 (iii) Sir C Lepani commenced on 29 July 2020 (iv) Mr T Richards commenced on 6 October 2020 40 2020 ANNUAL REPORTDIRECTORS’ REPORT 18. REMUNERATION REPORT - AUDITED (CONTINUED) Equity Instrument Disclosures Relating to KMP (Continued) Opening Balance 1 January 2019 Granted During the Year Exercised During the Year Net Change Other(i) Held at Resignation(ii) Closing Balance 31 December 2019 Rights Exercisable at 31 December 2019(iii) 2019 Directors M Jerkovic M Bojanjac I Clyne C Gilligan R Heeks I Murray - - - - - - - - 4,838,214 7,620,188 - - Sub total 4,838,214 7,620,188 Other KMP M Smith 3,565,714 5,616,000 G Zamudio 3,565,714 5,616,000 J Kerr 3,565,714 4,823,475 Sub total 10,697,142 16,055,475 TOTAL 15,535,356 23,675,663 - - - - - - - - - - - - - - - - (11,960,065) - (11,960,065) (8,814,445) (8,814,445) - - - - - - - - - - (8,389,189) - - - - - - - - 498,337 498,337 - - 498,337 498,337 367,269 367,269 - 367,269 367,269 - (17,628,890) (8,389,189) 734,538 734,538 (29,588,955) (8,389,189) 1,232,875 1,232,875 (i) Net Change Other includes the adjustments for the share consolidation on a 25:1 basis (ii) Held at Resignation does not factor in the 25:1 share consolidation as the consolidation occurred after the resignation (iii) Share Appreciation Rights exercisable at 31 December 2019 have not yet vested 41 2020 ANNUAL REPORTDIRECTORS’ REPORT 18. REMUNERATION REPORT - AUDITED (CONTINUED) Equity Instrument Disclosures Relating to KMP (Continued) Ordinary Shares The number of Ordinary Shares in the Company held during the financial year by each Director of the Company and other KMP of the Group, including their personally related parties, was as follows: Opening Balance 1 January 2020 Issued on Vesting of Options Shares Acquired on Market Held at Resignation(i) Net Change Other Closing Balance 31 December 2020 - - - - - - - - - - - 330,330 - - - - 330,330 - 333,317 373,317 706,634 1,036,964 2020 Directors I Clyne C Gilligan R Heeks(i) C Lepani(ii) I Murray Subtotal Other KMP T Richards(iii) M Smith G Zamudio Subtotal 272,000 - 449,832 - - 721,832 - 139,778 179,778 319,556 - - - - - - - 193,539 193,539 387,078 58,330 - - - - - - (449,832) - - 58,330 (449,832) - - - - - - - - TOTAL 1,041,388 387,078 58,330 (449,832) (i) Mr R Heeks resigned on 4 June 2020 (ii) Sir C Lepani commenced on 29 July 2020 (iii) Mr T Richards commenced on 6 October 2020 42 2020 ANNUAL REPORTDIRECTORS’ REPORT 18. REMUNERATION REPORT - AUDITED (CONTINUED) Equity Instrument Disclosures Relating to KMP (Continued) Opening Balance 1 January 2019 Issued on Vesting of Performance Rights Shares Acquired on Market(i) Held at Resignation(ii) Net Change Other(iii) Closing Balance 31 December 2019 2019 Directors M Jerkovic 13,196,677 M Bojanjac 3,416,666 - - - - (13,196,677) (3,416,666) - - - - 2,400,000 750,000 3,650,000 - - - 8,768,618 188,888 2,288,278 - - - - - - - (6,528,000) 272,000 - - (10,795,952) 449,832 - - 27,781,961 938,888 5,938,278 (16,613,343) (17,323,952) 721,832 I Clyne C Gilligan R Heeks I Murray Subtotal Other KMP M Smith J Kerr Subtotal G Zamudio 1,000,000 - - 3,494,444 3,494,444 3,494,444 1,000,000 10,483,332 - - - - - - (3,354,666) (4,314,666) (3,494,444) - 139,778 179,778 - (3,494,444) (7,669,332) 319,556 TOTAL 28,781,961 11,422,220 5,938,278 (20,107,787) (24,993,284) 1,041,388 (i) Shares Acquired on Market includes shares acquired in the Placement (ii) Held at Resignation does not factor in the 25:1 share consolidation as the consolidation occurred after the resignations (iii) Net Change Other includes the adjustments for the share consolidation on a 25:1 basis Transactions with directors, director related entities and other related parties Melron Pty Ltd Payment was made to Melron Investments Pty Ltd for director services fees. Mr R Heeks is a Director of Melron Investments Pty Ltd and served as Managing Direct of Geopacific. The total amount charged by Melron Investments Pty Ltd during the financial year was $654,996 plus GST (2019: $330,000). There were no amounts owing to Melron Pty Ltd as at 31 December 2020. All amounts were due and payable under normal commercial terms. END OF REMUNERATION REPORT The Directors Report, including the Remuneration Report, is signed in accordance with a resolution of the Directors: Ian Clyne Non-Executive Chairman Perth, Australia 30 March 2021 43 2020 ANNUAL REPORTAUDITOR’S INDEPENDENCE DECLARATION Ernst & Young 11 Mounts Bay Road Perth WA 6000, Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Auditor’s independence declaration to the directors of Geopacific Resources Limited As lead auditor for the audit of the financial report of Geopacific Resources Limited for the financial year ended 31 December 2020, I declare to the best of my knowledge and belief, there have been: a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Geopacific Resources Limited and the entities it controlled during the financial year. Ernst & Young Pierre Dreyer Partner 30 March 2021 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation PD:AJ:GPR:008 44 2020 ANNUAL REPORTINDEPENDENT AUDITOR’S REPORT Ernst & Young 11 Mounts Bay Road Perth WA 6000, Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Independent auditor’s report to the members of Geopacific Resources Limited Report on the audit of the financial report Opinion We have audited the financial report of Geopacific Resources Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 31 December 2020, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a. Giving a true and fair view of the consolidated financial position of the Group as at 31 December 2020 and of its consolidated financial performance for the year ended on that date; and b. Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation PD:AJ:GPR:007 45 2020 ANNUAL REPORTINDEPENDENT AUDITOR’S REPORT We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report. Going concern assessment Why significant How our audit addressed the key audit matter The Group is not yet generating mining revenue. Accordingly, the testing of the availability of sufficient funding for the Group to meet its obligations is considered to be a key part of our going concern assessment and therefore a significant aspect of our audit. This assessment is largely based on the expectations of, and the estimates made, by the Group. The expectations and estimates can be influenced by subjective elements such as estimated future cash flows. Estimates are based on assumptions, including expectations regarding future developments in the economy and the market. The Group’s financial report is prepared on a going concern basis. The Group’s assessment in respect of going concern is set out Note 1 to the financial report. We performed the following procedures: ► Vouched the capital raised subsequent to year end and confirmed the cash balance at 30 March 2021; ► Analysed the Group’s cash flow forecast and enquired with the Group to gain an understanding of the inputs and process underpinning the cash flow forecast prepared for the purpose of the going concern assessment; ► Assessed whether the cash flow forecast accurately reflected the budget that was approved by the Board; ► Assessed the external inputs and assumptions within the cash flow forecast by comparing them to assumptions and estimates used elsewhere in the preparation of the financial report. We also considered them in the context of our understanding and knowledge of the Group’s operations and commitments; ► Assessed the sensitivity analysis that the Group performed on the cash flow forecast; ► Assessed the possible mitigating actions identified by the Group in the event that actual cash flows are below cash flow forecast; and ► Assessed the adequacy of the disclosure included in Note 1 of the financial report. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 46 2020 ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT Derecognition of the Kou Sa project Why significant How our audit addressed the key audit matter In performing our procedures, we: ► Reviewed the terms of the SPA and the termination notice received from the vendors; ► Obtained and inspected communications between the Group and the vendors during the 2020 financial year and up to the date of this report; ► Challenged management’s assessment of the accounting treatment of the derecognition of the exploration and evaluation assets and extinguishment of the related deferred consideration (including its presentation on a net basis in the consolidated statement of profit or loss) based on the contractual terms of the SPA, the termination notice and the relevant accounting standards. This included discussion with the Group’s external legal advisers regarding the timing of extinguishment of the Group’s deferred consideration to the vendors; and ► Assessed the adequacy of disclosures and presentation in the financial report. The Group has derecognised its interest in the Kou Sa Project in Cambodia and the related deferred consideration as disclosed in Note 6 to the financial report following the receipt of a termination notice from the vendors in December 2020. The termination notice informed the Group that the vendors had elected to terminate the original Sale and Purchase agreement and subsequent amendments (SPA) under the termination provisions of the SPA. This termination has resulted in the derecognition from the consolidated statement of financial position of capitalised exploration and evaluation assets of $5,710,134 (see Note 12) and the simultaneous extinguishment of the related deferred consideration of $7,799,975 (see Note 16) based on the terms of the SPA and the termination notice. A net gain of $1,884,834 was recognised in the consolidated statement of profit or loss as a result of this termination. The determination of this net gain took into account a final settlement of $US$0.5 million payable to the vendors under the termination provisions of the SPA. Management determined that the presentation of the results of the derecognition on a net basis in the consolidated statement of profit or loss was appropriate in order to reflect the substance of the transaction as the derecognition of the capitalised exploration and evaluation assets and extinguishment of the deferred consideration arose due to the same transaction (termination of the SPA) and with the same counterparties. This was considered a key audit matter because of the significant judgement involved in determining both the timing of derecognition of the capitalised exploration and evaluation assets and the extinguishment of the deferred consideration following receipt of the termination notice as well as whether the presentation of the results of the termination should be recognised on a gross or net basis in the consolidated statement of profit or loss. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 47 2020 ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT Information other than the financial report and auditor’s report thereon The directors are responsible for the other information. The other information comprises the information included in the Company’s 2020 Annual Report, 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, with the exception of the Remuneration Report and our related assurance opinion. 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 financi al report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, an d to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 48 2020 ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment 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. 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 Group’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 Group’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 Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, includ ing 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 Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group 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, actions taken to eliminate threats or safeguards applied. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 49 2020 ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT From the matters communicated to the directors, we determi ne those matters that were of most significance in the audit of the financial report of the current year 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 dete rmine 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 audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 27 to 43 of the directors' report for the year ended 31 December 2020. In our opinion, the Remuneration Report of Geopacific Resources Limited for the year ended 31 December 2020, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and pres entation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Ernst & Young Pierre Dreyer Partner Perth 30 March 2021 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 50 2020 ANNUAL REPORT DIRECTORS’ DECLARATION GEOPACIFIC RESOURCES LIMITED and Controlled Entities DIRECTORS’ DECLARATION In accordance with a resolution of the Directors of Geopacific Resources Limited, I declare that: 1. In the opinion of the Directors: (a) the financial statements and notes, of Geopacific Resources Limited for the financial year ended 31 December 2020 are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2020 and of its performance for the year ended on that date; and (ii) complying with Accounting Standards and Corporations Regulations 2001. (b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1. (c) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. This declaration has been made after receiving the declarations required to be made to the Directors by the Chief Executive Officer and Chief Financial Officer in accordance with section 295A of the Corporations Act 2001 for the financial year ended 31 December 2020. On behalf of the Board Ian Clyne Non-Executive Chairman Perth, Australia 30 March 2021 54 | P a g e 51 2020 ANNUAL REPORTCONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2020 Finance income Administration expenses Consultancy expense Depreciation expense Employee benefits expense Share based payments Occupancy expenses Finance costs Impairment write downs Foreign currency gain Gain on derocognition of Kou Sa Project Exploration expense Loss before income tax Income tax benefit Consolidated 2020 $ 2019 $ 282,423 93,750 (965,938) (1,374,089) (141,634) (2,418,509) (1,120,281) (55,743) (830,927) (20,448) 401,346 1,884,834 (208,345) (4,567,311) (364,164) (743,127) (199,355) (1,672,205) (1,374,119) (58,253) (1,443,017) (75,473) - - (1,501,751) (7,337,714) - - Note 5 14 & 15 16 9 & 11 6 7 Loss after tax from continuing operations (4,567,311) (7,337,714) Loss for the year attributable to: Non-controlling interest Owners of the parent Other comprehensive income/(loss) Items of other comprehensive income/(loss) to be reclassified to profit or loss in subsequent periods (net of tax) Exchange differences on translating foreign controlled entities Other comprehensive (loss)/income for the year, net of tax Total comprehensive loss for the year 52 - (4,567,311) (61,349) (7,276,365) (4,567,311) (7,337,714) (5,358,751) (195,365) (5,358,751) (195,365) (9,926,062) (7,533,079) 55 | P a g e 2020 ANNUAL REPORTCONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2020 Total comprehensive income/(loss) attributable to: Non-controlling interest Owners of the parent Consolidated Note 2020 $ 2019 $ - (9,926,062) (9,926,062) (48,896) (7,484,183) (7,533,079) Loss per share (cents) for loss attributable to the ordinary equity holders of the company: Basic loss per share Diluted loss per share 26 26 (2.59) (2.59) (6.43) (6.43) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 56 | P a g e 53 2020 ANNUAL REPORTCONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 Current Assets Cash and cash equivalents Receivables Prepayments Inventory Total Current Assets Non-Current Assets Receivables Exploration and evaluation assets Mine properties under development Property, plant and equipment Right of use asset Total Non-Current Assets TOTAL ASSETS Current Liabilities Trade and other payables Lease liability Provisions Total Current Liabilities Non-Current Liabilities Trade and other payables Lease liability Provisions Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS Note 8 9 10 11 9 12 13 14 15(a) 16 15(b) 17 16 15(b) 17 Consolidated 2020 $ 2019 $ 34,639,855 392,774 1,384,099 444,169 36,860,897 37,505,067 687,717 1,027,731 339,592 39,560,107 1,046,971 1,844,673 37,975,609 7,244,464 718,272 48,829,989 - 8,262,803 30,803,497 1,892,285 - 40,958,585 85,690,886 80,518,692 6,128,458 220,164 142,907 6,491,529 6,991,223 82,111 65,590 7,138,924 - 496,708 201,691 698,399 2,694,195 - 207,198 2,901,393 7,189,928 10,040,317 78,500,958 70,478,375 Equity Issued capital Reserves Accumulated losses Total Equity attributable to equity holders 18 19 165,801,105 605,072 (87,905,219) 78,500,958 148,972,741 4,843,542 (83,337,908) 70,478,375 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. 57 | P a g e 54 2020 ANNUAL REPORT CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2020 5 7 3 , 8 7 4 , 0 7 ) 1 1 3 , 7 6 5 , 4 ( ) 1 5 7 , 8 5 3 , 5 ( ) 2 6 0 , 6 2 9 , 9 ( 8 1 8 , 9 7 3 , 8 1 ) 4 5 4 , 1 5 5 , 1 ( 1 8 2 , 0 2 1 , 1 8 5 9 , 0 0 5 , 8 7 - - - - - - - - 5 1 7 , 5 8 6 , 4 3 ) 4 1 7 , 7 3 3 , 7 ( ) 5 6 3 , 5 9 1 ( - 7 9 2 0 4 8 , ) 9 4 3 1 6 ( , ) 9 7 0 , 3 3 5 , 7 ( ) 9 4 3 1 6 ( , 0 0 0 , 6 3 4 , 4 4 ) 7 6 3 , 9 2 4 , 2 ( ) 3 1 0 , 5 5 ( 9 1 1 , 4 7 3 , 1 5 7 3 , 8 7 4 , 0 7 e g a P | 8 5 D E T I M I L S E C R U O S E R C I F I C A P O E G s e i t i t n E d e l l o r t n o C d n a Y T I U Q E N I S E G N A H C F O T N E M E T A T S D E T A D I L O S N O C 0 2 0 2 R E B M E C E D 1 3 G N D N E R A E Y E H T R O F I - n o N l e b a t u b i r t t A l a t o T l a t o T y t i u q E $ t s e r e t n I $ t n e r a P $ s e s s o L $ g n i l l o r t n o C f o s r e n w O o t l d e t a u m u c c A r e h t O y t i u q E e v r e s e R ) 9 1 e t o N ( $ n g i e r o F y c n e r r u C e r a h S d e s a B n o i t a l s n a r T s t n e m y a P e v r e s e R ) 9 1 e t o N ( e v r e s e R ) 9 1 e t o N ( $ $ d e u s s I l a t i p a C ) 8 1 e t o N ( $ d e t a d i l o s n o C - - ) 8 4 9 8 7 7 ( , 5 3 9 3 2 7 , - - , 0 0 0 6 3 4 4 4 , , ) 7 6 3 9 2 4 2 ( , , 9 1 1 4 7 3 1 , - - - - , ) 5 6 3 6 7 2 7 ( , , ) 5 6 3 6 7 2 7 ( , , ) 5 6 3 5 9 1 ( - , ) 0 3 7 1 7 4 7 ( , , ) 5 6 3 6 7 2 7 ( , , 8 1 4 5 4 8 3 3 , , ) 3 4 5 1 6 0 6 7 ( , - - - - - 8 4 7 5 5 7 , - , ) 5 6 0 6 2 1 2 ( , , 6 9 8 5 3 5 3 , , 9 0 2 9 9 4 1 , - - - - - ) 5 6 3 5 9 1 ( , ) 5 6 3 5 9 1 ( , - - - - - - , 9 1 1 4 7 3 1 , - - - 8 0 1 , 6 1 1 4 0 1 , , 0 0 0 6 3 4 4 4 , - , 0 0 0 0 5 8 2 , , ) 7 6 3 9 2 4 2 ( , 5 7 3 , 8 7 4 , 0 7 ) 8 0 9 , 7 3 3 , 3 8 ( ) 7 1 3 , 0 7 3 , 1 ( 1 3 5 , 0 4 3 , 3 8 2 3 , 3 7 8 , 2 1 4 7 , 2 7 9 , 8 4 1 ) 1 5 7 , 8 5 3 , 5 ( - , 5 7 3 8 7 4 0 7 , , ) 1 1 3 7 6 5 4 ( , , ) 1 1 3 7 6 5 4 ( , , ) 8 0 9 7 3 3 3 8 ( , , ) 2 6 0 6 2 9 9 ( , , 8 1 8 9 7 3 8 1 , , 1 8 2 0 2 1 1 , , ) 4 5 4 1 5 5 1 ( , - - - , ) 1 1 3 7 6 5 4 ( , - - - - - - , ) 7 1 3 0 7 3 1 ( , - - - , 1 3 5 0 4 3 3 , - , ) 1 5 7 8 5 3 5 ( , , ) 1 5 7 8 5 3 5 ( , - - - - - , 8 2 3 3 7 8 2 , , 1 8 2 0 2 1 1 , - - - - 1 4 7 , 2 7 9 8 4 1 , , 8 1 8 9 7 3 8 1 , , ) 4 5 4 1 5 5 1 ( , 8 5 9 , 0 0 5 , 8 7 ) 9 1 2 , 5 0 9 , 7 8 ( ) 7 1 3 , 0 7 3 , 1 ( ) 0 2 2 , 8 1 0 , 2 ( 9 0 6 , 3 9 9 , 3 5 0 1 , 1 0 8 , 5 6 1 s n o i t a r e p o n g e r o f i f o n o i t a l s n a r t n o e c n e r e f f i d e g n a h c x E s r e n w o s a y t i c a p a c r i e h t n i s r e n w o h t i w s n o i t c a s n a r T r a e y e h t r o f s s o l e v i s n e h e r p m o c l a t o T 0 2 0 2 y r a u n a J 1 t A r a e y e h t r o f s s o L s n o i t a r e p o n g e r o f i f o n o i t a l s n a r t n o e c n e r e f f i d e g n a h c x E s r e n w o s a y t i c a p a c r i e h t n i s r e n w o h t i w s n o i t c a s n a r T r a e y e h t r o f s s o l e v i s n e h e r p m o c l a t o T t s e r e t n i d e l l o r t n o c - n o N f o n o i t i s i u q c A r a e y e h t g n i r u d d e u s s i s e r a h S s t s o c e u s s i e r a h S s t n e m y a p d e s a b e r a h S 9 1 0 2 r e b m e c e D 1 3 t A r a e y e h t g n i r u d d e u s s i s e r a h S s t n e m y a p d e s a b e r a h S s t s o c e u s s i e r a h S 0 2 0 2 r e b m e c e D 1 3 t A 9 1 0 2 y r a u n a J 1 t A r a e y e h t r o f s s o L . s e t o n g n i y n a p m o c c a e h t h t i w n o i t c n u n o c n j i l d a e r e b d u o h s y t i u q e n i s e g n a h c f o t n e m e t a t s d e t a d i l o s n o c e v o b a e h T 55 2020 ANNUAL REPORT CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 31 DECEMBER 2020 CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Interest received Government incentives and other income Interest paid Net Cash Used In Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES Payments for plant and equipment Proceeds from the disposal of plant and equipment Exploration expenditure Mine development expenditure Payment as part of the Kula transaction Proceeds received from the Kula transaction Cash held by subsidiary on its disposal Net Cash Used In Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from share issues (net of costs) Payment of principal portion of lease liability Net Cash From Financing Activities Consolidated Note 2020 $ 2019 $ (5,198,755) 167,886 114,537 (9,950) 29(b) (4,926,282) (4,243,018) 32,519 - (4,513) (4,215,012) (5,837,187) 182 (65,098) (9,703,347) - - - (15,605,450) (1,119,562) 71,429 (697,980) (1,077,051) (745,382) 725,382 (67,745) (2,910,909) 17,398,899 (133,725) 17,265,174 42,006,632 (104,182) 41,902,450 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of the year Effect of exchange rates on cash held in foreign currencies CASH AND CASH EQUIVALENTS AT END OF THE YEAR (3,266,558) 37,505,067 401,346 34,639,855 34,776,529 3,059,221 (330,683) 37,505,067 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 59 | P a g e 56 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Geopacific Resources Limited (the Company or Geopacific) is an Australian Securities Exchange listed public company domiciled in Australia. The consolidated financial report of the Company for the financial year ended 31 December 2020 comprises the Company and its controlled entities (together referred to as the ‘Group’). The registered office is located at 278 Stirling Highway, Claremont, WA, 6010. The Group is principally engaged in the development of the Woodlark Gold Project in Papua New Guinea. The financial report was authorised for issue by the directors on 30 March 2021. Basis of preparation The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, 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. Compliance with Australian Accounting Standards ensures that the financial statements and the notes thereto also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless otherwise stated. The financial report has been prepared on a historical cost basis. Going Concern The financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. During the year ended 31 December 2020, the Group incurred a net loss after tax of $4,567,311 (2019: $7,337,714) and had cash outflows from operations of $4,926,282 (2019: $4,215,012). During October 2020, Geopacific announced the selection of Sprott Private Resources Lending II L.P. (“Sprott”) as its preferred financier for the development of the Woodlark Gold Project. On 5 October 2020, the Company entered into a period of exclusivity until 30 June 2021 with Sprott to finalise a US$85 million Project Finance Facility and US$15 million Callable Gold Stream for development of the Company’s Woodlark Gold Project. The Project Finance Facility and the Gold Stream remain subject to the usual conditions including Sprott committee approval and final documentation. This exclusivity arrangement with Sprott follows the results of extensive technical due diligence on the Woodlark Gold Project by Sprott and its advisors. In November 2020, the Group completed a Project Execution Update on the Woodlark Gold Project which indicated a thirteen year operating life and an estimated capital expenditure requirement of $254.8 million. 60 | P a g e 57 2020 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Going Concern (continued) On 14 December 2020, the Company announced a successful $140 million share placement which was finalised during February 2021. The Placement consisted of two tranches at an Issue Price of $0.42 per share which comprised the issue of 333.3 million shares: (cid:120) Tranche 1: 43.7 million shares issued in December 2020 raising $18.4 million. The raise was made pursuant to the Company’s placement capacity under Listing Rule 7.1 and Listing Rule 7.1A; and (cid:120) Tranche 2: 289.6 million shares were issued in February 2021 raising $121.6 million. The raise was subject to shareholder approval under Listing Rules 7.1 and 10.11 which was granted in February 2021 at an Extraordinary General Meeting of the Company. On 11 January 2021 the Company released a Share Purchase Plan Offer (SPP) to its eligible shareholders at $0.42 per share to raise up to $10 million. The SPP closed on 10 February 2021, applications for 4.5 million shares were received and subsequently issued under the Plan raising a further $1.9 million. Whilst the Group had cash on hand of $34,639,855 (2019: $37,505,067) at 31 December 2020 and currently has cash on hand of $143,857,106 at 30 March 2021, its cash flow forecast for the year ending 31 December 2021 reflects that the Group will require additional funding over that period in order to meet the Group’s forecast expenditure and complete the development and construction of the Woodlark Gold Project mine and processing plant. The Directors, however, have discretion regarding the level and timing of expenditure to be incurred on the development and construction as a large component of the forecast expenditure is currently not yet committed. The Directors believe that the equity component required to fund the development and construction of the Woodlark Gold Project mine and processing plant has been completed via the $142 million share Placement and subsequent SPP. As indicated above, the Group is currently negotiating an appropriate debt funding package with Sprott in order to complete the total forecast funding for the Woodlark Gold Project. The Directors have considered the funding and operational status of the business in arriving at their assessment of going concern and believe that the going concern basis of preparation is appropriate based on: (cid:120) Having adequate cash on hand at 30 March 2021 to meet the forecast cash outlay for completion of the Civil Works Program, being the first phase of the Woodlark Gold Project development and other committed costs for the year ending 31 December 2021; (cid:120) The Group’s ability to raise funds from external sources to meet ongoing development, exploration and working capital requirements, as demonstrated by the capital raisings of $18.4 million during the year ended 31 December 2020 and a further $123.5 million in February 2021; (cid:120) The Group’s ability to manage the timing of cash flows to meet the committed obligations of the business as and when they fall due; 61 | P a g e 58 2020 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Going Concern (continued) (cid:120) The Directors are confident of being able to finalise the necessary debt funding from Sprott in order to complete the development and construction of the Woodlark Gold project, the Directors do have the flexibility to amend business plans, should global and market conditions not be conducive to raise the necessary debt funding required to fully fund the development of the Woodlark Gold Project, taking into account the cash on hand and the commitments as disclosed in Note 21 at 31 December 2020, and to defer the Woodlark Gold Project development until market conditions improve. New and amended Accounting Standards and Interpretations adopted during the year The Group applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2020. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. The details of the standards and amendments adopted from 1 January 2020 are set out below. AASB 2019-3 Amendments to Australian Accounting Standards (AASs) – Interest Rate Benchmark Reform [Phase 1] Interbank offered rates (IBOR) are benchmark interest rates referenced in financial products worldwide. Examples include: (cid:120) A loan that incurs interest quarterly at 3-month LIBOR plus a margin (cid:120) An interest rate swap involving the exchange of fixed-rate monthly interest payments for variable interest payments based on monthly BBSW plus a margin Due to IBORs’ widespread usage, it has been observed that the market-wide reform of such interest rate benchmarks, including its replacement with alternative benchmark rates, could have significant implications on financial reporting. Addressing the financial reporting effects of IBOR reform comes in two phases. The first phase deals with urgent issues affecting financial reporting before the replacement of existing interest rate benchmarks. It introduces amendments to AASB 7 Financial Instruments: Disclosures, AASB 9 Financial Instruments and AASB 139 Financial Instruments: Recognition and Measurement, providing mandatory temporary relief enabling hedge accounting to continue during the period of uncertainty before existing interest rate benchmarks are replaced with alternative “nearly risk-free” benchmarks. These amendments apply retrospectively. However, any hedge relationships that have previously been de- designated cannot be reinstated, nor can any hedge relationships be designated with the benefit of hindsight. AASB 2018-7 Amendments to AASs – Definition of Material The amendments align the definition of ‘material’ across AASB 101 and AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors, and clarify certain aspects of the definition. The new definition states that, ’Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.’ The amendments clarify that materiality will depend on the nature or magnitude of information, or both. An entity will need to assess whether the information, either individually or in combination with other information, is material in the context of the financial statements. The amendments are applied prospectively. 62 | P a g e 59 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) New and amended Accounting Standards and Interpretations adopted during the year (continued) AASB 2018-6 Amendments to AASs – Definition of a Business The definition of a business helps entities to distinguish business combinations from asset purchases. Business combinations are accounted for using the acquisition method, which, among other things, may give rise to goodwill. Accounting treatments for other types of transactions may also be affected, depending on whether the transaction involves a business (e.g., A loss of control transaction where a retained interest is accounted for using the equity method). With the aim of helping companies determine whether an acquired set of activities and assets is a business, the amendments to AASB 3 Business Combinations: (cid:120) Clarify the minimum requirements for a business to exist (cid:120) Remove the assessment of whether market participants are capable of replacing missing elements of a business (cid:120) Provide guidance to help entities assess whether an acquired process is substantive (cid:120) Narrow the definitions of a business and of outputs (cid:120) Introduce an optional fair value concentration test to identify a business These amendments are applied prospectively. AASB 2019-1 Amendments to AASs – References to the Conceptual Framework The Conceptual Framework for Financial Reporting (Conceptual Framework) describes the objective of, and the concepts for, general purpose financial reporting. The purpose of the Conceptual Framework is to: (cid:120) Assist in the development of accounting standards; (cid:120) Help preparers develop consistent accounting policies where there is no applicable standard in place; and (cid:120) Assist all stakeholders to understand the standards better. The Conceptual Framework is not a standard, and none of the concepts override those in any standard or any requirements in a standard. The application of the Conceptual Framework is at present limited to for-profit entities. The revised Conceptual Framework includes: a new chapter on measurement; guidance on reporting financial performance; improved definitions and guidance - in particular, the definitions of an asset and a liability; and clarifications in important areas, such as the roles of stewardship, prudence and measurement uncertainty in financial reporting. Conceptual Framework for Financial Reporting issued on 29 March 2018 The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The purpose of the Conceptual Framework is to assist the International Accounting Standard Board (IASB) in developing standards, to help preparers develop consistent accounting policies where there is no applicable standard in place and to assist all parties to understand and interpret the standards. This will affect those entities which developed their accounting policies based on the Conceptual Framework. The revised Conceptual Framework includes some new concepts, updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts. These amendments had no impact on the consolidated financial statements of the Group. 63 | P a g e 60 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) New and amended Accounting Standards and Interpretations issued but not yet effective Australian Accounting Standards that have recently been issued or amended but are not yet effective and have not been adopted by the Group for the annual reporting year ended 31 December 2020 are outlined in the table below. Reference Title Summary COVID-19- Related Rent Concessions AASB 2020-4 Amend- ments to AASs Due to the COVID-19 pandemic, many lessors have granted rent concessions to lessees that impact lease payments. Rent concessions granted by a including any lessor can take many combination of: (cid:120) A rent payment holiday; (cid:120) A reduction in lease payments for a period of forms, time; Application date of standard 1 2020 June for Group 1 January 2021 to AASB 16 (cid:120) Other arrangements providing rent relief. A concession might also include a change to the lease term. The amendment is applied retrospectively with the cumulative effect of initial application recognised as an adjustment to the opening balance of retained earnings or other component of equity, as appropriate, at the beginning of the annual reporting period in which the lessee first applies the amendment. Earlier application is permitted. Similar relief was not provided to lessors for several reasons, including the fact that AASB 16 did not introduce significant changes to lessor accounting. impact of the The Group amendments, however, the amendments are not expected to have a material impact on the Group. is assessing the 64 | P a g e 61 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) New and amended Accounting Standards and Interpretations issued but not yet effective (continued) Reference Title Summary AASB 17 replaces AASB 4, AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts for for-profit entities. AASB 17 applies to all types of insurance contracts (i.e., life, non-life, direct insurance and reinsurance), regardless of the type of entity that issues them, as well as to certain guarantees and financial instruments with discretionary participation features. The overall objective of AASB 17 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements in AASB 4, which are largely based on grandfathering previous local accounting policies, AASB 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects. The core of AASB 17 is the general model, supplemented by: • A specific adaptation for contracts with direct participation features (the variable fee approach) • A simplified approach (the premium allocation approach) mainly for short-duration contracts The Group is currently assessing the impact of the amendments. The AASB issued amendments to AASB 101 Presentation of Financial Statements to clarify the requirements for classifying liabilities as current or non-current. The amendments clarify: • What is meant by a right to defer settlement • That a right to defer must exist at the end of the reporting period • That classification is unaffected by the likelihood that an entity will exercise its deferral right in a • That only convertible liability is itself an equity instrument would the terms of a liability not impact its classification. The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and must be applied retrospectively. The Group is currently assessing the impact of the amendments. if an embedded derivative AASB-17 Insurance Contracts AASB 2020-1 Amendments to AASB 101 – Classification of Liabilities as Current or Non-current 62 Application date of standard 1 January 2023 for Group 1 January 2023 1 January 2023 1 January 2023 65 | P a g e 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) New and amended Accounting Standards and Interpretations issued but not yet effective (continued) Reference Title Summary AASB 2020-3 Amendments to AASB 116 – Property, Plant and Equipment: Proceeds before Intended Use AASB 2020-3 Amendment to AASB 9 – Fees in the ‘10 per cent’ Test for Derecognition of Financial Liabilities Previously under AASB 116 Property, Plant and Equipment, net proceeds from selling items produced while constructing an item of property, plant and equipment were to be deducted from the cost of the asset. Due to interpretation issues, AASB 116 was amended, the Standard now prohibits entities deducting from the cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss. The Group is assessing the impact of the amendments, however, the amendments are not expected to have a material impact on the Group. Under AASB 9, an existing financial liability that has been modified or exchanged considered extinguished when the contractual terms of the new liability are substantially different, measured by the “10 per cent” test. That is, when the present value of the cash flows under the new terms, including any fees paid or received, is at least 10 per cent different from the present value of the remaining cash flows of the original financial liability. The amendment to AASB 9 clarifies that fees included in the 10 per cent test are limited to fees paid or received between the borrower and the lender, including amounts paid or received by them on the other’s behalf. When assessing the significance of any difference between the new and old contractual terms, only the changes in contractual cash flows between the lender and borrower are relevant. Consequently, fees incurred on the modification or exchange of a financial liability paid to third parties are excluded from the 10 per cent test. The Group is currently assessing the impact of the amendments. is Application date of standard 1 January 2022 for Group 1 January 2022 1 January 2022 1 January 2022 66 | P a g e 63 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) New and amended Accounting Standards and Interpretations issued but not yet effective (continued) Application date of standard 1 January 2022 for Group 1 January 2022 Reference Title Summary AASB 2020-3 Amendments to AASB 137 – Onerous Contracts – Cost of Fulfilling a Contract AASB 137 defines an onerous contract as a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic it. benefits expected to be received under Unavoidable cost is the lower of the cost of fulfilling the contract and any compensation or penalties arising from failure to fulfil it AASB 137 does not specify which costs to include in determining the cost of fulfilling a contract. Consequently, AASB 137 was amended to clarify that when assessing whether a contract is onerous, the cost of fulfilling the contract comprises all costs that relate directly to the contract, which includes both the incremental costs of fulfilling that contract (e.g., materials and labour) and an allocation of other costs that relate directly to fulfilling contracts (e.g., depreciation of property, plant and equipment). The amendments are not expected to have a material impact on the Group. 67 | P a g e 64 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Significant accounting policies The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. (a) Cash and cash equivalents Cash and short-term deposits in the consolidated statement of financial position comprise cash at bank and on hand. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above. (b) Share 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 from the proceeds. (c) Employee benefits Wages, salaries and annual leave Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be wholly settled within 12-months of the reporting date are recognised in provisions in respect of employees’ services up to the reporting date. The liabilities are measured at the amounts expected to be paid when they are settled. All other amounts are considered other long-term benefits for measurement purposes and are measured at the present value of expected future payments to be made in respect to services provided by employees. Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made, in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Superannuation The Group makes contributions on behalf of its employees to complying superannuation funds in accordance with the rates outlined by the statutory regulations. 68 | P a g e 65 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Employee benefits (continued) Share-based payments The fair value of options and rights granted to Directors and employees is recognised as a share-based payments expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options or rights. The fair value at grant date is determined by a combination of internal and external sources using a Black- Scholes option pricing model and independent third party valuations that take into account the exercise price, the term of the right or option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the right or option. The fair value of the options and rights granted is adjusted to reflect market vesting conditions, but excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options and rights that are expected to become exercisable. At each year end, the Company revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. Upon the exercise of options or rights, the balance of the share-based payments reserve relating to those options is transferred to a vested share-based payments reserve and the proceeds received, net of any directly attributable transaction costs, are credited to share capital. (d) Financial Instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets Initial recognition and measurement Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, fair value through other comprehensive income (OCI), or fair value through profit or loss (FVTPL). The classification of financial assets at initial recognition that are debt instruments depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient for contracts that have a maturity of one year or less, are measured at the transaction price determined under AASB 15. 69 | P a g e 66 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d) Financial Instruments (continued) Initial recognition and measurement (continued) In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest’ (SPPI) on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level and have a business model of holding the financial asset and collecting contractual cash flows. The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Subsequent measurement For purposes of subsequent measurement, financial assets are classified in four categories: (cid:120) (cid:120) Financial assets at amortised cost (debt instruments); Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments); Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments); and Financial assets at fair value through profit or loss. (cid:120) (cid:120) Financial assets at amortised cost (debt instruments) The Group measures financial assets at amortised cost if both of the following conditions are met: (cid:120) The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. (cid:120) Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment. Interest received is recognised as part of finance income in the statement of profit or loss and other comprehensive income. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. Financial assets at fair value through profit or loss Financial assets that do not meet the criteria for amortised cost are measured at fair value through profit and loss. 70 | P a g e 67 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d) Financial Instruments (continued) Impairment of financial assets The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. In this regard, the Group recognises a loss allowance based on the financial asset’s lifetime ECL at each reporting date. The Group has assessed the risk from a provision matrix that is based on the Group’s historic credit loss experience, adjusted for factors that are specific to the debtor, general economic conditions and an assessment of both the current as well as forecast conditions at the reporting date. For all other financial assets measured at amortised cost, the Group recognises lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to a 12-month ECL. The determination of the ECL includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and forward-looking information. The Group considers an event of default has occurred when a financial asset is more than 90 days past due or external sources indicate that the debtor is unlikely to pay its creditors, including the Group. A financial asset is credit impaired when there is evidence that the counterparty is in significant financial difficulty or a breach of contract, such as a default or past due event has occurred. The Group writes off a financial asset when there is information indicating the counterparty is in severe financial difficulty and there is no realistic prospect of recovery. Financial liabilities Initial recognition and measurement Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest method. No gain or loss is recognised in profit or loss upon conversion or expiration of the conversion option. Transaction costs that relate to the issue of the convertible notes are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognised directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component and are amortised over the lives of the convertible notes using the effective interest method. 71 | P a g e 68 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d) Financial Instruments (continued) Initial recognition and measurement (continued) The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the conversion option is exercised, in which case, the balance recognised in equity will be transferred to issued capital. Where the conversion option remains unexercised at the maturity date of the convertible note, the balance recognised in equity will be transferred to accumulated losses within equity. (e) Foreign currency transactions and balances Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is Geopacific’s functional and presentation currency. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of profit or loss and other comprehensive income. Group companies The financial results and position of foreign operations, whose functional currency is different from the Group’s presentation currency, are translated as follows: (cid:120) assets and liabilities are translated at year-end exchange rates prevailing at reporting date; and (cid:120) income and expenses are translated at average exchange rates for the period. Exchange differences arising on translation of foreign operations are recognized in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is reclassified to profit or loss in the period. 72 | P a g e 69 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (f) Goods and Services Tax (GST) and Value Added Tax (VAT) Revenues, expenses and assets are recognised net of the amount of associated GST or VAT, unless the GST or VAT incurred is not recoverable from the taxation authority. In this case, the GST or VAT is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST or VAT receivable or payable. The net amount of GST or VAT recoverable from, or payable to, the taxation authority is included with other receivables or payables in the consolidated statement of financial position. Cash flows are presented on a gross basis. The GST or VAT components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. (g) Impairment of non-financial assets Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. 73 | P a g e 70 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (h) Income tax The income tax expense or revenue for the year is the tax payable on the current year’s taxable income based on the national income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on the laws that have been enacted or substantively enacted by the reporting date. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. No deferred tax asset or liability is recognised in relation to temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. 74 | P a g e 71 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (i) Loss per share Basic loss per share Basic loss per share is calculated by dividing the result attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year. Diluted loss per share Diluted loss per share adjusts the figures used in the determination of basic loss per share to take into account the after tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. (j) Mineral Tenements and Deferred Mineral Exploration Expenditure Exploration and evaluation expenditure is carried forward as an asset when rights to tenure are current and: (cid:120) such costs are expected to be recouped through the successful development and exploitation of the area of interest, or by its sale; or (cid:120) exploration activities in the area of interest have not reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active or significant operations in, or in relation to, the area of interest are continuing. In the event that an area of interest is abandoned or if the Directors consider the expenditure to be of reduced value, accumulated costs carried forward are written off or impaired in the year in which that assessment is made. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Immediate restoration, rehabilitation and environmental costs necessitated by exploration and evaluation activities are treated as exploration and evaluation expenditure. Exploration activities resulting in future obligations in respect of restoration costs result in a provision to be made by capitalising the estimated costs, on a discounted basis, of restoration. The unwinding of the effect of the discounting on the provision is recorded as a finance cost in the statement of profit or loss. When a decision is made to proceed with development in a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then transferred to mine properties under development. 75 | P a g e 72 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (k) Mine properties under development Once technical feasibility and commercial viability of extraction of mineral resources in a particular area of interest becomes demonstrable, the exploration and evaluation assets attributable to that area of interest are reclassified as mine properties under development. Mine properties under development represent the direct and indirect costs incurred in preparing mines for production and includes site upgrades, clearing, stripping and waste removal costs incurred before production commences. These costs also include borrowing costs incurred during the development stage. These costs are capitalised to the extent that they are expected to be recouped through the successful exploitation of the related mining leases. Once production commences, these costs will be amortised using the units of production method based on the estimated economically recoverable reserves to which they relate or are written off if the mine property is abandoned. Mine properties under development are assessed for impairment if an impairment trigger is identified. For the purposes of impairment testing capitalised mine properties are allocated to the cash generating unit (CGU) to which the properties relate. (l) Plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the consolidated statement of profit or loss and other comprehensive income during the financial year in which they are incurred. Depreciation on assets is calculated using the straight-line or diminishing value method to allocate their cost, net of their residual values, over their estimated useful lives, as follows: (cid:120) Plant and equipment (cid:120) Computer software (cid:120) Furniture and fittings 5% - 50% 25% - 100% 4% - 15% The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected to arise from the continued use of the asset. 76 | P a g e 73 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Plant and equipment (continued) Any gains or loss on derecognition of an asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) are included in the consolidated statement of profit or loss and other comprehensive income in the period the item is derecognised. (m) Inventory Inventories are valued at the lower of cost and net realisable value. Cost is determined on a first-in-first out (FIFO) basis. Any provision for obsolescence or damage is determined by reference to specific stock items identified. The carrying value of obsolete or damaged items is written down to net realisable value. (n) Principles of consolidation The consolidated financial statements comprise the financial statements of Geopacific and its controlled entities, referred to collectively throughout these financial statements as the “Group”. Controlled entities are consolidated from the date on which control commences until the date that control ceases. Control is achieved when the Group is exposed, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has: (cid:120) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); (cid:120) Exposure, or rights, to variable returns from its involvement with the investee; and (cid:120) The ability to use its power over the investee to affect its returns. Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: (cid:120) The contractual arrangement(s) with the other vote holders of the investee; (cid:120) Rights arising from other contractual arrangements; and (cid:120) The Group’s voting rights and potential voting rights. The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. 77 | P a g e 74 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (n) Principles of consolidation (continued) The financial statements of the controlled entities are prepared for the same reporting period as the parent company using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist. The balances and effects of transactions between controlled entities included in the consolidated financial statements have been fully eliminated. Non-controlling interest Non-controlling interests are allocated their share of net profit or loss after tax in the consolidated statement of profit or loss and other comprehensive income and are presented within equity in the consolidated statement of financial position, separately from the equity of the owners of the parent. Losses are attributed to the non-controlling interests even if that results in a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. (o) Lease liability At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate and amounts expected to be paid under residual value guarantees. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term or a change in the in-substance fixed lease payments. 78 | P a g e 75 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (o) Lease liability (continued) Short-term leases and leases of low-value assets The Group applies the short-term and lease of low-value assets recognition exemptions to leases that are considered short-term or of low value (i.e. those leases that have a lease term of less than 12 months or where the value of the leased asset when new is below $10,000). Lease payments on short-term leases and leases of low-value assets are expensed over the lease term. Right-of-use asset The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised assets are depreciated on a straight-line basis over the shorter of its estimated useful life and lease term. Right-of-use assets are assessed for impairment. (p) Interest income Interest income is recognised as the interest accrues using the effective interest method. (q) Comparative figures When required by Accounting Standards or in order to enhance comparability, comparative figures have been adjusted to conform to changes in presentation for the current financial year. (r) Provisions Provisions are recognised when the Group has legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period. 79 | P a g e 76 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (s) Business combinations The acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any asset or liability resulting from a contingent consideration arrangement and the fair value of any pre- existing equity interest in the subsidiary. Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition by acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree’s net identifiable assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in statement of profit or loss. 80 | P a g e 77 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 2 FINANCIAL RISK MANAGEMENT The Group has exposure to a variety of risks arising from its use of financial instruments. This note presents information about the Group’s exposure to the specific risks, and the policies and processes for measuring and managing those risks. Further quantitative disclosures are included throughout this financial report. The Board of Directors have the overall responsibility for the risk management framework. (a) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from transactions with customers and investments. The carrying amount of financial assets included in the consolidated statement of financial position represents the Group’s maximum exposure to credit risk in relation to those assets. The Group does not hold any credit derivatives to offset its credit exposure. The Group trades only with recognised, credit worthy third parties and as such collateral is not requested nor is it the Group’s policy to securitise its trade and other receivables. Receivable balances are monitored on an ongoing basis with the result that the Group does not have a significant exposure to bad debts. The Group has the following concentrations of credit risk: Receivables The Group has no listed investments and the current nature of the business activity does not result in trading receivables. The receivables are through the normal course of business. Non-current receivables are expected to be recovered by the Group notwithstanding extended timing of receipt. The risk of non- recovery of receivables from this source is considered to be negligible. Cash deposits The Group’s primary banker is the ANZ Banking Group. The Moody’s credit rating of ANZ Banking Group is A1. (b) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages its liquidity risk by monitoring its cash reserves and forecast spending. Management is cognisant of the future demands for resources to finance the Group’s current and future operations, and consideration is given to the liquid assets available to the Group before commitment is made for future expenditure or investment. 81 | P a g e 78 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 2 FINANCIAL RISK MANAGEMENT (CONTINUED) (b) Liquidity risk (continued) The following table reflects the liquidity risk arising from the financial liabilities held by the Group at balance date. The contractual maturity reflects undiscounted gross amounts: Consolidated 2020 Carrying amount $ Contractual cash flows $ 6 months or less $ 6-12 months $ 1-5 years $ Financial Liabilities - Due for Payment Trade and other payables Lease liability Total expected outflows 6,128,458 716,872 6,845,330 6,128,458 867,615 6,996,073 6,128,458 124,500 6,252,958 - 106,888 106,888 - 636,227 636,227 Consolidated 2019 Carrying amount $ Contractual cash flows $ 6 months or less $ 6-12 months $ 1-5 years $ Financial Liabilities - Due for Payment Trade and other payables Lease liability Total expected outflows 9,685,418 82,111 10,911,920 92,142 9,767,529 11,004,062 5,871,024 55,285 5,926,309 1,120,199 36,857 1,157,056 3,920,697 - 3,920,697 At 31 December 2020, the Group had no interest-bearing liabilities (2019: nil). 82 | P a g e 79 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 2 FINANCIAL RISK MANAGEMENT (CONTINUED) (c) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising any return. Foreign exchange risk The Group operates in Australia and Papua New Guinea and is exposed to foreign exchange risks arising from the fluctuation of the exchange rates of the Australian dollar, United States dollar and the Papua New Guinean Kina. The Group has no further material foreign currency dealings other than the above. Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the functional currency of the Group entity in question. The Group does not have a formal foreign currency risk management policy however, it monitors its foreign currency expenditure in light of exchange rate movements. Foreign currency sensitivity The following table demonstrates the sensitivity to a reasonably possible change in the United States Dollar and Australian Dollar exchange rates, with all other variables held constant. The impact on the Group’s pre-tax equity is due to changes in the fair value of monetary assets and liabilities. The Group’s exposure to foreign currency changes for all other currencies is not material. Profit and Loss Equity 500bp increase $ 500bp decrease $ 500bp increase $ 500bp decrease $ - - - - - - - - (3,324) (267) 3,324 267 3,501 609,525 (3,501) (609,525) 2020 - AUD foreign currency sensitivity 2019 - AUD foreign currency sensitivity 2020 - USD foreign currency sensitivity 2019 - USD foreign currency sensitivity Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s cash and cash equivalents. The Group’s income and operating cash flows are not materially exposed to changes in market interest rates. The assets are cash and cash equivalents and other short-term interest-bearing deposits. No financial instruments have been used to mitigate risk. 83 | P a g e 80 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 2 FINANCIAL RISK MANAGEMENT (CONTINUED) (c) Market risk (continued) Interest rate risk (continued) The interest profile of the Group’s interest-bearing financial instruments at the reporting date are outlined in the table below: Variable rate instruments: Cash and cash equivalents Total Consolidated 2020 $ 2019 $ 34,639,855 34,639,855 37,505,067 37,505,067 The following table demonstrates the sensitivity to a reasonably possible change in interest rates on the cash and cash equivalent holdings at the reporting date. The analysis assumes that all other variables remain constant. Profit and Loss Equity 100bp increase $ 100bp decrease $ 100bp increase $ 100bp decrease $ 2020 - Variable rate instruments 2019 - Variable rate instruments 346,399 375,051 (346,399) (375,051) 346,399 375,051 (346,399) (375,051) (d) Capital management The Board’s policy is to maintain a sound capital base, defined as equity, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors capital expenditure and cash flows as mentioned in (b) above. The objective when managing capital is to safeguard the Group’s ability to continue as a going concern, so as to maintain a strong capital base sufficient to continue the development and exploration of its projects. In order to maintain or adjust the capital structure, the Group may return capital to shareholders, issue new shares or sell assets. The Group’s focus has been to raise sufficient funds through equity to fund development and exploration activities. There were no changes in the Group’s approach to capital management during the year. Risk management policies and procedures are established with regular monitoring and reporting. Neither the Company nor any of its controlled entities are subject to externally imposed capital requirements. 84 | P a g e 81 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 2 FINANCIAL RISK MANAGEMENT (CONTINUED) (e) Impairment Losses During the 2020 reporting period $14,670 was written off in relation to the Group’s financial assets (2019: $75,473). (f) Fair values versus carrying amounts The carrying amounts of financial assets and liabilities as described in the consolidated statement of financial position represent their estimated net fair value. 3 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS Estimates and judgments are continually evaluated and are based on historical experience and other factors including expectations of future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Key judgments Exploration and evaluation expenditure The Group’s policy in relation to the accounting for exploration and evaluation expenditure is stated in Note 1(j). There is judgment involved in determining the treatment of exploration and evaluation expenditure, including, determining whether it should be carried forward as capitalised exploration, transferred to mine properties under development, or written off to the consolidated statement of profit or loss and comprehensive income. The Board and management give due consideration to the areas of interest relating to the exploration and evaluation expenditure on a regular basis and are confident that decisions to either transfer, write off or carry forward such expenditure fairly reflects the prevailing situation. In the year ended 31 December 2020, no previously capitalised exploration and evaluation expenditure was transferred to mine properties under development (2019: $30,461,193); $5,710,134 of previously capitalised exploration and evaluation expenditure related to the Kou Sa project was derecognised in the year ended 31 December 2020 (2019: nil), see Note 6. Mine properties under development The Group’s policy in relation to the accounting for mine properties under development is stated in Note 1(k). There is judgment involved in determining the treatment of mine properties under development, including, determining whether it should be carried forward as capitalised mine properties under development, transferred to property, plant and equipment, transferred to exploration and evaluation expenditure or written off to the consolidated statement of profit or loss and comprehensive income. The Board and management give due consideration to the areas of interest relating to mine properties under development on a regular basis and are confident that decisions to either transfer, write off or carry forward such expenditure fairly reflects the prevailing situation. In the year ended 31 December 2020 no mine properties under development has been transferred or written off (2019: nil). 85 | P a g e 82 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 3 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED) Key judgments (continued) Leases - Estimating the incremental borrowing rate The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group ‘would have to pay’, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary’s functional currency). The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the subsidiary’s stand-alone credit rating). The weighted average incremental borrowing rate applied to the leases is 8% (2019: 8%). Kou Sa Project In January 2015 a Group subsidiary, Royal Australia Resources Ltd, entered into an agreement to acquire 100% of the issued capital of Golden Resource Development Co Ltd (the Kou Sa Project) for US$14 million, US$7.7 million of this amount was paid as required under the agreement. Through an amendment to the original agreement a revised payment schedule for the remaining US$6.3 million was agreed, these payments were dependent upon the completion of certain milestones in regard to the project, with the first payment to be completed no later than 21 September 2019. The Group continued to progress the Kou Sa Project throughout 2019 and 2020, while further negotiations were conducted with the intention to further restructure and defer the remaining consideration payments. No mutually satisfactory resolution could be agreed and a termination notice was subsequently received from the vendors in December 2020. On receipt of the termination notice, management concluded that it no longer controlled the Kou Sa Project assets and they were, therefore, derecognised. On that basis, the related deferred consideration payable was also treated as extinguished on receipt of the termination notice. Key Estimates Share based payments The Group measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by a combination of internal and external sources using a Black-Scholes option pricing model and independent third party valuations. Refer Note 25 for details of estimates and assumptions used. 86 | P a g e 83 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 4 PARENT COMPANY INFORMATION The following information has been extracted from the books and records of the parent entity, Geopacific, and has been prepared in accordance with Accounting Standards. STATEMENT OF FINANCIAL POSITION Assets Current assets Non-current assets Total Assets Liabilities Current liabilities Non-current liabilities Total Liabilities Equity Issued capital Reserves Accumulated losses Total Equity STATEMENT OF COMPREHENSIVE INCOME Total loss TOTAL COMPREHENSIVE LOSS Guarantees Parent 2020 $ 2019 $ 33,987,184 47,127,481 81,114,665 37,158,663 33,939,118 71,097,781 2,085,435 528,272 2,613,707 591,501 27,905 619,406 165,801,105 1,825,415 (89,125,562) 78,500,958 149,029,347 705,133 (79,256,105) 70,478,375 (9,869,457) (9,869,457) (8,052,188) (8,052,188) Geopacific has not entered into any guarantees, in relation to the debts of its subsidiaries (2019: nil). The Company has term deposits of $250,000 (2019: $132,000) over the lease of its office premises and credit card facilities. This has been classified as trade and other receivables in current assets. Contingent liabilities At 31 December 2020, Geopacific had no contingent liabilities (2019: nil). Contractual commitments At 31 December 2020, Geopacific had not entered into any contractual commitments for the acquisition of property, plant and equipment (2019: nil). 87 | P a g e 84 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 5 FINANCE INCOME Government incentives Other income Interest income – financial institutions Total finance income 6 GAIN ON DERECOGNITION OF KOU SA PROJECT Kou Sa Project Exploration & evaluation asset derecognised (Note 12) Deferred consideration liability (Note 16) Payables derecognised Payables recognised Total Consolidated 2020 $ 2019 $ 100,000 14,537 167,886 282,423 61,231 - 32,519 93,750 Consolidated 2020 $ 2019 $ (5,710,134) 7,799,975 404,828 (609,835) 1,884,834 - - - - - In January 2015, the Company’s subsidiary, Royal Australia Resources Ltd, entered into an agreement to acquire 100% of the issued capital of Golden Resource Development Co Ltd (the Kou Sa Project) for US$14 million. US$7.7 million of the acquisition price was paid as required under the agreement. An amendment to the original agreement was executed in September 2016 which revised the acquisition payment schedule for the remaining US$6.3 million. The amendment resulted in the remaining acquisition payments being due for payment as follows: (cid:120) US$1.575 million due at completion of a bankable feasibility study for the Kou Sa Project, or by 21 September 2019, whichever is earlier; and (cid:120) US$4.725 million to be paid in equal instalments over three years following payment of the above US$1.575 million. The Group have been in negotiation with the vendors of the Kou Sa Project during 2019 and 2020 to restructure the deferred consideration payments. No mutually satisfactory resolution could be agreed and a termination notice was subsequently received from the vendors in December 2020. On receipt of the termination notice, management concluded that it no longer controlled the Kou Sa project assets and they were, therefore derecognised. On that basis, the related deferred consideration payable was also treated as extinguished. As a result, the Group has reflected the derecognition of the Kou Sa project assets and related deferred consideration liability in the reporting period ended 31 December 2020 which resulted in a gain on derecognition of $1,884,834 as detailed above. This gain included recognising a final settlement of US$0.5 million payable to the vendors under the termination provisions of the original agreement to acquire the Kou Sa project. 88 | P a g e 85 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 7 INCOME TAX (a) The components of the income tax benefit comprise: Current tax Deferred tax Total tax benefit (b) Reconciliation of income tax to prima facie tax benefit: Consolidated 2020 $ 2019 $ - - - - - - Consolidated 2020 $ 2019 $ Net loss before tax (4,567,311) (7,337,714) Prima facie tax benefit at 30% (2019: 30%) (1,370,193) (2,201,314) Adjusted for the tax effect of: Non-deductible share based payments Other non-deductible expenses Derecognition of Kou Sa Project Tax losses not recognised Total tax benefit 336,085 (1,355,099) (565,450) 2,954,657 - 412,236 637,565 - 1,151,513 - 89 | P a g e 86 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 7 INCOME TAX (CONTINUED) (c) Deferred tax: Deferred tax assets: Provisions Tax losses Total before offset Offset by deferred tax liabilities Total deferred tax assets after offset Deferred tax liabilities: Exploration and evaluation expenditure Mine properties under development Total before offset Offset by deferred tax assets Total deferred tax liabilities after offset (d) Deferred tax assets not recognised: Deferred tax assets not recognised Tax losses not brought to account Provisions Business related costs Total deferred tax assets not recognised Consolidated 2020 $ 2019 $ 45,082 11,891,298 11,936,380 (11,936,380) - 53,788 9,788,094 9,841,882 (9,841,882) - 553,402 11,382,978 11,936,380 (11,936,380) - 600,833 9,241,049 9,841,882 (9,841,882) - Consolidated 2020 $ 2019 $ 53,198,157 48,592 225,287 53,472,036 55,194,328 28,048 193,990 55,416,366 Movement of tax losses not brought to account Tax losses not brought to account - beginning of the year Tax losses not recognised Under/(over) Foreign exchange fluctuation Tax losses – end of the year Tax losses - recognised to the extent of the deferred tax liability Tax losses not brought to account – end of the year 55,194,328 2,954,657 456,941 (5,407,769) 53,198,157 (11,891,298) 41,306,859 44,149,379 1,151,512 9,588,905 304,532 55,194,328 (9,788,094) 45,406,234 Deferred tax assets relating to tax losses have only been recognised in Papua New Guinea to the extent of the deferred tax liability balance. The deferred tax assets relating to the remainder of the Group have not been recognised in the current reporting period as the Directors do not believe the realisation is probable at this point in time. 90 | P a g e 87 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 8 CASH AND CASH EQUIVALENTS Current Cash at bank Total cash and cash equivalents 9 RECEIVABLES Current Security deposits Sundry debtors GST receivable Total current trade and other receivables Non-current Security deposits Sundry debtors GST receivable Total non-current trade and other receivables Consolidated 2020 $ 2019 $ 34,639,855 34,639,855 37,505,067 37,505,067 Consolidated 2020 $ 2019 $ 250,000 18,418 124,356 392,774 9,816 35,821 1,001,334 1,046,971 264,532 40,930 382,255 687,717 - - - - Write down During the reporting period a write down of $14,670 was recorded in respect of the security deposits (2019: $75,473 in respect of the loan receivable). 10 PREPAYMENTS Current Community relocation materials Total Prepayments Consolidated 2020 $ 2019 $ 1,384,099 1,384,099 1,027,731 1,027,731 Prepayments relate to a 30% upfront payment to the relocation contractor for the procurement of materials associated with the Communities Relocation Program. The prepayment is unwound when the underlying materials have been delivered. 91 | P a g e 88 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 11 INVENTORY Current Consumables Kitchen stocks Cleaning stocks Medical stocks Protective clothing Total Consolidated 2020 $ 2019 $ 362,524 45,182 13,478 6,549 16,436 444,169 295,401 30,096 6,641 5,583 1,871 339,592 Write down During the year ended 31 December 2020, consumables were identified which had expired or were damaged and as such had no net realisable value. The full amount of $5,779 (2019: $30,822) was written off from inventory and recorded in the consolidated statement of profit or loss. 12 EXPLORATION AND EVALUATION ASSETS Consolidated 2020 $ 2019 $ Non-current 1,844,673 8,262,803 Movement during the year Carrying value - beginning of the year Additions Derecognition of Kou Sa Project(i) Transfers to mine properties under development (Note 13) Foreign exchange fluctuation Carrying value - end of the year (i) The Company derecognised the Kou Sa Project. See Note 6 for further information 8,262,803 65,098 (5,710,134) - (773,094) 1,844,673 37,494,025 442,022 - (30,461,193) 787,949 8,262,803 Impairment At 31 December 2020, the Group conducted an assessment to determine whether there were any indicators of impairment in relation to the carrying value of its capitalised exploration and evaluation expenditure. No indicators of impairment were present and therefore the Group did not impair any previously capitalised expenditure (2019: nil). Costs not directly relating to the advancement of the Group’s exploration projects were expensed as exploration expenditure in the consolidated statement of profit or loss and other comprehensive income. For the 2020 reporting period this amounted to $208,345 (2019: $1,501,751). 92 | P a g e 89 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 13 MINE PROPERTIES UNDER DEVELOPMENT Consolidated 2020 $ 2019 $ Non-current 37,975,609 30,803,497 Movement during the year Carrying value - beginning of the year Transfers from exploration and evaluation (Note 12) Transfers from property, plant and equipment (Note 14) Additions Foreign exchange fluctuation Carrying value - end of the year 30,803,497 - 184,592 11,697,347 (4,709,827) 37,975,609 - 30,461,193 60,855 860,265 (578,816) 30,803,497 Impairment At 31 December 2020, the Group conducted an assessment to determine whether there were any indicators of impairment in relation to the carrying value of its mine properties. No indicators of impairment were present, therefore the Group did not impair any capitalised mine properties under development (2019: nil). Transfer from exploration and evaluation expenditure In October 2019, the Group raised over $40 million via share a Placement and Share Purchase Plan to advance the Woodlark Gold Project and development activities. Management formed the view that completing the Placement and commencing development activities was sufficient to demonstrate the technical feasibility and commercial viability of the Woodlark Gold Project. As a result, the capitalised exploration and evaluation expenditure associated with the projects mining licence was reclassified to mine properties under development. 93 | P a g e 90 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 14 PROPERTY, PLANT AND EQUIPMENT 2020 Consolidated Right-of- use asset $ Work under construction $ Plant & Equipment $ Computer Software $ Furniture & Fittings $ Total $ Gross carrying amount – at cost Less: accumulated depreciation Balance - - - 5,871,008 - 5,871,008 5,066,861 (4,172,762) 894,099 98,737 (98,584) 153 941,239 11,977,845 (4,733,381) 7,244,464 (462,035) 479,204 Right-of- use asset $ 186,225 (101,577) 84,648 Right-of- use asset $ 84,648 - - - 2019 Gross carrying amount – at cost Less: accumulated depreciation Balance Plant & Equipment Movement 2020 Balance at 1 January 2020 Additions Disposals Transfer between categories Transfers to mine properties under development Transfer to right-of-use asset Foreign exchange fluctuation Depreciation Balance at 31 December 2020 Plant & Equipment Movement 2019 Consolidated Work under construction $ Plant & Equipment $ Computer Software $ Furniture & Fittings $ Total $ 472,105 - 472,105 5,106,267 (4,354,656) 751,611 98,737 1,043,349 (460,797) 582,552 (97,368) 1,369 6,906,683 (5,014,398) 1,892,285 Work under construction $ 472,105 5,343,546 - 106,268 Plant & Equipment $ 751,611 489,966 (256) (90,271) Computer Software $ 1,369 - - - Furniture & Fittings $ 582,552 3,675 - (15,997) - (33,859) - (50,789) - - - (50,911) - 5,871,008 (156,805) - (77,661) (22,485) 894,099 - - - (1,216) 153 (27,787) - (58,226) (5,013) 479,204 Right-of- use asset $ Work under construction $ Plant & Equipment $ Balance at 1 January 2019 Additions Disposals Transfers from assets held for sale Transfers to mine properties under development Impact of adopting AASB 16 Foreign exchange fluctuation Depreciation Balance at 31 December 2019 - - - - - 186,225 - (101,577) 84,648 - 462,394 - - 9,418 - 293 - 472,105 187,903 631,353 (8,604) 9,964 (19,938) - 1,511 (50,578) 751,611 Computer Software $ 2,780 865 - - Furniture & Fittings $ 650,928 24,179 (1,593) - - - - (2,276) 1,369 (50,335) - 4,297 (44,924) 582,552 Total $ 1,892,285 5,837,187 (256) - (184,592) (33,859) (186,798) (79,503) 7,244,464 Total $ 841,611 1,118,791 (10,197) 9,964 (60,855) 186,225 6,101 (199,355) 1,892,285 94 | P a g e 91 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 15 RIGHT-OF-USE ASSET AND LEASE LIABILITY (a) Right-of-use asset Non-current Gross carrying amount - office leases Less: accumulated depreciation Total Movement during the year Balance at 1 January Transfer from property, plant and equipment (Note 14) Additions Depreciation expense Balance at 31 December (b) Lease liability Current Non-current Movement during the year Balance at 1 January Additions Interest expense Payments Balance at 31 December 92 Consolidated 2020 $ 2019 $ 746,544 (28,272) 718,272 - 33,859 746,544 (62,131) 718,272 - - - - - - - - Consolidated 2020 $ 2019 $ 220,164 496,708 716,872 82,111 746,544 9,950 (121,733) 716,872 82,111 - 82,111 186,225 - 4,513 (108,627) 82,111 95 | P a g e 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 16 TRADE AND OTHER PAYABLES Current Trade creditors and accrued expenses Deferred consideration(i) Total Non-current Deferred consideration(i) Total Consolidated 2020 $ 2019 $ 6,128,458 - 6,128,458 1,950,327 5,040,896 6,991,223 - - 2,694,195 2,694,195 Deferred consideration movement during the year Carrying value - beginning of the year Unwind of the discount – finance cost Foreign exchange fluctuation Derecognition of Kou Sa Project – extinguishment of liability(i) Carrying value - end of the year (i) The Company derecognised the Kou Sa Project. See Note 6 for further information 7,735,091 830,927 (766,043) (7,799,975) - 6,244,927 1,443,017 47,147 - 7,735,091 17 PROVISIONS Current Employee provisions Total Non-current Rehabilitation provision Employee provisions Total Movements Rehabilitation provision Balance at 1 January Movement in provision Foreign exchange fluctuation Balance at 31 December Consolidated 2020 $ 2019 $ 142,907 142,907 65,590 65,590 170,127 31,564 201,691 179,293 27,905 207,198 179,293 10,169 (19,335) 170,127 178,183 - 1,110 179,293 96 | P a g e 93 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 18 ISSUED CAPITAL Consolidated 2020 $ 2019 $ Issued Capital 165,801,105 148,972,741 Reconciliation of movements in Issued Capital during the period: Date Shares $ Shares $ 2020 2019 Balance at 1 January Shares issued pursuant to a Placement Consideration for acquisition of Woodlark(i) Conversion of Options Shares issued pursuant to a Placement Shares issued as part of a SPP Shares issued pursuant to a Placement Adjustment for share consolidation Conversion of Zero Exercise Price Options Shares issued pursuant to a Placement Less: share issue costs 05-Apr-19 02-Jul-19 11-Jul-19 28-Oct-19 09-Dec-19 17-Dec-19 20-Dec-19 21-Jul-20 18-Dec-20 174,525,760 - - - - - - - 520,131 43,761,472 - 148,972,741 - - - - - - - - 18,379,818 (1,551,454) 2,081,907,130 510,000,000 150,000,000 17,188,888 689,774,033 4,040,000 910,225,997 (4,188,610,288) - - - 104,116,108 4,335,000 2,850,000 - 17,244,350 101,000 22,755,650 - - - (2,429,367) Balance at 31 December 218,807,363 165,801,105 174,525,760 148,972,741 (i) Acquisition of the remaining interest in Woodlark Mining Limited was settled by the issue of 150,000,000 shares in Geopacific to Kula Gold Limited at a share price of $0.019 per share, this occurred prior to the 1 for 25 share consolidation in December 2019 97 | P a g e 94 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 19 RESERVES (a) Reserves Share-based payments reserve Foreign currency translation reserve Other equity reserve Total (b) Movements Share-based payments reserve Balance at 1 January Share based payment expense Balance at 31 December Foreign currency translation reserve Balance at 1 January Exchange losses during year Balance at 31 December Other equity reserve Balance at 1 January Transfers during the year Balance at 31 December Total reserves (c) Nature and purpose of reserves Share-based payments reserve The share-based payments reserve records: Consolidated 2020 $ 2019 $ 3,993,609 (2,018,220) (1,370,317) 605,072 2,873,328 3,340,531 (1,370,317) 4,843,542 2,873,328 1,120,281 3,993,609 1,499,209 1,374,119 2,873,328 3,340,531 (5,358,751) (2,018,220) 3,535,896 (195,365) 3,340,531 (1,370,317) - (1,370,317) 755,748 (2,126,065) (1,370,317) 605,072 4,843,542 (cid:120) (cid:120) (cid:120) the value of exercised and unexercised options issued or granted to employees and Directors which have been expensed; the value of exercised and unexercised performance rights and share appreciation rights issued to employees and Directors which have been expensed; and the value of options issued on acquisition of Millennium Mining (Fiji) Ltd. Foreign currency translation reserve The foreign currency translation reserve records unrealised exchange gains and losses on translation of the Group’s controlled entities’ results and financial position where their functional currency is different to the Group’s presentation currency. Other equity reserve The other equity reserve records transfers of interests to the Group from non-controlling interests. 98 | P a g e 95 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 20 CONTINGENT LIABILITIES The Group did not have any contingent liabilities at the end of the reporting period (2019: nil). 21 COMMITMENTS (a) Tenement Commitments Entities in the Group are required to spend certain amounts to retain their interest in areas over which Special Prospecting Licenses are held. All requirements have been complied with and all reports and lodgements have been made. In the ordinary course of business, the Group is currently waiting on the reissue of certain licences by the Mineral and Resource Departments of Papua New Guinea. The following table provides an outline of the annual expenditure required by tenement: Tenement EL 1172 EL 1279 EL 1465 Location Papua New Guinea Papua New Guinea Papua New Guinea Tenement Renewed to 27-Nov-21 Annual Commitment 2021 $ 112,646 25-Aug-21 150,195 Comments 22-Dec-20 75,098 Licence renewal lodged with authorities for an additional two years. Tenure remains while renewal pending. (b) Operating Commitments The Group entered into contracts with HBS Machinery and Rhodes to commence the Civil Works Program at the Woodlark Gold Project. The future lease payments for the HBS non-cancellable lease contracts is $2,481,376. The committed expenditure for the Rhodes contact is $4,041,719. Both of these contracts are scheduled to be completed within one year. 99 | P a g e 96 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 22 PARTICULARS RELATING TO CONTROLLED ENTITIES (a) Material Subsidiaries Worldwide Mining Projects Pty Ltd PT IAR Indonesia Ltd Eastkal Pte Ltd Royal Australia Resources Ltd Golden Resource Development(i) Geopacific Limited Beta Limited Millennium Mining (Fiji) Limited Woodlark Mining Limited Country of Incorporation and Carrying on Business Australia Indonesia Singapore Cambodia Cambodia Fiji Fiji Fiji Papua New Guinea Effective Ownership Percentage 2020 2019 % 100 100 100 85 - 100 100 100 100 % 100 100 100 85 100 100 100 100 100 Class of Share Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary (i) The Company derecognised the Kou Sa Project. See Note 6 for further information 100 | P a g e 97 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 23 KEY MANAGEMENT PERSONNEL DISCLOSURES (a) Directors Details of each person holding the position of Director of the Company during the current and prior reporting periods are outlined in the table below: Name Non-Executive Directors Ian Clyne Colin Gilligan Sir Charles Lepani Appointed 29 July 2020 Ian Murray Executive Directors Ron Heeks Resigned 4 June 2020 (b) Other Key Management Personnel (KMP) Position Non-Executive Chairman Non-Executive Director Non-Executive Director Non-Executive Director Managing Director Details of the Other KMP of the Group during the current and prior reporting periods are set out in the table below: Name Executives Tim Richards Matthew Smith Glenn Zamudio Appointed 6 October 2020 Position Chief Executive Officer Chief Financial Officer & Company Secretary General Manager - Projects (c) KMP Compensation Consolidated 2020 $ 2019 $ 1,328,899 102,408 1,120,282 47,731 12,872 399,996 3,012,188 1,010,162 68,397 978,482 44,230 5,862 20,769 2,127,902 101 | P a g e Key Management Personnel Compensation: Short-term benefits Post-employment benefits Share-based payments Annual leave Long-term benefits Termination payments Total 98 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 24 RELATED PARTY TRANSACTIONS Melron Pty Ltd Payment was made to Melron Investments Pty Ltd for director services fees. Mr R Heeks is a Director of Melron Investments Pty Ltd and served as Managing Direct of Geopacific. The total amount charged by Melron Investments Pty Ltd during the financial year was $654,996 plus GST (2019: $330,000). There were no amounts owing to Melron Pty Ltd as at 31 December 2020. All amounts were due and payable under normal commercial terms. 25 SHARE-BASED PAYMENTS (a) Employee Incentive Plan The Company’s Securities Incentive Plan was approved by shareholders at the Annual General Meeting held on 30 May 2018. All employees are eligible to participate in the plan. Instruments granted under the plan are issued for no consideration, carry no dividend or voting rights and when exercised convert into ordinary shares. Included under share-based payments expense in the statement of profit or loss and other comprehensive income is an amount of $1,120,281 (2019: $1,374,119) which relates to equity settled share-based payments transactions issued under the plan. All options granted to key management personnel are for ordinary shares in Geopacific, which confer a right of one ordinary share for every option held. All share appreciation rights granted to key management personnel are for ordinary shares in Geopacific, which confer an amount of shares equal to the difference between the Company’s share price at the end of the vesting period and the price on grant date. During the reporting period the Company issued four types of incentives to employees. They were short- term zero exercise price options (ZEPO’s), medium-term ZEPO’s, premium exercise price options (PEPO’s) and share appreciation rights (SAR’s). These incentives were granted on 28 July 2020 and 11 August 2020 and were issued in accordance with the Securities Incentive Plan. The vesting condition of each incentive is continuous employment (at Board discretion). All incentives issued during the 2019 reporting period were issued prior to the 25:1 share consolidation that took place in December 2019. All incentives were adjusted at the time of the consolidation to reduce the number of incentives (reduced 25:1) and increase the exercise price (increased 25:1) where relevant. 102 | P a g e 99 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 25 SHARE-BASED PAYMENTS (CONTINUED) (a) Employee Incentive Plan (continued) The incentives were valued by a combination of internal and external sources using a Black-Scholes option pricing model and independent third party valuations. The key inputs and valuations are summarised below: Item Underlying share value Exercise price Valuation date(i) Vesting date Vesting period (years) Expiry date Life of the options (years) Volatility(ii) Risk free rate Dividend yield Granted on 28 July 2020(i) Number of options Value per option Value per tranche Granted on 11 August 2020 Number of options Value per option Value per tranche Short-Term ZEPO’s Medium-Term ZEPO’s PEPO’s SAR’s $0.625 Nil 11-Aug-20 11-Aug-21 1.00 21-Aug-21 1.03 100% 0.260% Nil 5,231 $0.680 3,557 25,076 $0.625 15,673 $0.625 Nil 11-Aug-20 11-Aug-23 3.00 21-Aug-23 3.03 100% 0.275% Nil 244,662 $0.680 166,370 281,600 $0.625 176,000 $0.625 $0.894 11-Aug-20 11-Aug-24 4.00 21-Aug-24 4.03 100% 0.410% Nil 182,344 $0.430 78,408 194,202 $0.393 76,321 $0.625 $0.625 11-Aug-20 11-Aug-23 3.00 21-Aug-24 4.03 100% 0.275% Nil 182,656 $0.468 85,483 224,360 $0.429 96,250 (i) The grant date for R Heeks was determined as the AGM date, being 28 July 2020. The value per instrument differs for R Heeks as the valuation was conducted on the grant date (ii) A volatility of the share price fluctuation was calculated by considering the historical movement of the share price over a period of time as well factoring market conditions of its competitors to predict the distribution of relative share performance 103 | P a g e 100 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 25 SHARE-BASED PAYMENTS (CONTINUED) (a) Employee Incentive Plan (continued) 2020 2019 Number of options or rights Weighted average exercise price ($) Number of options or rights Weighted average exercise price ($) 2,787,735 30,307 526,262 (520,132) 2,824,172 - 2,824,172 1,872,590 376,546 - - 2,249,136 - 2,249,136 2,023,707 407,016 - - 2,430,723 - 2,430,723 - - - - - - - 41,454,763 13,003,205 32,424,070 (17,188,888) 69,693,150 (66,905,415) 2,787,735 0.7714 0.9300 - - 0.7980 - 0.7980 20,218,500 26,596,200 - - 46,814,700 (44,942,110) 1,872,590 0.5381(i) 0.6000(i) - - 0.5485 - 0.5485(i) 22,365,071 28,227,488 - - 50,592,559 (48,568,852) 2,023,707 - - - - - - 0.0408 0.0233 - - 0.0309 0.7405 0.7714 0.0285(i) 0.0160(i) - - 0.0215 0.5166 0.5381(i) Zero exercise price options Outstanding at beginning of year Granted Class A Granted Class B Exercised Total Adjusted for share consolidation Outstanding at end of year Premium exercise price options Outstanding at beginning of year Granted Class C Expired/lapsed Exercised Total pre-share consolidation Adjusted for share consolidation(ii) Outstanding at end of year Share appreciation rights Outstanding at beginning of year Granted Expired/lapsed Exercised Total pre-share consolidation Adjusted for share consolidation(ii) Outstanding at end of year (i) The exercise price of the share appreciation rights – represents a theoretical exercise price given the payoff is the difference between the Company’s share price at the end of the vesting period and the price on grant date (ii) The weighted average exercise price has been updated to reflect the 25:1 share consolidation The weighted average remaining contractual life of the incentives outstanding at 31 December 2020 are: Instrument Zero exercise price options Premium exercise price options Share appreciation rights Years 1.39 2.37 2.36 104 | P a g e 101 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 25 SHARE-BASED PAYMENTS (CONTINUED) (b) Unlisted Incentives There were 40,000 options over unissued shares unexercised at reporting date (2019: 40,000). Since the end of the financial year, no unlisted options have been cancelled or exercised. Details of unlisted options over unissued shares in the Company as at the date of this report are outlined in the tables below: 2020 Issue Date Expiry Date Exercise Price Number on Issue Movement During the Year 6-Jun-09 6-Jun-09 Note (a) Note (b) $ 62.50 125.00 1-Jan-20 32,000 8,000 40,000 Granted - - - Lapsed - - - Adjusted for share consolidation - - - Number on Issue 31-Dec-20 32,000 8,000 40,000 (a) Not later than 5 years after defining a JORC compliant ore reserve of over 200,000oz Au on the Faddy’s Gold Deposit (b) Not later than 10 years after defining a JORC compliant ore reserve of over 1,000,000oz Au on the Faddy’s Gold Deposit 2019 Issue Date Expiry Date Exercise Price(i) Number on Issue Movement During the Year 1-Jan-19 6-Jun-09 6-Jun-09 Note (a) Note (b) (768,000) (192,000) (960,000) (i) The exercise price has been updated to reflect the 25:1 share consolidation conducted in December 2019 800,000 200,000 1,000,000 Granted - - - Lapsed - - - $ 62.50 125.00 Adjusted for share consolidation Number on Issue 31-Dec-19 32,000 8,000 40,000 (a) Not later than 5 years after defining a JORC compliant ore reserve of over 200,000oz Au on the Faddy’s Gold Deposit (b) Not later than 10 years after defining a JORC compliant ore reserve of over 1,000,000oz Au on the Faddy’s Gold Deposit (c) Services During the reporting period, the Company did not issue any shares as payment for services (2019: nil). 105 | P a g e 102 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 26 LOSS PER SHARE (a) Basic and Diluted Loss per Share Basic loss per share: From continuing operations attributable to the ordinary equity holders of the company Diluted loss per share: From continuing operations attributable to the ordinary equity holders of the company (b) Reconciliation of Loss Used in Calculating Loss Per Share Basic and Diluted Loss Per Share: Loss attributable to the ordinary equity holders of the Company used in calculating basic and diluted loss per share: From continuing operations (c) Weighted Average Number of Shares Used as the Denominator Weighted average number of ordinary shares used as the denominator in calculating basic and diluted loss per share Consolidated 2020 Cents 2019 Cents (2.59) (2.59) (2.59) (2.59) (6.43) (6.43) (6.43) (6.43) Consolidated 2020 $ 2019 $ (4,567,311) (4,567,311) (7,276,365) (7,276,365) Consolidated 2020 2019 No. of Shares No. of Shares(i) 176,404,229 113,152,082 (i) The weighted average number of ordinary shares is reflective of the 25:1 share consolidation conducted in December 2019 106 | P a g e 103 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 27 EVENTS OCCURRING AFTER BALANCE DATE The financial statements have been prepared based upon conditions existing at 31 December 2020 and due consideration has been given to events that have occurred subsequent to 31 December 2020 that provide evidence of conditions that existed at the end of the reporting period. In December 2020, the Company announced a successful $140 million Placement which was finalised in February 2021. The Placement was strongly supported by existing institutional shareholders and was complemented by significant demand from new major domestic and international investors and was cornerstoned by two of Geopacific’s substantial shareholders, Tembo and DELPHI, and several leading domestic and international institutions. In addition, there was strong support from Sprott Resource Lending and its affiliates, along with members of the Geopacific Board and Management. This transformational capital raising will provide the equity funding component of the development capital required for the Company’s Woodlark Gold Project. The Placement consisted of two tranches at an Issue Price of $0.42 per share which comprised the issue of 333.3 million shares: (cid:120) Tranche 1: 43.7 million shares issued in December 2020 to raise $18.4 million pursuant to the Company’s placement capacity under Listing Rule 7.1 and Listing Rule 7.1A; and (cid:120) Tranche 2: 289.6 million shares issued in February to raise $121.6 million. Tranche 2 of the Placement was subject to shareholder approval under Listing Rules 7.1 and 10.11 which was obtained in February 2021 at an Extraordinary General Meeting of the Company. The Company also extended an SPP Offer to existing eligible shareholders to acquire up to $30,000 worth of Geopacific shares at $0.42 per share, the same price as the Placement, with a cap of $10 million. The SPP Offer closed on 10 February 2021 and raised a further $1.87million (4,461,821 Shares). Other than the matter discussed above, no other matters or circumstances haves arisen since the end of the financial period year which 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. 107 | P a g e 104 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 28 OPERATING SEGMENTS The Group has identified its operating segments based on the internal reports that are reviewed by the Board in assessing performance and determining the appropriate allocation of the Group’s resources. The Group also has had regard to the qualitative thresholds for the determination of operating segments. For management purposes in the 2020 reporting period the Group was organised into two operating segments based on geographical locations, which involve mineral exploration and development in Papua New Guinea and all other segments, which incorporates the minor activities conducted during the period in Cambodia and Fiji. All other corporate expenses are disclosed as “Corporate” within this segment report. The Group’s principal activities are interrelated and the Group has no revenue from operations. All significant operating decisions are based on analysis of the Group as two segments. The accounting policies applied for internal reporting purposes are consistent with those applied in preparation of the financial statements. 2020 All other segments Papua New Guinea $ $ Corporate $ Other income Net Loss for the year Segment Assets Segment Liabilities - 344,796 115,610 998,273 63 282,360 (101,311) (4,810,796) 50,792,747 34,782,529 3,577,948 2,613,707 Total $ 282,423 (4,567,311) 85,690,886 7,189,928 2019 Cambodia $ Papua New Guinea $ Corporate $ Fiji $ Total $ Other income - 61,232 32,518 - 93,750 Net Loss for the year (2,309,309) (749,861) (4,160,065) (118,479) (7,337,714) Segment Assets 6,289,629 36,937,466 37,169,475 122,122 80,518,692 Segment Liabilities 8,170,401 1,250,510 619,406 - 10,040,317 108 | P a g e 105 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 29 NOTES TO THE STATEMENT OF CASH FLOWS (a) Cash and Cash Equivalents Cash and cash equivalents at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows: Cash at bank Total (b) Reconciliation of Cash Flows from Operating Activities Consolidated 2020 $ 2019 $ 34,639,855 34,639,855 37,505,067 37,505,067 Consolidated 2020 $ 2019 $ Net loss after income tax (4,567,311) (7,337,714) Adjustments for Non-cash Items: Depreciation Share based payments Impairment write downs Finance costs Foreign currency revaluation Gain on derecognition of Kou Sa Project Proceeds from disposal of plant and equipment Changes in Assets & Liabilities Increase in trade and other receivables (Increase) in inventory Increase in trade and other payables Increase/(Decrease) in provisions Net Cash Used in Operating Activities 106 141,634 1,120,281 20,448 830,927 (401,346) (1,884,834) - 199,355 1,374,119 75,473 1,443,017 - - (61,232) (770,068) - 528,015 55,972 (4,926,282) (302,748) (96,821) 553,320 (61,781) (4,215,012) 109 | P a g e 2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GEOPACIFIC RESOURCES LIMITED and Controlled Entities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 29 NOTES TO THE STATEMENT OF CASH FLOWS (CONTINUED) (c) Non-cash investing and financing activities Consolidated 2020 $ 2019 $ Gain on derecognition of Kou Sa Project(i) Shares issued as part of the Kula transaction(ii) (i) The Company derecognised the Kou Sa Project. See Note 6 for further information (ii) Acquisition of the remaining interest in Woodlark Mining Limited was settled by the issue of 150,000,000 shares in Geopacific to Kula Gold Limited at a share price of $0.019 per share (1,884,834) - - 2,850,000 30 REMUNERATION OF AUDITORS The Auditor of Geopacific is Ernst & Young. Amounts received or receivable - Ernst & Young for: - An audit or review of the financial report Total Consolidated 2020 $ 2019 $ 65,100 65,100 57,500 57,500 110 | P a g e 107 2020 ANNUAL REPORTSHAREHOLDER INFORMATION GEOPACIFIC RESOURCES LIMITED and Controlled Entities SHAREHOLDER INFORMATION The shareholder information set out below was applicable as at 28 March 2021. (a) Analysis of numbers of equity security holders by size of holding: Analysis of numbers of equity security holders by size holding: 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over Total (b) Equity security holders – ordinary shares Class of Equity Security Ordinary Shares Number Shares 294 537 243 602 189 1,865 141,254 1,414,278 1,817,451 20,925,596 488,542,467 512,841,046 The names of the twenty largest holders of quoted equity securities, ordinary shares, are listed below: Ordinary Shares Number Held 113,602,310 63,453,391 53,017,644 51,045,958 47,270,363 15,535,540 12,904,762 11,904,762 10,196,816 8,050,369 6,900,000 5,784,086 4,711,782 4,472,224 4,200,000 3,571,429 3,449,265 3,309,501 2,545,000 2,380,952 428,306,154 84,534,892 512,841,046 % of Issued Shares 22.15 12.37 10.34 9.95 9.22 3.03 2.52 2.32 1.99 1.57 1.34 1.13 0.92 0.87 0.82 0.70 0.67 0.65 0.50 0.46 83.52 16.48 100.00 111 | P a g e HSBC CUSTODY NOMINEES NDOVU CAPITAL IV B V J P MORGAN NOMINEES AUSTRALIA DELPHI UNTERNEHMENBERATUNG CITICORP NOMINEES PTY LIMITED NATIONAL NOMINEES LIMITED SPARTA AG DEUTSCHE BALATON BROADGATE INVESTMENTS PTY LTD CS THIRD NOMINEES PTY LIMITED HOME IDEAS SHOW PTY LTD BNP PARIBAS NOMS PTY LTD UBS NOMINEES PTY LTD HENDERSON INTERNATIONAL PTY MR CRAIG GRAEME CHAPMAN NERO RESOURCE FUND PTY LTD SPARTA AG BNP PARIBAS NOMINEES PTY LTD DIXSON TRUST PTY LIMITED BNP PARIBAS NOMINEES PTY LTD TOP 20 SHAREHOLDERS OTHER SHAREHOLDERS TOTAL ORDINARY SHAREHOLDERS 108 2020 ANNUAL REPORT SHAREHOLDER INFORMATION GEOPACIFIC RESOURCES LIMITED and Controlled Entities SHAREHOLDER INFORMATION (c) Substantial holders Extracts from substantial shareholder register: SPARTA AG NDOVU CAPITAL IV B V SPHERIA ASSET MANAGEMENT Shareholding Number Held % of Issued Shares 77,418,482 64,086,031 62,782,986 15.10 12.60 12.24 The above holdings are based on the most recent Notice of Change of Interests of Substantial Holder statements lodged by each substantial holder. (d) Voting rights The voting rights attached to each class of equity securities are set out below: Fully paid Ordinary Shares On a show of hands, every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Options – listed and unlisted There are no voting rights attached to options. (e) Summary of unlisted options issued Options expiring not later than five years after the defining on Faddy's Gold Deposit of a JORC complaint Ore Reserve of over 200,000 oz of contained Au with an exercise price of $62.50 Option holder with more than 20% of class Exploration Drilling Services (Fiji) Ltd L Anderson Investments Pty Ltd Sheila Anderson Investments Options expiring not later than ten years after the defining on Faddy's Gold Deposit of a JORC compliant Ore Reserve of over 1,000,000 oz of contained Au with an exercise price of $125.00 Option holder with more than 20% of class Exploration Drilling Services (Fiji) Ltd L Anderson Investments Pty Ltd Sheila Anderson Investments Number of Options Number of Holders Options Held % of Options Issued 32,000 5 8,000 5 12,800 8,800 7,200 3,200 2,200 1,800 40.0 27.5 22.5 40.0 27.5 22.5 112 | P a g e 109 2020 ANNUAL REPORT SHAREHOLDER INFORMATION GEOPACIFIC RESOURCES LIMITED and Controlled Entities SHAREHOLDER INFORMATION (e) Summary of unlisted options issued (continued) Number of Options Number of Holders Options Held % of Options Issued Zero exercise price options expiring three years from the issue date on 10 July 2021 Option holder with more than 20% of class R Heeks Premium exercise price options expiring four years from the issue date on 10 July 2022 Option holder with more than 20% of class R Heeks Share appreciation rights expiring four years from the issue date on 10 July 2022 Option holder with more than 20% of class R Heeks Zero exercise price options expiring 13 years from the issue date on 19 July 2022 Option holder with more than 20% of class R Heeks Premium exercise price options expiring four years from the issue date on 19 July 2023 Option holder with more than 20% of class R Heeks Share appreciation rights expiring four years from the issue date on 19 July 2023 Option holder with more than 20% of class R Heeks Zero exercise price options expiring one year from the issue date on 21 August 2021 Option holder with more than 20% of class M Smith G Zamudio Zero exercise price options expiring three years from the issue date on 21 August 2023 Option holder with more than 20% of class R Heeks M Smith G Zamudio 970,638 808,740 894,605 1,296,965 1,063,850 1,129,101 30,307 526,262 110 6 6 6 5 5 5 3 3 220,875 22.8 195,300 24.1 193,529 21.6 366,993 28.3 318,060 29.9 304,808 27.0 12,538 12,538 244,662 168,960 112,640 41.4 41.4 46.5 32.1 21.4 113 | P a g e 2020 ANNUAL REPORT SHAREHOLDER INFORMATION GEOPACIFIC RESOURCES LIMITED and Controlled Entities SHAREHOLDER INFORMATION (e) Summary of unlisted options issued (continued) Premium exercise price options expiring four years from the issue date on 21 August 2024 Option holder with more than 20% of class R Heeks M Smith G Zamudio Share appreciation rights expiring four years from the issue date on 21 August 2024 Option holder with more than 20% of class R Heeks M Smith G Zamudio Number of Options Number of Holders Options Held % of Options Issued 376,546 3 407,016 3 182,344 116,521 77,681 182,656 134,616 89,744 48.4 31.0 20.6 44.9 33.1 22.0 114 | P a g e 111 2020 ANNUAL REPORT TENEMENT DETAILS GEOPACIFIC RESOURCES LIMITED and Controlled Entities TENEMENT DETAILS Current interest in tenements held by Geopacific and its subsidiaries, as at 31 December 2020 are listed below: Country Location Tenement Interest Papua New Guinea Papua New Guinea Papua New Guinea Papua New Guinea Papua New Guinea Papua New Guinea Papua New Guinea Papua New Guinea Papua New Guinea Papua New Guinea Papua New Guinea Papua New Guinea Woodlark Island Woodlark Island Woodlark Island Woodlark Island Woodlark Island Woodlark Island Woodlark Island Woodlark Island Woodlark Island Woodlark Island Woodlark Island Woodlark Island EL 1172 EL 1279 EL 1465 LMP 89 LMP 90 LMP 91 LMP 92 LMP 93 ME 85 ME 105 ME 111 ML 508 112 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 115 | P a g e 2020 ANNUAL REPORT 

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