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Annual Report 2020

Plain-text annual report

CONTINUED GROWTH REFLECTS OUR STRATEGY IN ACTION CORPORATE DIRECTORY DIRECTORS Kevin Lines – BSc (Geology), MAusIMM, MAICD (resigned 30 September 2020) Independent Non-Executive Chairman Mark Zeptner – BEng (Hons) Mining, MAusIMM, MAICD Managing Director and Chief Executive Officer Michael Bohm – BAppSc (Mining Engineering), MAusIMM, MAICD (acting Chair from 1 October 2020) Independent Non-Executive Director David Southam – B. Com, CPA, MAICD Independent Non-Executive Director Natalia Streltsova – MSc, PhD (Chem Eng), GAICD (appointed 1 October 2019) Independent Non-Executive Director COMPANY SECRETARY Richard Jones – BA (Hons), LLB CHIEF FINANCIAL OFFICER CHIEF OPERATING OFFICER GENERAL MANAGER – EXPLORATION PRINCIPAL REGISTERED OFFICE SHARE REGISTRY Tim Manners – BBus (Accounting), FCA, MAICD Duncan Coutts – BEng (Hons) Mining, MAusIMM Kevin Seymour – BSc (Geology), MAusIMM Level 1, 130 Royal Street East Perth WA 6004 + 61 8 9202 1127 Computershare Investor Services Pty Limited Level 5, 115 Grenfell Street Adelaide SA 5000 1300 556 161 (within Australia) + 61 3 9415 4000 (outside Australia) AUDITOR Deloitte Touche Tohmatsu Tower 2, Brookfield Place 125 St Georges Terrace Perth WA 6000 STOCK EXCHANGE LISTING Ramelius Resources Limited (RMS) shares are listed on the Australian Securities Exchange (ASX) WEBSITE www.rameliusresources.com.au TABLE OF CONTENTS Key Operational Highlights for the Year Chairman’s Report Managing Director’s Report Review of Operations Overview Operational Summary Mt Magnet Edna May Development & Exploration Projects Resources and Reserves Company Summary Mineral Resources Ore Reserves Competent Persons Sustainability Report 2020 Achievements About Ramelius Our Business Our People Our Communities Our Environment Performance Data Annual Financial Report Directors’ Report Auditor’s Independence Declaration Income Statement Statement of Comprehensive Income Balance Sheet Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report Shareholder Information 02 06 08 12 13 14 15 18 19 24 24 25 27 28 30 32 35 41 44 48 51 55 58 60 81 84 84 85 86 87 89 137 138 143 1 Annual Report 2020 KEY OPERATIONAL HIGHLIGHTS FOR THE YEAR Acquisition of the Penny Gold Project (Spectrum Metals Limited) on 17 March 2020 The Penny Gold Project currently has a Mineral Resource of 300,000oz and an Ore Reserve of 230,000oz helping Ramelius extend the Life of Mine Plan by 34% to 1.45Moz. Commencement of mining operations at the Marda Gold Project The Mining Proposal and Mine Closure Plan for the Marda Gold Project were approved in September 2019. A total of 449k tonnes were mined in the financial year at a grade of 1.78 g/t for 25,656oz of contained gold. As at 30 June 2020 a total of 276k tonnes of ore was stockpiled at site awaiting haulage to Edna May for processing. 2 Ramelius Resources Commencement of mining operations at the Greenfinch open pit (Edna May) Clearing Permit application for the Greenfinch open pit project, adjacent to the Company’s Edna May gold operations in Western Australia granted on 3 October 2019. Received the final Federal Controlled Action environmental approval to proceed with the project on 28 January 2020. Ore mining commenced in March 2020. A total of 117k tonnes were mined in the financial year at a grade of 0.89 g/t for 3,380oz of contained gold. Mine performance has been in line with the mine plan and grades are expected to increase as the pit reaches depth. Annual Report 2020 3 OUR CORPORATE STRATEGY • Actively seek to grow production beyond 300koz pa • Maintain mine life beyond five years through exploration and acquisition OUR MISSION 44 Ramelius Resources Ramelius ResourcesAND WE WILL DO THIS BY 1. Securing a third production centre 2. Establishing a suitable organisational structure 3. Leveraging high gold price to convert more Resources to Reserves 4. Further embedding Company culture and consistency across the business OUR VALUES At Ramelius Resources, we are defined by the following core values: Our culture is defined by a ‘fit for purpose and can-do’ attitude. 5 Annual Report 2020CHAIRMAN’S REPORT DEAR FELLOW SHAREHOLDERS, It is my great pleasure to report that Ramelius Resources Limited has continued to record very strong growth both financially and operationally in the financial year ended 30 June 2020. The Company reported: • Net profit before tax of $149.5 million; • Net Profit after tax of $113.4 million; • Gold sales of 228,210 ounces generating revenue of $460.6 million and; • Cash and gold (net of debt) at 30 June 2020 of $161.1 million. Each of these results are records for Ramelius and reflect the excellent underlying operational performance and the focussed financial management across our multiple mining operations. These achievements are all the more impressive when considered in light of the restrictions placed on the Company by the global COVID-19 pandemic. The response of the Ramelius team to the coronavirus outbreak has been outstanding, firstly ensuring the safety of our workforce, whilst allowing the almost seamless continuation of mining operations. OUR PROJECTS At Edna May, 315km east of Perth, permitting delays for the commencement of open-pit mining at Greenfinch resulted in a reduction in available mill feed and a subsequent cutback of processing operations for a portion of the year. The successful resolution of the permitting issues has allowed operations to return to full capacity and it is a credit to all of our team for achieving a very pleasing outcome to what were very taxing issues. The Marda operations, located 170km north-northeast of Edna May, and acquired in the 2019 financial year, were brought into production during the year with multiple open-pits providing important higher-grade feed to the Edna May mill. Similarly the Edna May underground mine has continued to perform strongly with output increasing during the year whilst development has advanced at depth and deeper drilling has been undertaken to define the full potential of this resource. At the Tampia Hill project, near Narembeen, 240km east of Perth, our efforts have been directed at advancing our understanding of the optimum development pathway, with the Company looking forward to operations commencing in 2021. Exploration has continued during the year over our strategic landholding, to the south of Edna May, with encouraging results continuing to be returned, particularly in the region of the Symes’ Find deposit. It has been an excellent year at Mt Magnet where the team continued to deliver on both the operation and exploration fronts. The Eridanus open pit formed the backbone of production feeding the Mt Magnet mill and performed above expectations throughout the year. At the same time drilling at depth below the initial pit defined substantial additional Resources that have supported an increased Reserve and deeper final pit. Exploration focus at Eridanus has now turned to studying the potential for a bulk-mining underground operation after completion of the open-pit. The lower-grade, baseload, mill feed from Eridanus has been complemented by excellent grades and tonnages from the new Shannon underground mine. At our Vivien underground mining operation near Leinster, work has focussed on establishing the access to deeper levels of the mine following last year’s approval to extend mine life. SPECTRUM METALS LTD TAKEOVER In a bid to maximise the ongoing financial performance of the Company’s assets at Mt Magnet, your Company launched a takeover offer for Spectrum Metals Limited (Spectrum) in February 2020. The primary asset of Spectrum was the high-grade Penny project, located 150kms south-east of Mt Magnet. This exciting Resource provided the opportunity for significant additional high- grade feed to the Mt Magnet mill, improving financial returns and extending overall mine life. With the unanimous support of the Spectrum Board the takeover was completed by 23 June 2020, a result that reflects very positively on the developing corporate M&A skills at Ramelius. 6 Ramelius Resources LIFE OF MINE PLAN STEPPING DOWN Subsequent to the end of the financial year, the Company announced that I will be standing down as Chairman and resigning from the Board of Ramelius effective 30th September 2020. It has been my privilege to have served on the Board over the last 12 years and to have been witness to the evolution of Ramelius from a mining minnow to its current standing as a respected mid-tier Australian gold company. My decision to retire has been made for both personal and professional reasons but I believe it is in the best interests of Ramelius and allows for the continuing Board renewal that I consider is a prerequisite to further corporate growth. I take this, my final opportunity, to thank our employees and contractors for their continuing efforts during the past year. I also would like to particularly thank our Managing Director, Mark Zeptner and the management team, as well as my fellow Non-Executive Directors, Mike Bohm, David Southam and Natalia Streltsova. On behalf of the Board, I also thank all of you, our shareholders, for your ongoing support and wish you all the very best in the year ahead. Kevin Lines Chairman Ramelius Resources Ltd The combination of these Exploration, Corporate and Mine optimisation efforts has culminated during the year with the release, in June, of the Company’s revised Life of Mine plan. This plan identifies over 1.45M ounces of gold and forecasts production from our dual operating centres, to be in excess of 250,000 ounces per annum over at least the next four years followed by continuing solid production for a further two years. These results are very significant for the Company and are a credit to a great many employees and contractors across our operations. EXTENDED CAPACITY The efforts of your Company have been appreciated by the market with a growing recognition, not just of the capability of our team to continuously deliver on forecasts, but the expanding capacity of Ramelius to action growth initiatives in a timely and cost-effective manner. As a result, in the period 1 July 2019 to 30 June 2020; • Ramelius share price appreciated 176%. • Market Capitalisation appreciated 236%; • Market Capitalisation (at A$1.99/share) had risen to A$1.6 billion. Subsequent to the year end and following the September Quarter Rebalance of the S&P/ASX indices, Ramelius was, for the first time, included in the S&P/ASX200. This is a particularly important event in the Company’s history and strengthens our appeal within the broader investment community. DIVIDENDS On the back of the Company’s financial performance in the 2020 financial year it is pleasing that the Board has been able to approve the payment of a fully franked dividend of 2.0 cents per share. This payment doubles the dividend paid to shareholders in the 2019 financial year and represents a payout ratio of 12% when compared to Basic Earnings Per Share of 16.4 cents. Your Board remains focussed on continuing to grow your investment in the Company by prudent use of capital on exploration, asset acquisition and corporate activities. In parallel with these initiatives Ramelius will continue to monitor an often rapidly changing external business environment to ensure the Company retains the necessary skills to manage change at all levels within the organisation. Annual Report 2020 7 MANAGING DIRECTOR’S REPORT DEAR FELLOW SHAREHOLDERS, It is with a certain sense of satisfaction that I look back on the achievements of the 2020 financial year. Not only was it the most successful year in Ramelius’ history from an operational and financial point of view, further important steps were taken to ensure the Company continues to represent one of the standout investment choices amongst mid-tier Australian gold producers. On the operational front, Ramelius delivered record full-year gold production of 230,426 ounces from our Mt Magnet and Edna May production centres, aided in no small part by the June 2020 Quarter in which we produced 86,517 ounces, beating our original guidance for the Quarter by more than 16,000 ounces. Coming as it did in a period of stronger gold prices and with typical Ramelius diligence applied to keeping costs under control, the record full-year production result translated into a record net profit after tax of $113.4 million, a 420% improvement on the prior year. This helped ensure the balance sheet was in sturdy health at the end of the year. With the Company carrying $185.5 million in cash and bullion and $24.4 million in debt at 30 June whilst having met the necessary criteria, we were able to declare a fully franked dividend of 2.0c per share. PENNY GOLD PROJECT Leading a dividend-paying gold miner is a particular source of pride for me and I am confident that we are currently striking the right balance between returning funds to shareholders and ensuring that sufficient capital is available to fund exploration and project development and to act on any potential acquisition opportunities as they arise. With regards to the latter, we again demonstrated our willingness to move on the right opportunity in February when we made a recommended takeover offer for Spectrum Metals Limited, owner of the Penny Gold Project, one of the highest grade undeveloped gold assets in Australia. The development of Penny Gold Project, which is located 150km south-east of our Mt Magnet operations, is expected to begin in the September Quarter next year. First production is scheduled for late in financial year 2022, although there is a possibility that we will be able to compress the project timeline and bring that date forward. The Pre-Feasibility Study (PFS) completed on the Penny Gold Project in June demonstrated that the project will deliver significant cashflows to the Company. Based on the PFS, the mine should produce an initial 230,000 ounces at an all-in sustaining cost of just A$703 an ounce. We hope to add substantially to the life of the project through further exploration. MINE PLAN Other milestones on the project development front included the start of mining at Marda, completion of the Tampia Feasibility Study delivering a major reduction in upfront capital, the approval of a significantly larger open pit development at Eridanus and after a lengthy wait and much negotiation with the state government, receipt of a Clearing Permit for the Greenfinch open pit at Edna May. These projects were all factored into the updated Mine Plan, released to the market at the end of June, which details the production of 1.45 million ounces of gold across eight years to financial year 2028. In total, this is 34% higher than the previous plan published in June 2019 and another example of the progressive growth that the Company has been able to deliver. PRODUCTION GOALS At present, we are guiding for production of 260,000- 280,000 ounces of gold at an AISC of A$1,230-1,330 an ounce in the 2021 financial year, which would again be a record. With the aim of extending our production profile out further, there are multiple studies underway looking at converting more of our large resource base into mineable reserves. These include examining bulk underground mining options at Eridanus, Galaxy and Morning Star, all at Mt Magnet, as well as re-visiting the large Stage 3 open pit cutback at Edna May. We are also exploring the prospect of expanding the processing plant at Mt Magnet. 8 Ramelius Resources A PROSPEROUS FUTURE It has been gratifying to see the strong operating performance and clearly articulated growth strategy meet with increasing recognition from investors over recent years. From 1 July 2019 to 30 June 2020, the Ramelius share price rose from 72c to $1.99, with the Company’s market capitalisation increasing to $1.6 billion. The upward trend in the share price continued early in the new financial year and we were pleased to receive notification recently that Ramelius would be included in the S&P/ASX200 at the September 2020 Quarterly Rebalance. Inclusion in the index is expected to lead to broader investor recognition. In reflecting on the achievements of the past year, it would be remiss of me not to acknowledge the efforts of Ramelius staff and contractors. They navigated through the uncertainty that came with the COVID-19 pandemic with aplomb and deserve great credit for the operational and financial outcomes we have been able to deliver. SUMMARY On a final note, I would again like to express my gratitude to Kevin Lines, who retired as Chairman at the end of September after 12 years of continuous service on the Ramelius Board. The integral role Kevin has played in the success of the Company will never be forgotten and I am extremely grateful for the support he has provided me personally over the past two and a half years since he took over the chairmanship. We all wish Kevin, and his wife Heather, all the best in retirement. I thank you as well for your ongoing support of Ramelius and I look forward to another year of significant achievements ahead. Mark Zeptner Managing Director Ramelius Resources Ltd Key Financial Highlights 10+ years AS A SUCCESSFUL GOLD MINER 230,426 ounces OVER THE YEAR $19.8 million SPENT ON EXPLORATION $113.4 million NET PROFIT AFTER TAX Annual Report 2020 9 THANK YOU FOR A DECADE OF SERVICE Kevin Lines – Outgoing Chairman 2008 April Appointed to Board of Ramelius May Recommenced open pit mining at Wattle Dam Drilling identifies very high grade underground potential 2009 April/ Raised $13.4 May million and committed to underground mine at Wattle Dam June Joe Houldsworth retires as MD Ian Gordon appointed CEO July Dioro Exploration takeover announced as counter-bid to Avoca Resources 2010 Feb Ramelius reached over 37% in Dioro then accepted into the Avoca offer Sale of Avoca shares raised $20 million July Purchased Mt Magnet from Harmony for $35 million (plus $5 million in environmental bonds) Oct Ian Gordon appointed MD 2011 April Approval to commence mining at Mt Magnet June Joe Houldsworth retires from Board Beach Energy sell their stake in Ramelius held since the float 2012 Feb Announced $10 million acquisition of Vivien from Gold Fields Transaction completed September 2013 Mar Mark Zeptner appointed COO Aug Reg Nelson resigns as a Director Oct Michael Bohm joins Board as Non-Executive Director Board members Mike Bohm, Mark Zeptner, Kevin Lines and David Southam on-site. 10 Ramelius Resources 2014 Mar Mark Zeptner 2015 May Vivien 2017 Sept Discovery 2018 Mar Bob Kennedy 2019 Feb appointed CEO replacing Ian Gordon June Acquisition of commences mining and Kathleen Valley given go-ahead Kathleen Valley for $4.1 million announced July Mark Zeptner joins the Board as MD Sept Ian Gordon resigns from Board of Shannon Underground Deposit at Mount Magnet Oct Acquisition of Edna May from Evolution for $40 million plus royalties Dec Discovery of the 500,000 oz Au Eridanus Deposit at Mount Magnet passes away Kevin Lines appointed Chairman July David Southam joins the Board as Non-Executive Director Sept Takeover of Explaurum Limited (ASX:EXU) announced Offer to acquire Marda announced Office consolidation in Perth completed EXU takeover reaches 90% (for approx. $67M) Marda purchase completed (for approx. $13M) Aug First Dividend payment to shareholders under new policy announced Oct Natalia Streltsova joins Board as Non-Executive Director 2020 Feb Spectrum Metals Limited (ASX:SPX) takeover announced May SPX bid completed for $171 million Sept Ramelius enters S&P/ ASX200 Index Kevin Lines retires 11 Annual Report 2020 REVIEW OF OPERATIONS Overview Operational Summary Mt Magnet Edna May Development & Exploration Projects 13 14 15 18 19 12 Ramelius Resources OVERVIEW Ramelius is an established mid-tier ASX200 gold production and exploration company. Ramelius achieved record annual gold production for the financial year of 230,426 ounces and has averaged production of in excess of 200,000 ounces per annum over the last three financial years. Ramelius had a remarkable year reporting a 397% increase in earnings before interest and tax (EBIT) compared to the 2019 financial year. The reported EBIT for the 2020 financial year was $152.5 million (2019: $30.7 million). This performance has been driven by increasing grades across the operations (notably at Mt Magnet) and a strong A$ gold price. In addition to the strong EBIT the operating cashflows also reported a significant increase of 72% to $236.0 million. Further details on the financial performance of the group for the 2020 financial year can be found in the financial review section of the Directors’ Report. Production guidance for the 2021 financial year has been set at 260,000 – 280,000 ounces which, if achieved, will be another record year for Ramelius. Furthermore, a life of mine plan was released on 30 June 2020 which detailed annual gold production averaging over 250,000 ounces out to the 2025 financial year. This represents a 25% increase in the average annual production and an extension of two years on the prior year life of mine plan. Figure 1: Ramelius’ operations locations Annual Report 2020 1313 Annual Report 2020REVIEW OF OPERATIONS OVERVIEW (CONTINUED) As noted, during the 2020 year the company produced a record 230,426 ounces from its Mt Magnet, Vivien, Edna May, and Marda gold mines at an All-In Sustaining Cost (AISC) of A$1,164 per ounce. This is the 6th consecutive year the group’s AISC has been below A$1,200 per ounce (refer Figure 2). Sales for the year totalled 228,210 ounces at an average realised gold price of A$2,014 generating a strong AISC margin of A$850 per ounce. Figure 2: AISC per ounce and realised gold price for 2015 to 2020 OPERATIONAL SUMMARY Table 1: Mine operations performance for the 2020 financial year 1In the below table and throughout this report Mt Magnet includes the Vivien gold mine whilst the Edna May operation includes the Marda Gold Project. Unit Mt Magnet1 Edna May1 2020 Group 2019 Group Change Change % kt g/t oz kt g/t oz kt kt g/t oz % oz oz oz 2,940 1.30 122,844 502 5.84 94,270 566 1.60 29,036 139 4.86 3,506 1.35 151,880 641 5.63 21,758 116,028 2,576 1.26 104,530 337 5.04 54,591 930 0.09 47,350 304 0.59 61,437 + 36 % + 7 % + 45 % + 90 % + 12 % + 113 % 3,442 705 4,147 2,912 1,235 + 42 % 1,973 2.74 173,622 96.5 167,507 167,129 2,262 0.99 71,697 91.2 65,360 63,297 4,235 1.80 245,319 94.9 232,867 230,426 4,804 1.33 205,921 94.8 195,264 196,679 (569) 0.47 39,398 0.1 37,603 33,747 - 12 % + 35 % + 19 % + 0 % + 19 % + 17 % 163,696 64,514 228,210 203,318 24,892 + 12 % Open Pit High grade ore mined Grade Contained gold Underground High grade ore mined Grade Contained gold Total ore mined Mill Production Tonnes milled Grade Contained gold Recovery Recovered gold Gold poured Gold sold 14 Ramelius ResourcesREVIEW OF OPERATIONS MT MAGNET Figure 3: Mt Magnet key mining and exploration areas MINING Operations at Mt Magnet continued on a multi pit / underground basis throughout the 2020 financial year with ore being milled from five open pit and four underground projects. A summary of the main projects for the year is provided below: Area Milky Way Type Open Pit Operational commentary Mining at Milky Way was completed during the year with 371k tonnes mined at a grade of 1.24 g/t. A total of 409k tonnes were milled during the year at a grade of 1.24 g/t for recovered gold of 15,409 ounces. At the end of the year there remained just over 400k tonnes of high grade Milky Way ore stockpiled, which is comparable to the opening stockpile position. The higher grade Eridanus ore was preferentially treated during the year. Stellar Open Pit Spectacular drill results in the prior year led to a redesign of the mine plan for Stellar. Mining of the redesigned pit commenced in March 2020, later than expected, with operations focussing on Eridanus. By the completion of the year the Stellar pit cut back had advanced to reach the upper levels of the high grade ore zone. A total of 52k tonnes were mined at a grade of 1.11 g/t with the main ore body scheduled to be mined early in the 2021 financial year. A minimal amount of ore was processed from Stellar (and Stellar West) during the year with the higher grade Eridanus and Shannon ores being preferentially treated. 15 Annual Report 2020REVIEW OF OPERATIONS MT MAGNET (CONTINUED) MINING Area Eridanus Type Open Pit Operational commentary Eridanus was the main ore source at Mt Magnet during the year making up 49% of the ore feed. The Eridanus open pit performed exceptionally well during the year with production overperforming against the Ore Reserve in both tonnages and grade. Extensive RC drilling was undertaken in the first half of the year, which, in December, resulted in a 226% increase in the Mineral Resource reported in 2018 for Eridanus. (refer to ASX Announcement dated 23 December 2019 “Major resource increase at Eridanus (Mt Magnet)”). Following on from this, a new open pit Ore Reserve of 5.2 million tonnes at 1.20 g/t for 194,000 ounces of gold was announced in April 2020. (refer to ASX Announcement dated 30 April 2020 “Ramelius Life of Mine Update”). This Ore Reserve upgrade has allowed for a significantly larger open pit mine to be designed with a Stage 2 pit cut-back commencing in July 2020. Total high grade ore mined for the year was 2,306k tonnes at a grade of 1.33 g/t. The Eridanus high grade ore was preferentially treated throughout the year due to the higher grades being available. A total of 960k tonnes were milled at a grade of 1.90 g/t and recovery of 94.9% for recovered gold of 55,553 ounces. At the end of the year there was 1,353k tonnes of high grade Eridanus ore stockpiled which will provide the base load mill feed in the 2020 financial year as the Eridanus Stage 2 cut-back is mined. Vegas Open Pit Mining of the small Vegas pit, which was mined to provide oxide BIF ore for blending purposes, was completed during the year. During the year 211k tonnes were mined at a grade of 1.12 g/t with 93k tonnes being milled at a grade of 0.97 g/t and a recovery of 95.3% for recovered gold of 2,773 ounces. Just under 200k tonnes remain stockpiled at year end for selective processing in the 2021 financial year. Shannon Underground The Shannon underground mine performed very well during the year with production grades exceeding expectations with significant visible, nuggety gold occurring within the quartz lode. During the year, 158k tonnes were milled at a grade of 9.66 g/t and a recovery of 98.1% for recovered gold of 48,237 ounces. Development for the year at Shannon totalled 3,798 metres. Water Tank Hill Underground Late in the 2019 financial year several additional small stoping areas were identified with the mining of these areas continuing at modest volumes throughout the 2020 financial year. Hill 60 Underground Vivien Underground A total of 47k tonnes were milled at a grade of 2.96 g/t and recovery of 97.6% for recovered gold of 4,373 ounces. Development work continued at the Hill 60 underground mine throughout the year with a total of 3,032 metres of development taking place. Several ore drive levels were accessed with stoping production commencing in the second half of the year. During the year 104k tonnes were milled at a grade of 2.26 g/t and a recovery of 97.9% for recovered gold of 7,362 ounces. Stoping production will ramp up and continue throughout the 2021 financial year. The Vivien mine was previously scheduled for completion in the 2020 financial year. However, the success of drilling added both Mineral Resources and Ore Reserves to the mine plan (refer to ASX Announcement dated 12 September 2019 “Vivien Underground Extended to June 2021”). As part of this mine life extension, the mining contractor was changed to RUC Cementation Mining and significant development work extending the mine life was undertaken. Total high grade mill production from Vivien was 186k tonnes at a grade of 5.72 g/t and recovery of 97.5% for recovered gold of 33,313 ounces. The current mine plan for Vivien has operations extending out to early in the 2022 financial year. 16 Ramelius ResourcesREVIEW OF OPERATIONS MT MAGNET (CONTINUED) MILLING Table 2: Mt Magnet mill production for the 2020 financial year Mill Production Tonnes milled Grade Contained gold Recovery Recovered gold Gold poured Gold sold Unit 2020 2019 Change % kt g/t oz % oz oz oz 1,973 2.74 173,622 96.5 167,507 167,129 1,962 1.91 120,271 95.5 114,800 114,840 + 1 % + 43 % + 44 % + 1 % + 46 % + 46 % 163,696 119,997 + 36 % A total of 1,973k tonnes were processed at the Mt Magnet mill during the year compared to 1,962k tonnes in the prior year representing a 1% increase in throughput. Milled grades were up 43% on the prior year which resulted in a significant increase in gold poured of 52,289 ounces or 46%. Grades at Mt Magnet were up on the prior year as a result of 50% more underground ore being available at a grade 21% higher than the prior year. Underground grades were up on the prior year predominately due to the performance of Shannon. Additionally, whilst the tonnages milled from the open pit operations were down (with the higher grade underground ore being preferentially treated), the recovered gold was 17% higher than the prior year with higher grades being achieved. The higher open pit grades were attributable to the performance of the Eridanus ore which made up the base load feed during the 2020 financial year. Gold production from Mt Magnet is forecast to be approximately 155,000 ounces in the 2021 financial year. Annual Report 2020 17 REVIEW OF OPERATIONS EDNA MAY MINING Mining operations at Edna May focused on the Edna May underground mine, Greenfinch open pit, and the recently developed Marda Gold Project (open pit). A summary of these projects for the year is provided as follows: Area Type Operational commentary Edna May Underground Underground Development of the Edna May underground commenced late in the 2019 financial year and continued for the first half of the 2020 financial year. During this development phase and into the second half of the 2020 financial year the proportion of stope ore production steadily increased. A total of 168k tonnes were milled at a grade of 4.11 g/t and recovery of 90.8% for recovered gold of 20,204 ounces. Greenfinch Open Pit As reported earlier in this report, final Federal environmental approval for the Greenfinch open pit project was received late January 2020 with clearing and mining commencing shortly thereafter. Pre strip activities dominated the mining activities with just under 1.0 million bcms being moved at a waste to ore strip ratio of 21.6:1. A total of 107k tonnes were milled at a grade of 0.96 g/t and recovery of 92.8% for recovered gold of 3,055 ounces. Marda Open Pits The Mining Proposal and Mine Closure Plan for the Marda Gold Project were approved in September 2019 with site works and ore mining commencing shortly thereafter. A total of 449k tonnes were mined in the financial year at a grade of 1.78 g/t from the Python, Dugite, Dolly Pott, and Goldstream open pits. During the year 151k tonnes were milled at a grade of 2.22 g/t and a recovery of 91.8% for recovered gold of 9,915 ounces. As at 30 June 2020 a total of 276k tonnes of ore remained stockpiled at the mine site awaiting haulage and processing. MILLING Table 3: Edna May mill production for the 2020 financial year Mill Production Tonnes milled Grade Contained gold Recovery Recovered gold Gold poured Gold sold Unit 2020 2019 Change % kt g/t oz % oz oz oz 2,262 0.99 71,697 91.2 65,360 63,297 2,842 0.94 85,650 93.9 80,464 81,839 – 20 % + 5 % – 16 % – 3 % – 19 % – 23 % 64,514 83,321 – 23 % A total of 2,262k tonnes were processed at the Edna May mill during the year compared to 2,842k tonnes in the prior year representing a 20% decrease in throughput. Due to the delays in the Greenfinch open pit approvals, Edna May milling was reduced to a 12 day on 9 day off roster in October 2019. Milling reverted back to a 24/7 operation in March 2020 once the Greenfinch approvals were received. The milling schedule was scaled back in order to preserve low grade oxide stockpiles for future blending with the underground and Marda ore. Milled grades were up 5% on the prior year. The increased availability of the higher grade underground tonnes was offset in part by the use of low grade stockpiles at Edna May during the year. The above resulted in a reduction in gold poured of 18,542 ounces or 23%. Gold production from Edna May is forecast to be approximately 115,000 ounces in the 2021 financial year. 18 Ramelius ResourcesREVIEW OF OPERATIONS DEVELOPMENT & EXPLORATION PROJECTS DEVELOPMENT PROJECTS In the 2019 Annual Report Ramelius outlined the plans for the following development projects: • Greenfinch (Edna May) • Marda Gold Project • Tampia Gold Project Of these three development projects, mining has commenced on two projects (Greenfinch and Marda) and a Feasibility Study has been published for the Tampia Hill Gold Project (refer to ASX Announcement dated 30 April 2020 “Ramelius Life of Mine Update”) with mining expected to commence towards the end of the 2021 financial year. In addition to this, a Pre-Feasibility Study (PFS) was published for the recently acquired Penny Gold Project (Spectrum Metals Limited) (refer to ASX Announcement dated 30 June 2020 “Ramelius Extends Life of Mine Plan by 34% to 1.45Moz”). TAMPIA GOLD PROJECT (NAREMBEEN, WA) During the year various technical studies, including metallurgy, surface and groundwater hydrology, and ore haulage were progressed with an updated Ore Reserve and Feasibility Study being published in April 2020 (refer to ASX Announcement dated 30 April 2020 “Ramelius Life of Mine Update”). The Feasibility Study delivered a simplified processing solution for the project which resulted in a significant reduction in capital cost (~$24 million) and a commensurate reduction in operating costs associated with processing. Negotiations are continuing for the finalisation of the compensation payments with landowners and with the 10% minority owner to resolve incomplete arrangements made with the previous tenement holders. In addition to this, stakeholder consultation with relevant Shires and regulatory bodies is ongoing with production expected to commence in the 2022 financial year. The Tampia Gold Project has a Mineral Resource of 8.2Mt at 1.7 g/t for 460,000oz of contained gold and Ore Reserves of 2.5Mt at 2.7 g/t for 210,000oz of contained gold. PENNY GOLD PROJECT (MURCHISON REGION, WA) (SPECTRUM METALS LIMITED) With control of Spectrum Metals Limited being achieved in March 2020 Ramelius moved quickly to complete and publish the results of the PFS (refer to ASX Announcement dated 30 June 2020 “Ramelius Extends Life of Mine Plan by 34% to 1.45Moz”). The PFS proposes a partial cutback of the existing Penny West pit to provide a suitable location for the development of the Penny North underground main decline portal and ventilation / egress adits. A small open pit is also planned to be mined on the Magenta lode 1.5 kilometres to the north of the Penny North underground mine subject to the finalisation of the Feasibility Study and final investment decision. Underground development at the Penny Gold Project is scheduled to commence during the 2021 financial year with ore being mined in the 2022 financial year. The mining method consists of a conventional mechanised decline and 20m sub level development. The stoping method is conventional longhole drilling and blasting of up-hole bench stopes with a combination of in-situ pillars and cement rock fill stope support. Ore will be hauled along existing access and government roads to the Mt Magnet plant for processing. Preparatory work is ongoing with environmental and heritage surveys underway, stakeholder consultation, and miscellaneous lease applications being made which will be incorporated into the Feasibility Study. ERIDANUS (MT MAGNET) Significant drilling and studies were undertaken during the year on Eridanus which resulted in substantial increases to the Mineral Resource and Ore Reserve for Eridanus. Eridanus is now the third largest endowment area in the +6 million ounce Mt Magnet gold camp, after Hill 50 (2.1 million ounces), and Morning Star (1.2 million ounces). The increased Ore Reserve resulted in a much larger open pit design with Mining Approvals for the Stage 2 cutback being received late in the financial year with operations commencing in July 2020. Remodelling of the Eridanus underground resource, accounting for additional deeper diamond drilling and quartz vein-sets mapped in the open pit, commenced late in the year and is expected to be completed along with the Scoping Study early in the 2021 financial year. 19 Annual Report 2020REVIEW OF OPERATIONS DEVELOPMENT & EXPLORATION PROJECTS (CONTINUED) DEVELOPMENT PROJECTS (CONTINUED) SHANNON & HILL 60 (MT MAGNET, WA) AND EDNA MAY (WESTONIA, WA) Underground infill and resource definition diamond drilling was undertaken at the Mt Magnet and Edna May underground mines during the year. Drilling is expected to improve resource confidence for each deposit for ongoing mine development and potentially add extra resources for mine extensions. MINING/PROCESSING STUDIES AND RESOURCE CONVERSION The company plans to leverage its large resource base^, particularly at Mt Magnet and Edna May, over the next twelve months to ultimately produce a longer Life of Mine Plan (LOMP) with higher conversion of resources. Ramelius notes that any increase in production that is largely due to the higher gold price environment we are currently operating in will generally lead to higher underlying operating costs due to a lower cut-off grade being applied to design parameters. Notwithstanding, mining/processing studies that are currently planned for 2021 financial year include: MT MAGNET • Galaxy (Saturn, Mars, Titan and Hill 50) – underground studies to look at options to convert a percentage of approximately 470koz^ of mineral resources into the LOMP • Morning Star – underground study to consider the 79koz^ mineral resource currently at depth as well as other nearby opportunities • Eridanus/Shannon/Stellar – continue work on the bulk underground option at Eridanus as well as accelerate extensional drilling at Shannon and considering underground opportunities below the high-grade pod at the base of the Stellar pit • Processing facility – the processing plant, currently operating between 1.9-2.0Mtpa, has previously operated up to 2.4Mtpa with additional secondary crushing, ball mill and leach tanks being decommissioned in the early 2000’s. The team is currently carrying out a cost/benefit analysis on this upgrade option which, based on previous studies, could be carried out for less than A$20.0 million. EDNA MAY • Edna May underground – carry out study on bulk underground option and compare to current high-grade lode only mine plan which focuses primarily on the Fuji and Jonathan lodes • Edna May Stage 3 – re-visit the large cutback on the original Stage 2 pit to potentially unlock over 500koz^ of lower grade resources which would potentially secure a mine life at Edna May out towards 10 years. ^ refer to ASX Announcement dated 10 September 2019 “Resources and Reserves Statement 2019”. 20 Ramelius ResourcesREVIEW OF OPERATIONS DEVELOPMENT & EXPLORATION PROJECTS (CONTINUED) EXPLORATION PROJECTS Ramelius’ exploration activities focussed around the Mt Magnet and Edna May Gold Projects during the year. MT MAGNET An aggregate of 37,920m of exploratory RC drilling and 3,413m of diamond drilling (including geotechnical drilling) was completed at Mt Magnet during the year primarily focussing on extensions to the Eridanus open pit. Also included in this total was exploratory RC drilling at the Boomer, Zeus, and Orion and Valhalla (Eridanus – Franks Tower Trend) prospects. The major exploration activity at Mt Magnet is discussed below. ERIDANUS DEEPS PROSPECT HESPERUS SOUTH PROSPECT Drilling at the Eridanus deposit continued to deliver significant results with wide intersections of stockwork style mineralisation occurring within the Eridanus Granodiorite below the current open pit. Drilling took place in multiple orientations in order to work around active mining operations and to test the stockwork mineralisation from various directions. Ramelius has subsequently initiated an underground bulk mining Scoping Study with the aim of realising value from the deposit below the planned open pit. A small program of RC drilling was completed at Hesperus South. The program was designed to target the depth extensions to the mineralised porphyries that extend throughout the Sirdar Formation (Galaxy banded iron, mafic and ultramafic dominated package). Encouraging mineralised porphyry results were returned with true widths remaining undetermined at this stage. Further interrogation is required to ascertain the significance of this drilling as a potential vector to deeper mineralised systems. MABEL AND GOLDEN TREASURE PROSPECTS Infill (resource definition) RC drilling was completed over the Mabel and Golden Treasure prospects during the year. Drilling was designed to scope below the historical Golden Treasure pit as well as test the mineralised banded iron formation ‘bars’ northwards towards Mabel. Interrogation of the drilling results is continuing. ORION (FRANKS TOWER TREND) AND VALHALLA PROSPECTS Encouraging reconnaissance RC drill results were returned from the newly defined Orion Prospect. Orion occupies the 600m eastern strike extension of the Eridanus Granodiorite before it leads into the historical Franks Tower pit, further east. Analogous to Eridanus, Orion is returning broad zones of anomalous stockwork related gold mineralization and shallow supergene gold mineralization throughout the granodiorite where it has been drill tested to date. Further infill drilling along this highly prospective trend (now traceable over 2km strike between Eridanus and the old Valhalla pit) is underway. PENNY GOLD PROJECT (MURCHISON REGION, WA) (SPECTRUM METALS LIMITED) Ramelius fast tracked the completion of 4,222m of resource definition RC drilling and 1,517m of diamond drilling at the Penny West, Penny North and Magenta prospects during the year. The high-grade Penny North mineralisation was enhanced with a geotechnical diamond hole into the top of the resource. In addition to this, encouraging intersections confirm further high-grade gold mineralisation within the Penny West Lode immediately below the pit. At Magenta, located 1.8km north and along strike of the Penny West pit, a resource-definition programme of shallow infill RC drilling was completed. The drilling aimed to improve confidence in reported shallow oxide intersections ahead of resource modelling and pit optimisation work. The results of the resource modelling will be integrated into the Penny Feasibility Study. The drill results are in line with expectations. 21 Annual Report 2020REVIEW OF OPERATIONS DEVELOPMENT & EXPLORATION PROJECTS (CONTINUED) EXPLORATION PROJECTS (CONTINUED) EDNA MAY An aggregate of 13,631m of RC drilling along with 66,362m of reconnaissance Aircore drilling took place in the year throughout the Edna May / Tampia / Marda region (see figure 4). Low order anomalous Aircore results (4m composites >100ppb Au) have been identified from several prospects that will require infill Aircore traverses and/or deeper RC drill testing as/when access is permissible. GIBB ROCK FARM-IN AND JOINT VENTURE PROJECT – RAMELIUS EARNING 75% Aircore drilling designed to test broad gold in soil anomalies along the interpreted granite-greenstone contact commenced late in the year with Assay results awaited at 30 June 2020. OTHER TANAMI JOINT VENTURE (NT) – RAMELIUS 85% The Tanami Joint Venture was terminated during the year. JUPITER FARM-IN AND JOINT VENTURE (NEVADA, USA) – RAMELIUS EARNING 75% No significant results were returned from a small RC drilling programme completed at Jupiter during the year. COVID-19 travel restrictions have since hampered any follow-up, but future work programmes have been designed for the 2021 financial year. MT HAMPTON (INCLUDING SYMES’ FIND) Step out RC drilling was completed during the year outside the maiden Indicated and Inferred Symes’ Find Mineral Resource of 540,000 tonnes at 1.90g/t for 34,000 ounces of contained gold targeting the southern strike and plunge projection of the higher grade shoots at Symes’ Find. Disappointing results were returned from the immediate southern extension to the resource, but infill drilling confirmed the robustness of the deposit and reconnaissance drilling to the north of Symes has indicated potential for northern extensions and/or repeats of the Symes mineralisation. HOLLETON MINING CENTRE RC drilling along the Columbus and Calzoni trends within the Holleton Mining Centre commenced late in the year after land access and compensation agreements with private landowners were finalised. Initial results appear encouraging with reasonable thicknesses of mineralisation being intersected. Follow-up drilling will be planned but timing is contingent upon site access and the completion of seasonal flora and fauna surveys ahead of any ground disturbing activities as required. TAMPIA EXPLORATION PROSPECTS Encouraging RC drilling assay results have been returned from two prospect areas located within 6km of the Tampia Resource. The RC drilling was following up on anomalous Aircore results at Tampia South and previous explorer’s drilling results at Dorset (part of Anomaly 8, located 6km north of Tampia). Further drill testing is required to ascertain the significance of the Dorset intersections, whilst further infill drilling over the untested plus 1km southern strike extension to the intersections will be completed after Christmas 2020, once the winter crops have been harvested at Tampia South. 22 Ramelius ResourcesREVIEW OF OPERATIONS DEVELOPMENT & EXPLORATION PROJECTS (CONTINUED) Figure 4: Exploration and development projects around the Edna May Gold Mine Annual Report 2020 23 RESOURCES AND RESERVES COMPANY SUMMARY AS AT 30 JUNE 2020 ORE RESERVES UP 32% The Ramelius Mineral Resources and Ore Reserves as at 30 June 2020 increased 15% and 32% respectively for the year, after mining depletion. Total Mineral Resources are estimated to be; • 90 Mt at 1.6 g/t Au for 4.7 Moz of gold Total Ore Reserves are estimated to be; • 17 Mt at 2.1 g/t Au for 1.1 Moz of gold Increases were achieved at Ramelius’ gold projects in Western Australia via drilling and resource additions at Eridanus, Shannon and Vivien, plus the acquisition of the Penny project. As in previous years, the Company’s ability to consistently meet production guidance has been underpinned by realistic resource modelling and deliverable reserve estimates. Growth in both Mineral Resources and Ore Reserves has accelerated in recent years as illustrated below. Figure 5: Historical Resources and Reserves 24 Ramelius Resources RESOURCES AND RESERVES (CONTINUED) MINERAL RESOURCES TABLE 4: MINERAL RESOURCES MINERAL RESOURCES AS AT 30 JUNE 2020 – INCLUSIVE OF RESERVES Project Deposit Measured Indicated Inferred Total Resource t g/t oz t g/t oz t g/t oz t g/t oz Galaxy Group Morning Star Bartus Group Boomer Britannia Well Bullocks 92,000 - 49,000 - - - 1.8 - 2.2 - - - Eastern Jaspilite 150,000 2.2 10,000 5,400 3,600,000 - 4,900,000 4,000 110,000 - - - 1,200,000 180,000 200,000 120,000 170,000 Eclipse Eridanus Golden Stream Golden Treasure Lone Pine Mt Magnet Milky Way Spearmont-Galtee Stellar Welcome - Baxter Open Pit deposits Hill 50 Deeps Hill 60 Morning Star Deeps Saturn UG Shannon - - - 280,000 1.4 12,000 7,500,000 - - - - - - 220,000 790,000 280,000 260,000 - - - - - - - - 1.6 1.7 5.5 4.2 - - - - - - - - 11,000 150,000 780,000 490,000 820,000 25,000 260,000 280,000 43,000 21,000,000 49,000 35,000 - - 930,000 220,000 190,000 - 1.7 1.9 2.1 1.8 2.0 3.3 2.8 2.2 1.2 2.9 1.1 1.3 1.1 2.9 2.4 1.6 1.6 7.0 4.7 4.2 - 190,000 2,200,000 300,000 4,300,000 8,000 68,000 12,000 21,000 11,000 12,000 240,000 790,000 - 40,000 130,000 41,000 290,000 5,400,000 14,000 28,000 21,000 67,000 880,000 390,000 29,000 1,600,000 2,000 210,000 20,000 15,000 - 200,000 1,000,000 16,000,000 210,000 400,000 34,000 26,000 36,000 330,000 - 1,600,000 63,000 14.2 29,000 83,000 14.0 38,000 270,000 110,000 1,400,000 6.6 310,000 2,600,000 UG deposits 610,000 ROM & LG stocks 4,000,000 Total Mt Magnet 5,400,000 Edna May Edna May UG Edna May Greenfinch ROM & LG stocks - - 940,000 190,000 Total Edna May 1,100,000 Vivien UG Coogee Symes Find Dolly Pot Dugite Python Goldstream Golden Orb King Brown Die Hardy Red Legs 310,000 - - - - - - - - - - Vivien Coogee Symes Marda Tampia Penny 5.8 0.7 1.4 - - 1.0 0.5 0.9 4.8 - - - - - - - - - - 95,000 - 250,000 22,000,000 - - 18,000,000 310,000 30,000 1,900,000 2,700 - 33,000 20,000,000 48,000 230,000 - - - - - - - - - - 14,000 28,000 570,000 530,000 170,000 620,000 71,000 380,000 140,000 940,000 - - 14,000 2,900,000 31,000 7,700,000 - 1.9 1.0 5.1 1.0 - 1.0 5.2 3.6 1.9 1.7 1.7 1.8 2.5 2.9 4.2 1.6 - - 2.0 1.7 - - 1,400,000 19,000,000 560,000 5,000,000 51,000 280,000 59,000 1,400,000 - - 670,000 6,700,000 38,000 200,000 3,200 35,000 29,000 9,600 35,000 5,800 35,000 18,000 49,000 - - - - 59,000 39,000 47,000 180,000 140,000 200,000 49,000 360,000 370,000 - 130,000 200,000 ROM & LG stocks Total Marda Tampia 260,000 260,000 390,000 Nth, West & Magenta - 1.7 1.7 2.4 - 180,000 1,300,000 420,000 - 420,000 19.0 260,000 1.3 1.5 1.6 1.0 - 2.5 2.5 2.1 1.1 1.2 1.0 1.7 1.1 4.3 - 1.8 1.3 6.4 3.4 5.0 2.5 4.6 3.6 - 1.6 1.0 4.3 0.8 - 1.1 2.9 3.3 1.2 1.6 1.8 1.4 1.7 1.8 1.5 2.9 - 2.0 1.8 6.6 93,000 5,900,000 210,000 9,200,000 12,000 400,000 26,000 2,000,000 - 3,000 11,000 3,000 180,000 240,000 400,000 210,000 200,000 13,000,000 2,700 220,000 28,000 1,700,000 21,000 870,000 57,000 2,400,000 28,000 - 11,000 230,000 260,000 700,000 700,000 38,000,000 81,000 1,600,000 3,900 53,000 520,000 530,000 130,000 1,600,000 40,000 410,000 300,000 4,700,000 - 4,000,000 1,000,000 47,000,000 150,000 23,000,000 39,000 590,000 39,000 4,300,000 - 190,000 230,000 28,000,000 19,000 740,000 6,300 1,500 2,400 - 10,000 6,000 11,000 2,800 87,000 610,000 580,000 170,000 790,000 210,000 580,000 190,000 17,000 1,300,000 34,000 - 370,000 260,000 84,000 4,400,000 7,400 8,200,000 1.5 1.7 1.9 1.5 2.1 3.1 2.5 2.2 1.2 2.4 1.0 1.5 1.1 4.0 2.4 1.7 1.5 6.6 4.3 4.7 2.5 8.0 4.8 0.7 1.7 1.0 4.7 0.9 0.5 1.0 4.4 3.4 1.9 1.7 1.7 1.8 1.8 2.5 3.5 1.6 2.9 1.7 2.0 1.7 290,000 510,000 24,000 94,000 12,000 24,000 32,000 15,000 500,000 17,000 56,000 42,000 86,000 30,000 20,000 37,000 1,800,000 340,000 73,000 79,000 130,000 110,000 720,000 95,000 2,600,000 710,000 90,000 130,000 2,700 930,000 100,000 9,600 37,000 31,000 9,600 45,000 12,000 47,000 21,000 66,000 34,000 14,000 280,000 460,000 42,000 620,000 15.0 300,000 Total Resource 7,500,000 1.6 380,000 54,000,000 1.7 3,000,000 28,000,000 1.6 1,400,000 90,000,000 1.6 4,700,000 Figures rounded to 2 significant figures. Rounding errors may occur. 25 Annual Report 2020RESOURCES AND RESERVES (CONTINUED) historic in nature or gathered by previous owners, however Ramelius has added significant further drilling for all deposits, especially those forming Ore Reserves. Mineralisation has been modelled via cross- sectional interpretations using deposit appropriate lower cut-off grade shapes and geological interpretations. Geological understanding has formed the basis of all ore interpretations. Ore domain interpretations have then been wireframed using geological software, including Micromine, Leapfrog and Surpac. Mineralisation has been grouped by domain where required and statistical analysis, top-cutting and estimation carried out using anisotropic search ellipses. Estimation uses Ordinary Kriging and/or Inverse Distance methods. Modelling has been undertaken with recognition of the probable mining method and minimum mining widths and the resource classifications reflect drill spacing, data quality, geological and grade continuity. Density information for fresh rock is generally well established and new measurements have frequently been obtained. Nearly all deposits listed, with the exception of Tampia, have had some degree of recent production or historic mining. Resources are reported using cut-offs approximating A$1,600 - A$2,300/oz gold price. MINERAL RESOURCES (CONTINUED) MINERAL RESOURCE COMMENTARY Mt Magnet is comprised of numerous gold deposits contained within a contiguous tenement holding, located within an 8km radius of the processing facility. Current and recent mining operations include the Eridanus, Milky Way, Stellar and Vegas open pits and the Hill 60 and Shannon underground mines. Vivien is a high-grade quartz lode deposit, located near Leinster. The Edna May mine was acquired in October 2017. It was re-modelled and reported in 2019, following significant underground and surface drilling campaigns. It comprises of the large-scale Edna May granitoid hosted, stockwork deposit and the related, adjacent Greenfinch deposit. Two high grade cross-cutting quartz lodes are mined underground within the broader Edna May deposit. In 2020, mining commenced at the Greenfinch open pit providing a significant base load ore source. In late 2019 mining operations commenced at the Marda project, 130km north of Southern Cross. Ore haulage and milling of this ore at Edna May commenced in early 2020. All deposits have been depleted from mining during the 2020 financial year. Continued exploration, resource definition and grade control drilling has delivered significant increases to resources and reserves for the Eridanus, Shannon and Vivien deposits. Acquisition of the Penny project also added a major component of the resource and reserve increase. See RMS ASX releases below for additional Mineral Resource reporting details: • • • ‘Vivien Underground Extended to June 2021’, 12 September 2019 ‘Major Increase of Eridanus Mineral Resource’, 23 December 2019 ‘Ramelius Extends Life of Mine Plan by 34% to 1.45Moz’, 30 June 2020 Minor decreases occurred with disposal of the Kathleen Valley and Western Queen projects. The Tampia deposit is hosted within amphibolite facies mafic rocks 12km SE of Narembeen in the WA wheatbelt. Gold is hosted within shallow dipping lode/shear zones and associated with arsenopyrite. Symes Find is located 120km SSE of Edna May, also in the WA wheatbelt and consists of lateritic and primary mineralisation hosted in mafic gneiss units similar to Tampia. The Penny project was acquired via the takeover of Spectrum Metals in early 2020. Penny West is a high grade quartz-sulphide lode discovered and mined by open pit in the early 1990’s. Spectrum discovered the high grade Penny North lode in early 2019 and rapidly drill defined a significant lode resource. All resources are based on combinations of RC and diamond drill holes. Sampling has been via riffle or cone splitters (RC) or by sawn half core. Assay is carried out by commercial laboratories and accompanied by appropriate QAQC samples. A substantial proportion of drill data is 26 Ramelius ResourcesRESOURCES AND RESERVES (CONTINUED) ORE RESERVES TABLE 5: ORE RESERVES Project Deposit Mt Magnet Edna May Vivien Marda Boomer Brown Hill Eridanus Golden Stream Morning Star Stellar Total Open Pit Hill 60 Shannon Total Underground ROM & LG stocks Mt Magnet Total Edna May UG Greenfinch ROM & LG stocks Edna May Total Vivien UG Dolly Pot Dugite Python Goldstream Golden Orb East Golden Orb West King Brown ROM & LG stocks Total Marda Tampia Penny Total Reserve Tampia Penny North & Magenta ORE RESERVE STATEMENT AS AT 30 JUNE 2020 Proven g/t t - - oz t - - - - 130,000 620,000 91,000 1.1 3,200 3,600,000 - - - 91,000 100,000 90,000 190,000 4,000,000 4,300,000 79,000 610,000 190,000 880,000 110,000 - - - - - - - 260,000 260,000 190,000 - 5,700,000 - - - 1.1 2.5 9.7 5.9 0.7 1.0 5.0 1.1 0.5 1.3 6.1 - - - - - - - 1.7 1.7 3.4 - 1.2 - - - 3,200 8,200 28,000 36,000 95,000 95,000 1,100,000 64,000 5,700,000 350,000 120,000 470,000 - 130,000 6,100,000 13,000 22,000 2,800 190,000 920,000 - 37,000 1,100,000 22,000 - - - - - - - 14,000 14,000 200,000 330,000 110,000 310,000 53,000 64,000 140,000 75,000 - 14,000 1,100,000 20,000 - 230,000 2,300,000 500,000 11,000,000 Probable g/t 2.9 1.6 1.2 3.0 1.9 6.3 1.5 2.5 7.2 3.7 - 1.7 4.6 1.0 - 1.7 4.5 1.6 1.8 1.8 2.7 4.2 2.7 5.3 - 2.3 2.6 14.0 2.5 Figures rounded to 2 significant figures. Rounding errors may occur. ORE RESERVE COMMENTARY Total Reserve t g/t oz oz 12,000 31,000 130,000 620,000 140,000 3,700,000 9,200 95,000 68,000 1,100,000 13,000 64,000 270,000 5,700,000 28,000 27,000 55,000 450,000 210,000 660,000 - 4,000,000 330,000 10,000,000 29,000 270,000 31,000 1,500,000 - 190,000 60,000 2,000,000 29,000 17,000 6,200 18,000 4,600 8,600 12,000 13,000 310,000 330,000 110,000 310,000 53,000 64,000 140,000 75,000 - 260,000 79,000 1,300,000 190,000 230,000 910,000 2,500,000 500,000 17,000,000 2.9 1.6 1.2 3.0 1.9 6.3 1.5 2.5 8.3 4.3 0.7 1.4 4.7 1.1 0.5 1.5 5.1 1.6 1.8 1.8 2.7 4.2 2.7 5.3 1.7 2.1 12,000 31,000 140,000 9,200 68,000 13,000 280,000 36,000 55,000 91,000 95,000 460,000 41,000 52,000 2,800 96,000 50,000 17,000 6,200 18,000 4,600 8,600 12,000 13,000 14,000 93,000 2.7 14.0 2.1 210,000 230,000 1,100,000 All Ore Reserves have been reported from Measured and Indicated Resources only. Current operations are the Stellar, Eridanus, Greenfinch, Dugite, Dolly Pot, Python and Goldstream pits and the Vivien, Edna May, Shannon and Hill 60 underground mines. All current pit and underground operations were depleted to 30 June 2020. All Ore Reserves have been generated from design studies using appropriate cost, geotechnical, slope angle, stope span, dilution, cut-off grade and recovery parameters. Ore Reserves are utilised in the current Life of Mine plan. Mining approvals processes are in progress for the Tampia open pits and Penny underground operation. Various gold prices have been used to generate Ore Reserves and appropriate cut-offs; • Mt Magnet open pit reserves including Boomer, Brown Hill, Golden Stream, Morning Star and Stellar utilise a gold price of A$1,650/oz, except for Eridanus which utilises A$2,000/oz • Mt Magnet underground mine reserves including Hill 60 and Shannon utilise A$2,100/oz. • Edna May open pits reserves (Greenfinch) utilise a gold price of A$1,650/oz and the underground utilises a gold price of A$1,800/oz • Vivien underground reserves utilise a gold price of A$2,000/oz • Marda open pits reserves utilise a gold price of A$1,700/oz • Tampia open pit reserves utilise a gold price of A$2,100/oz • Penny open pits and underground utilise a gold price of A$2,300/oz 27 Annual Report 2020RESOURCES AND RESERVES (CONTINUED) ORE RESERVES (CONTINUED) ORE RESERVE COMMENTARY (CONTINUED) Mining, milling and additional overhead costs are based on currently contracted and budgeted operating costs. Mill recoveries for all ore types are based upon operating experience or metallurgical testwork. Stockpiles consist of ROM stocks and low-grade stocks mined after 2012. Figure 6: Reserve Inventory Change FORWARD LOOKING STATEMENTS This report contains forward looking statements. The forward looking statements are based on current expectations, estimates, assumptions, forecasts and projections and the industry in which it operates as well as other factors that management believes to be relevant and reasonable in the circumstances at the date such statements are made, but which may prove to be incorrect. The forward looking statements relate to future matters and are subject to various inherent risks and uncertainties. Many known and unknown factors could cause actual events or results to differ materially from the estimated or anticipated events or results expressed or implied by any forward looking statements. Such factors include, among others, changes in market conditions, future prices of gold and exchange rate movements, the actual results of production, development and/or exploration activities, variations in grade or recovery rates, plant and/or equipment failure and the possibility of cost overruns. Neither Ramelius, its related bodies corporate nor any of their directors, officers, employees, agents or contractors makes any representation or warranty (either express or implied) as to the accuracy, correctness, completeness, adequacy, reliability or likelihood of fulfilment of any forward looking statement, or any events or results expressed or implied in any forward looking statement, except to the extent required by law. COMPETENT PERSONS The information in this report that relates to Mineral Resources and Ore Reserves is based on information compiled by Rob Hutchison (Mineral Resources) and Duncan Coutts (Ore Reserves), who are Competent Persons and Members of The Australasian Institute of Mining and Metallurgy. Rob Hutchison and Duncan Coutts are full-time employees of the company. Rob Hutchison and Duncan Coutts have sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Rob Hutchison and Duncan Coutts consent to the inclusion in this report of the matters based on their information in the form and context in which it appears. 28 Ramelius ResourcesAnnual Report 2020 29 SUSTAINABILITY REPORT 2020 Achievements About Ramelius Our Business Our People Our Communities Our Environment Performance Data 32 35 41 44 48 51 55 30 Ramelius Resources ENVIRONMENTAL SOCIAL GOVERNANCE PERFORMANCE Annual Report 2020 31 SUSTAINABILITY REPORT 2020 ACHIEVEMENTS 2020 HIGHLIGHTS OUR BUSINESS (Economic performance) (Organisational governance) (Regulatory and compliance) RECORD CASH FLOW, DIVIDENDS AND WAGE PAYMENTS NEW RISK AND SUSTAINABILITY COMMITTEE FORMED ZERO FINES OR MATERIAL INCIDENTS OUR PEOPLE (Health, safety and wellbeing) NEW SAFETY MANAGEMENT SYSTEM, INCREASING TRANSPARENCY (Employment and contractors) 33% OF NEW HIRES WERE FEMALE (Talent attraction, development and retention) 39 TEAM MEMBERS COMPLETED MINE EMERGENCY RESPONSE AND RESCUE CERTIFICATE 32 Ramelius Resources SUSTAINABILITY REPORT (CONTINUED) OUR COMMUNITIES (Indigenous and native title) TWO INDIGENOUS DEVELOPMENT PROJECTS OUR ENVIRONMENT (Water) 19% OF TOTAL WATER IS REUSED (Taxes, royalties and supplier payments) A$476m CONTRIBUTED TO AUSTRALIAN ECONOMY (Community relations and investment) OVER $400k DIRECTLY DONATED TO LOCAL COMMUNITIES (Emissions and energy) BASELINE SET FOR ONGOING EMISSIONS AND ENERGY MEASUREMENT AND COMPARISON (Waste, effluents, air pollution) UPGRADED WASTEWATER TREATMENT AT EDNA MAY MAKING WASTEWATER SAFE FOR PUBLIC IRRIGATION Annual Report 2020 33 SUSTAINABILITY REPORT (CONTINUED) This year we contributed $476 million to the Australian economy and spent approximately $8.2 million directly with local businesses, employees and community organisations. In addition to our sponsorships and donations, we partner with our community stakeholders on legacy projects that will provide benefits to the community that last beyond the life of the mine. We seek opportunities to effectively manage water and energy, minimise waste, and to reduce our environmental footprint. The 2020 financial year will serve to set a baseline for measuring our environmental impact and we will be looking to make reductions through the 2021 financial year and beyond. Across the entire Ramelius business our people have continued to work incredibly hard during the year and I would like to thank each and every Ramelius employee, Director and contractor for their contribution and effort. The progress we have made would not have been possible without you. THE CEO ON SUSTAINABILITY AT RAMELIUS DEAR RAMELIUS STAKEHOLDERS, This year we have taken significant steps towards our mission of becoming a sustainable gold producer that focuses on delivering superior returns for stakeholders. We believe a sustainable gold producer should deliver more than just financial benefit. It’s about the way we do business, the relationships we build with our people and communities, and the efforts we make to conserve the environment. Our inaugural Sustainability Report aims to provide transparency on the path we take in delivering superior returns for our stakeholders. We believe that our direct and indirect contribution should generate value for our people, communities and society at large. We have started our journey of actively participating in disclosure of sustainability issues and opportunities. In the 2020 financial year , we engaged an independent sustainability consultant to facilitate a workshop with Ramelius sustainability leaders to identify and prioritise our stakeholders and topics that are of material importance to the Company. We know that we can’t make a contribution to sustainable development without excellent financial performance and as detailed in this Annual Report, the 2020 financial year saw a number of positive milestones. We believe in strong and transparent corporate governance and are committed to maintaining a high standard in all aspects of corporate governance. To further develop our capacity in these areas, we formed a new Risk and Sustainability Committee to assist the Board in its responsibilities of overseeing risk, governance, and sustainability activities which include setting objectives for environmental and community obligations, ethical standards and compliance. Our success and the delivery of our long-term strategy is reliant on our people embodying our values of Honesty, Fairness and Respect. Operating within the resources industry, we know it is essential to provide a healthy and safe workplace for our people. We know we’ll always have work to do in this area but are striving to improve our safety performance every year. The adoption this year of a new reporting system will ensure greater accountability and hopefully keep our people safer. We work to attract, develop and retain talented people not only with the best skills but with the best mindset and were very happy to retain a high proportion of our people. 34 Ramelius ResourcesSUSTAINABILITY REPORT (CONTINUED) ABOUT RAMELIUS MISSION STATEMENT “To be a sustainable gold producer that focuses on delivering superior returns for stakeholders” OUR VALUES At Ramelius Resources (Ramelius), we are defined by the following core values: • Honesty • Fairness • Respect Our culture is defined by a ‘fit-for purpose and can-do’ attitude. OUR CORPORATE STRATEGY • Actively seek to grow annual production beyond 300koz gold • Maintain mine life at five years or more through exploration and acquisition SUSTAINABILITY PILLARS SUSTAINABILITY STATEMENT We believe a sustainable gold producer should deliver more than just financial benefit. It’s about the way we do business, the relationships we build with our people and communities and the efforts we make to conserve the environment. OUR BUSINESS OUR PEOPLE OUR COMMUNITIES OUR ENVIRONMENT Economic performance Health, safety and wellbeing Indigenous and native title Water Regulatory and compliance Employment and contractors Organisational governance Talent attraction, development and retention Taxes, royalties and supplier payments Community relations and investment Emissions and energy Waste, effluents, air pollution 35 Annual Report 2020SUSTAINABILITY REPORT (CONTINUED) ABOUT RAMELIUS (continued) OUR SUSTAINABILITY ECOSYSTEM Through the Risk & Sustainability Committee, our Board of Directors maintains oversight of all sustainability impacts and activities across Ramelius. We strive to conduct business in a sustainable manner, guided by the following hierarchy: Risk & Sustainability Committee Charter Sustainability Policies Sustainability Statement & Pillars Community Consultation Policy Indigenous People Policy Risk Management Policy HSE Policy Diversity Policy Code of Conduct This Sustainability Report, approved for release by our Board of Directors, covers the financial year ended 30 June 2020. The report forms part of our annual corporate reporting suite and offers an account of our interaction with our stakeholders. The currency used throughout this report is Australian Dollars (A$). Further information about Sustainability at Ramelius (including policies) can be found on our website. GROUP INFORMATION Ramelius Resources Limited is a Western Australian gold producer headquartered in East Perth with approximately 300 employees. We were incorporated in 1979, listed on the Australian Securities Exchange in 2003 (ASX: RMS) and have been in production since 2006. Ramelius and our subsidiaries are engaged in the exploration, mine development, and production and sale of gold in Australia. We own and operate the Mt Magnet Gold Mine, the Vivien Gold Mine, the Edna May Gold Mine and the Marda Gold Project and associated processing plants around Western Australia. Ramelius has enjoyed significant success in recent years with increased gold production and the addition of new WA gold mining projects Tampia and Penny. Figure 7: Ramelius’ operations locations In addition to the operations listed above, Ramelius is involved in: • Three WA-based exploration projects: Mt Magnet, Edna May and Holleton (including Symes’ Find, Tampia and Marda) • One US-based farm-in/joint venture: Jupiter Gold Project in Nye County, Nevada (Ramelius: 75%, Renaissance: 25%) Further information is available on our website1. 1 www.rameliusresources.com.au/projects 36 Ramelius ResourcesSUSTAINABILITY REPORT (CONTINUED) ABOUT RAMELIUS (continued) SUPPLY CHAIN Contractors and suppliers are a critical part of our business and are relied upon to ensure that we deliver on our strategy. The supply chain at Ramelius includes but is not limited to: EXPLORATION & PROJECT DEVELOPMENT Drilling contractors Geology and geophysical contractors Analytical laboratories Surveying Earthmoving contractors Environmental and water consultants MINING Surface and underground mining contractors Cement supply Fleet, maintenance, parts and equipment Fuel, oil and tyre supply Mining communications PROCESSING Chemical supply Lab services Civil contractors Fuel and gas supply TRANSPORTATION REFINING AND SALES Freight services Ore Haulage contractor Refinery Customers Security services Bullion freight and security Aviation charter companies SUPPORT SERVICES Camp management services Power, communication and IT services Insurance Employee benefits Personal protective equipment and clothing Medical, health and safety services Labour supply Water and waste management 37 Figure 7: Ramelius’ operations locations Annual Report 2020SUSTAINABILITY REPORT (CONTINUED) ABOUT RAMELIUS (continued) UNITED NATIONS (UN) SUSTAINABLE DEVELOPMENT GOALS Ramelius is focused on aligning environmental, social and governance policies and activities across our operations in accordance with the UN Sustainable Development Goals (SDGs). These are considered the blueprint to achieving a better and more sustainable future for all and as such represent a major inspiration for the future prosperity of our stakeholders. We have chosen the ten most relevant SDGs that align to our business, strategy and stakeholder priorities. The following table summarises the ways in which we are striving to contribute to the ten specific SDGs: GOAL 9: Industry, Innovation and Infrastructure GOAL 10: Reduced Inequalities • As a gold producer, we recognise the important contribution that we make to the industrial use of gold as a conductor in electronics, including components for clean energy products such as renewable energy and battery storage. Gold is also used in other innovative industrial products and infrastructure in the energy, medical, aerospace, dentistry and health sectors. • Through our membership of the Gold Industry Group, we are involved in cutting-edge research to improve efficiencies in gold exploration and to support innovation in the Australian mining industry. • We consider native titleholders and indigenous communities as core stakeholder groups across all of our operations. We strive to work from a position of respect for local indigenous culture with the aim of creating goodwill, mutual awareness, understanding and respect. • As outlined in our Indigenous Peoples Policy, we work with Aboriginal representatives to improve communication and to better understand the views and beliefs of local indigenous communities. We aim to ensure that employees and contractors approach local sites with respect and a clear understanding of importance of the land to indigenous communities. • Established high on-site safety standards to minimise the risk of employee and contractor harm from occupational hazards, air pollution, transport accidents and other risks. • Provide employee medical checks and a health assistance program across all operations. Also developing employee health and wellness programs to help reduce illness and disease. • In response to the COVID-19 pandemic, we have put in place cleanliness and social distancing measures in accordance with advice from State and Federal health authorities. • We value the contribution of all of our employees and encourage personal development and training to enable our workforce to achieve their full potential. • We are committed to recruiting the best candidates regardless of gender, age, religion or cultural background. Our Diversity Policy ensures encourages a workforce comprised of individuals with a wide range of backgrounds, skills and experiences. • We endeavour to build and maintain a sustainable, diverse, satisfied and high- performing workforce. To do this, we encourage staff training and ongoing professional development, with all employees offered the opportunity to develop their skills and capabilities to improve their professional abilities. • We publicly report to shareholders and investors to ensure they are informed on corporate governance issues and sustainability matters, including business- related risks and maintenance of risk registers across all sites. GOAL 3: Good Health and Well-being GOAL 5: Gender Equality GOAL 8: Decent Work and Economic Growth 38 Ramelius ResourcesSUSTAINABILITY REPORT (CONTINUED) ABOUT RAMELIUS (continued) GOAL 15: Life on Land GOAL 16: Peace, Justice and Strong Institutions • We undertake and strive to improve our waste product management activities including mine site sewage, tailings and other hazardous materials, dust and general waste. Landfill rehabilitation and ongoing restoration is also undertaken wherever possible. • We maintain a focus on the efficient use of resources including water and electricity and endeavour to implement water and other resource recycling measures wherever possible. • We acknowledge our social responsibilities and the need to meet community expectations around ESG reporting. We report in accordance with the National Pollutant Inventory (NPI), National Greenhouse and Energy Reporting (NGER), Workplace Gender Equality Agency (WGEA) and the Modern Slavery Act 2018. • To ensure governance expectations around sustainability, we follow the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations 3rd Edition. GOAL 11: Sustainable Cities and Communities GOAL 12: Responsible Consumption and Production GOAL 13: Climate Action • We seek to build relationships with all stakeholders to ensure that their views and concerns are taken into account in order to achieve mutually beneficial outcomes. This includes current operations, future planning and post-closure activities such as mine rehabilitation. • Where possible, we support local organisations and businesses as a first option in procurement with the aim of developing the capacity of businesses in our local communities to improve local job creation and economic prosperity. • In accordance with legislation, we seek to comply with requirements around environmental protection and sustainability and promote a high regard for the environment across our operations. Reporting mechanisms include environmental impact studies, incident reporting and pollution audits. • Biodiversity planning is always included as part of our planning process. This includes flora and fauna studies, native vegetation recording and disturbed land restoration and rehabilitation. • We acknowledge that physical and transitional risks associated with climate change have the potential to negatively impact our business. Top priority climate- related risks include reduced water availability, extreme weather events, changes to legislation and regulation, reputational risk, and technological and market changes. • We are committed to understanding and proactively managing the impact of climate-related risks to our business. This includes integrating climate-related risks, as well as energy considerations, into our strategic planning and decision-making and working towards disclosure on the impact of climate risk on our business and the ways in which we mitigate such risks. 39 Annual Report 2020SUSTAINABILITY REPORT (CONTINUED) ABOUT RAMELIUS (continued) STAKEHOLDER ENGAGEMENT To determine the content of this report, Ramelius has reviewed the topics that matter most to our business and stakeholders. We have applied a materiality process to assess the importance and impact of topics on our business and stakeholders, which informs the scope and level of disclosures. Our stakeholder groups include: • Shareholders, lenders, investment community and insurers • Suppliers, contractors, partners and customers • Employees, unions and the Board • Regulators and government • Local communities, shires and landowners • Native title owners and indigenous groups • Media and non-governmental organisations (NGO)s • Education, research and training organisations One of our key sustainability pillars is the engagement of communities through regular consultation processes, which are guided by our Community Consultation Policy. Proactive dialogue allows us to keep the community informed about our activities and to provide a forum through which community members can provide feedback to our business. In the 2020 financial year we have had regular meetings and correspondence with government departments, local government shires, pastoralists and native title groups. MATERIAL TOPICS AND MATRIX This report focuses on the economic, social and environmental topics identified as being of material value to our stakeholders and our business. Inspired by the Global Reporting Initiative (GRI) standards for sustainability reporting, in the 2020 financial year we prioritised our material topics by combining feedback from our Executive, internal Sustainability Project Team, stakeholder expectations and an analysis of peers and the external environment. Topics have been reviewed and prioritised to ensure the corporate mission and strategic imperatives are considered. OUR MATERIAL ISSUES ARE PRESENTED IN THE FOLLOWING MATRIX: Very high S R E D L O H E K A T S Low Low 40 Health, safety and wellbeing Economic performance Regulatory/compliance Taxes, supplier payments and royalties Talent attraction, development and retention Water Types of employment and contractors Community investment and engagement GHC/Emissions/Energy Indigenous/native title Waste and tailings Diversity Ethics and Human Rights Biodiversity Information technology Innovation Mire closure/ rehabilitation RAMELIUS Very high Ramelius ResourcesSUSTAINABILITY REPORT (CONTINUED) OUR BUSINESS Economic performance Regulatory and compliance Organisational governance Ramelius employee Jess Wallrodt on the Perth Heart of Gold Discovery Trail, sponsored through Gold Industry Group ECONOMIC PERFORMANCE Maintaining high and stable levels of economic growth is one of the key objectives of sustainable development (SDG 8). Economic performance and therefore sustainability, aims to improve standards of living through efficient use of assets to maintain long-term company profitability. Economic performance creates economic value and therefore requires Ramelius to make decisions in the most fiscally responsible way possible. Ramelius’ projects and production decisions are made to create long-term value, rather than just the short-term benefits. To be a sustainable business and execute its sustainability strategies, Ramelius must have financial stability. On a larger scale, Ramelius contributes to a sustainable economy that is strong and resilient, environmentally conscientious and creates value for communities. Without strong economic performance, Ramelius can’t provide jobs for local workforces, generate tax revenue to fund public services or support supplier businesses. Ramelius’ strategy aims to promote a sustainable economy that fosters economic development, local prosperity through goods and services, and creating partnerships within regions to generate jobs. REGULATORY AND COMPLIANCE Ramelius acknowledges the range of social responsibilities to which we must adhere to ensure our business meets community and government expectations. We are pleased to report that there were no material compliance or regulatory breaches in the 2020 financial year. Further details on the way in which we report against the following frameworks is covered in more detail later in this report: • The National Pollutant Inventory (NPI): provides the community, industry and government with information about substance emissions in Australia • National Greenhouse and Energy Reporting (NGER): the national framework for reporting and disseminating company information about greenhouse gas emissions, energy production and energy consumption • Workplace Gender Equality Agency (WGEA): an Australian Government statutory agency charged with promoting and improving gender equality in Australian workplaces • Modern Slavery Act 2018: requires certain large businesses and other entities in Australia to make annual public reports on their actions to address modern slavery risks in their operations and supply chains ORGANISATIONAL GOVERNANCE Good corporate governance is the basis on which business objectives and stakeholder value depend. Ramelius regularly reviews governance practices and policies in order to incorporate changes in law and best practice into our governance processes. Through our Risk & Sustainability Committee, the Board oversees sustainability strategy, measures performance and considers sustainability risks and opportunities. Day-to-day oversight of sustainability operations and administration is the responsibility of our CEO, who in turn delegates specific responsibilities to the senior management team. We follow the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations: 3rd Edition which require the Board to carefully consider the appropriate corporate governance policies and practices needed to meet stakeholder expectations. We also take guidance where possible from the Mining Principles published by the International Council on Mining & Metals (ICMM). These define good practice environmental, social and governance requirements for the mining and metals industry through a comprehensive set of performance expectations related to tailings management, pollution, waste, resettlement and mine closure. Our Corporate Governance Statement is released in October each year. The most recent statement is available on our website2. 2 www.rameliusresources.com.au/wp-content/uploads/bsk-pdf-manager/2019/10/ASX-2019-Corporate-Governance-Statement-and-Appendix-4G.pdf 41 Annual Report 2020SUSTAINABILITY REPORT (CONTINUED) OUR BUSINESS (continued) GOVERNANCE REPORTING In the 2020 financial year, Ramelius bolstered governance functions by splitting out our Audit & Risk Committee into an Audit Committee and a Risk & Sustainability Committee to ensure appropriate levels of oversight across key governance topics. Our governance structure for sustainability is as follows: Board of Directors Audit Committee Nomination & Remuneration Committee Risk & Sustainability Committee CEO Operations Finance & Business Development Exploration Corporate We also updated a number of our sustainability policies in the 2020 financial year , namely those defining the way in which we approach: • Human Resources (HR) management, including whistleblowing • Community consultation • Indigenous people • Risk management • Health, safety and environment (HSE) The committee functions under a newly created Risk & Sustainability Committee Charter3. Further details of our corporate governance framework, policies and practices are available on our website4. RISK MANAGEMENT Risk management at Ramelius is overseen by our Board of Directors. The Board, Executive Team, Audit and Risk & Sustainability Committees regularly review the risk portfolio of the business and the effective management of risks. In the 2020 financial year a new project was initiated to create a best practice risk management framework. As a multi-year endeavour, it is a work in progress but we look forward to reporting progress in the 2021 financial year. Risk registers are held for each of our sites as well as the corporate office and are managed by the respective work group with oversight provided by our HSE Managers. Each risk register is formally reviewed and updated at least annually and is used in the budget planning process to prioritise expenditure in an effort to mitigate risk. Further information can be found in the Risk & Sustainability Charter and Risk Management Policy. INNOVATION AND RESEARCH Innovation is a key element of the Ramelius business and is recognised as a driver for efficiency, improvement and waste reduction. Ramelius also recognises the power of partnerships to develop innovative ways to unlock economic, environmental and social value and is committed to collaborative research and development. Through our partnership with Australia’s national science agency CSIRO, we are involved in cutting-edge research seeking to improve efficiencies in gold exploration and to support innovation in the Australian mining industry. 42 Ramelius Resources 3 https://www.rameliusresources.com.au/wp-content/uploads/bsk-pdf-manager/2020/08/2020-Risk-Sustainabilty-Committee-Charter.pdf 4 www.rameliusresources.com.au/corporate-governance/ CSIRO researchers John Walshe and Adam Bath logging and sampling historical diamond drill core from the Mount Magnet core farm CASE STUDY 1: CSIRO RESEARCH Ramelius is supporting innovative and ground-breaking research into mineral exploration being undertaken by Australia’s national science agency the Commonwealth Scientific and Industrial Research Organisation (CSIRO). The research is a collaboration between CSIRO, Ramelius, together with a number of other Australian gold producers and supported by the Western Australian Government through the Minerals Research Institute of WA (MRIWA). The work is aimed at improving efficiencies in gold exploration and advancing Australia’s development of a productive, sustainable and globally-competitive mineral resources industry. It is producing a new understanding of mineralisation in the WA’s Yilgarn Province and follows CSIRO’s previous development of new technology for an environmentally-superior gold recovery process. Source: https://www.csiro.au/en/News/News-releases/2020/CSIRO-uncovers-innovative-approach-to- gold-exploration Annual Report 2020 43 SUSTAINABILITY REPORT (CONTINUED) OUR PEOPLE Health, safety and wellbeing Employment and contractors Talent attraction, development and retention Ramelius recognises that employees lie at the heart of our current and future prosperity. At all times our priority is to keep our people safe, healthy and fulfilling their potential. HEALTH, SAFETY AND WELLBEING SAFETY Ramelius is committed to providing a working environment that adheres to best practice health and safety requirements for all our employees and contractors as well as any members of the public that are impacted by our operations. This is achieved by: • Complying with legislation and standards relating to health and safety in the workplace • Fostering a culture promoting workplace health and safety in the best interests of all participants • Regular site safety meetings to encourage identification of issues and continual improvement, including incident investigations and reporting to the Board • Strict mine site entry procedures and requirements, including enforcement of our drug and alcohol policy and testing of site personnel • Documented and regular review of emergency procedures and processes, ongoing staff safety training and risk management processes In the 2020 financial year, Ramelius achieved safety frequency rates of 18.3 for Total Recordable Injury Frequency Rate (TRIFR) and 8.14 for Lost Time Injury Frequency Rate (LTIFR). In the 2021 financial year, we will focus on education and taking action across our operations in order to further improve our TRIFR and LTIFR rates. We will also continue developing and standardising HSE systems across all our sites to identify areas in which we can better understand and improve health and safety. 44 “Safety is a ‘given’ at Ramelius and the safety and welfare of all personnel working at any of our operations are our key priorities. We follow a risk based and fit for purpose approach to the development, implementation and management of health and safety at our operations. Everyone that works at our operations is empowered to discuss and manage safety challenges every day.” - Duncan Coutts, Ramelius Resources Chief Operating Officer Management of health and safety is handled by our health and safety team. At all times, we strive to increase the number of proactive safety systems and strategies being implemented across all our sites. This includes undertaking regular systems development and standardisation for existing sites and rolling out the process for new sites. Ramelius uses the INX system for data management of incident reporting and investigation outcomes and training records. A new module has now been added to the INX system for online learning which has a number of benefits and we have committed to this learning approach. A review of the overall system and benefits will be included in our 2021 Sustainability Report. HEALTH AND WELLBEING Ramelius takes a proactive approach to the health and well-being of our workforce. Our vision is to create a physically and mentally healthy working environment with improved workforce participation and increased social inclusion. We aim to do this by fostering more supportive and engaging team environments in order to increase resilience, enhance positive early intervention and reduce negative mental health outcomes. Ramelius ResourcesSUSTAINABILITY REPORT (CONTINUED) OUR PEOPLE (continued) COVID-19 RESPONSE In the 2020 financial year , Ramelius consolidated and standardised the medical service being provided to employees across all our operations. A competitive tender process was undertaken and in October 2019 dedicated medical service provider - Occupational and Environmental Medicine (OccuMed), was appointed to oversee health provision across our business. Through OccuMed, Ramelius provides the following services: • Pre-employment medicals • Periodical medicals • Fitness-for-work testing • Workers compensation and injury management services • Tele-health service • Remote medical support To ensure our personnel are fit for the role that they are employed to do, in the 2020 financial year we also created 40 Job Role Profiles (JRP). This approach ensures that all new recruits are now medically assessed against the correct JRP before being employed. To ensure the health and safety of every person working at Ramelius, their families and communities during the COVID-19 pandemic, we operate all our sites in strict adherence to advice from State and Federal health authorities. This minimises risk from the COVID-19 pandemic to our employees and the communities in which we operate. In the 2020 financial year, there was no material impact on Ramelius’s operations from COVID-19. Ramelius continues to employ a variety of approaches to mitigate the impacts of the pandemic in accordance with requirements outlined by the Australia Government Health Department, the Government of Western Australia’s Health Department and WA’s Department of Mines, Industry Regulation and Safety. Our medical service provider OccuMed has also developed a Medical Management Plan to address issues arising from the COVID-19 pandemic. This plan is reviewed and updated regularly by OccuMed and communicated to operational sites for actioning. EMERGENCY RESPONSE TEAM (ERT) Each site has a core group of ERT volunteers who support the fulltime emergency personnel in regard to emergency preparedness. Site ERT target numbers are developed and agreed upon with site management teams and are based on a thorough analysis of the type of activities being undertaken and the size of the workforce. The ERT is made up of both employees and contractors’ team members. Four new Certificate III in Mine Emergency Response and Rescue courses were run during 2020 financial year . A total of 39 people completed courses in Certificate III in Mine Emergency Response and Rescue across our three operational sites during the 2020 financial year. The overall growth in trained ERT members at all the Ramelius sites provides an increased level of confidence regarding response capability and capacity at all times. Emergency response team (ERT) training 45 Annual Report 2020SUSTAINABILITY REPORT (CONTINUED) ETHICAL BEHAVIOUR All employees, including contractors working for or on behalf of Ramelius are required to adhere to overarching principles set out in our Code of Conduct Policy. This requires all employees and contractors to observe appropriate standards of behaviour, ethics and integrity as a condition of their employment. Our working values include honesty, fairness and respect and our culture is defined by a ‘fit-for purpose and can-do’ attitude. The Code of Conduct Policy includes the following expectations from our employees and contractors: • Honesty and fairness in all dealings with customers, co-workers, management and the public • Respect for our equipment, supplies and property • Zero tolerance for discrimination, harassment or offensive language and/or behaviour in the workplace • Adherence to appropriate Professional Codes of Practice and/or ethic • Zero tolerance for postings on any social media platform material that could reasonably be deemed inappropriate or unlawful, including posts that are bullying, threatening, defamatory, racist, sexist, obscene, discriminatory or profane, whether obscured by symbols or not, which contravene any existing Company policy or standards WHISTLEBLOWING In the 2020 financial year, Ramelius introduced a whistleblower mechanism through our Human Resource Management Policy to enable all directors and employees to report, without the risk of penalty or retribution to themselves or others, concerns about any questionable conduct or practice. This is in accordance with the whistleblower protections outlined in the Corporations Act 2001 (Corporations Act) which were expanded on 1 July 2019 to provide greater legal rights and protections for whistleblowers as regulated by the Australian Securities & Investments Commission (ASIC). Further information is available in our Code of Conduct and Human Resource Management Policy. OUR PEOPLE (continued) EMPLOYMENT AND CONTRACTORS DIVERSITY AND EQUAL OPPORTUNITY Ramelius acknowledges that benefits flow from a workforce comprised of individuals who come from diverse backgrounds and offer a range of skills and experiences. This helps create a high performing, innovative environment that in turn benefits our organisation. As outlined in our Diversity Policy, Ramelius is committed to recruiting the best candidates to fill available positions regardless of gender, age, religion or cultural background. Our Diversity and Human Resource Management Policies together with our Code of Conduct Policy enshrine our commitment to operate a workplace free from discrimination and harassment, in which individuals are treated with respect, equity, dignity and fairness. The Policies and Code set out the procedures to address grievances and complaints including those relating to discrimination, harassment and bullying. Further information is provided in our Human Resource Management Policy, Diversity Policy and 2019 Workplace Gender Equality Public Report5. KEY DIVERSITY METRICS IN 2020 20% of our Board of Directors is female 14% of senior leaders are female 33% of new hires were female HUMAN RIGHTS Ramelius is guided by the UN Guiding Principles on Business and Human Rights and the Voluntary Principles on Security and Human Rights (VPSHR) to respect the human rights of all stakeholders, ensuring the fundamental freedoms and basic human rights of all individuals. This commitment is reinforced by our Modern Slavery and Human Rights Policy. Our Modern Slavery Statement will be published in 2021 and will cover our expectations regarding risks of modern slavery in our operations and supply chains and the action being taken to address those risks. This is in accordance with the Commonwealth Modern Slavery Act 2018: Guidance for Reporting Entities. 5 www.rameliusresources.com.au/wp-content/uploads/bsk-pdf-manager/2019/10/2019-Workplace-Gender-Equality-Public-Report.pdf 46 Ramelius ResourcesSUSTAINABILITY REPORT (CONTINUED) OUR PEOPLE (continued) TALENT ATTRACTION, DEVELOPMENT AND RETENTION DEVELOPING AND REWARDING OUR PEOPLE We provide opportunities and support to employees to improve the skills, knowledge and qualifications that are required for the performance of their existing roles and for improving their prospects of promotion to other internal roles. Informal annual performance reviews were conducted for all employees in the 2020 financial year. Additional training, including mines rescue training, was also offered to enhance employee performance and effectiveness. Salaries are set on the basis of the level of responsibility of the position, technical skills and qualifications required to perform the role, and are professionally benchmarked against industry standards and peers on an annual basis. DEVELOPING THE NEXT GENERATION Ramelius aims to create a bright future for students and graduates entering the mining industry by offering work placements, graduate programs and apprenticeships. Our graduate program offers university graduates a flexible program that aims to support them in their transition from study to career. In the 2020 financial year, we have one apprentice and seven graduate students, three of whom are female. The program is designed to support, challenge and reward graduates in a work environment that will foster and develop them into future leaders and technical experts. Ramelius supports the WA School of Mines Wallabies, a non-profit, student run organisation that participates in events and programs like the Australian Institute of Mining and Metallurgy (AusIMM) National Mining Competition and New Leaders Conferences, international collegiate mining competitions and orientation weeks. We also offer a scholarship to support students from all backgrounds realise their full potential. More information can be found in Case Study 2 below. From left to right WA School of Mines Wallabies: Sherran De Silva, CEO Mark Zeptner and Benjamin Fallows CASE STUDY 2: BOB KENNEDY SCHOLARSHIP In memory of former Chairman, Robert (Bob) Kennedy, Ramelius offer a scholarship to support students from all backgrounds realise their full potential. The scholarship is open to any Ramelius employee or those with a family connection to Ramelius. The Scholarship provides up to $10,000 to the cost of course fees, books, computing and other related study fees. “It’s been the biggest help in starting my university courses and it’s been really nice getting to know some of the staff at Ramelius” 2019 scholarship recipient Jade Rotherham, Bachelor of Science (Environment Science and Zoology) Annual Report 2020 47 SUSTAINABILITY REPORT (CONTINUED) OUR COMMUNITIES Indigenous and native title Taxes, royalties and supplier payments Community relations and investment Ramelius believes that meaningful stakeholder engagement and partnerships empower the community, build trust and decrease operational risk. Our approach to social responsibility ensures that we deliver sustainable and long-lasting social and economic benefits to native titleholders, local communities and interest holders in the regions in which our projects are located. We are guided by our Community Consultation Policy. INDIGENOUS COMMUNITIES AND NATIVE TITLEHOLDERS Ramelius considers native titleholders and indigenous communities as one of our core stakeholder groups. We strive to work from a position of respect for indigenous culture, traditions and cultural sites and endeavour to foster a spirit of cooperation, with the aim of creating goodwill, mutual awareness, understanding and respect. As outlined in our Indigenous Peoples Policy, we work with Aboriginal representatives to improve communication and better understand the views and beliefs of the indigenous communities local to our operations. We will be guided by the Native Title Legislation Amendment Bill 2019 in all of our future dealings over native title negotiations. We aim to ensure that employees and contractors approach culturally significant sites with respect and a clear understanding of importance of the land to indigenous communities. We are committed to taking appropriate steps to identify and reduce the effects of any unforeseen impacts from its activities on indigenous communities, land, culture, traditions and cultural sites. In order to increase our understanding of indigenous culture and our connections with indigenous communities, we have been involved in a number of educational, cultural and sporting initiatives, examples of which are provided in Case Studies below. CASE STUDY 3: INDIGENOUS CULTURAL CONTRIBUTION THROUGH THE MOUNT MAGNET BENEFIT FUND Since 2015, the Ramelius Community Benefit Fund (RCBF) has helped support Indigenous community groups to undertake social, community and recreational projects in the Mount Magnet area through approximately $60,000 in total grants per year and over $300,000 over the last 5 years. In the 2020 financial year, the Fund supported the following organisations: • Badimia Land Aboriginal Corporation (BLAC): manages heritage and land projects for the Badimia People in conjunction with Heritage Link, including promoting Badimia art and culture, fostering training, employment and business opportunities and operating the Wirnda Barna Art Centre: badimia.org.au • Shine Inspire Achieve Belong Inc (SHINE): collaborates with WA secondary schools to actively connect with adolescent female students from Aboriginal and Torres Strait Islander backgrounds who are at risk of disengaging from the conventional education system: shinetoday.com.au 48 Ramelius Resources SUSTAINABILITY REPORT (CONTINUED) OUR COMMUNITIES (continued) TAXES, ROYALTIES AND SUPPLIER PAYMENTS In the 2020 financial year, we engaged local community stakeholders through our Greenfinch project consultation, Tampia community meeting and informal interactions in our local Shires. Through the payment of taxes, government royalties, workforce wages and supplier payments, Ramelius makes a significant financial contribution to local, regional and national economies. In the 2020 financial year , we contributed over $476.1 million to the Australian economy through the following mechanisms: Ramelius recognises that financial and in-kind contributions are a critical aspect of community investment and support. Our community investments are carefully considered to ensure they create a positive impact on the communities and its members, as well as aligning with our business priorities. • Goods and services: $366.5 million • Wages: $46.0 million • Taxes: $35.2 million • Royalties: $19.3 million • Dividends: $6.6 million • Interest: $0.3 million • State and shire rent: $2.2 million • Community contributions and donations: over $400,000 COMMUNITY RELATIONS AND INVESTMENT We are committed to involving local and indigenous communities in the areas in which we operate in planning and decision-making and ensuring accountability through effective communication and consultation strategies. In the 2020 financial year, we donated approximately $400,000 to support initiatives and groups seeking to build lasting, positive community impact. We also made $55,000 worth of in-kind donations towards additional events and programs. Some of our major donations went to the Shire of Mount Magnet’s Community Benefit Fund, the Starlight Children’s Foundation, the MACA Cancer 200 Challenge, Netball WA, the feature film The Furnace set in WA’s 1890s gold rush, and the Gold Industry Group (GIG). An overview of the wide range of community- related projects in which Ramelius has been involved through our membership of GIG is provided in the following Case Study which includes a snapshot of grants provided to local community groups. 49 Annual Report 2020CASE STUDY 4: GOLD INDUSTRY GROUP COMMUNITY INITIATIVES Through our membership of the Gold Industry Group (GIG), Ramelius supports a wide range of initiatives covering communities, education, youth sport, diversity, tourism, indigenous advancement, health and safety, environment and economic growth. These include: • Educational and sporting pathways for women and indigenous communities through Netball WA of which GIG is a Premier Partner. This includes annual scholarships to assist student netballers pursue a career in gold mining and Leadership Camps held with Netball WA’s Aboriginal All Stars to help young indigenous players develop their leadership qualities, prioritise health and well- being and improve their netball skills. o Mental health and well-being through Lifeline WA, and o Food provision for disadvantaged communities through Foodbank WA. • Pathways in Australia’s gold industry for jobseekers, employees, students and teachers through Gold Jobs, a central online hub of employment opportunities; • Education in science, technology, engineering and mathematics (STEM) in Australian primary and secondary schools across four states through GIG’s National Gold Education Program in conjunction with Earth Science WA (ESWA); • Sporting opportunities, facilities and equipment for young female Aboriginal and Torres Strait Islanders through the Shooting Stars netball team of which GIG is a Premier Partner. • GIG’s annual Women in Gold Great Diversity Debate in Perth, Sydney and Melbourne which promotes gender diversity in the Australian gold mining industry; • Over $9 million donated by GIG as part of the • Gold tourism initiatives and businesses to drive COVID-19 Community Support Initiative set up by the Chamber of Minerals and Energy of WA supporting: o Remote medical provision through the Royal Flying Doctor Service (RFDS), economic growth across WA’s gold mining region through GIG’s Heart of Gold Australia app which promotes Perth and Kalgoorlie Heart of Gold Discovery Trails and the other gold tourism experiences. 50 Ramelius Resources SUSTAINABILITY REPORT (CONTINUED) OUR ENVIRONMENT Water Emissions and energy Waste, effluents, air pollution Ramelius is committed to attaining an outstanding level of environmental performance across all of our operations. We have a social responsibility to not only achieve all legislative compliance expectations but also to strive for best practice in meeting the environmental expectations of the communities in which we operate. Our environmental activities are instructed by our HSE Policy which outlines guiding environmental principles and a commitment to environmental sustainability and conducting our business activities in an environmentally responsible manner. Ramelius operates all mine sites in accordance with the policies, regulations and environmental requirements outlined in Western Australia’s Mining Act 1978. All our operations have been assessed under a rigorous risk and outcomes-based environmental assessment process with clear objectives to ensure the environmental risk assessment and setting of site-specific environmental outcomes is consistent with the expectations of our stakeholders. Approved projects are then commenced and monitored to protect the environmental values of the areas in which we operate. Environmental data on water, air emissions and energy is collated annually across our operations and verified by third party auditors Greenbase. Ramelius has used the 2020 financial year to establish a baseline environmental monitoring process. This will help us measure our environmental performance and enable us to strive for year-on-year improvements. WATER Ramelius recognises that the semi-arid geographical locations of our operations are in some of the most water-deprived regions of the WA’s Wheatbelt and the Goldfields. The climate in these areas is mostly hot and dry with variable annual rainfall of around 340mm and 250mm per year respectively. We are cognisant of water being a valuable resource, not just to our operations but also to the towns and pastoralists of the districts in which we operate. We aim to demonstrate optimal water management by using this resource responsibly and efficiently and by maximising our re-use of water from Tailings Storage Facilities (TSF), minimising our reliance on natural surface and groundwater sources and preferentially utilising sources of saline water instead of fresh water. Each of our sites complies with stringent water licensing conditions which have been placed on the mines to ensure our operational impacts are ecologically-sustainable, environmentally-acceptable, not prejudicial to other current and future needs for water and unlikely to have a detrimental effect on another person or another source. In the 2020 financial year, we abstracted a total 3,551ML of raw (saline) water for all our sites, with an additional 677ML of recycled water used. Recycling and re-using water from TSFs not only reduces demand on natural sources of surface and groundwater, but also saves on process plant chemical costs and maintains the safe, dewatered operation of TSFs. In the 2021 financial year, we will continue accessing sources of saline water for our operations in preference to fresh water in order to free up more potable water for the communities in which we operate. 51 Annual Report 2020SUSTAINABILITY REPORT (CONTINUED) OUR ENVIRONMENT (continued) ENERGY AND EMISSIONS The mining sector recognises the contributions the industry makes to global greenhouse gas emissions (GHG) and climate change. Ramelius recognises that climate-related risk may impact our business and we have a responsibility to reduce our emissions. As a first step, we are collating and reporting annual GHG emissions, energy production and energy consumption data and improvement initiatives in line with National Greenhouse and Energy Reporting (NGER). Where our sites are located in close proximity to WA’s electricity grid, we preferentially utilise this source to power our sites particularly for the energy-intensive processing hub operations at Mt Magnet and Edna May. Our remote regional sites use diesel for electricity provision which is closely monitored and rationalised where possible. This year, we sourced a total 1,847,953Gj of electricity from the grid and diesel generation. In the 2021 financial year, we will focus on improving efficiencies in consumption rate across all of our operations. Our total Scope 1 and 2 emissions were 140,442 t CO2e. WASTE, EFFLUENTS AND AIR POLLUTION Mining operations have the potential to generate significant streams of non-hazardous and putrescible waste including tyres, batteries, oil, grease and other hydrocarbon-contaminated wastes, food scraps, metals, cardboard, glass, plastic, and aluminium. The remote, isolated locations of our regional mine sites generally mean recycling these wastes can be costly and impractical for the business. To counter this, Ramelius continually aims to reduce the burden of these waste streams in the first instance by limiting them from coming to site and then being placed in landfill. All sites contractually oblige suppliers to provide products with minimal packaging where possible, and to use licensed waste transport companies to send waste oils and other hydrocarbons for recycling at dedicated facilities. Other waste products include effluent from wastewater treatment plants which is treated in accordance with licensed standards prior to discharge. An example of the way in which we are working to improve the use of wastewater treatment is outlined in Case Study 5 Wastewater treatment at Edna May. Dust pollution from mining and trucking activities can reduce air quality. Procedures are in place across all our mine sites to reduce dust generation by watering surfaces with saline water and monitoring dust deposition levels at sensitive environmental receptor locations. CASE STUDY 5: WASTEWATER TREATMENT AT EDNA MAY Following an upgrade to the effluent wastewater treatment plant at our Edna May operation, all wastewater is now treated to WA Department of Health standards, making it suitable and safe for irrigating local public playing fields under agreement with the Shire of Westonia. Ramelius benefits from reusing this important source of water and the community and the environment benefits by eliminating reliance on town supply of fresh potable water from the Goldfield Water Supply Scheme pipeline, freeing up the resource for other uses. Westonia Oval, Shire of Westonia 52 Ramelius Resources SUSTAINABILITY REPORT (CONTINUED) In the 2020 financial year, each operation reviewed its approved Mine Closure Plan with Ramelius also commissioning an independent review of our closure cost provisioning in order to refine and improve our methodology, address closure knowledge gaps and replace cost assumptions with up-to-date rates. During the 2020 financial year, Ramelius had a total tenement land holding package of 347,617 hectares, of which land disturbed by mining totalled just 1,788 hectares (0.51%). The amount of land currently under rehabilitation, which includes land that has been fully rehabilitated and relinquished, is 583 hectares which equates to 32.6% of disturbed land restored. BIODIVERSITY Ramelius adheres to environmental objectives and regulations that seek to protect fauna, flora and vegetation so that biological diversity and ecological integrity are maintained. Each new greenfield project and proposed operational expansion is subjected to rigorous environmental baseline and impact assessment studies, undertaken to a standard consistent with best practice guidance to ensure our projects avoid and minimise impacts to biodiversity. Occasionally, significant fauna, flora and vegetation are encountered during surveys and additional levels of planning are required to manage and mitigate unacceptable potential impacts. One such example occurred at the Edna May Operations for the newly proposed Greenfinch Project, which is outlined in the Case Study on page 54. All of Ramelius’ baseline biodiversity study reports are submitted to environmental regulators during the mining project permit application process. The information contributes to Western Australia’s environmental and biodiversity datasets which then provides a broader decision-making base for regulators, an expanded knowledge base of the State’s flora and fauna, and improved availability of environmental information for the community to create better environmental outcomes for the State. 6 https://www.rameliusresources.com.au/environment/ OUR ENVIRONMENT (continued) TAILINGS MANAGEMENT Ramelius builds, owns and operates two Tailings Storage Facilities (TSF) across our mining operations. The design, construction, operation and closure of these facilities is strictly controlled by government regulation, codes of practice and relevant guidelines, as well as our own internal standards, procurement policies and contractor management processes. The chosen location, design, construction method, operational strategy, monitoring and surveillance, emergency response planning and rehabilitation of each TSF undergoes a rigorous risk and environmental impact assessments prior to approval. Specialist engineers are engaged by Ramelius to ensure all factors that can potentially impact on the long-term performance of each TSF are considered and all risks are addressed. The design process is complex, but repeatable and rigorous, and ensures the integrity and safety of each TSF’s during: • normal and irregular operation • extreme weather and events • decommissioning The priority is to ensure that our TSFs are safe, stable, erosion- resistant, and non-polluting after tenement relinquishment. Ramelius also completes detailed and regular inspections and auditing of our operating TSFs, including the preparation and implementation of a site-specific TSF Operating Manual which sets out the safe and environmentally-acceptable operating procedures, monitoring and reporting requirements, trigger levels and actions to be taken to rectify any potential deficiencies. Audit reports are lodged with relevant regulators demonstrating our compliance with all conditions. Regulations also require Ramelius to use independent TSF consultant engineers for the design and annual inspection of our TSFs as well as requirements for the provision of information, instruction, training and supervision that assures the integrity of facilities and the occupational safety and health of personnel working at them. More information can be found in the Management of Tailings Report6 on our website REHABILITATION AND CLOSURE MANAGEMENT Ramelius strives to revegetate our disturbances in a manner that promotes biological diversity and ecological integrity. All our operations work to keep land clearing and disturbed ground to an absolute minimum. In order to develop the knowledge and capabilities to meet stakeholder expectations on mine rehabilitation and closure, we work to progressively rehabilitate mining disturbances as effectively as possible during the lifetime of our operations. 53 Annual Report 2020Photos of Eremophila Resinosa and the Eucalypt Woodlands CASE STUDY 6: GREENFINCH PROJECT, WESTERN AUSTRALIA The Greenfinch Project lies approximately 2km north of the Westonia township in WA’s Wheatbelt region. Initial plans for the mining development required vegetation clearing of some 62.3 hectares which was previously surveyed for biological diversity. Much of the vegetation (39.1 hectares) within the proposed project footprint had been mapped as Eucalypt Woodlands of the WA Wheatbelt and listed as Critically Endangered under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act), a Threatened Ecological Community (TEC) and a Priority Ecological Community for WA. Additional assessments undertaken by Ramelius identified that the vegetation type: • Provides potential foraging habitat for the nationally-endangered Carnaby’s Black-Cockatoo • Provides habitat for the critically-endangered Arid Bronze Azure Butterfly • Contains the Eremophila Resinosa, a flowering figwort plant, which is a Declared Rare Flora species under the WA Biodiversity Conservation Act 2016, listed as Endangered under the EPBC Act, and ranked as Endangered under the IUCN Red List of Threatened Species. Ramelius responded to the potential risk to habitat by engaging government regulators and advisory departments, NGOs and interest groups, subject matter experts and local communities to re-design a project footprint that avoided or at worst minimised the impacts to manageable and acceptable levels. Using the baseline biodiversity and species studies, we were ultimately able to re-design the Greenfinch Project so that just 16.6 hectares of conservation- significant vegetation was cleared (a 57% reduction) with no loss of any Eremophila resinosa plants. 54 Ramelius Resources SUSTAINABILITY REPORT (CONTINUED) PERFORMANCE DATA SAFETY Safety performance Mill Production Employee fatalities Contractor fatalities Total Recordable Incident Frequency Rate (TRIFR) Employee Total Recordable Incident Frequency Rate (TRIFR) Contractor Total Recordable Incident Frequency Rate (TRIFR) Lost Time Injury Frequency (LTIF ) Lost Time Injuries Restricted work Medical treatment injuries Unless specified, all classifications above include contractors. Emergency Rescue Teams (ERT) 2020 - - 18.3 6.79 17.76 8.14 13 21 20  Total PEOPLE Diversity Profile 2020 Mt Magnet Edna May 25  19 Vivien  11 Full time employee M 209 F 33 Part time employee Full time contract Part time contract Casual Employees total Workforce M 1 F 2 M - F - M - F - M 13 F 1 M 223 F 36 Total 259 Level 2020 - including contractors Board Leadership Managers M 5 F 1 M 7 F 1 M 12 F 1 Professional / Trade M 145 F 17 Operator M 54 F 14 New Employees 2020 Age group <36 Age group 36–55 Age group >55 Employees total Total M 33 F 7 M 14 F 9 M 8 F 2 M 55 F 18 73 Turnover 2020 Age group <36 Age group 36–55 Age group >55 Total M 43 F 9 M 21 F 5 M 18 F - 96 Site Profile 2020 Corporate Mt Magnet Edna May Vivien Exploration M 20 M 4 - F 8 F 3 1 Developing our approach to diversity and inclusion Graduate Apprentice M 93 F 18 M 88 M 10 M 6 F 4 M 19 F 5 M 226 Total 7 1 Total F 45 All 271 55 Annual Report 2020SUSTAINABILITY REPORT (CONTINUED) PERFORMANCE DATA (continued) ENVIRONMENT Environmental compliance and incidents Monetary value of significant fines ($A) 2020 environmental Incidents Total volume of significant spills (ML) Energy Energy consumption (GJ) Total Energy intensity (ore processed - GJ/tonne) Total Emissions Total direct and indirect emissions Greenhouse gas emissions Scope 1 (t CO2-e)(1) Greenhouse gas emissions Scope 2 (t CO2-e)(2) Total of Scope 1 and Scope 2 (t CO2-e) - 33 - 2020 1,847,953 0.44 2020 105,215 35,227 140,442 Water Water withdrawal Surface (ML) water Bore water - saline (ML) Total water withdrawal Recycled (ML) % Total reused Water intensity (ore processed-kL/ tonne) 2020 3,551 3,551 677 19% 0.84 Waste Mineral waste Total Tailings Asset Number of active TSF Number of inactive TSF Construction Type (eg. Downstream, HDPE Lined, Upstream, IWL) Acid-generating seepage Waste material mined (kt) 20,568 Total ore processed (kt) 4,235 Mt Magnet 1 4 Edna May 1 - Upstream IWL Asset Mt Magnet Edna May Vivien The energy and emissions boundary is based on operational control as defined by the National Greenhouse and Energy Reporting (NGER) Act 2007. The applied global warming potential (GWP) rates and emission factors are based on the NGER Act (2007) and the National Pollutant Inventory. Predicted to occur Actively mitigated Under treatment or remediation (1) Scope 1 refers to emissions produced directly by operations, primarily resulting Rehabilitation and closure - - - - - - - - - from combustion of various fuels and includes CO2-equivalent values for greenhouse gases such as CH4, N20 and SF6. (2) Scope 2 refers to indirect emissions resulting from the import of electricity from external parties; commonly the electricity grid. Land management (ha) 2020 Total Land disturbed 1,788 Land rehabilitated 583.04 Sites with protected conservation status - 56 Ramelius ResourcesSUSTAINABILITY REPORT (CONTINUED) PERFORMANCE DATA (continued) SOCIAL RESPONSIBILITY Socioeconomic contribution (A$) million Operations Employees Region Supplier payments (Goods and services) Local suppliers, rates and employees National economy (excluding local suppliers and employees) Total 3.8 362.7 366.5 Economic contribution Wages 2.2 43.8 46.0 Contributed into Australian Economy (A$) million Direct spend with community organisations (A$) million Reconciliation to income tax payable Profit before income tax expense Permanent differences Temporary differences: –  Accounting and tax depreciation differences –  Mine development –  Exploration and evaluation expenditure –  Provisions –  Other Taxable income before utilisation of carried forward tax losses Australian income tax payable Corporate income tax paid during the year ended June 2020 Utilisation of carried forward losses 2020 R&D refund expected Net income tax payable/(receivable) Community and cultural heritage Material Cultural Heritage incidents Material Community Impact incidents 2020 R&D refund expected Net income tax payable/(receivable) Payments to providers of capital Dividend payments to shareholders - 6.6 6.6 Payments to financial Payments to government Total contribution Interest Taxes Royalties State and Shire Rent - 35.2 35.2 - 19.3 19.3 2.2 - 2.2 8.2 467.9 476.1 - 0.3 0.3 2020 476.1 8.2 2020 (A$) million  149.5 4.5 (0.4) (23.2) (35.1) (4.0) 4.0 95.3 28.6 (1.2) (6.1) - 21.3 2020 - - - 21.3 57 Annual Report 2020ANNUAL FINANCIAL REPORT Directors’ report Directors and Company Secretary Principal activities Key highlights for the year Dividends Events since the end of the financial year Operations review Financial review Development and exploration projects Investor Relations Material business risks Environmental regulation Information on Directors Meetings of Directors Remuneration report Shares under option Insurance of officers and indemnities Proceedings on behalf of the company Non-audit services Auditor independence Rounding of amounts Auditor’s independence declaration Financial statements Financial statements Notes to the financial statements Signed reports Directors’ declaration Independent auditor’s report to the members 60 60 60 60 61 61 61 62 65 65 66 67 68 70 70 79 79 79 80 80 80 81 83 84 89 137 137 138 58 Ramelius Resources FOR THE FINANCIAL YEAR ENDED JUNE 2020 59 Annual Report 2020DIRECTORS’ REPORT Your Directors present their report on the consolidated entity consisting of Ramelius Resources Limited and the entities it controlled at the end of, or during, the year ended 30 June 2020. Throughout the report, the consolidated entity is referred to as Ramelius or the group. Unless specifically noted, all dollar amounts disclosed in this report are Australian Dollars (A$ or AUD). DIRECTORS AND COMPANY SECRETARY The following persons were Directors of Ramelius Resources Limited during the whole of the financial year and up to the date of this report: Mark Zeptner Michael Bohm David Southam Kevin Lines was a Director of Ramelius Resources Ltd during the whole of the financial year and up to 30 September 2020. Natalia Streltsova was appointed as a Director on 1 October 2019 and continued in office at the date of this report. The Company Secretary is Richard Jones. Mr Jones has nearly 20 years’ experience as a corporate commercial lawyer in both private and in-house capacities and across various industries. He has also served as Company Secretary for ASX listed and unlisted companies in the mining sector. PRINCIPAL ACTIVITIES The principal activities of the group during the year included exploration, mine development, mine operations and the production and sale of gold. There were no significant changes to those activities during the year. KEY HIGHLIGHTS FOR THE YEAR Acquisition of the Penny Gold Project (Spectrum Metals Limited) The Penny Gold Project was the primary asset of Spectrum Metals Limited (Spectrum), which was acquired by Ramelius during the year. The Penny Gold Project is located 130km south-east of the Mt Magnet mining and processing operations and approximately 500km north-east of Perth in Western Australia. The Penny Gold Project currently has a Mineral Resource of 300,000 ounces and an Ore Reserve of 230,000 ounces (refer to ASX Announcement dated 30 June 2020 ‘Ramelius Extends Life of Mine Plan by 34% to 1.45Moz’ for full details). On 10 February 2020 Ramelius announced an off-market takeover offer for Spectrum Metals Limited. Under the offer Spectrum shareholders received one (1) Ramelius share for every ten (10) Spectrum shares held and cash consideration of A$0.017 for each Spectrum share held. On the same day, the Spectrum Board unanimously recommended that Spectrum shareholders accept the Ramelius offer in the absence of a superior proposal. Control was attained on 17 March 2020 with Ramelius holding a relevant intertest in Spectrum of 50.50%, or 727,402,825 Spectrum shares. Ramelius obtained 100% control on 23 June 2020. A total of $28.9 million cash consideration (net of cash acquired) was paid along with 145,203,969 Ramelius shares issued to Spectrum Share and Option holders as part of the offer. Acquisition costs totalled $11.7 million which includes stamp duty on the transaction (which as at 30 June 2020 was not yet finalised). Commencement of mining operations at the Marda Gold Project The Mining Proposal and Mine Closure Plan for the Marda Gold Project were approved in September 2019 with site works and ore mining commencing shortly thereafter. A total of 449k tonnes were mined in the financial year at a grade of 1.78 g/t for 25,656 ounces of contained gold. As at 30 June 2020 a total of 276k tonnes of ore was stockpiled at site awaiting haulage to Edna May for processing. The Marda Gold Project is located 176km by road north-northeast of the Edna May operations and is amenable to processing at the existing Edna May facilities. The Marda Gold Project has a Mineral Resource of 300,000 ounces and an initial Ore Reserve of 89,000 ounces. The Marda Gold Project was acquired in the 2019 financial year via the acquisition of Black Oak Minerals Limited (in Liquidation). Commencement of mining operations at the Greenfinch open pit (Edna May) On 3 October 2019 Ramelius was advised that the revised Clearing Permit application for the Greenfinch open pit project, adjacent to the company’s Edna May gold operations in Western Australia, had been granted by the Department of Mining, Industry Regulation and Safety (DMIRS). On 28 January 2020 Ramelius further received the final Federal Controlled Action environmental approval to proceed with the project. Clearing and grade control drilling commenced in February 2020 with ore mining following in March 2020. A total of 117k tonnes were mined in the financial year at a grade of 0.89 g/t for 3,380 ounces of contained gold. Mine performance has been in line with the mine plan and grades are expected to increase as the pit reaches depth. There were no other significant changes in the state of affairs of the group that occurred during the financial year not otherwise disclosed in this report or the financial statements. 60 Ramelius ResourcesDIRECTORS’ REPORT (continued) COVID-19 The COVID-19 virus had no material impact to the operations of Ramelius with the company implementing several measures that it believes go beyond just the formal guidance issued by State and Federal health authorities. Ramelius has defined clear processes throughout the organisation to ensure that all employees and contractors do their absolute best to control the risk of infection and transmission of COVID-19. Initiatives implemented include: • Travel: suspending international travel and restricting non-essential domestic and intrastate travel. • • • • Social distancing: utilising video and phone conference facilities, reducing face-to-face interactions, and increasing flexible working arrangements wherever possible. Health management: proactive temperature testing and screening of individuals prior to entering the company’s sites or corporate offices, strict hygiene practices, along with the securing of clinical masks, hand sanitiser, and COVID-19 swab test kits. In addition, plans were put in place for the isolation, testing, and rapid removal from site of any employee or contractor displaying flulike symptoms. Planning: the addition of a number of casual employees to be available in the event of the loss of team members from any part of the business as well as the constant management and review of the supply chain. Communication: constant liaison with WA Health Department, through our consultant occupational doctor and medical provider, to ensure best practice as far as possible with the ever-changing regime around controlling the virus. In addition to this there was frequent communication across the entire work force regarding COVID-19 and company protocols. All Ramelius mine operations are located within Western Australia which has enabled the group to have a dynamic, rapid, and consistent approach to the management of the COVID-19 virus. Whilst at the date of this report the COVID-19 situation in Western Australia seems to be relatively under control, management continues to diligently monitor and be in a position to respond quickly to the ongoing COVID-19 virus. DIVIDENDS Dividends recommended but not yet paid Since the end of the 2020 financial year the Directors have recommended the payment of a fully franked final dividend of 2.0 cents per fully paid share. The fully franked final dividend will have a record date of 2 September 2020 and a payment date of 2 October 2020. The financial effect of the final dividend has not been brought to account in the financial statements for the year ended 30 June 2020 but will be recognised in subsequent financial reports. Dividends paid Dividends paid Final ordinary dividend for the 2019 financial year of 1 cent (2019: nil) per fully paid share paid on 4 October 2019 2020 $M 2019 $M 6.6 - Table 6: Dividends paid to members during the 2020 financial year. EVENTS SINCE THE END OF THE FINANCIAL YEAR No matter or circumstance has arisen since 30 June 2020 that has significantly affected the group’s operations, results, or state of affairs, or may do so in the future. OPERATIONS REVIEW A review of the group’s operations for the year is discussed in the ‘Review of Operations’ section of this Annual Report which commences on page 12. 61 Annual Report 2020DIRECTORS’ REPORT (continued) FINANCIAL REVIEW Financial performance * Revenue Cash costs of production Gross margin excluding ‘non-cash’ items Amortisation and depreciation Inventory movements Gross profit Earnings before interest and tax (EBIT) Net finance costs Mt Magnet $M Edna May $M Corp and other $M Group 2020 $M 2019 $M Change $M Change % 324.3 136.3 (157.8) 166.5 (70.5) 38.4 134.4 134.4 - (84.6) 51.7 (32.6) 17.7 36.8 36.8 - - - - - - - 460.6 352.8 (242.4) (210.2) 218.2 (103.1) 56.1 171.2 142.6 (81.3) (17.7) 43.6 30.7 (0.3) 107.8 (32.2) 75.6 (21.8) 73.8 127.6 121.8 (2.7) + 31% + 15% + 53% + 27% - 417% + 293% + 397% + 900% (18.7) 152.5 (3.0) (3.0) Profit / (loss) before income tax 134.4 36.8 (21.7) 149.5 30.4 119.1 + 392% Income tax expense - - (36.1) (36.1) (8.6) (27.5) + 320% Profit / (loss) for the year 134.4 36.8 (57.8) 113.4 21.8 91.6 + 420% * Note that the 2019 comparative information has not been restated for the impact of AASB 16 Leases as per that Standard. Refer to Note 13 of the financial statements for further details on the impact of the application of AASB 16 Leases. Table 7: 2020 Financial performance Revenue reconciliation $65.7 $460.6 $0.9 M $ A $475 $450 $425 $400 $375 $350 $325 $43.0 $352.8 2019 sales revenue Volume Average gold price Silver and other sales 2020 sales revenue Figure 8: Revenue reconciliation between 2020 and 2019 62 Ramelius ResourcesDIRECTORS’ REPORT (continued) Revenue Revenue for the year ended 30 June 2020 increased by 31% to $460.6 million compared to $352.8 million for the year ended 30 June 2019. This excellent result was achieved with an increase in gold production of 17% coupled with a 17% increase in the average realised gold price. • Mt Magnet gold sales increased by 36% or 43,699 ounces due to the higher grades as discussed within this report. • • Edna May gold sales decreased by 23% or 18,807 ounces due to the lower tonnages being milled as discussed within this report. The realised gold price for the year was $2,014 per ounce being a 17% increase on the 2019 realised gold price of $1,726 per ounce. This was below the average spot price for the year with some gold being delivered into forward contracts. • The average price of the hedge book as at 30 June 2020 increased 16% over the year to $2,135 per ounce (2019: $1,834 per ounce). • • Silver sales were comparable year on year. Other sales decreased $0.9 million in 2020 with the 2019 year other income including the gain on sale of equipment at Edna May as the mine moved to a contractor model when operations focussed on the underground development. Earnings before interest and tax (EBIT) The EBIT for Ramelius increased 397% to $152.5 million for the year ended 30 June 2020 compared to $30.7 million for the year ended 30 June 2019. This record result was achieved on higher A$ gold prices, higher production and sales through an increase in head grades and a continued focus on maintaining control over costs across the business. For the group the overall cost per tonne increased 7% however it is important to note that this is the result of a change in the proportional ore feed of the group with more tonnes being sourced from the higher cost, but much higher grade, underground mines at both sites. As a result of the increase in grades across the group the overall cost per ounce decreased 16% from the 2019 financial year with the EBIT margin increasing nearly fourfold to 33.1% (2019: 8.7%). Whilst gold production is up, it was achieved on lower tonnages which has resulted in total operating costs being 6% down on the prior year. The chart below demonstrates the impact of this on the EBIT for the year. Looking at the operations individually the costs per tonne are comparable to the 2019 financial year, this is discussed further below. Reconciliation of earnings before interests and tax (EBIT) $19.9 $6.8 $152.5 $43.0 M $ A $180.0 $160.0 $140.0 $120.0 $100.0 $80.0 $60.0 $40.0 $20.0 0 $65.7 $30.7 2019 EBIT Improved gold price Increased volume Operating costs Corp and other 2020 EBIT Figure 9: Reconciliation of movement in EBIT from 2019 to 2020 63 Annual Report 2020DIRECTORS’ REPORT (continued) Mt Magnet delivered an EBIT of $134.4 million for the year ended 30 June 2020 which was up from the $14.5 million EBIT for the corresponding prior period. Profitability at Mt Magnet was up on 2019 due to higher grades and higher realised gold prices in the 2020 financial year. The cost per tonne at Mt Magnet was down 1% on the prior year with the low cost Eridanus tonnes being mitigated in part by the availability of the more expensive, but higher grade, underground tonnes. With operating costs per tonne being comparable year on year, the main driver of the increased profitability has been the higher grades at Mt Magnet which brings the operating cost per ounce down by 27%. Grades were up at Mt Magnet as a result of 50% more underground ore being available at a grade 21% higher than the prior year. The Mt Magnet grades are discussed in further detail in the operations review section of this report. Edna May delivered an EBIT of $36.8 million for the year ended 30 June 2020 compared to $29.1 million for the year ended 30 June 2019. The operations at Edna May have changed substantially over the year with the processing plant operating on a 12 day on / 9 day off roster from October 2019 to March 2020. The main source of ore for the Edna May plant during the year was the low grade ore stockpiles which were supplemented by underground ore throughout the year. Greenfinch and Marda ore commenced milling in the fourth Quarter of the financial year with less reliance being placed on the low grade stockpiles. (negligible amounts of Marda ore were milled in the March 2020 Quarter). Importantly, the low grade ore at Edna May was both cashflow and earnings positive during the year. The Greenfinch and Marda ore will continue to be the primary source of ore feed at Edna May in the 2021 financial year. Corporate and other costs increased from those in 2019 due to an impairment of previously capitalised exploration and evaluation assets. A total of $6.3 million of exploration and evaluation assets were impaired at 30 June 2020. These impairments related to exploration activities across the group’s portfolio with the main areas of interest incurring an impairment being Coogee, as the company dilutes below 90% equity; Marda, where reconnaissance exploration has downgraded several targets; a re-prioritising of several peripheral targets at Mount Magnet as shallower opportunities take precedence in the short to medium term; and ongoing impediments to exploration outside Australia caused by COVID-19, suggesting it’s prudent to impair the Jupiter JV in the US. In addition to the exploration and evaluation asset impairment, the other main driver of the increase in corporate and other costs from those in 2019 has been the share-based payments expense, which is non-cash. These costs relate to the options and performance rights on issue with the value of these equity instruments being expensed over the vesting period for the right or option (typically three years). Net Profit After Tax (NPAT) Net profit after income tax increased 420% (or $91.6 million) to $113.4 million for the year ended 30 June 2020 (2019: $21.8 million). Net finance costs of $3.0 million, which include interest income, interest expense, and non-cash financing costs relating to the unwinding of discount rates and the impact of the adoption of AASB 16 Leases (refer to Note 13 of the financial statements), were $2.7 million higher than the 2019 financial year due to the establishment and draw down of the Syndicated Facility Agreement during the year and a decline in the interest rate market. The effective tax rate of the group for the year ended 30 June 2020 was 24% compared to 28% for the year ended 30 June 2019. The effective tax rate has reduced with group recording a $10.1 million one-off tax benefit on the unused tax loses transferred from Explaurum Operations Pty Limited. This is discussed further in Note 3 to the financial statements. Balance Sheet The net assets of the group increased 85% over the year as a result of a strong net profit after tax and the acquisition of Spectrum. Current assets increased 78% largely as a result of cash and cash equivalents (see comments below) and inventories, which increased 138% due to strong mining performance at Mt Magnet and the accumulation of stockpiles at Marda. As at 30 June 2020 the group had over 91,000 ounces of gold in ore stockpiles, gold in circuit, and bullion on hand. Non-current assets increased 98% due to the acquisition of Spectrum, investments in mine development (Marda and Greenfinch), and the introduction of AASB 16 Leases which resulted in $29.7 million of right-of-use assets being recorded as property, plant and equipment. Current liabilities of the group increased by 207% which has been largely attributable to the draw down on borrowing facilities, the introduction of AASB 16 Leases (current lease liability of $16.6 million), and Ramelius becoming a tax payer with tax payable for the 2020 financial year estimated at $21.3 million. In addition to this trade and other payable increased 83% to $82.3 million due to a stamp duty accrual on the Spectrum acquisition, increased royalty payables with the higher gold price and significant fourth Quarter performance. An increase in creditors and accruals is not unexpected given the significant increase in activities in FY20 as compared to this time last year. Non-current liabilities increased 22% mainly due to the introduction of AASB 16 Leases (non-current lease liability of $13.8 million). Cashflow The net cash flow from operations for the year were up 72% (or $99.1 million) on the 2019 financial year to $236.0 million (2019: $137.0 million). This increase is attributable to the increase in gold sales revenue (gold production and gold price driven – see figure 8 within this report) as well as lower operating costs with the lower tonnages being milled. Offsetting these positive cashflow movements has been the build-up of gold and ore stockpiles over the year (mostly relating to Eridanus and Marda). 64 Ramelius ResourcesDIRECTORS’ REPORT (continued) During the year a total of $56.1 million was added to gold and ore stockpiles for future monetisation, this compared to the drawdown of ore stockpiles and gold on hand in the 2019 financial year of $17.7 million. A total of $170.8 million was re-invested during the year which included: • Payments (including acquisition costs) for the Penny Gold Project (Spectrum Metals Ltd) (net of cash acquired) of $30.7 million. • Payments for the development of open pit and underground mines of $105.0 million. • Payments for property, plant and equipment of $16.2 million. • Payments for mining tenements and exploration of $18.4 million. During the year, a Syndicated Facility Agreement (SFA) was executed with the Commonwealth Bank of Australia, BNP Paribas, and the National Australia Bank. The SFA and associated documents provided for the provision of working capital and performance bond facilities totalling A$35 million. The facility was established to provide financial support for working capital purposes but also for any corporate asset acquisitions that the Company may undertake at a future date. The SFA has been structured such that the quantum available could be increased subject to the approval of the syndicate members including the completion of satisfactory due diligence on the company or asset in question. A total of $32.5 million was drawn on the SFA in March 2020 to provide the company with additional working capital, should it be needed, during the global COVID-19 pandemic. In accordance with the SFA the first repayment of $8.1 million took place in June 2020. The bank loan under the SFA is repayable in full before 30 June 2021. Free cash flow# for the year was $96.4 million (2019: $51.8 million). Cash on hand at the end of the financial year was $165.7 million compared to $95.8 million at 30 June 2019. As at 30 June 2020 a total of 7,681 ounces (2019: 5,465 ounces) of gold was on hand with the reported cash and gold bullion on hand at 30 June 2020 being $185.5 million (2018: $106.8 million). After taking into account the borrowings the reported net cash and gold position as at 30 June 2020 was $161.1 million. Financial Risk Management Ramelius held forward gold sales contracts at 30 June 2020 totalling 247,350 ounces of gold at an average price of A$2,135 per ounce over a period to December 2022.This compared to forward gold sales contracts at 30 June 2019 totalling 240,900 ounces of gold at an average price of A$1,834 per ounce over a period to August 2021. Up until March 2020 the group increased the level of price protection in line with the increased production profile. However, since the outbreak of COVID-19 a concerted effort was made to reduce the price protection with a focus on delivery into contracts with minimal additions to the hedge book. In line with the increasing AUD gold prices and prudent hedge book management the average price of the forward sales has increased 16%. As noted in prior ASX releases the current intention of the Company’s forward sales policy is to maintain approximately one (1) years’ worth of production hedged over a period of approximately three (3) years. DEVELOPMENT AND EXPLORATION PROJECTS A review of the group’s development and exploration projects for the year is discussed in the ‘Review of Operations’ section of this Annual Report which commences on page 12. INVESTOR RELATIONS During the year the company presented at several conferences (both in person and virtually) and conducted road shows to existing and prospective investors, analysts and stockbrokers. These included: • Diggers and Dealers Conference, Kalgoorlie, August 2019 • Citi’s Inaugural Gold Corporate Day, Sydney, September 2019 • Denver Gold Conference, Colorado, September 2019 • RIU Conference, Fremantle, February 2020 • Morgan’s Virtual Gold Conference, March 2020 • Goldman Sachs Gold Virtual Forum, May 2020 • Various investor mine site visits • Various investor presentations in Sydney, Melbourne, Perth and virtually Each presentation that contained new content was released to the ASX and was made available on both the ASX (www.asx.com.au) and the Ramelius Resources website (www.rameliusresources.com.au). # Free cash flow is defined as operating cash flows less payments for development, exploration, and property, plant and equipment. 65 Annual Report 2020DIRECTORS’ REPORT (continued) MATERIAL BUSINESS RISKS The material business risks for the group include: • COVID-19: Ramelius continues to actively respond to the ongoing COVID-19 virus currently impacting people and businesses globally. The health and safety of every person working at Ramelius, their families and our communities remains paramount during this time. To date there has been no material impact on Ramelius’ operations from the COVID-19 virus. Ramelius continues to operate under protocols developed to minimise risks to our people and communities and ensure we can safely produce gold during this challenging period. Initiatives implemented include: - Travel: suspending international travel and restricting non-essential domestic and intrastate travel. - - - - Social distancing: utilising video and phone conference facilities, reducing face-to-face interactions, and increasing flexible working arrangements wherever possible. Health management: proactive temperature testing and screening of individuals prior to entering the company’s sites or corporate offices, strict hygiene practices, along with the securing of clinical masks, hand sanitiser and COVID-19 swabs test kits. In addition, plans were put in place for the isolation, testing, and rapid removal from site of any employee or contractor displaying flulike symptoms. Planning: the addition of several casual employees to be available in the event of the loss of team members from any part of the business as well as the constant management and review of the supply chain. Communication: constant liaison with WA Health Department, through our consultant occupational doctor and medical provider, to ensure best practice as far as possible with the ever-changing regime around controlling the virus. In addition to this there was frequent communication across the entire work force regarding COVID-19 and company protocols. • • • • Fluctuations in the United States Dollar (USD) spot gold price and AUD/USD exchange rate: The financial results and position of the group are reported in Australian dollars. Gold is sold throughout the world based principally on the U.S. dollar price. Accordingly, the group’s revenues are linked to both the USD spot gold price and AUD/USD exchange rate. Volatility in the gold price creates revenue uncertainty and requires careful management to ensure that operating cash margins are maintained should there be a sustained fall in the AUD spot gold price. The group uses AUD gold forward contracts, within certain Board approved limits, to manage exposure to fluctuations in the AUD gold price. Government regulation: The group’s mining, processing, development and exploration activities are subject to various laws and statutory regulations governing prospecting, development, production, taxes, royalty payments, labour standards and occupational health, mine safety, toxic substances, land use, water use, communications, land claims of local people and other matters. No assurance can be given that new laws, rules and regulations will not be enacted or that existing laws, rules and regulations will not be applied in a manner which could have an adverse effect on the group’s financial position and results of operations. Any such amendments to current laws, regulations and permits governing operations and activities of mining and exploration, or more stringent implementation thereof, could have a material adverse impact on the group. Operating risks and hazards: The group’s mining operations, consisting of open pit and underground mines, involve a degree of risk. The group’s operations are subject to all the hazards and risks normally encountered in the exploration, development and production of gold. Processing operations are subject to hazards such as equipment failure, toxic chemical leakage, loss of power, fast-moving heavy equipment, failure of tailings disposal pipelines and retaining dams around tailings containment areas, rain and seismic events which may result in environmental pollution and consequent liability. The impact of these events could lead to disruptions in production and scheduling, increased costs and loss of facilities, which may have a material adverse impact on the group’s results of operations, financial condition, license to operate and prospects. These risks are managed by a structured operations risk management framework, experienced employees and contractors and formalised procedures. Ramelius also has in place a comprehensive insurance program with a panel of experienced industry supportive underwriters. Production, cost and capital estimates: The group prepares estimates of future production, operating costs and capital expenditure relating to production at its operations. The ability of the group to achieve production targets or meet operating and capital expenditure estimates on a timely basis cannot be assured. The assets of the group are subject to uncertainty with regards to ore tonnes, grade, metallurgical recovery, ground conditions, and operational environment. Failure to achieve production, cost or capital estimates, or material increases to costs, could have an adverse impact on the group’s future cash flows, profitability and financial condition. The development of estimates is managed by the group using a rigorous budgeting and forecasting process. Actual results are compared with forecasts and budgets to identify drivers behind discrepancies which may result in updates to future estimates. • Exploration and development risk: An ability to sustain or increase the current level of production in the longer term is in part dependent on the success of the group’s exploration activities and development projects, and the expansion of existing mining operations. The exploration for, and development of, mineral deposits involves significant risks that even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in substantial rewards, few properties that are explored subsequently have economic deposits of gold identified, and even fewer are ultimately developed into producing mines. Major expenses may be required to locate and establish mineral reserves, to establish rights to mine the ground, to receive all necessary operating permits, to develop metallurgical processes and to construct mining and processing facilities at a particular site. 66 Ramelius Resources DIRECTORS’ REPORT (continued) • Ore Reserves and Mineral Resources: The group’s estimates of Mineral Resources and Ore are based on different levels of geological confidence and different degrees of technical and economic evaluation, and no assurance can be given that anticipated tonnages and grades will be achieved, that the indicated level of recovery will be realised or that Ore Reserves could be mined or processed profitably. The quality of any Mineral Resources and Ore Reserves estimate is a function of the quantity of available technical data and of the assumptions used in engineering and geological interpretation, and modifying factors affecting economic extraction. Such estimates are compiled by experienced and appropriately qualified personnel and subsequently reported by Competent Persons under the JORC Code. Fluctuation in gold prices, key input costs to production, as well as the results of additional drilling, and the evaluation of reconciled production and processing data subsequent to any estimate may require revision of such estimates. Actual mineralisation of ore bodies may be different from those predicted, and any material variation in the estimated Ore Reserves, including metallurgy, grade, dilution, ore loss, or stripping ratio at the group’s properties may affect the economic viability of its properties, and this may have a material adverse impact on the group’s results of operations, financial condition and prospects. There is also a risk that depletion of reserves will not be offset by discoveries or acquisitions, or that divestitures of assets will lead to a lower reserve base. The reserve base of the group may decline if reserves are mined without adequate replacement and the group may not be able to sustain production beyond current mine lives, based on current production rates. • Climate Change: Ramelius acknowledges that climate change effects have the potential to impact our business. The highest priority climate related risks include reduced water availability, extreme weather events, changes to legislation and regulation, reputational risk, and technological and market changes. The group is committed to understanding and proactively managing the impact of climate related risks to our business. This includes integrating climate related risks, as well as energy considerations, into our strategic planning and decision making. ENVIRONMENTAL REGULATION Regulations The operations of the group in Australia are subject to environmental regulations under both Commonwealth and State legislation. In the mining industry, many activities are regulated by environmental laws as they may have the potential to cause harm and/or otherwise impact upon the environment. Therefore, the group conducts its operations under the necessary State Licences and Works Approvals to carry out associated mining activities and operate a processing plant to process mined resources. The group’s licences and works approvals are such that they are subject to audits both internally and externally by the various regulatory authorities. These industry audits provide the group with valuable information in regard to environmental performance and opportunities to further improve systems and processes, which ultimately assist the business in minimising environmental risk. Reporting Due to the various licences and works approvals the group holds, annual environmental reporting (for a 12-month period) is a licence and works approval condition. The group did not experience any reportable environmental incidents for the reporting year 2019-2020. Regulatory agencies requiring annual environmental reports are outlined below but are not limited to the following: • Department of Water and Environmental Regulation (DWER) • Department of Mines, Industry Regulation and Safety (DMIRS) • Tenement Condition Report • Native Vegetation Clearing Report • Mining Rehabilitation Fund (MRF) Levy • National Pollutant Inventory (NPI) • National Greenhouse and Energy Reporting Scheme (NGERS) • Bureau of Land Management. Sustainability The group is committed to environmental performance and sustainability and works closely with the regulatory authorities to minimise the environmental impact and achieve sustainable operations. Where the business can, continuous improvement processes are implemented to improve the operation and environmental performance. The group seeks to build relationships with all stakeholders to ensure that their views and concerns are taken into account in regard to decisions made about the operations, to achieve mutually beneficial outcomes. This includes current operations, future planning and post closure activities 67 Annual Report 2020DIRECTORS’ REPORT (continued) INFORMATION ON DIRECTORS The following information is current as at 30 June 2020 KEVIN LINES BSc (Geology), MAusIMM, MAICD Independent Chairman Non-Executive Experience Mr Lines is a geologist and has more than 35 years’ experience in mineral exploration and mining for gold, copper, lead, zinc and tin. He has held senior geological management positions with Newmont Australia Limited, Normandy Mining Limited and the CRA group of companies. He was the foundation Chief Geologist at Kalgoorlie Consolidated Gold Mines where he led the team that developed the ore-body models and geological systems for the Super-Pit Operations in Kalgoorlie. Interest in Shares and Options 1,000,000 Ordinary Shares Special responsibilities Chairman of the Board Member of Audit Committee Member of Nomination and Remuneration Committee Member of Risk and Sustainability Committee Directorships held in other listed entities in the last three years None MARK ZEPTNER BEng (Hons) Mining, MAusIMM, MAICD Managing Director and Chief Executive Officer Experience Mr Zeptner has more than 25 years’ industry experience including senior operational and management positions with WMC and Gold Fields Limited at their major gold and nickel assets in Australia and offshore. He joined Ramelius Resources Limited on 1 March 2012 as the Chief Operating Officer, was appointed Chief Executive Officer on 11 June 2014 and Managing Director effective 1 July 2015. Interest in Shares and Options 4,512,500 Ordinary Shares 500,000 Performance Rights over Ordinary Shares expiring on 11 June 2026 322,342 Performance Rights over Ordinary Shares vesting on 1 July 2020 and expiring on 1 July 2027 568,956 Performance Rights over Ordinary Shares vesting on 1 July 2021 and expiring on 1 July 2028 644,683 Performance Rights over Ordinary Shares vesting on 1 July 2022 and expiring on 1 July 2029 Special responsibilities Chief Executive Officer Directorships held in other listed entities in the last three years None MICHAEL BOHM B.AppSc (Mining Eng), MAusIMM, MAICD Independent Director Non-Executive Experience Mr Bohm is a mining engineer with extensive corporate and operational management experience in the minerals industry in Australia, South East Asia, Africa, Chile, Canada and Europe. He is a graduate of the WA School of Mines and has worked as a mining engineer, mine manager, study manager, project manager, project director and Managing Director. He has been directly involved in many project developments in the gold, base metals and diamond sectors in both open pit and underground mining environments. Interest in Shares and Options 637,500 Ordinary Shares Special responsibilities Chairman of Nomination and Remuneration Committee Member of Risk and Sustainability Committee Directorships held in other listed entities in the last three years Non-Executive Chairman of Cygnus Gold Limited Non-Executive Director Mincor Resources NL Previously a Non-Executive Director of Perseus Mining Limited 68 Ramelius ResourcesDIRECTORS’ REPORT (continued) INFORMATION ON DIRECTORS (CONTINUED) DAVID SOUTHAM B.Comm, CPA, MAICD Independent Director Non-Executive NATALIA STRELTSOVA MSc, PhD (Chem Eng), GAICD Independent Director Non-Executive Experience Mr Southam is a Certified Practicing Accountant with more than 25 years’ experience in accounting, capital markets and finance across the resources and industrial sectors. Mr Southam has been intimately involved in several large project financings in multiple jurisdictions and has completed significant capital market and M&A transactions. Interest in Shares and Options Nil Special responsibilities Chairman of Audit Committee Member of Nomination and Remuneration Committee Directorships held in other listed entities in the last three years Managing Director of Mincor Resources NL Previously Executive Director of Western Areas Limited Previously Non-Executive Director of Kidman Resources Limited Experience Dr Streltsova is a PhD qualified Chemical Engineer with 25+ years’ minerals industry experience, including over 10 years in senior technical and corporate roles with mining majors – WMC, BHP and Vale. She has a strong background in mineral processing and metallurgy with specific expertise in gold and base metals. Dr Streltsova has considerable international experience covering project development and acquisitions in Africa, South America and in the countries of the Former Soviet Union. Interest in Shares and Options Nil Special responsibilities Chair of Risk and Sustainability Committee Member of Audit Committee Directorships held in other listed entities in the last three years Non-Executive Director of Western Areas Limited Non-Executive Director of Neometals Limited Previously Non-Executive Director of Parkway Minerals Limited 69 Annual Report 2020DIRECTORS’ REPORT (continued) MEETINGS OF DIRECTORS The number of meetings of the company’s Board of Directors and each Board Committee held during the year ended 30 June 2020, and number of meetings attended by each Director were: Director Kevin Lines Mark Zeptner Michael Bohm David Southam Natalia Streltsova Meetings of Committees Full meetings of Directors Audit Committee Nomination and Remuneration Committee Risk and Sustainability Committee A 17 16 17 17 10 B 17 17 17 17 12 A 5 - 3 5 2 B 5 - 3 5 3 A 4 - 4 3 - B 4 - 4 4 - A 1 - 1 - 1 B 1 - 1 - 1 A = Number of meetings attended; B = Number of meetings held during the time the Director held office or was a member of the Committee during the year. REMUNERATION REPORT (AUDITED) The Directors present the Ramelius Resources Limited 2020 remuneration report, outlining key aspects of our remuneration policy and framework, and the remuneration awarded this year. This remuneration report is prepared in accordance with the requirements of the Corporations Act 2001 (the Act) and its regulations. This information has been audited as required by section 308(3C) of the Act. The remuneration report details the remuneration arrangements for key management personnel (KMP) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the group, directly or indirectly, and is a direct report to the Managing Director / Chief Executive Officer. This includes any directors (executive and non-executive) of Ramelius Resources Limited, the Chief Financial Officer, Chief Operating Officer, General Manager – Exploration, and the Manager Legal / Company Secretary. The report is structured as follows: (a) Key management personnel covered in this report (b) Remuneration governance (c) Remuneration policy and framework (d) Elements of remuneration (e) Link between remuneration and performance (f) Contractual arrangements for executive KMP (g) Non-executive director arrangements (h) Details of KMP remuneration (i) Other statutory information (a) Key management personnel covered in this report Name Position Directors of the group during the financial year were: Kevin Lines Mark Zeptner Michael Bohm David Southam Natalia Streltsova Non-Executive Chairman Managing Director / Chief Executive Officer Non-Executive Director Non-Executive Director Non-Executive Director (appointed 1 October 2019) The KMP during the financial year were: Tim Manners Duncan Coutts Kevin Seymour Richard Jones Chief Financial Officer Chief Operating Officer General Manager – Exploration Manager Legal / Company Secretary Details on the Executive and Non-Executive Directors can be found on pages 68 to 69 of the Directors’ report. 70 Ramelius ResourcesDIRECTORS’ REPORT (continued) REMUNERATION REPORT (CONTINUED) (b) Remuneration governance The Nomination and Remuneration Committee (NRC) is a Committee of the Board. It is primarily responsible for making recommendations to the Board on: • Non-executive director fees; • Executive remuneration (directors and executives); and • The executive remuneration framework and incentive plan policies. The objective of the NRC is to ensure that remuneration policies and structures are fair and competitive and aligned with the long-term interests of the company. In performing its functions, the NRC may seek advice from independent remuneration consultants. (c) Remuneration policy and framework Ramelius has adopted a policy that aims to attract, motivate and retain a skilled executive team focused on contributing to its objective of creating wealth and adding value for its shareholders. The remuneration framework has been formed on this basis. The remuneration framework is based on several factors including the experience and performance of the individual in meeting key objectives of Ramelius. The objective of the executive remuneration framework includes incentives that seek to encourage alignment of management performance and shareholder interests. The framework aligns executive rewards with strategic objectives and the creation of value for shareholders and conforms to market practices for delivery of rewards. In determining executive remuneration, the NRC aims to endeavour that remuneration practices are: • Competitive and reasonable, enabling the company to attract and retain and incentivise key talent. • Aligned to the company’s strategic and business objectives and the creation of shareholder value. • Distinctly demonstrate a link between performance and remuneration. • Structured to have a suitable mix of fixed and performance related variable components. • Acceptable to shareholders. • Transparent. The executive remuneration framework is designed to ensure market competitiveness and achievement of the remuneration objective. The remuneration of executives is: • Benchmarked from time to time against similar organisations both within the industry and of comparable market size to ensure uniformity with market practices. • A reflection of individual roles, levels of seniority and responsibility that key personnel hold. • Structured to take account of prevailing economic conditions. • A mix of fixed remuneration and at-risk performance-based elements using short and long-term incentives. The executive remuneration framework has three components: • Base pay and benefits, including superannuation. • Short-term performance incentives. • Long-term incentives through participation in the Performance Rights Plan as approved by the Board. The combination of these comprises an executive’s total remuneration package. Incentive plans are regularly reviewed to ensure continued alignment with financial and strategic objectives. (d) Elements of remuneration Ramelius remunerates its executives with a total remuneration package (TRP) that consists of two components: • Total fixed remuneration. • Total variable remuneration. The total variable remuneration ensures an executive’s remuneration is aligned to the group’s performance. This portion of an executive’s remuneration is considered “at risk”. Variable remuneration can be in the form of either a short-term incentive (STI) or a long-term incentive (LTI). 71 Annual Report 2020 DIRECTORS’ REPORT (continued) REMUNERATION REPORT (CONTINUED) Total fixed remuneration Total fixed remuneration (TFR) comprises of base salary, superannuation, and any fringe benefits tax charges related to employee benefits. The group allows a KMP to salary sacrifice certain items such as superannuation and motor vehicles (on a total cost basis). Remuneration levels are reviewed annually in June by the NRC through a process that considers individual performance and the overall performance of the group. Industry remuneration surveys and data are utilised to assist in this process. There are no guaranteed base pay increases included in any executive contracts. Short-term incentives Short-term incentives allow executives to earn an annual incentive which is linked the group’s annual performance. How is it paid? Any STI awards are typically paid in cash after the assessment of the annual performance is made. How much can an executive earn? In the 2020 financial year the Managing Director / Chief Executive Officer was able to earn a maximum STI of 75% of the TFR. Other executives were able to earn a maximum STI of 45% of their TFR. In conjunction with the group’s key performance measures detailed below, a comprehensive review of each executive’s individual performance is made to determine the achievable percentage (between 0% - 100%) of the maximum potential STI available to be awarded. This may result in the proportion of remuneration related to performance varying between individual executives. How is performance measured? A structured set of key performance measures have been selected which are core drivers of short-term performance as well as considered important for the group’s growth and profitability. For any STI to be paid two ‘gates’ must be passed, these are: • No loss of life at any project site. • No serious environmental, heritage, or community related breach. The KPI’s used to measure performance for the Managing Director / Chief Executive Officer are: • Net profit after tax relative to budget • Gold production relative to budget • All in sustaining cost (AISC) relative to budget • Discovery/Reserve addition to Life of Mine Plan 30% 20% 30% 20% The KPI’s used to measure performance for the other KMPs are as follows. Ranges are shown as the particular weighting varies depending on the role of the KMP: • Net profit after tax relative to budget • Gold production relative to budget • All in sustaining cost (AISC) relative to budget • Discovery/Reserve addition to Life of Mine Plan 20 - 30% 20 - 30% 20 - 30% 20 - 40% The performance is measured relative to the budget with threshold, target, and stretch cases considered. The STIs are payable at the absolute discretion of the Board. There are several modifiers considered by the Board which may result in a downward reduction in the STIs paid. When is it paid? The STI award is determined following a review of the financial results, operations, changes to the Life-Of-Mine Plan and the annual Resources and Reserves Statement by the NRC. This typically occurs in the second Quarter of the financial year. No amount is provided for or included in the financial report and remuneration report until such review has taken place. Based on this assessment, the STI cash payments for the 2019 financial year which were paid in the 2020 financial year are detailed in the following table: Name Position Mark Zeptner Tim Manners Duncan Coutts Kevin Seymour Richard Jones 1 Amounts disclosed above include superannuation attributable to the STI. Managing Director / Chief Executive Officer Chief Financial Officer Chief Operating Officer General Manger – Exploration Manager Legal / Company Secretary Maximum STI1 Achieved STI1 % 60% 45% 45% 45% 45% $ 363,000 187,308 204,188 144,401 136,125 % 46% 44% 40% 40% 34% $ 254,100 165,000 165,000 115,500 93,500 72 Ramelius Resources DIRECTORS’ REPORT (continued) REMUNERATION REPORT (CONTINUED) Long-term incentives Under the Ramelius Performance Rights Plan, annual grants of performance rights are made to executives to align remuneration with the creation of shareholder value over the long-term. The LTIs are designed to focus executives on delivering long-term shareholder returns. How is it paid? LTIs are provided to selected executives under the Ramelius Performance Rights Plan. Selected executives are eligible to receive performance rights (being entitlements to shares in Ramelius subject to satisfaction of vesting conditions) as long-term incentives as determined by the Board in accordance with the terms and conditions of the plan. How much can an executive earn? The plan provides selected executives the opportunity to participate in the equity of Ramelius through the issue of rights as a long-term incentive that is aligned to the long-term interests of shareholders. Under the Performance Rights Plan, the number of rights granted to executives ranges up to 40% (60% for the Managing Director / Chief Executive Officer) of the executive’s TFR and is dependent upon the individual’s skills, responsibilities and ability to influence financial or other key objectives of Ramelius. The number of rights granted is calculated by dividing the LTI remuneration dollar amount by the volume weighted average price of Ramelius shares traded on the Australian Securities Exchange during the five-trading day period prior to the date of the grant. How is performance measured? The vesting of performance rights to 30 June 2020 is subject to vesting conditions related to achievement of total shareholder returns (TSR) and period of service. TSR performance is measured against the TSR of a benchmark peer group. From 1 July 2020, future performance right grants will also include a compounding annual growth rate vesting condition. The following companies have been identified by Ramelius to comprise the peer group: Company ASX Code Company ASX Code Saracen Mineral Holdings Limited Regis Resources Limited Silver Lake Resources Limited Westgold Resources Limited Northern Star Resources Limited Resolute Mining Limited Gold Road Resources Limited Dacian Gold Limited St Barbara Limited SAR RRL SLR WGX NST RSG GOR DCN SBM Pantoro Limited Evolution Mining Limited IGO Limited # Perseus Mining Limited # De Grey Mining Limited # Bellevue Gold Limited # Red 5 Limited # Capricorn Metals Limited # Aurelia Metals Limited # PNR EVN IGO PRU DEG BGL RED CMM AMI # Companies added to the peer group on 23 July 2020 but not applied retrospectively. The NRC may recommend to the Board to either include or exclude gold mining organisations available on this list to reflect changes in the industry. The proportion of executive rights that vest is dependent on how the Ramelius TSR compares to the peer group as follows: Relative TSR Over the Vesting and Measurement Period Below the 50th percentile At the 50th percentile Between the 50th and 75th percentile At and above the 75th percentile Proportion of Performance Rights Vested 0% 50% Pro-rata between 50% and 100% 100% Once vested, rights may be exercised within seven years of the vesting date. The vesting and measurement period for performance rights granted in the 2017 financial year have been set over three years with vesting and measurement for each third of the granted rights occurring at the end of each year during the three-year period. For performance rights granted after 30 June 2017 the performance rights vest three years after the grant date. Any performance rights that do not vest will lapse after testing. There is no re-testing of performance rights. When is performance measured? What happens if an executive leaves? Where an executive ceases to be an employee of the group, any unvested performance rights will lapse on the date of cessation of employment, except in limited circumstances that are approved by the Board on a case by case basis. 73 Annual Report 2020DIRECTORS’ REPORT (continued) REMUNERATION REPORT (CONTINUED) Based on the above assessment the performance rights issued, vested, and lapsed in the 2020 financial year (for the 2019 financial year performance) are detailed in the following table: Name Mark Zeptner 2 Tim Manners Duncan Coutts Kevin Seymour Richard Jones Position Managing Director / Chief Executive Officer Chief Financial Officer Chief Operating Officer General Manger – Exploration Manager Legal / Company Secretary Issued 1 967,025 212,382 247,294 157,398 160,014 Performance rights measured for vesting - - 117,994 87,652 - All performance rights 1 Performance rights issued during the financial year will be measured for vesting on 1 July 2022. 2 Performance rights issued during the financial year will be measured for vesting on 1 July 2020 (322,342) and 1 July 2022 (644,683). 3,684,003 770,369 Percentage vested % Number vested 0% 0% 100% 100% 0% - - 117,994 87,652 - 100% 770,369 Employee Share Acquisition Plan The Employee Share Acquisition Plan enables the Board to offer eligible employees ordinary fully paid shares in Ramelius as a long-term incentive, in accordance with the terms of the plan. Shares may be offered at no consideration unless the Board determines that market value or some other value is appropriate. No such shares were offered during the 2020 financial year. Other long-term incentives The Board may at its discretion provide share rights/options as a long-term retention incentive to employees. (e) Link between remuneration and performance The following table shows key performance indicators for the group over the last five years: Net profit after tax Dividend Share price 30 June Basic earnings per share Diluted earnings per share Unit $’000 $’000 $ cents cents 2020 113,415 6,579 1.99 16.43 16.13 2019 21,832 - 0.73 3.74 3.67 2018 30,760 - 0.58 5.84 5.75 2017 17,765 - 0.45 3.39 3.36 2016 27,540 - 0.44 5.82 5.81 The total remuneration mix for the Managing Director / Chief Executive Officer and other Executives is illustrated in the following graph. The link between performance and remuneration is discussed within this remuneration report. 2020 Total remuneration mix Managing Director/CEO Other executives 74 44% 17% 31% 7% 55% 20% 20% 5% 0 20% 40% 60% 80% 100% TFR STI LTI STI forgone Ramelius ResourcesDIRECTORS’ REPORT (continued) REMUNERATION REPORT (CONTINUED) (f) Contractual arrangements for executive KMP Remuneration and other terms of employment for executives are formalised in service agreements. The service agreements specify the components of remuneration, benefits and notice periods. Participation in short-term and long-term incentives are at the discretion of the Board. Other major provisions of the agreements relating to remuneration are set out below. Contracts with executives may be terminated early by either party as detailed below: Name and Position Term of Agreement Base Salary incl. Super 1 Company / Employee Notice Period Termination Benefit 2 $650,000 Mark Zeptner Managing Director / Chief Executive Officer Tim Manners Chief Financial Officer Duncan Coutts Chief Operating Officer Kevin Seymour GM – Exploration Richard Jones Manager Legal / Company Secretary 1 Base salaries quoted are as at 30 June 2020, they are reviewed annually by the Nomination and Remuneration Committee. 2 Termination benefits are payable on early termination by the company, other than for gross misconduct, unless otherwise indicated. In certain circumstances the termination benefit may be 12 months base salary. On-going commencing 1 July 2015 On-going commencing 31 July 2017 On-going commencing 12 February 2016 On-going commencing 1 July 2009 On-going commencing 26 October 2018 3 / 3 months 3 / 3 months 6 / 3 months 6 / 3 months 6 / 3 months $401,500 $467,500 $302,500 $297,554 6 months’ base salary 6 months’ base salary 3 months’ base salary 3 months’ base salary 6 months’ base salary (g) Non-executive director arrangements Non-executive director fees are determined using the following guidelines. Fees are: • Determined by the nature of the role, responsibility and time commitment necessary to perform required duties. • Not performance or incentive based but are fixed amounts. • Determined by the desire to attract a group of individuals with pertinent knowledge and experience. In accordance with the Company’s Constitution, the total amount of remuneration of Non-Executive Directors is within the aggregate limit of $750,000 per annum as approved by shareholders at the 2019 Annual General Meeting. Non-executive directors may apportion any amount up to this maximum level amongst the non-executive directors as determined by the Board. Remuneration consists of non-executive director fees, committee fees and superannuation contributions. Non-executive directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred in performing their duties as directors. Non-executive directors do not participate in any performance-based pay including schemes designed for the remuneration of an executives, share rights or bonus payments and are not provided with retirement benefits other than salary sacrifice and superannuation. All non-executive directors enter into a service agreement with the company in the form of a letter of appointment. The letter summarises the Board policies and terms, including remuneration, relevant to the office of director. Details of remuneration fees paid to non-executive directors are set out below: Non-executive directors Kevin Lines Michael Bohm David Southam Natalia Streltsova1 Total 1 Natalia Streltsova was appointed as a director on 1 October 2019. Year 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Director fees Superannuation Total remuneration 176,136 173,269 110,000 95,304 110,000 97,231 78,750 - 474,886 365,804 17,614 17,327 11,000 9,530 11,000 9,723 7,875 - 47,489 36,580 193,750 190,596 121,000 104,834 121,000 106,954 86,625 - 522,375 402,384 75 Annual Report 2020 DIRECTORS’ REPORT (continued) REMUNERATION REPORT (CONTINUED) (h) Details of KMP remuneration The following table shows details of the remuneration expense recognised for the group’s executive KMP for the current and previous financial year measured in accordance with the requirements of the accounting standards. FIXED REMUNERATION VARIABLE REMUNERATION Cash Salary1 Term. Payments Non- Monetary Benefits 1 Annual and Long Service Leave 2 Super- annuation STI 1, 5 LTI Rights 3 Total Perform. Related - - - - 6,518 5,343 6,518 5,343 632,500 521,666 Executive Director Mark Zeptner – Managing Director / Chief Executive Officer 2020 2019 Executives Tim Manners – Chief Financial Officer 383,919 2020 2019 357,868 Duncan Coutts – Chief Operating Officer 446,665 2020 2019 387,499 Kevin Seymour – General Manager – Exploration 2020 2019 Richard Jones – Manager Legal / Company Secretary 281,667 2020 2019 187,500 Domenico Francese - Company Secretary 4 2020 2019 Total 2020 2019 2,021,449 1,846,079 276,698 266,720 - 124,826 - 299,583 - 299,583 32,590 25,112 6,518 5,343 6,518 3,740 6,518 5,343 - - - - - - - - (41,877) 85,087 20,833 25,000 254,100 250,470 462,003 111,466 1,334,077 999,032 37,367 (218) 33,853 15,076 (6,922) 12,143 22,997 17,456 - (44,146) 45,418 85,398 17,581 20,531 20,830 25,000 20,856 25,000 20,833 18,750 - 21,888 165,000 129,773 165,000 142,932 115,500 103,818 93,500 - - 94,050 161,251 46,378 186,550 58,667 128,122 42,699 76,122 8,736 - 202 771,636 559,675 859,416 634,517 540,772 455,723 501,637 236,182 - 496,403 100,933 136,169 793,100 721,043 1,014,048 268,148 4,007,538 3,381,532 53.7% 36.2% 42.3% 31.5% 40.9% 31.8% 45.1% 32.2% 33.8% 3.7% - 19.0% 45.1% 29.3% 1. Short-term benefits as per Corporations Regulation 2M.3.03(1) Item 6. 2. Other long-term benefits as per Corporations Regulation 2M.3.03 (1) Item 8. The amounts disclosed in this column represent the movements in the associated provisions. They may be negative where a KMP has taken more leave than accrued during the year. 3. Rights and options relate to rights and options over ordinary shares issued to key management personnel. The fair value of rights and options granted shown above is non- cash and was determined in accordance with applicable accounting standards and represents the fair value calculated at the time rights and options were granted and not when shares were issued. 4. In addition to the amounts above Domenico Francese was paid $329,661 in 2019 for annual and long service leave entitlements which had been accrued but not paid during his employment. 5. Refer to section (d) of this remuneration report for further information on the short-term incentives paid. 76 Ramelius ResourcesDIRECTORS’ REPORT (continued) REMUNERATION REPORT (CONTINUED) (i) Other statutory information (i) Terms and conditions of the share-based payment arrangements Performance rights The terms and conditions of each grant of performance rights affecting remuneration in the current or future reporting period are as follows: Grant Date 1 July 2017 31 July 2017 3 October 2017 5 September 2018 29 November 2018 9 October 2019 29 November 2019 29 November 2019 29 November 2019 Vesting and Exercise Date 1 July 2020 1 July 2020 1 July 2020 1 July 2021 1 July 2021 1 July 2022 1 July 2020 1 July 2022 1 July 2022 Expiry Date 1 July 2027 1 July 2027 1 July 2027 1 July 2028 1 July 2028 1 July 2029 1 July 2027 1 July 2029 1 July 2029 Exercise Price Value Per Performance Right at Grant Date Vested $nil $nil $nil $nil $nil $nil $nil $nil $nil $0.33 $0.29 $0.27 $0.39 $0.27 $1.22 $0.86 $0.86 $0.65 0% 0% 0% 0% 0% 0% 0% 0% 0% Rights to deferred shares under the Performance Rights Plan are assessed against vesting criteria (and vested accordingly) in July each year. Generally, performance rights granted vest three years from the grant date. On vesting, each right must be exercised within seven years of the vesting date. The performance rights carry no dividend or voting rights. If an employee ceases employment before the performance rights vest, the rights will be forfeited, except in limited circumstances that are approved by the Board on a case-by-case basis. (ii) Reconciliation of options, performance rights, and ordinary shares held by KMP Options The table below shows a reconciliation of options held by each KMP from the beginning to the end of the 2020 financial year. All vested options were exercisable. Name and grant dates Mark Zeptner 26 November 2015 Balance at start of year Number Vested Balance at end of year Number % Exercised Vested Unvested 1,500,000 1,500,000 100 (1,500,000) - - The amounts paid per ordinary share on the exercise of options at the date of exercise were as follows: Exercise date 9 June 2020 Amounts paid per share $0.20 No amounts are unpaid on any shares issued on the exercise of options. 77 Annual Report 2020 DIRECTORS’ REPORT (continued) REMUNERATION REPORT (CONTINUED) Performance rights The table below shows a reconciliation of performance rights held by each KMP from the beginning to the end of the 2020 financial year. All vested performance rights were exercisable. Name Balance at start of year Granted during year Vested Balance at end of year Value to vest1 Grant year Number Number % Exercised Vested Unvested $ Mark Zeptner 2020 2019 2017 Tim Manners 2020 2019 2018 Duncan Coutts 2020 2019 2018 2017 Kevin Seymour 2020 2019 2018 20172 Richard Jones 2020 2019 - 568,956 500,000 - 260,966 317,778 - 284,483 342,222 334,324 - 201,186 254,222 248,355 - 189,655 967,025 - - 212,382 - - 247,294 - - - 157,398 - - - 160,014 - - - - - - - - - - 117,994 - - - 87,652 - - - - - - - - - - - 100 - - - 100 - - - - - - - - - - - (334,324) - - - (248,355) - - - - 500,000 - - - - - - - - - - - - - 967,025 568,956 - 212,382 260,966 317,778 247,294 284,483 342,222 - 157,398 201,186 254,222 - 160,014 189,655 393,797 59,906 - 188,441 36,560 - 219,417 39,560 - - 139,655 27,977 - - 141,976 19,969 1. The maximum value of the performance rights yet to vest has been determined as the amount of the grant date fair value of the rights that is yet to be expensed. 2. The balance at the start of the year includes both vested and unvested performance rights, all unvested rights at the beginning of the financial year vested during the financial year. Shareholdings The table below shows a reconciliation of shareholdings held by each KMP from the beginning to the end of the 2020 financial year. Name Mark Zeptner Kevin Lines Michael Bohm Kevin Seymour1 Duncan Coutts1 Balance at start of year 3,012,500 1,000,000 1,237,500 194,860 - Received during year on exercise of options Received during year on exercising of performance rights 1,500,000 - - - - - - - 248,355 334,324 Sold during year Balance at end of year - - (600,000) (308,000) (334,324) 4,512,500 1,000,000 637,500 135,215 - 1. The share price on the date of exercise was $1.31. All shareholdings noted above are held either directly by the KMP or their associate. 78 Ramelius ResourcesDIRECTORS’ REPORT (continued) REMUNERATION REPORT (CONTINUED) Loans to key management personnel There were no loans made to key management personnel or their personally related parties during the current or prior financial year. Other transactions with key management personnel There were no other transactions with key management personnel. Voting and comments made at the company’s 2019 Annual General Meeting Of the total valid available votes lodged, Ramelius received 98% of ‘FOR’ votes on its remuneration report for the 2019 financial year. The company did not receive any specific feedback at the AGM on its remuneration practices. Share trading policy The trading of shares is subject to, and conditional upon, compliance with the company’s employee Share Trading Policy. The policy is enforced through a system that includes a requirement that executives confirm compliance with the policy and provide confirmation of dealings in Ramelius securities. The ability for an executive to deal with an option or a right is restricted by the terms of issue and the plan rules which do not allow dealings in any unvested security. The Share Trading Policy specifically prohibits an executive from entering into transactions that limit the economic risk of participating in unvested entitlements such as equity-based remuneration schemes. The Share Trading Policy can be viewed on the Company’s website. Remuneration report ends. SHARES UNDER OPTION (a) Unissued ordinary shares No unissued ordinary shares of Ramelius Resources Limited are under option at the date of this report. (b) Shares issued on the exercise of options The following ordinary shares of Ramelius were issued during the year ended 30 June 2020 as a result of the exercise of options. No amounts are unpaid on any of the shares. Date options granted Exercise price of options Number of shares issued 26 November 2015 $0.20 1,500,000 1,500,000 INSURANCE OF OFFICERS AND INDEMNITIES Indemnification Ramelius is required to indemnify its Directors and Officers against any liabilities incurred by the Directors and Officers that may arise from their position as Directors and Officers of Ramelius and its controlled entities. No costs were incurred during the year pursuant to this indemnity. Ramelius has entered into deeds of indemnity with each Director whereby, to the extent permitted by the Corporations Act 2001, Ramelius agreed to indemnify each Director against all loss and liability incurred as an officer of the Company, including all liability in defending any relevant proceedings. Insurance premiums Since the end of the previous year Ramelius has paid insurance premiums in respect of Directors’ and Officers’ liability and legal expenses insurance contracts. The terms of the policies prohibit disclosure of details of the amount of the insurance cover, the nature thereof and the premium paid. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of Ramelius or to intervene in any proceedings to which Ramelius is a party, for the purpose of taking responsibility on behalf of Ramelius for all or part of those proceedings. There were no such proceedings brought or interventions on behalf of Ramelius with leave from the Court under section 237 of the Corporations Act 2001. 79 Annual Report 2020DIRECTORS’ REPORT (continued) NON-AUDIT SERVICES The company may decide to engage the auditor (Deloitte Touche Tohmatsu) on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the company and/or the group are important. Details of the amounts paid or payable to the auditor for audit and non-audit services provided during the year are set out below. The Board of Directors has considered the position and, in accordance with advice received from the Audit and Risk Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: - - All non-audit services have been reviewed by the Audit and Risk Committee to ensure they do not impact the impartiality and objectivity of the auditor; None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. During the year the following fees were paid or payable for non-audit services provided by the auditor of the parent entity, its related practices and non-related audit firms: Other assurance and agreed upon procedures under other legislation or contractual arrangements Other services: Other Total 2020 $ - - - 2019 $ 6,250 13,200 19,450 AUDITOR INDEPENDENCE A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 81. ROUNDING OF AMOUNTS The company is of the kind referred to in ASIC Legislative Instrument 2016/191 relating to the ‘rounding off’ of amounts in the Directors’ report. Amounts in the Directors’ report have been rounded off in accordance with the instrument to the nearest thousand dollars, or in certain cases, to the nearest dollar. This report is made in accordance with a resolution of Directors. Kevin James Lines Chairman Perth 24 August 2020 80 Ramelius Resources DIRECTORS’ REPORT (continued) INDEPENDENT AUDITOR’S DECLARATION Deloitte Touche Tohmatsu ABN 74 490 121 060 Tower 2, Brookfield Place 123 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia Tel: +61 8 9365 7000 Fax: +61 8 9365 7001 www.deloitte.com.au The Directors Ramelius Resources Limited Level 1, 130 Royal Street East Perth, WA 6892 24 August 2020 Dear Directors Auditor’s Independence Declaration to Ramelius Resources Limited In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Ramelius Resources Limited. As lead audit partner for the audit of the financial report of Ramelius Resources Limited for the year ended 30 June 2020, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. Yours faithfully DELOITTE TOUCHE TOHMATSU David Newman Partner Chartered Accountants Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte Network. 81 Annual Report 2020 82 Ramelius ResourcesFINANCIAL REPORT Income statement and statement of comprehensive income Balance sheet Statement of changes in equity Statement of cash flows Notes to the financial statements Directors’ declaration Independent auditor’s report to the members 84 85 86 87 89 137 138 83 Annual Report 2020INCOME STATEMENT For the year ended 30 June 2020 Revenue Cost of production Gross profit Other expenses Other income Interest income Finance costs Profit before income tax Income tax expense Profit for the year from continuing operations Earnings per share Basic earnings per share Diluted earnings per share Note 1(a) 2(a) 2(b) 1(b) 2(c) 3 28 28 2020 $’000 460,574 (289,358) 171,216 (20,050) 1,346 998 (4,025) 149,485 (36,070) 113,415 Cents 16.43 16.13 2019 $’000 352,770 (309,161) 43,609 (15,016) 2,125 1,886 (2,193) 30,411 (8,579) 21,832 Cents 3.74 3.67 STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2020 Profit for the year Other comprehensive income, net of tax Items that may be reclassified to profit or loss: Exchange differences on translation of foreign operations Items that may not be reclassified to profit or loss: Change in fair value of financial assets Other comprehensive income for the year, net of tax Note 17 17 2020 $’000 113,415 (18) 672 654 2019 $’000 21,832 (69) (50) (119) Total comprehensive income for the year 114,069 21,713 84 Ramelius ResourcesBALANCE SHEET As at 30 June 2020 Current assets Cash and cash equivalents Trade and other receivables Inventories Other assets Total current assets Non-current assets Other assets Financial assets at FVOCI Property, plant, and equipment Development assets Exploration and evaluation expenditure Total non-current assets Total assets Current liabilities Trade and other payables Borrowings Lease liabilities Contingent consideration Current tax liabilities Provisions Current liabilities Non-current liabilities Lease liabilities Contingent consideration Deferred tax liabilities Provisions Total non-current liabilities Total liabilities Net assets Equity Share capital Reserves Retained earnings Total equity Note 4(a) 5 6 7 7 8 9 10 11 12 13 14 3 15 13 14 3 15 16 17 2020 $’000 165,670 3,234 97,553 4,475 270,932 503 624 78,368 208,268 196,247 484,010 754,942 82,302 23,475 16,643 6,261 21,272 9,219 159,172 13,846 6,923 21,061 38,720 80,550 239,722 515,220 370,781 (34,707) 179,146 515,220 2019 $’000 95,815 6,774 41,067 8,629 152,285 1,488 101 43,823 99,430 99,442 244,284 396,569 44,926 - - - - 6,852 51,778 - 12,121 7,741 45,987 65,849 117,627 278,942 214,218 (7,674) 72,398 278,942 85 Annual Report 2020STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2020 Balance at 30 June 2018 Profit for the year Other comprehensive loss Total comprehensive (loss) / income Transactions with owners in their capacity as owners: Shares issued for acquisition of Explaurum Limited (see notes 17 & 20) Shares issued on exercise of options Share-based payments Balance at 30 June 2019 Balance at 1 July 2019 Adoption of AASB16 Leases (net of tax) At 1 July 2019 (re stated) Profit for the year Other comprehensive gain Total comprehensive (loss) / income Transactions with owners in their capacity as owners: Shares issued for acquisition of Spectrum Metals Limited (see notes 17 & 20) Payment of dividends Shares issued on exercise of options Share-based payments Balance at 30 June 2020 Share capital $’000 149,568 - - - 64,232 300 118 214,218 214,218 - 214,218 - - - 155,523 - 300 740 370,781 Share-based payment reserve $’000 Other reserves $’000 Retained profits $’000 Total equity $’000 1,545 339 50,520 201,972 - - - - - 487 2,032 2,032 - 2,032 - - - - - - 1,390 3,422 - (119) (119) 21,832 - 21,832 21,832 (119) 21,713 - 54,306 (9,926) - - (9,706) (9,706) - (9,706) - 46 72,398 72,398 (696) 71,702 - 46 46 113,415 608 114,023 300 651 278,942 278,942 (696) 278,246 113,415 654 114,069 (28,469) - - - (38,129) - 127,054 (6,579) - - 179,146 (6,579) 300 2,130 515,220 Share-based payment reserve Share-based payments reserve records items recognised as expenses on valuation of employees share options and rights. Other reserves - financial assets at FVOCI The group has elected to recognise changes in the fair value of certain investments in equity securities in OCI. These changes are accumulated within the FVOCI reserve within equity. The group transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised. Other reserves - Non-Controlling Interest (NCI) acquisition reserve The NCI acquisition reserve represents the incremental increase in the Ramelius share price on the acquisition of non-controlling interest post the date control was obtained. This reserve relates to the acquisition of Spectrum Metals Limited and Explaurum Limited. Foreign currency translation reserve Foreign currency translation reserve comprises all foreign exchange difference arising from the translation of the financial statements of foreign operations where their functional currency is different to the presentation currency of the reporting entity. 86 Ramelius ResourcesSTATEMENT OF CASH FLOWS For the year ended 30 June 2020 Cash flows from operating activities Receipts from operations Payments to suppliers and employees Interest received Income tax (paid) / received Net cash provided by operating activities Cash flows from investing activities Payments for property, plant and equipment Payments for development assets Proceeds from sale of property, plant and equipment Proceeds from the sale of subsidiary Proceeds from the sale of mining tenements Payments for the acquisition of subsidiary, net of cash acquired Loan to Explaurum Limited Payments for financial assets Payments for mining tenements and exploration Payments for site rehabilitation Net cash used in investing activities Cash flows from financing activities Proceeds from the issue of shares Proceeds from borrowings Repayment of borrowings Borrowing costs and interest paid Principal elements of lease payments Return of / (payments for) secured deposits Dividends paid Net cash provided by / (used in) financing activities Net increase in cash and cash equivalents Cash at the beginning of the financial year Note 4(b) 20 15 16 12 12 13 2020 $’000 466,333 (230,024) 930 (1,208) 236,031 (16,207) (105,037) 107 - 950 (30,692) - (30) (18,356) (1,540) (170,805) 300 32,500 (8,125) (1,860) (15,737) 4,130 (6,579) 4,629 69,855 95,815 Cash and cash equivalents at the end of the financial year 4(a) 165,670 2019 $’000 348,382 (213,321) 1,843 79 136,983 (7,995) (58,233) 763 1,000 - (21,621) (3,700) (25) (18,962) (209) (108,982) 300 - - (14) - (681) - (395) 27,606 68,209 95,815 87 Annual Report 202088 Ramelius ResourcesCONTENTS OF THE NOTES TO THE FINANCIAL STATEMENTS About this report Key numbers Segment information Note 1: Revenue Note 2: Expenses Note 3: Income tax expense Note 4: Cash and cash equivalents Note 5: Trade and other receivables Note 6: Inventories Note 7: Other assets Note 8: Property, plant and equipment Note 9: Development assets Note 10: Exploration and evaluation assets Note 11: Trade and other payables Note 12: Borrowings Note 13: Lease liabilities Note 14: Contingent consideration Note 15: Provisions Note 16 Share capital Note 17: Reserves Risk 90 92 92 94 95 96 99 100 101 102 102 105 107 108 109 110 115 116 118 119 119 Note 18: Financial instruments and financial risk management 119 Note 19: Capital risk management Group structure Note 20: Asset acquisitions Note 21: Interests in other entities Unrecognised items Note 22: Contingent liabilities Note 23: Commitments Other information Note 24: Events occurring after the reporting period Note 25: Related party transactions Note 26: Share based payments Note 27 Remuneration of auditors Note 28: Earnings per share Note 29: Assets pledged as security Note 30: Deed of cross guarantee Note 31: Parent entity information Note 32: Accounting policies 123 124 124 125 126 126 127 128 128 128 128 131 131 132 133 135 136 89 Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS About this report Ramelius Resources Limited (referred to as ‘Ramelius’ or ‘company’) is a for-profit company limited by shares incorporated and domiciled in Australia whose shares are publicly listed on the Australian Securities Exchange Limited (ASX). The nature of the operations and principal activities of Ramelius and its controlled entities (referred to as ‘the group’) are described in the segment information. The consolidated general purpose financial report of the group for the year ended 30 June 2020 was authorised for issue in accordance with a resolution of the Directors on 24 August 2020. The Directors have the power to amend and reissue the financial report. The financial report is a general purpose financial report which: - has been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standard Board (AASB) and the Corporations Act 2001. The consolidated financial statements of the group also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). - has been prepared under the historical cost convention except for FVOCI financial assets, which have been measured at fair value. - - - has been presented in Australian dollars and rounded to the nearest $1,000 unless otherwise stated, in accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. adopts all new and amended Accounting Standards and Interpretations issued by the AASB that are relevant to the group and effective for reporting periods beginning on or before 1 July 2019. Refer to Note 32 for further details. does not early adopt Accounting Standards and Interpretations that have been issued or amended but are not yet effective. Refer to Note 32 for further details. KEY JUDGEMENTS, ESTIMATES AND ASSUMPTIONS In the process of applying the group’s accounting policies, management has made a number of judgements and applied estimates of future events. Judgements and estimates which are material to the financial report are found in the following notes. Page 98 102-108 102-106 106 106 106 108 114 115 117 117 Note Note 3 Note 8, 9 & 10 Note 8 & 9 Note 9 Note 9 Note 9 Note 10 Note 13 Note 14 Note 15 Note 15 Recovery of deferred tax assets Impairment of assets Depreciation and amortisation Production stripping Deferred mining expenditure Ore reserves Exploration and evaluation expenditure Leases Contingent consideration Provision for restoration and rehabilitation Provision for long service leave PRINCIPLES OF CONSOLIDATION The consolidated financial statements comprise the financial statements of the parent entity, Ramelius Resources Limited, and its controlled entities. A list of controlled entities is contained in Note 21 to the consolidated financial statements. All controlled entities have a 30 June financial year end. In preparing the consolidated financial statements, all inter-company balances and transactions, income and expenses and profits and losses resulting from intra-group transactions have been eliminated. Subsidiaries are consolidated from the date on which control is obtained to the date on which control is disposed. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. FOREIGN CURRENCY The functional currencies of overseas subsidiaries are listed in Note 21. As at the reporting date, the assets and liabilities of overseas subsidiaries are translated into Australian dollars at the rate of exchange ruling at the balance sheet date and the income statements are translated at the average exchange rates for the year. The exchange differences arising on the translation are taken directly to a separate component of equity. 90 Ramelius Resources NOTES TO THE FINANCIAL STATEMENTS FOREIGN CURRENCY (continued) Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the balance sheet date. Exchange differences arising from the application of these procedures are taken to the income statement, with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity, which are taken directly to equity until the disposal of the net investment and are then recognised in the income statement. Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity. OTHER ACCOUNTING POLICIES Significant and other accounting policies that summarise the measurement basis used and are relevant to an understanding of the financial statements are provided throughout the notes to the financial statements. THE NOTES TO THE FINANCIAL STATEMENTS The notes include information which is required to understand the financial statements and is material and relevant to the operations, financial position and performance of the group. Information is considered material and relevant if, for example: - - - - the amount in question is significant because of its size or nature; it is important for understanding the results of the group; it helps to explain the impact of significant changes in the group’s business – for example acquisition and impairment write downs; or it relates to an aspect of the group’s operations that is important to its future performance. The notes are organised into the following sections: - - - - - Key Numbers: provides a breakdown of individual line items in the financial statements that the Directors consider most relevant and summarises the accounting policies, judgements and estimates relevant to understanding these line items. Risk: provides information about the capital management practices of the group and discusses the group’s exposure to various financial risks and what the group does to manage these risks. Group Structure: explains aspects of the group structure and how changes have affected the financial position and performance of the group. Unrecognised Items: provides information about items that are not recognised in the financial statements but could potentially have a significant impact on the group’s financial position and performance. Other Information: provides information on items which require disclosure to comply with Australian Accounting Standards and other regulatory pronouncements. However, these are not considered critical in understanding the financial performance or position of the group. SIGNIFICANT ITEMS IN THE CURRENT REPORTING PERIOD The financial position and performance of the group was particularly affected by the following events and transactions during the reporting period: • The acquisition of Spectrum Metals Limited (Penny Gold Hill Project) which was completed in June 2020 (see Note 20) which resulted in an increase in exploration and evaluation assets (Note 10). For a detailed discussion about the group’s performance and financial position please refer to our operating and financial review on pages 12 to 23 and 62 to 65. 91 Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS Key numbers SEGMENT INFORMATION (a) Description of segments and principal activities Management has determined the operating segments based on internal reports about components of the group that are regularly reviewed by the Chief Operating Decision Maker (CODM), being the Managing Director / Chief Executive Officer, to make strategic decisions. Reportable operating segments are Mt Magnet, Edna May and Exploration. The group operates primarily in one business segment, namely the exploration, development and production of minerals with a focus on gold. The CODM monitors performance in these areas separately. Unless stated otherwise, all amounts reported to the CODM are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the group. Operating segment performance details for financial years 2020 and 2019 are set out below. (b) Segment results 2020 Segment results Segment revenue Cost of production Amortisation and depreciation Movement in inventory Deferred mining costs Gross margin Impairment of exploration and evaluation assets Segment margin Interest income Finance costs Other expenses Profit before income tax from continuing operations Total segment assets Total segment liabilities 2019 Segment results Segment revenue Cost of production Amortisation and depreciation Movement in inventory Deferred mining costs Gross margin Impairment of exploration and evaluation assets Segment margin Interest income Finance costs Other expenses Profit before income tax from continuing operations Total segment assets Total segment liabilities 92 Mt Magnet $’000 324,322 (211,659) (70,465) 38,444 53,756 134,398 - 134,398 Edna May $’000 136,252 (117,877) (32,620) 17,728 33,335 36,818 - 36,818 Exploration $’000 Total $’000 - - - - - - (6,336) (6,336) 460,574 (329,536) (103,085) 56,172 87,091 171,216 (6,336) 164,880 998 (4,025) (12,368) 149,485 183,486 204,249 196,892 584,627 92,011 75,821 907 168,739 Mt Magnet $’000 Edna May $’000 Exploration $’000 207,123 (176,895) (67,920) 5,360 46,879 14,547 - 14,547 145,647 (85,537) (13,383) (23,034) 5,369 29,062 - 29,062 - - - - - - (2,800) (2,800) Total $’000 352,770 (262,432) (81,303) (17,674) 52,248 43,609 (2,800) 40,809 1,886 (2,193) (10,091) 30,411 115,975 74,594 100,021 290,590 55,676 48,163 1,626 105,465 Ramelius ResourcesNOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) SEGMENT INFORMATION (continued) (c) Segment gross margin reconciliation Segment margin reconciles to profit before income tax from continuing operations for the year ended 30 June 2020 and 30 June 2019 as follows: Segment margin Other income Interest income Depreciation and amortisation Employee benefit expense Equity settled share-based payments Exploration and evaluation costs Change in fair value of Edna May contingent consideration Impairment of debtors (Loss) / gain on sale of property, plant and equipment Gain on sale of tenements Finance costs Other expenses Profit before income tax from continuing operations (d) Other profit and loss disclosure 2020 Exploration and evaluation costs Impairment of exploration and evaluation assets Change in fair value of contingent consideration Total other profit and loss disclosure 2019 Exploration and evaluation costs Impairment of exploration and evaluation assets Change in fair value of contingent consideration Total other profit and loss disclosure (e) Segment assets Operating segment assets are reconciled to total assets as follows: Segment assets Unallocated assets: Cash and cash equivalents Other current assets Other non-current assets Financial assets at FVOCI Property, plant and equipment Total assets as per the balance sheet 2020 $’000 164,880 31 998 (428) (6,737) (2,130) (438) 173 - (113) 1,142 (4,025) (3,868) 149,485 2019 $’000 40,809 116 1,886 (193) (6,674) (651) (711) 2,009 (717) - - (2,193) (3,270) 30,411 Mt Magnet $’000 Edna May $’000 Exploration $’000 - - - - - - 173 173 (438) (6,336) - (6,774) Mt Magnet $’000 Edna May $’000 Exploration $’000 - - - - - - 2,009 2,009 (711) (2,800) - (3,511) Total $’000 (438) (6,336) 173 (6,601) Total $’000 (711) (2,800) 2,009 (1,502) 2020 $’000 584,627 165,670 3,630 13 624 378 754,942 2019 $’000 290,590 95,815 8,629 1,016 101 418 396,569 93 Annual Report 2020NOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) SEGMENT INFORMATION (continued) (f) Segment liabilities Operating segment liabilities are reconciled to total liabilities as follows: Segment liabilities Unallocated liabilities: Trade and other payables Current tax liabilities Current provisions Current lease liabilities Borrowings Non-current provisions Deferred tax liabilities Total liabilities as per the balance sheet 2020 $’000 168,739 4,290 21,272 555 288 23,475 42 21,061 239,722 2019 $’000 105,465 3,980 - 423 - - 18 7,741 117,627 (g) Major customers Ramelius sells its gold production to either The Perth Mint or delivers it into forward gold contracts. (h) Segments assets by geographical location The total non-current assets other than financial instruments and deferred tax assets, broken down by the location of the assets, is shown in the following table: Australia US Total non-current assets other than financial instruments and deferred tax assets NOTE 1: REVENUE The group derives the following types of revenue: (a) Revenue Gold sales Silver sales Other revenue Total revenue from continuing operations (b) Other income Change in fair value of Edna May contingent consideration Gain on sale of tenements Foreign exchange gains Total other income from continuing operations 94 2020 $’000 482,883 - 482,883 2020 $’000 459,609 767 198 460,574 2020 $ 173 1,142 31 1,346 Note Note 14 2019 $’000 241,741 954 242,695 2019 $’000 350,981 808 981 352,770 2019 $ 2,009 - 116 2,125 Ramelius ResourcesNOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 1: REVENUE (continued) (c) Recognising revenue from major business activities Revenue (general) Revenue is measured at the fair value of the consideration received or receivable. Revenue from sale of goods or rendering of a service is recognised upon delivery of the goods or service to customers as this corresponds to the transfer of control of the goods and the cessation of all involvement with those goods. All revenue is stated net of goods and services tax (GST). Gold bullion and silver sales Revenue from gold bullion and silver sales is brought to account when control over the inventory has transferred to the buyer and selling prices are known or can be reasonably estimated. NOTE 2: EXPENSES Profit before tax includes the following expenses whose disclosure is relevant in explaining the performance of the group: (a) Cost of production Mining and milling production costs Employee benefits expense Royalties Amortisation and depreciation Inventory movements Total cost of production from continuing operations (b) Other expenses Employee benefit expense Equity settled share-based payments Other expenses Amortisation and depreciation Exploration and evaluation costs Impairment of exploration and evaluation assets Impairment of receivable Loss on sale of property, plant and equipment Total other expenses from continuing operations (c) Finance costs Provisions: unwinding of discount Contingent consideration: unwinding of discount Interest on leases Interest and finance charges Total finance costs from continuing operations Note 26 10 15 14 13 2020 $’000 182,020 38,388 22,036 103,085 (56,171) 289,358 6,737 2,130 3,868 428 438 6,336 - 113 20,050 639 1,236 1,009 1,141 4,025 2019 $’000 157,575 36,247 16,362 81,303 17,674 309,161 6,674 651 3,270 193 711 2,800 717 - 15,016 941 1,238 - 14 2,193 (d) Recognising expenses from major business activities Amortisation and depreciation Refer to Notes 8 and 9 for details on depreciation and amortisation. Impairment Impairment expenses are recognised to the extent that the carrying amounts of assets exceed their recoverable amounts. Refer to Notes 8, 9 and 10 for further details on impairment. Employee benefits expense The group’s accounting policy for liabilities associated with employee benefits is set out in Note 15. The policy relating to share-based payments is set out in Note 26. 95 Annual Report 2020NOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 3: INCOME TAX EXPENSE (a) The components of tax expense comprise: Current tax Deferred tax Income tax expense from continuing operations (b) Recognition of income tax expense to prima facia tax payable: Accounting profit before tax Income tax expense calculated at 30% Tax effects of amounts which are not deductible / (taxable) in calculating taxable income: - Share-based payments - Other non-allowable items - Adjustments for prior periods - Research and development tax credit - Tax losses utilised in current year - Tax losses brought to account Income tax expense 2020 $’000 22,480 13,590 36,070 2020 $’000 149,485 44,846 639 671 - - (2,996) (7,090) 36,070 2019 $’000 (79) 8,658 8,579 2019 $’000 30,411 9,123 195 11 (671) (79) - - 8,579 24% 28% Applicable effective tax rate (c) Deferred tax movement: 30 June 2020 Deferred tax liability (DTL) Exploration and evaluation Development Inventory – consumables Total DTL Deferred tax asset (DTA) Inventory – deferred mining costs Inventory – stock Property, plant and equipment Provisions Leases (see note 13) Financial assets at FVOCI Tax losses Tax losses brought to account Other Total DTA Net deferred tax liability # 1 July 2019 $’000 Adoption of AASB 16 $’000 Transfers $’000 Other comp. income $’000 Income statement $’000 30 June 2020 $’000 8,726 22,234 319 31,279 2,236 - 1,944 15,554 - - 2,115 - 1,689 23,538 (7,741) - - - - - - - - 298 - - - - - - 3,021 (3,021) - - - - - - - - - - - - - - - - - - - - - - (28) - - - (28) 10,519 6,945 (5) 17,459 (1,192) 1,469 (128) (971) (61) - (2,115) 7,090 (223) 3,869 (13,590) 22,266 26,158 314 48,738 1,044 1,469 1,816 14,583 237 (28) - 7,090 1,466 27,677 (21,061) # Deferred tax assets and liabilities have been offset for presentation on the balance sheet pursuant to set off provisions. 96 Ramelius ResourcesNOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 3: INCOME TAX EXPENSE (continued) (c) Deferred tax movement (continued): 30 June 2019 Deferred tax liability (DTL) Exploration and evaluation Development Property, plant and equipment Inventory – consumables Total DTL Deferred tax asset (DTA) Inventory – deferred mining costs Property, plant and equipment Provisions Tax losses Other Total DTA Net deferred tax asset / (liability) # Balance at 1 July 2018 $’000 Charged / (credited) to income $’000 Balance at 30 June 2019 $’000 5,644 19,545 499 342 26,030 2,236 933 14,886 8,296 596 26,947 917 3,082 2,689 (499) (23) 5,249 - 1,011 668 (6,181) 1,093 (3,409) 8,726 22,234 - 319 31,279 2,236 1,944 15,554 2,115 1,689 23,538 (7,741) # Deferred tax assets and liabilities have been offset for presentation on the balance sheet pursuant to set off provisions. (d) Tax losses: Unused tax losses: - for which a deferred asset has been recognised - for which no deferred asset has been recognised Total potential unused tax losses 2020 2019 Gross Net (30%) Gross Net (30%) 23,632 25,402 49,034 7,090 7,620 14,710 7,050 37,923 44,973 2,115 11,377 13,492 Unused tax losses for which no deferred asset has been recognised Spectrum Metals Limited, Zebra Minerals Pty Ltd and Red Dirt Mining Pty Ltd (‘the Spectrum tax consolidated group’) joined the Ramelius tax consolidated group on 23 June 2020. When a company enters an existing tax consolidated group, the tax losses of that company at the date it enters the tax consolidated group may be transferred to the existing tax group and utilised against future taxable income, subject to various provisions in the relevant tax legislation. As at 30 June 2020 the ability of the Ramelius consolidated tax group to access and utilise the carried forward tax losses from the Spectrum tax consolidated group is being assessed and as such no deferred tax asset has been recognised in relation to these carried forward tax losses. As at 30 June 2019 the Spectrum tax consolidated group had carried forward tax losses of $21,097,000 with a potential benefit of $6,329,000, with work continuing on the tax loss for the ‘stub’ period (being the period from 1 July 2019 to 22 June 2020). The balance of the unused tax losses for which no deferred tax asset has been recognised relates to capital losses. 97 Annual Report 2020NOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 3: INCOME TAX EXPENSE (continued) (d) Tax losses (continued) Unused tax losses for which a deferred asset has been recognised During the year work was completed on the assessment of the ability of the Ramelius consolidated tax group to access and utilise the carried forward tax losses of Explaurum Operations Pty Ltd. This work included obtaining advice from external tax advisors as part of the availability assessment. As a result of this assessment the unused tax losses of Explaurum Operations Pty Limited were transferred into the existing tax consolidated group. These losses were assessed as recoverable and as a result have been recognised. These losses can be utilised against current and future taxable income, subject to various provisions in the relevant tax legislation. Unused tax losses transferred into the existing tax consolidated group totalled $33,618,000 with a potential benefit $10,085,000. A total of $20,272,000 of tax losses with a benefit of $6,081,000 (which includes $2,996,000 relating to historical Explaurum Operations Pty Limited losses) were utilised during the current financial year with a balance of $23,632,000 unused tax losses with a potential benefit of $7,090,000 remaining as at 30 June 2020. A deferred tax asset has been recognised for these unused tax losses. The Directors have assessed that it is probable that the group will generate sufficient taxable profits to utilise the losses recognised as a deferred tax asset. Key judgement, estimates and assumptions: Recovery of deferred tax assets Judgement is required to determine whether deferred tax assets are recognised in the balance sheet. Deferred tax assets, including those arising from unused tax losses, require management to assess the likelihood that the group will generate sufficient taxable earnings in the future periods in order to recognise and utilise those deferred tax assets. Judgement is also required in respect of the expected manner of recovery of the value of an asset or liability (which will then impact the quantum of the deferred tax assets or deferred tax liabilities recognised) and the application of existing laws in each jurisdiction. Estimates of future taxable income are based on forecast cash flows from operations and existing tax laws in each jurisdiction. These assessments require the use of estimates and assumptions such as exchange rates, commodity prices, the timing of production profiles, and operating performance over the life of the assets. To the extent that cash flows and taxable income differ significantly from estimates, the ability of the group to realise the net deferred tax assets reported at the reporting date could be impacted. Additionally, future changes in tax laws in the jurisdictions in which the group operates could limit the ability of the group to obtain tax deductions and recover/utilise deferred tax assets in future periods. (e) Recognition and measurement of income tax Current income tax Current income tax expense charged to the income statement is the tax payable on taxable income calculated using applicable income tax rates that have been enacted, or substantially enacted by the reporting date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretations. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Deferred taxes Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed for accounting purposes, but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised, or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the way management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profits will be available against which the benefits of the deferred tax asset can be utilised. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income tax legislation and the anticipation that that the group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. 98 Ramelius ResourcesNOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 3: INCOME TAX EXPENSE (continued) (e) Recognition and measurement of income tax (continued) Tax consolidated group Ramelius Resources Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under tax consolidation legislation. Each entity in the group recognises its own current and deferred tax assets and liabilities. Such taxes are measured using the ‘stand-alone taxpayer’ approach to allocation. Current tax liabilities (assets) and deferred tax assets arising from unused tax losses and tax credits in the subsidiaries are immediately transferred to the head entity. The tax consolidated group has entered into a tax funding arrangement whereby each company in the group contributes to the income tax payable by the group in proportion to their contribution to the group’s taxable income. Differences between the amounts of net tax assets and liabilities derecognised and the net amounts recognised pursuant to the funding arrangement are recognised as either a contribution by, or distribution to the head entity. NOTE 4: CASH AND CASH EQUIVALENTS (a) Cash and cash equivalents Cash at bank and in hand Deposits at call Total cash and cash equivalents (b) Reconciliation of net profit after tax to net cash flows from operations Net profit Non-cash items - Share based payments - Depreciation and amortisation - Write off and impairment of exploration assets - Discount unwind on provisions - Discount unwind on deferred consideration - Change in fair value of Edna May contingent consideration - Net exchange differences - Impairment of receivable Items presented as investing or financing activities - Gain on disposal of non-current assets - Other finance costs (Increase) / decrease in assets - Prepayments - Trade and other receivables - Inventories - Deferred tax assets Increase / (decrease) in liabilities - Trade and other payables - Current tax payable - Provisions - Deferred tax liabilities Net cash provided by operating activities 2020 $’000 125,670 40,000 165,670 113,415 2,130 103,513 6,336 639 1,236 (173) (31) - (1,029) 2,150 918 3,725 (56,486) (5,320) 24,347 21,272 721 18,668 236,031 2019 $’000 40,815 55,000 95,815 21,832 651 81,496 3,511 941 1,238 (2,009) - 717 (765) - (690) (3,337) 17,019 3,409 8,111 - (404) 5,249 136,969 99 Annual Report 2020NOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 4: CASH AND CASH EQUIVALENTS (continued) (c) Recognition and measurement Cash and cash equivalents Cash and cash equivalents in the balance sheet comprise cash at bank, demand deposits held with banks, other 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 values. For the purposes of the Statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined below. Risk exposure The group’s exposure to interest rate risk is discussed in Note 18. Maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of cash and cash equivalents disclosed above. (d) Net cash reconciliation This section sets out an analysis of net cash and the movements in the net cash for each of the financial years presented. Net Cash Cash and cash equivalents Borrowings – bank loans repayable within one year Borrowings – leases repayable within one year Borrowings – leases repayable after one year Net cash Net cash at 30 June 2018 Cash flows Balance at 30 June 2019 Balance at 1 July 2019 Adoption of AASB 16 Leases At 1 July 2019 (re stated) Cash flows Lease additions (including interest) Balance at 30 June 2020 2020 $’000 165,670 (24,375) (16,643) (13,846) 110,806 Borrowings $’000 Leases $’000 Sub-total $’000 - - - - - - (24,375) - (24,375) - - - - (21,256) (21,256) 15,737 (24,970) (30,489) - - - - (21,256) (21,256) (8,638) (24,970) (54,864) Cash $’000 68,209 27,606 95,815 95,815 - 95,815 69,855 - 165,670 NOTE 5: TRADE AND OTHER RECEIVABLES Current Trade receivables Provision for impairment Trade receivables Other receivables Total current trade and other receivables 100 2020 $’000 23 (8) 15 3,219 3,234 2019 $’000 95,815 - - - 95,815 Net Cash $’000 68,209 27,606 95,815 95,815 (21,256) 74,559 61,217 (24,970) 110,806 2019 $’000 5,422 (8) 5,414 1,360 6,774 Ramelius ResourcesNOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 6: INVENTORIES Ore stockpiles Gold in circuit Gold bullion and dore Gold nuggets Consumables and supplies Total inventories 2020 $’000 73,308 5,382 7,376 80 11,407 97,553 2019 $’000 22,313 2,107 5,475 80 11,092 41,067 (a) Inventory expense Write down of inventories to net realisable value amounted to $4,802,000 (2019: $548,000 credit to income statement). These were recognised as an expense during the year ended 30 June 2020 and included in the cost of production in the income statement. The write downs to the net realisable value mainly related to stockpiles of Stellar ore which is of a low grade until which point the main ore body is accessed. (b) Recognition and measurement Inventories Gold ore, gold in circuit and poured gold bars are physically measured, or estimated, and valued at the lower of cost and net realisable value. Cost represents the weighted average cost and includes direct costs and an appropriate allocation of fixed and variable production overhead costs, including depreciation and amortisation. Consumables and stores are valued at the lower of cost and net realisable value. Costs of purchased inventory are determined after deducting any applicable rebates and discounts. A periodic review is undertaken to establish the extent of any surplus or obsolete items and where necessary a provision is made. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion of sale. Gold ore represents stockpiled ore that has been mined or otherwise acquired and is available for further processing. If there is significant uncertainty as to whether the stockpiled ore will be processed, it is expensed. Where future processing of ore can be predicted with confidence (e.g. it exceeds the mine cut-off grade), it is valued at the lower of cost and net realisable value. If ore is not expected to be processed within 12 months after reporting date, it is classified as non-current assets. Ramelius believes processing ore stockpiles may have a future economic benefit to the group and accordingly ore is valued at lower of cost and net realisable value. 101 Annual Report 2020NOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 7: OTHER ASSETS Current Prepayments Secured term deposits with financial institutions Total other current assets Non-current Secured term deposits with financial institutions Other security bonds and deposits Total other non-current assets 2020 $’000 1,105 3,370 4,475 - 503 503 2019 $’000 2,129 6,500 8,629 1,000 488 1,488 (a) Other non-current assets Other non-current assets comprise secured deposits with financial institutions for finance facilities as well as bonds and deposits with government bodies with regards to the mining and exploration activities of the group. NOTE 8: PROPERTY, PLANT AND EQUIPMENT Land and buildings $’000 Plant and equipment $’000 Assets under construction $’000 Right-of-use assets $’000 8,651 (1,577) 7,074 - 7,074 7,074 - 692 (127) 177 (590) 7,226 9,411 (2,185) 7,226 107,852 (73,831) 34,021 - 34,021 34,021 365 7,193 (93) 3,533 (10,916) 34,103 118,781 (84,678) 34,103 2,728 - 2,728 - 2,728 2,728 - 8,322 - (3,710) - 7,340 7,340 - 7,340 - - - 20,262 20,262 20,262 - 23,961 - - (14,524) 29,699 44,223 (14,524) 29,699 Total $’000 119,231 (75,408) 43,823 20,262 64,085 64,085 365 40,168 (220) - (26,030) 78,368 179,755 (101,387) 78,368 2020 As at 1 July 2019 Cost Accumulated depreciation Net book amount Adoption of AASB 16 Leases As at 1 July 2019 (restated) Year ended 30 June 2020 Opening net book amount Acquisition of subsidiary Additions Disposals Transfers Depreciation charge Closing net book amount As at 30 June 2020 Cost Accumulated depreciation Net book amount 102 Ramelius ResourcesNOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 8: PROPERTY, PLANT AND EQUIPMENT (CONTINUED) 2019 As at 1 July 2019 Cost Accumulated depreciation Net book amount Year ended 30 June 2019 Opening net book amount Additions on the acquisition of subsidiary Transfers from mine development Additions Disposals Transfers Depreciation charge Closing net book amount As at 30 June 2019 Cost Accumulated depreciation Net book amount Land and buildings $’000 Plant and equipment $’000 Assets under construction $’000 7,096 (802) 6,294 6,294 135 - - - 1,420 (775) 7,074 8,651 (1,577) 7,074 102,212 (59,297) 42,915 42,915 134 249 - (6) 5,223 (14,494) 34,021 107,852 (73,831) 34,021 1,913 - 1,913 1,913 - - 7,458 - (6,643) - 2,728 2,728 - 2,728 Total $’000 111,221 (60,099) 51,122 51,122 269 249 7,458 (6) - (15,269) 43,823 119,231 (75,408) 43,823 (a) Depreciation Items of plant and equipment are depreciated on a straight-line basis over their estimated useful lives, the duration of which reflects the useful lives depending on the nature of the asset. The group uses the straight-line method when depreciating property, plant and equipment, resulting in estimated useful lives for each class of depreciable assets as follows: Class of fixed asset Properties Plant and equipment – mine camp Plant and equipment – mill refurbishments Plant and equipment – tailings dam Plant and equipment – computers Plant and equipment – office equipment Plant and equipment – office furniture Plant and equipment – other Mine and exploration equipment Motor vehicles Useful life 40 years 2 – 15 years 3 - 5 years 5 years 4 years 3 – 10 years 10 – 25 years 2.5 – 25 years 2 – 33.3 years 8 – 12 years Key judgement, estimates and assumptions: Depreciation The estimations of useful lives, residual value and depreciation methods require management judgement and are reviewed bi-annually for all major items of plant and equipment. If they need to be modified, the change is accounted for prospectively from the date of reassessment until the end of the revised useful life (for both the current and future years). 103 Annual Report 2020NOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 8: PROPERTY, PLANT AND EQUIPMENT (continued) (b) Derecognition An item of property, plant and equipment is derecognised when it is sold or otherwise disposed of, or when its use is expected to bring no future economic benefits. Gains and losses on derecognising assets are determined by comparing proceeds with the carrying amount. These gains and losses are included in the Income Statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. (c) Impairment Key judgements, estimates and assumptions: Impairment of assets The group assesses each Cash-Generating Unit (CGU) at least annually, to determine whether there is any indication of impairment or reversal of a prior impairment. Where an indicator of impairment or reversal exists, a formal estimate of the recoverable amount is made, which is deemed as being the higher of the fair value less costs to sell and value in use. These assessments require the use of estimates and assumptions such as ore reserves, future production, commodity prices, discount rates, exchange rates, operating costs, sustaining capital costs, any future development cost necessary to produce the reserves (including the magnitude and timing of cash flows) and operating performance. Some of the factors considered in management’s assessment as to whether there existed any indicators of impairment at the CGUs included: • Strong operational and financial performance of the CGUs; • The extension of mine life across all CGUs; • Positive gold price environment against budget; and • Acquisitions complementing the existing CGUs of the group. (d) Recognition and measurement of property, plant and equipment Cost Each class of plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses. Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Major spares purchased specifically for particular plant are capitalised and depreciated on the same basis as the plant to which they relate when in use. Assets are depreciated or amortised from the date they are installed and are ready for use, or in respect of internally constructed assets, from the time the asset is completed and deemed ready for use. 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 Income Statement during the financial period in which they are incurred. 104 Ramelius Resources NOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 9: DEVELOPMENT ASSETS Development assets Less: accumulated amortisation Net book amount Development asset reconciliation Opening net book amount Additions on the acquisition of subsidiary Additions Restoration and rehabilitation adjustment Transfer to property, plant and equipment Transfer from exploration and evaluation asset Amortisation Closing net book amount Note 15 8 10 2020 $’000 516,134 (307,866) 208,268 99,430 - 107,537 (4,753) - 83,537 (77,483) 208,268 2019 $’000 330,866 (231,436) 99,430 84,728 13,759 57,159 3,164 (249) 7,096 (66,227) 99,430 (a) Impairment No impairment of development assets arose during the 2020 financial year. Refer to Note 8(c) for further discussion on the impairment of assets and the process undertaken by management in forming this conclusion. (b) Recognition and measurement Mine development Development assets represent expenditure in respect of exploration, evaluation, feasibility and development incurred by or on behalf of the group, including overburden removal and construction costs, previously accumulated and carried forward in relation to areas of interest in which mining has now commenced. Such expenditure comprises net direct costs and an appropriate allocation of directly related overhead expenditure. All expenditure incurred prior to commencement of production from each development property is carried forward to the extent to which recoupment out of future revenue from the sale of production, or from the sale of the property, is reasonably assured. When further development expenditure is incurred in respect of a mine property after commencement of production, such expenditure is carried forward as part of the cost of the mine property only when future economic benefits are reasonably assured, otherwise the expenditure is classified as part of the cost of production and expensed as incurred. Such capitalised development expenditure is added to the total carrying value of development assets being amortised. Deferred mining expenditure - Pre-production mine development Pre-production mining costs incurred by the group in relation to accessing recoverable reserves are carried forward as part of ‘development assets’ when future economic benefits are established, otherwise such expenditure is expensed as part of the cost of production. Deferred mining expenditure - Surface mining costs Mining costs incurred during the production stage of operations are deferred, this is generally the case where there are fluctuations in deferred mining costs over the life of the mine, and the effect is material. The amount of mining costs deferred is based on the ratio obtained by dividing the volume of waste material moved by the volume of ore mined. Mining costs incurred in the period are deferred to the extent that the current period waste to ore ratio exceeds the life-of-mine waste-to-ore (life of mine) ratio. The life of mine ratio is based on economically recoverable reserves of the operation. In the production stage of some operations, further developments of the mine require a phase of unusually high overburden removal activity that is similar in nature to pre-production mine development. The costs of such unusually high overburden removal activity are deferred and charged against reported profits in subsequent periods on a unit-of-production basis. The accounting treatment is consistent with that of overburden removal costs incurred during the development phase of a mine, before production commences. Deferred mining costs that relate to the production phase of the operation are carried forward as part of ‘development assets’. The amortisation of deferred mining costs is included in site operating costs. 105 Annual Report 2020NOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 9: DEVELOPMENT ASSETS (continued) Key judgement, estimates and assumptions: Production stripping The life of mine ratio is a function of an individual mine’s design and therefore changes to that design will generally result in changes to the ratio. Changes in other technical or economic parameters that impact reserves will also have an impact on the life of mine ratio even if they do not affect the mine’s design. Changes to the life of mine ratio are accounted for prospectively. Key judgement, estimates and assumptions: Deferred mining expenditure The group defers mining costs incurred during the production stage of its operations. Changes in an individual mine’s design will generally result in changes to the life of mine waste to ore (life of mine) ratio. Changes in other technical and economic parameters that impact reserves will also have an impact on the life of mine ratio even if they do not affect the mine’s design. Changes to the life of mine ratio are accounted for prospectively. Key judgement, estimates and assumptions: Ore reserves The group estimates ore reserves and mineral resources each year based on information compiled by Competent Persons as defined in accordance with the Australian code for reporting Exploration Results, Mineral Resources and Ore Reserves 2012 (‘JORC code’). Estimated quantities of economically recoverable reserves are based upon interpretations of geological models and require assumptions to be made including estimates of short and long-term commodity prices, exchange rates, future operating performance and capital requirements. Changes in reported reserve estimates can impact the carrying value of plant and equipment and development, provision for restoration and rehabilitation obligations as well as the amount of depreciation and amortisation. Key judgement, estimates and assumptions: Amortisation and impairment The group uses the unit-of-production basis when depreciating / amortising mine specific assets which results in a depreciation / amortisation charge proportional to the depletion of the anticipated remaining life of mine production. Economic life, which is assessed annually, has due regard to both its physical life limitations and to present assessments of economically recoverable reserves of the mine property. These calculations require the use of estimates and assumptions. Development assets are amortised based on the unit-of-production method which results in an amortisation charge proportional to the depletion of the estimated recoverable reserves. Where there is a change in the reserves the amortisation rate is adjusted prospectively in the reporting period in which the change occurs. The net carrying values of development expenditure carried forward are reviewed half- yearly by Directors to determine whether there is any indication of impairment, refer to Note 8 (d) for further information. 106 Ramelius ResourcesNOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 10: EXPLORATION AND EVALUATION ASSETS Exploration and evaluation Exploration and evaluation asset reconciliation Opening net book amount Additions on the acquisition of subsidiary Additions Disposal Impairment Exchange differences Transfer to development asset Closing net book amount Note 20 2(b) 9 2020 $’000 196,247 99,442 168,515 18,355 (208) (6,336) 16 (83,537) 196,247 2019 $’000 99,442 19,317 72,262 17,732 - (2,800) 27 (7,096) 99,442 (a) Transfer to development assets During the year a total of $83,537,000 was transferred from exploration and evaluation assets to a mine development asset. These amounts related to the Tampia Hill Gold Project and the Eridanus project (Mt Magnet). The Tampia Hill Gold Project costs were transferred to mine development upon the completion of the Feasibility Study and subsequent investment decision with the project now moving into development. The Eridanus transfer relates to the work completed to increase the Eridanus open pit project which resulted in a significantly larger open pit. The Stage 2 cut back has commenced in July 2020. (b) Recognition and measurement Exploration and evaluation Exploration and evaluation costs related to areas of interest are capitalised and carried forward to the extent that: (a) Rights to tenure of the area of interest are current; and (b) (i) Costs are expected to be recouped through successful development and exploitation of the area of interest or alternatively by sale; or (ii) Where activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, active and significant operations in, or in relation to, the areas are continuing. Such expenditure consists of an accumulation of acquisition costs and direct net exploration and evaluation costs incurred by or on behalf of the group, together with an appropriate portion of directly related overhead expenditure. Deferred feasibility Feasibility expenditure represents costs related to the preparation and completion of feasibility studies to enable a development decision to be made in relation to an area of interest and is capitalised as incurred. When production commences, relevant past exploration, evaluation and feasibility expenditure in respect of an area of interest that has been capitalised is transferred to mine development where it is amortised over the life of the area of interest to which it relates on a unit-of-production basis. When an area of interest is abandoned or the Directors decide it is not commercial, any accumulated costs in respect of that area are written off in the year the decision is made. Each area of interest is reviewed at the end of each reporting period and accumulated costs written off to the extent they are not expected to be recoverable in the future. 107 Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 10: EXPLORATION AND EVALUATION ASSETS (continued) Mineral rights Mineral rights comprise identifiable exploration and evaluation assets, mineral resources and ore reserves, which are acquired as part of a business combination or a joint venture and are recognised at fair value at date of acquisition. Mineral rights are attributable to specific areas of interest and are classified within exploration and evaluation assets. Mineral rights attributable to each area of interest are amortised when commercial production commences on a unit-of-production basis over the estimated economic reserve of the mine to which the rights related. Impairment Impairment of specific exploration and evaluation assets during the year have occurred where Directors have concluded that capitalised expenditure is unlikely to be recovered by sale or future exploitation. At each reporting date the group undertakes an assessment of the carrying amount of its exploration and evaluation assets. During the year indicators of impairment were identified on certain exploration and evaluation assets in accordance with AASB 6 Exploration for and Evaluation of Mineral Resources. As a result of this review, an impairment loss of $6,336,000 (2019: $2,800,000) has been recognised in relation to areas of interest where the Directors have concluded that capitalised expenditure is unlikely to be recovered by sale or future exploitation. Key judgement, estimates and assumptions: Exploration, evaluation and deferred feasibility expenditure Judgement is required to determine whether future economic benefits are likely, from either exploitation or sale, or whether activities have not reached a stage that permits a reasonable assessment of existence of reserves. In addition to these judgements, the group has to make certain estimates and assumptions. The determination of JORC resources is itself an estimation process that involves varying degrees of uncertainty depending on how the resources are classified (i.e. measured, indicated or inferred). The estimates directly impact when the group capitalises exploration and evaluation expenditure. The capitalisation policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular, the assessment of whether economic quantities of reserves will be found. Any such estimates and assumptions may change as new information becomes available. NOTE 11: TRADE AND OTHER PAYABLES Trade payables Other payables and accruals Total trade and other payables (a) Recognition and measurement 2020 $’000 23,350 58,952 82,302 2019 $’000 9,436 35,490 44,926 Trade and other payables Liabilities for trade and other payables are initially recorded at the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the group, and then subsequently at amortised cost. Trade payables are unsecured and are usually paid within 30 days of recognition. The carrying amounts of trade and other payables are assumed to be the same as their fair values, due to their short- term nature. Risk exposure The group’s exposure to cash flow risk is discussed in Note 18. 108 Ramelius ResourcesNOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 12: BORROWINGS Current Secured bank loans Less: capitalised borrowing costs Total current borrowings 2020 $’000 24,375 (900) 23,475 2019 $’000 - - - (a) Secured liabilities and assets pledged as security Secured Bank Loans Ramelius Resources Limited entered into a Syndicated Facility Agreement (SFA) with the Commonwealth Bank of Australia, BNP Paribas, and the National Australia Bank. The SFA and associated documents provide for the provision of working capital and performance bond facilities totalling $35,000,000. The facility has been established to provide financial support for working capital purposes but also for any corporate asset acquisitions that the Company may undertake at a future date. The SFA has been structured such that the quantum available could be increased subject to the approval of the syndicate members including the completion of satisfactory due diligence on the company or asset in questions. The group has granted a security interest over all of its assets in favour of CBA Corporate Services (NSW) Pty Ltd as security trustee. As at the date of this report the assets of Spectrum Metals Limited, Red Dirt Mining Pty Limited, and Zebra Minerals Pty Limited were not included in this security arrangement. A total of $32,500,000 was drawn on the SFA in March 2020 to provide the Company with additional working capital, should it be needed, during the global COVID-19 pandemic. The bank loan under the SFA is repayable in full before 30 June 2021. The carrying amounts of the financial and non-financial assets pledged as security for the secured borrowings are disclosed in Note 29. (b) Compliance with loan covenants Ramelius Resources Limited has complied with the financial and non-financial covenants of the SFA during the 2020 reporting period. (c) Fair value For the secured bank loans under the SFA, the fair values are not materially different from their carrying amounts, since the interest payable on the secured bank loan is close to current market rates and the secured bank loan is of a short term nature. (d) Risk exposures Details of the group’s exposure to risks arising from borrowings are set out in Note 18. 109 Annual Report 2020NOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 13: LEASE LIABILITIES Current Current Non-current Total lease liability Set out below are the carrying amounts of lease liabilities and the movements during the year: As at 1 July 2019 Additions Interest expense (note 2(c)) Payments As at 30 June 2020 Maturity analysis: Year 1 Year 2 Year 3 Year 4 Gross lease liability Less future interest charges Total lease liability 2019 $’000 - - - 2020 $’000 16,643 13,846 30,489 2020 $’000 21,256 23,961 1,009 (15,737) 30,489 17,431 8,064 4,269 2,057 31,821 (1,332) 30,489 (a) First time adoption of AASB 16 Leases The group has adopted AASB 16 Leases (AASB 16) for the first time as of 1 July 2019. The nature and effect of the changes as a result of the adoption of AASB 16 are described below. Overview AASB 16 supersedes AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases - Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to recognise most leases on the balance sheet under a single on-balance sheet model. Impact on the group The leases recognised by the group under AASB 16 predominantly relate to mining equipment utilised under mining services contracts and power infrastructure utilised under power supply contracts. The group does not have any sub-leases. Before the adoption of AASB 16, the group classified each of its leases (as lessee) at inception as either a finance lease or operating lease. As at 30 June 2019 the group had no finance leases. Refer to below for the accounting policy prior to 1 July 2019. The group adopted AASB 16 using the modified retrospective approach, with the date of initial application of 1 July 2019. Under this method, the standard has been applied retrospectively with the cumulative effect of initially applying the standard recognised as an adjustment to the opening balance of retained earnings at the date of initial application and comparatives have not been restated. The group has applied the new definition of a lease to all contracts still effective at the date of initial application. Upon adoption of AASB 16, the group applied a single recognition and measurement approach for all leases except for short-term leases and leases of low-value assets. Refer below for the accounting policy beginning 1 July 2019. 110 Ramelius ResourcesNOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 13: LEASE LIABILITIES (continued) Leases previously accounted for as operating leases or operating expenses All the group’s existing leases were operating leases. Some mining services and other service contracts, which were previously expensed to the income statement as operating expenses, are now determined to be leases based on the AASB 16 definition of a lease. The group recognised right-of-use assets and lease liabilities for those leases previously classified as operating leases and service contracts that meet the new definition of a lease, except for short-term leases with lease terms that end within 12 months of the date of initial application and leases of low-value assets. The right-of-use assets for all leases were recognised based on the amount equal to the lease liabilities, or, as if AASB 16 had been applied from the commencement of the lease. The determination as to how to measure the lease asset is made on a lease by lease basis. No adjustments were needed for any previously recognised prepaid or accrued lease expenses as there were none. Lease liabilities were recognised based on the present value of the remaining lease payments, discounted using the incremental borrowing rate at the date of initial application. The group also applied the available practical expedients wherein it: • Applied a single discount rate to a portfolio of leases with reasonably similar characteristics. • Applied the short-term leases exemptions to leases with lease terms that end within 12 months of the date of initial application. • Used hindsight in determining the lease term where the contract contained options to extend or terminate the lease. As per AASB 16 the comparative information has not been restated for the impact of the application of AASB 16. Impact of adoption The effect (increase/(decrease)) of adopting AASB 16 as at 1 July 2019 is set out below: Impact on Balance Sheet: Assets Property, plant and equipment Deferred tax assets Total assets Liabilities Lease liabilities Current Non-current Total liabilities Net assets Equity Retained earnings Total Equity As at 1 July 2019: 1 July 2019 $’000 20,262 298 20,560 10,614 10,642 21,256 (696) (696) (696) • Right-of-use assets were recognised and presented as part of Property, plant and equipment. • • Initial lease liabilities were recognised and presented separately in the balance sheet, showing the current and non-current commitments. Additional deferred tax assets were recognised because of the deferred tax impact of the changes in recognised lease-related assets and liabilities. 111 Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 13: LEASE LIABILITIES (continued) Reconciliation of operating lease commitments as at 30 June 2019 The lease liabilities as at 1 July 2019 can be reconciled to the operating lease commitments as at 30 June 2019 as follows: Lease liabilities recognised on transition: Operating lease commitments disclosed at 30 June 2019 Add: Service contracts1 Add: Adjustments for future rate increases2 Less: Present value discounting of lease liabilities3 Less: Short term leases4 Less: Low value leases4 Lease liabilities recognised on transition 1 July 2019 $’000 1,343 20,243 18 (42) (253) (53) 21,256 1. Mining contracts previously expensed as incurred are included as the contracts contain the use of assets that meet the AASB 16 definition of a lease. 2. As per the measurement requirements of AASB 16, the lease liabilities are measured taking into account adjustments for future rate increases. 3. 4. Lease liabilities were discounted using a weighted average discount rate of 3.61% per annum. As permitted by AASB 16, the group has elected not to recognise right-of-use assets and lease liabilities relating to short-term leases and leases for which the underlying assets are of low value. Right-of-use assets The group has lease contracts for various items of mining equipment, power infrastructure, motor vehicles and buildings used in its operations. These leases generally have lease terms between two and five years. The group’s obligations under its leases are secured by the lessor’s title to the leased assets. Generally, the group is restricted from assigning and subleasing the leased assets. The group also has certain leases of assets with lease terms of 12 months or less and leases of storage containers and equipment for which the assets are of low value. The group applies the short-term lease and lease of low-value assets recognition exemptions for these leases. Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period (as shown in property, plant and equipment): 2020 As at 1 July 2019 Additions Depreciation charge As at 30 June 2020 Land and buildings $’000 Plant and equipment $’000 428 - (151) 277 19,654 23,708 (14,229) 29,133 Vehicles $’000 180 253 (144) 289 Total $’000 20,262 23,961 (14,524) 29,699 Impact on the income statement The following amounts are recognised in the income statement: Impact on income statement Note 30 June 2020 $’000 The application of AASB 16 has resulted in the following amounts being recorded in the income statement for the year ended 30 June 2020: Depreciation of right-of-use asset Interest expense Income tax expense Total amount recorded in the income statement resulting from AASB 16 8 2(c) 3 14,524 1,009 61 15,594 Payments of $6,180,000 for short term leases (lease term of 12 months or less) and payments of $75,000 for leases of low value assets were expensed in the income statement for the year ended 30 June 2020. 112 Ramelius Resources NOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 13: LEASE LIABILITIES (continued) (b) Accounting policy - Leases Accounting policy applicable prior to 1 July 2019 The determination of whether a contract is, or contains, a lease is based on the substance of the contract at the date of inception. The contract is assessed to determine whether fulfilment is dependent on the use of a specific asset (or assets) and the contract conveys a right to use the asset (or assets), even if that asset is (or those assets) are not explicitly specified in the contract. The group is not a lessor in any transactions, it is only a lessee. Operating lease payments are recognised as an operating expense in the statement of profit or loss and other comprehensive income on a straight- line basis over the lease term. Accounting policy applicable from 1 July 2019 When a contract is entered into the group assesses whether the contract contains a lease. A lease arises when the group has the right to direct the use of an identified asset which is not substitutable and to obtain substantially all economic benefits from the use of the assets throughout the period of use. The group separates the lease and non-lease components of the contract and accounts for these separately. The group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. Right-of-use assets The group recognises right-of-use assets at the commencement date of the lease (i.e., the date when 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 remeasurement 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 plus any make-good obligations. Right-of-use assets are depreciated using the straight-line method over the shorter of their useful life and the lease term as follows: • Mining equipment 2 to 5 years • Motor vehicles 2 to 5 years • Buildings 3 years Periodic adjustments are made for any re-measurement of the lease liabilities and for impairment losses, assessed in accordance with the group’s impairment policies. Lease liabilities Lease liabilities are initially measured as the present value of future minimum lease payments, discounted using the group’s incremental borrowing rate if the rate explicit in the lease cannot be readily measured at amortised cost using the effective interest rate over the lease term. Minimum lease payments are fixed payments or index-based variable payments incorporating the group’s expectations of extension options and do not include non-lease component of a contract. Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the event or condition that triggers the payment occurs. The lease liability is remeasured when there are changes in the future lease payments arising from a change in rates, index, or lease terms from exercising an extension or termination options. A corresponding adjustment is made to the carrying amount of the lease assets, with any excess recognised in the income statement. Short-term leases and leases of low-value assets The group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of plant and equipment that are of low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense as they are incurred. 113 Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 13: LEASE LIABILITIES (continued) Key judgements, estimates and assumptions: Leases Identification of non-lease components In addition to containing a lease, the group’s mining services contracts involves the provision of additional services, including personnel cost, low value materials, drilling, hauling related activities and other items. These are non-lease components and the group has elected to separate these from the lease components. Judgement is required to identify each of the lease and non-lease components. The consideration in the contract is then allocated between the lease and non-lease components on a relative stand-alone price basis. This requires the group to estimate stand-alone prices for each lease and non-lease component based on quoted prices within the contract. Identifying in-substance fixed rates versus variable lease payments The lease payments used to calculate the lease-related balances under AASB 16 include fixed payments, in-substance fixed payments and variable payments based on an index or rate. Variable payments not based on an index or rate are excluded from the measurement of lease liabilities and related assets. For the group’s mining services contracts, in addition to the fixed payments, there are payments that are variable payments because the contract terms require payment based on a rate per hour. In terms of AASB 16, the group uses judgement to determine that no minimum hours or volumes within the contract are a fixed minimum that results in an amount payable that is unavoidable. Therefore, the group has had to apply judgement to determine that there are no in-substance fixed payments included in the lease payments used to calculate the lease-related balances. Payments identified as variable not based on an index or rate, are excluded from recognition and measurement of the lease-related balances. Estimating the incremental borrowing rate The group cannot readily determine the interest rate implicit in its leases. Therefore, it uses the relevant 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 and to make adjustments to reflect the terms and conditions of the lease. The group estimates the IBR using observable inputs (such as market interest rates) when available and considered certain contract and entity-specific judgements estimates (such as the lease term and credit rating). The IBR range used by the group was between 3.14% and 3.61%. 114 Ramelius ResourcesNOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 14: CONTINGENT CONSIDERATION Current Edna May contingent consideration Non-current Edna May contingent consideration Total contingent consideration Movements Balance as at 1 July 2019 Unwinding of discount rate Change in fair value of contingent consideration Total contingent consideration 2019 $’000 - 12,121 12,121 2020 $’000 6,261 6,923 13,184 Contingent consideration $’000 12,121 1,236 (173) 13,184 Note 2(c) 1(b) Significant estimate: Contingent consideration The purchase consideration for Edna May included contingent consideration of: • • $20,000,000 in cash or Ramelius shares, or a combination of both, at Ramelius’ sole election, upon a Board approved decision-to-mine the Edna May Stage 3 open pit; and Royalty payments of up to a maximum of $30,000,000 payable at $60/oz from gold production over 200,000 ounces (or up to $50,000,000 payable at $100/oz if the Edna May Stage 3 open pit decision-to-mine is not Board approved). The potential undiscounted amount payable under the agreement is between $0 and $50,000,000. The fair value of the contingent consideration has been revalued at 30 June 2020 which resulted in a reduction of the contingent consideration of $173,000 which has been recorded in the income statement. 115 Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 15: PROVISIONS Current Employee benefits Rehabilitation and restoration costs Total current provisions Non-current Employee benefits Rehabilitation and restoration costs Total non-current provisions Rehabilitation and restoration costs Opening book amount Revision of provision during the year Expenditure on rehabilitation and restoration Discount unwind Total provision for rehabilitation and restoration Rehabilitation and restoration costs Current Non-current Total provision for rehabilitation and restoration Note 9 2 2020 $’000 6,804 2,415 9,219 418 38,302 38,720 46,371 (4,753) (1,540) 639 40,717 2,415 38,302 40,717 2019 $’000 6,089 763 6,852 379 45,608 45,987 42,489 3,150 (209) 941 46,371 763 45,608 46,371 (a) Revision of rehabilitation and restoration provision Represents amendments to future restoration and rehabilitation liabilities resulting from changes to the approved mine plan in the financial year, initial recognition of new rehabilitation provisions as well as a change in provision assumptions. Key provision assumption changes include reassessment of costs and timing of expenditure. (b) Recognition and measurement Provisions Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Employee Benefits - Wages, salaries, salary at risk, annual leave and sick leave Liabilities arising in respect of wages and salaries, bonuses, annual leave and any other employee benefits expected to be wholly settled within 12 months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liabilities are settled. These amounts are recognised in ‘trade and other payables’ (for amounts other than annual leave and bonuses) and ‘current provisions’ (for annual leave and bonuses) in respect of employee services up to the reporting date. Costs incurred in relation to non-accumulating sick leave are recognised when the leave is taken and are measured at the rate paid or payable. 116 Ramelius ResourcesNOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 15: PROVISIONS (continued) Long service leave The liability for long service leave is measured at the present value of the estimated future cash outflows to be made by the group resulting from employees’ services provided up to the reporting date. Liability for long service leave benefits not expected to be settled within 12 months are discounted using the rates attaching to high quality corporate bonds at the reporting date, which most closely match the terms of maturity of the related liability. In determining the liability for these long-term employee benefits, consideration has been given to expected future increases in wage and salary rates, the group’s experience with staff departures and periods of service. Related on-costs have also been included in the liability. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least 12 months after the reporting period, regardless of when the actual settlement is expected to occur. Defined contribution superannuation plans Contributions to defined contribution superannuation plans are expensed when incurred. Provision for restoration and rehabilitation Estimated costs of decommissioning and removing an asset and restoring the site are included in the cost of the asset as at the date the obligation first arises and to the extent that it is first recognised as a provision. The group records the present value of the estimated cost of constructive and legal obligations to restore operating locations in the period in which the obligation is incurred. The nature of decommissioning activities includes dismantling and removing structures, rehabilitating mine sites, dismantling operating facilities, closure of plant and waste sites and restoration, reclamation and revegetation of affected areas. Typically, the obligation arises when the asset is installed, or the environment is disturbed at the development location. When the liability is initially recorded, the present value of the estimated cost is capitalised by increasing the carrying amount of the related mining assets. Over time, the discounted liability is increased for the change in the present value based on the discount rates that reflect the current market assessments and the risks specific to the liability. Additional disturbances or changes in decommissioning costs will be recognised as additions or changes to the corresponding asset and rehabilitation liability when incurred. The unwind effect of discounting the provision is recorded as a finance cost in the Income Statement and the carrying amount capitalised as a part of mining assets is amortised on a unit-of-production basis. Costs incurred that relate to an existing condition caused by past operations, but do not have future economic benefits, are expensed as incurred. Key judgement, estimates and assumptions: Provision for restoration and rehabilitation The group assesses its mine restoration and rehabilitation provision bi-annually in accordance with the accounting policy. Significant judgement is required in determining the provision for restoration and rehabilitation as there are many transactions and other factors that will affect the ultimate liability payable to rehabilitate and restore the mine sites. The estimate of future costs therefore requires management to make assessment of the future restoration and rehabilitation date, future environmental legislation, changes in regulations, price increases, changes in discount rates, the extent of restoration activities and future removal and rehabilitation technologies. When these factors change or become known in the future, such differences will impact the restoration and rehabilitation provision in the period in which they change or become known. At each reporting date the rehabilitation and restoration provision is remeasured to reflect any of these changes. Key judgement, estimates and assumptions: Long service leave Management judgement is required in determining the following key assumptions used in the calculation of long service leave at balance sheet date: - Future increase in salaries and wages; - Future on cost rates; and - Future probability of employee departures and period of service. 117 Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 16: SHARE CAPITAL Ordinary shares Share capital at 30 June 2018 Shares issued as part of the acquisition of Explaurum1 Shares issued from exercise of performance rights Shares issued from exercise of options Transfer from share based payments reserve At 30 June 2019 Shares issued as part of the acquisition of Spectrum1 Shares issued from exercise of performance rights Shares issued from exercise of options Transfer from share based payments reserve At 30 June 2020 Note Number of shares $’000 528,509,008 127,778,619 85,342 1,500,000 - 657,872,969 145,203,969 1,377,522 1,500,000 - 805,954,460 149,568 64,232 28 300 90 214,218 155,523 598 300 142 370,781 20 1. Represents the value of shares at the date of issue. Refer to Note 17 for details on the NCI reserve. (a) Recognition and measurement Share capital Ordinary share capital is classified as equity and is recognised at fair value of the consideration received by the group. Any transaction costs arising on the issue of ordinary shares and the associated tax are recognised directly in equity as a reduction of the share proceeds received. Ordinary shares Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders’ meetings other than voting exclusions as required by the Corporations Act 2001. In the event of winding up of the Company, ordinary shareholders rank after all creditors and are fully entitled to any proceeds of liquidation. Options over shares Refer Note 26 for further information on options, including details of any options issued, exercised and lapsed during the financial year and options over shares outstanding at financial year end. Rights over shares Refer Note 26 for further information on rights, including details of any rights issued, exercised and lapsed during the financial year and rights over shares outstanding at financial year end. 118 Ramelius ResourcesNOTES TO THE FINANCIAL STATEMENTS Key numbers (continued) NOTE 17: RESERVES Share-based payments reserve Financial assets at FVOCI Other NCI acquisition reserve Foreign currency translation reserve Total reserves 2020 $’000 3,422 (317) 634 (38,395) (51) (34,707) 2019 $’000 2,032 (383) 634 (9,926) (31) (7,674) Share-based payment reserve Share-based payments reserve records items recognised as expenses on valuation of employees share options and rights. Financial assets at FVOCI The group has elected to recognise changes in the fair value of certain investments in equity securities in OCI. These changes are accumulated within the FVOCI reserve within equity. The group transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised. Non-Controlling Interest (NCI) acquisition reserve The NCI acquisition reserve represents the incremental increase in the Ramelius share price on the acquisition of non-controlling interest post the date control was obtained. This reserve relates to the acquisition of Spectrum Metals Limited and Explaurum Limited. Foreign currency translation reserve Foreign currency translation reserve comprises all foreign exchange difference arising from the translation of the financial statements of foreign operations where their functional currency is different to the presentation currency of the reporting entity. Risk NOTE 18: FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT The Directors are responsible for monitoring and managing financial risk exposures of the group. The group holds the following financial assets and liabilities: Financial assets Cash at bank Term deposits Trade and other receivables Secured term deposits with financial institutions Other security bonds and deposits Financial assets at FVOCI Total financial assets Financial liabilities Trade and other payables Lease Liabilities Borrowings Total financial liabilities 2020 $’000 125,670 40,000 3,234 3,370 503 624 173,401 82,302 30,489 23,475 136,266 2019 $’000 40,815 55,000 6,774 7,500 488 101 110,678 44,926 - - 44,926 119 Annual Report 2020NOTES TO THE FINANCIAL STATEMENTS Risk (continued) NOTE 18: FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued) (a) Recognition and measurement Initial recognition and measurement Financial instruments are initially measured at fair value plus transaction costs except where the instrument is classified ‘at fair value through profit or loss’ in which case transaction costs are expensed immediately. (b) Classification and subsequent measurement Financial instruments are subsequently measured at fair value, amortised cost using the effective interest rate method or at cost. Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Quoted prices in an active market are used to determine fair value where possible. The group does not designate any interest in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments. Amortised Cost Amortised cost amounts are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. Fair value through other comprehensive income (FVOCI) FVOCI financial assets include any financial assets not included in the above categories. (c) Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. (d) Expected loss At each reporting date, the group assesses whether there is objective evidence that a financial instrument has been impaired. If there is objective evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously not recognised in the profit or loss - is removed from equity and recognised in profit or loss. Management of financial risk The group’s management of financial risk is aimed at ensuring cash flows are sufficient to: • Withstand significant changes in cash flow at risk scenarios and meet all financial commitments as and when they fall due; and • Maintain the capacity to fund future project development, exploration and acquisition strategies. The group continually monitors and tests its forecast financial position against these criteria. The group is exposed to the following financial risks: liquidity risk, credit risk and market risk (including foreign exchange risk, commodity price risk and interest rate risk). (a) Liquidity risk The group manages liquidity risk by monitoring immediate and forecasted cash requirements and ensures adequate cash reserves are maintained to pay debts as and when due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. At the end of the financial year the group held short term on demand cash balances of $125,670,000 (2019: $40,815,000) that is available for managing liquidity risk. In addition to this short term deposits at call totalled $40,000,000 (2019: $55,000,000). During the year the group established a credit facility to reduce liquidity risk, this facility was fully drawn on during the financial year. At the end of the financial year the group did not have access to any undrawn borrowing facilities. Management monitors rolling forecasts of the group’s available cash reserve on the basis of expected cash flows to manage any potential future liquidity risks. 120 Ramelius Resources NOTES TO THE FINANCIAL STATEMENTS Risk (continued) NOTE 18: FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued) (i) Maturities of financial liabilities The tables below analyse the group’s financial liabilities into relevant groupings based on their contractual maturities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. Maturities of financial liabilities Less than 6 months $’000 6 – 12 months $’000 Between 1 and 2 years $’000 Between 2 and 5 years $’000 As at 30 June 2020 Trade and other payables Borrowings Lease liabilities Contingent consideration Total non-derivatives As at 30 June 2019 Trade and other payables Contingent consideration Total non-derivatives 72,412 16,250 9,238 1,964 99,864 44,926 - 44,926 9,890 8,125 7,404 4,298 29,717 - 7,855 7,855 - - 7,711 6,025 13,736 - 6,110 6,110 - - 6,136 2,118 8,254 - 722 722 Total contractual cash flows $’000 Carrying amount of liabilities $’000 82,302 24,375 30,489 14,405 151,571 82,302 23,475 30,489 13,184 149,450 44,926 14,687 59,613 44,926 12,121 57,047 (b) Credit risk exposures Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted. The credit risk on financial assets of the entity which have been recognised in the Balance Sheet is the carrying amount, net of any provision for doubtful debts. Credit risk is managed through the consideration of credit worthiness of customers and counterparties. This ensures to the extent possible, that customers and counterparties to transactions are able to pay their obligations when due and payable. Such monitoring is used in assessing impairment. (i) Past due but not impaired As at 30 June 2020 there were no receivables past due but not impaired (2019: NIL). (ii) Impaired trade receivables Individual receivables which are known to be uncollectable are written off by reducing the carrying amount directly. The other receivables are assessed to determine whether there is objective evidence that an impairment has been incurred but not yet identified. For these receivables, the estimated impairment losses are recognised in a separate provision for impairment. The group considers that there is evidence of impairment if any of the following indicators are present: • significant financial difficulties of the debtor, • probability that the debtor will enter bankruptcy or financial reorganisation, and • default or delinquency in payments (past due). Receivables for which an impairment provision was recognised are written off against the provision when there is no expectation of recovering additional cash. Impairment losses are recognised in profit or loss within other expenses. Subsequent recoveries of amounts previously written off are credited against other expenses. (c) Market risk i. Foreign currency risk The group undertakes transactions impacted by foreign currencies; hence exposures to exchange rate fluctuations arise. The majority of the group’s revenue is affected by movements in USD:AUD exchange rate that impacts on the Australian gold price whereas the majority of costs (including capital expenditure) are in Australian dollars. The group considers the effects of foreign currency risk on its financial position and financial performance and assesses its option to hedge based on current economic conditions and available market data. 121 Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS Risk (continued) NOTE 18: FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued) ii. Commodity price risk The group’s revenue is exposed to commodity price fluctuations, in particular to gold prices. Price risk relates to the risk that the fair value of future cash flows of gold sales will fluctuate because of changes in market prices largely due to demand and supply factors for commodities and gold price commodity speculation. The group is exposed to commodity price risk due to the sale of gold on physical delivery at prices determined by markets at the time of sale. The group manages commodity price risk as follows: Forward sales contracts Gold price risk is managed through the use of forward sales contracts which effectively fix the Australian Dollar gold price and thus provide cash flow certainty. These contracts are accounted for as sale contracts with revenue recognised once gold has been physically delivered into the contract. The physical gold delivery contracts are considered a contract to sell a non-financial item and therefore do not fall within the scope of AASB 9 Financial Instruments. At 30 June 2020, the group had 247,350 ounces in forward sales contracts at an average price of A$2,135. Refer to Note 23 for further details. Put options Gold price risk may be managed with the use of hedging strategies through the purchase of gold put options to establish gold ’floor prices’ in Australian dollars over the group’s gold production; however, this is generally at levels lower than current market prices. These put options enable Ramelius to retain full exposure to current, and any future rises in the gold price while providing protection to a fall in the gold price below the strike price. Gold put options are marked to market at fair value through the income statement. Gold prices, cash flows and economic conditions are constantly monitored to determine whether to implement a hedging program. (d) Gold price sensitivity analysis The group has performed a sensitivity analysis relating to its exposure to gold price risk at reporting date. This sensitivity analysis demonstrates the effect on the current year results and equity. Based on gold sales of 67,410oz (228,210 oz less forward sales of 160,800oz) in 2020 and 39,102oz (200,352oz less forward sales of 161,250oz) in 2019, if gold price in Australian dollars had changed by + / - A$100, with all other variables remaining constant, the estimated realised impact on pre-tax profit (loss) and equity would have been as follows: Impact on pre-tax profit Increase in gold price by A$100 Decrease in gold price by A$100 Impact on equity Increase in gold price by A$100 Decrease in gold price by A$100 2020 $’000 6,741 (6,741) 6,741 (6,741) 2019 $’000 3,910 (3,910) 3,910 (3,910) (e) Fair value measurement The financial assets and liabilities of the group are recognised on the balance sheet at their fair value in accordance with the group’s accounting policies. Measurement of fair value is grouped into levels based on the degree to which fair value is observable in accordance with AASB 7 Financial Instruments: Disclosure. - - - Level 1 - fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 - fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices). Level 3 - fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). 122 Ramelius Resources NOTES TO THE FINANCIAL STATEMENTS Risk (continued) NOTE 18: FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued) (f) Fair value measurement of financial instruments Derivative financial assets are measured at fair value using valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates. The valuations would be recognised as a Level 2 in the fair value hierarchy as they have been derived using inputs from a variety of market data. Available-for-sale financial assets are measured at fair value using the closing price on the reporting date as listed on the Australian Securities Exchange Limited (ASX). Available for sale financial assets are recognised as a Level 1 in the fair value hierarchy as defined under AASB 7 Financial Instruments: Disclosures. The carrying amounts of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. NOTE 19: CAPITAL RISK MANAGEMENT (a) Risk management The group’s objectives when managing capital are to: • Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and • Maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, or issue new shares. Loan covenants Under the terms of the SFA the group is required to comply with financial and non-financial covenants. The group has complied with these covenants throughout the financial year. (b) Dividends Ordinary shares Final ordinary dividend for the 2019 financial year of 1 cent (2018: nil) per fully paid share paid on 4 October 2019 Total dividends paid Franked dividends Franking credits available for subsequent reporting periods based on a tax rate of 30% (2019 – 30%) 2020 $’000 6,579 6,579 2019 $’000 - - 41,486 21,826 The above represents the balance of the franking account as at the end of the reporting period, adjusted for: - Franking credits / debits that will arise from payment of any current tax liability / current tax asset, and - Franking debits that will arise from the payment of dividends recognised as a liability at the reporting date. 123 Annual Report 2020 NOTES TO THE FINANCIAL STATEMENTS Group structure NOTE 20: ASSET ACQUISITIONS (a) Penny Gold Project (Spectrum Metals Limited) The Penny Gold Project was the primary asset of Spectrum Metals Limited (Spectrum), which was acquired by Ramelius during the year. The Penny Gold Project is located 130km south-east of Ramelius’ Mt Magnet mining and processing operations and approximately 500km north-east of Perth in Western Australia. The Penny Gold Project currently has a Mineral Resource of 300,000 ounces and an Ore Reserve of 230,000 ounces (refer to ASX Announcement dated 30 June 2020 ‘Ramelius Extends Life of Mine Plan by 34% to 1.45Moz’ for full details). On 10 February 2020 Ramelius announced an off-market takeover offer for Spectrum Metals Limited. Under the offer Spectrum shareholders received one (1) Ramelius share for every ten (10) Spectrum shares held and cash consideration of A$0.017 for each Spectrum share held. On the same day, the Spectrum Board unanimously recommended that Spectrum shareholders accept the Ramelius offer in the absence of a superior proposal. Control was attained on 17 March 2020 with Ramelius holding a relevant intertest in Spectrum of 50.50%, or 727,402,825 Spectrum shares. Ramelius obtained 100% control on 23 June 2020. A total of $28,872,000 million cash consideration (net of cash acquired) was paid along with 145,203,969 Ramelius shares issued to Spectrum share and option holders as part of the offer. Acquisition costs totalled $11,711,000 million which includes stamp duty on the transaction. The group has determined that the transaction does not constitute a business combination in accordance with AASB 3 Business Combinations. The acquisition of the net assets meets the definition of, and has been accounted for, as an asset acquisition. When an asset acquisition does not constitute a business combination, the assets and liabilities are assigned a carrying amount based on their relative fair values in an asset purchase transaction and no deferred tax will arise in relation to the acquired assets and assumed liabilities as the initial recognition exemption for deferred tax under AASB 112 Income Taxes is applied. No goodwill arises on the acquisition and transactions costs of the acquisition are included in the capitalised cost of the asset. Details of the purchase consideration and the net assets acquired are as follows: Purchase consideration: Cash paid Revaluation of on market acquisitions Ordinary shares issued (145,203,969) NCI reserve Acquisition costs Total purchase consideration $’000 31,433 608 155,523 (28,469) 11,711 170,806 The fair value of the shares issued to gain control of Spectrum Metals Limited was based on the Ramelius share price on 17 March 2020 (the date on which control was obtained) of $0.875 per share. The fair value of the shares issued post control being obtained was the share price at the date the shares were issued. The difference between this share price and that at the date of control has been recorded in the NCI acquisition reserve (see Note 17). Net assets acquired: Cash and cash equivalents Trade and other receivables Plant and equipment Exploration and evaluation assets Trade and other payables Provisions Net identifiable assets acquired Outflow of cash to acquire subsidiary, net of cash acquired: Cash consideration, net of receipts Acquisition costs Less: acquisition costs provided for but not paid Less: cash balance acquired Net outflow of cash – investing activities 124 $’000 2,562 132 365 168,515 (735) (33) 170,806 31,433 11,711 (9,890) (2,562) 30,692 Ramelius ResourcesNOTES TO THE FINANCIAL STATEMENTS Group structure (continued) NOTE 20: ASSET ACQUISITIONS (continued) (b) Tampia Hill Gold Project (Explaurum Limited) On 4 April 2019, the company completed the acquisition of Explaurum Limited and its subsidiaries. The total purchase consideration was $67,671,000 comprising cash paid of $8,472,000, shares issued (net of NCI reserve) of $54,306,000, and acquisitions related costs of $4,893,000. The group determined that the transaction did not constitute a business combination in accordance with AASB 3 Business Combinations. The acquisition of net assets meets the definition of, and has been accounted for, as an asset acquisition. Details of the acquisition were disclosed in Note 17 of the group’s annual financial statements for the year ended 30 June 2019. (c) Marda Gold Project (Black Oak Minerals Limited) On 13 February 2019, the group completed the acquisition of the Marda Gold Project (Black Oak Minerals Limited). The total purchase consideration was $13,901,000 comprising cash paid of $13,000,000, and acquisitions related costs of $901,000. The group determined that the transaction did not constitute a business combination in accordance with AASB 3 Business Combinations. The acquisition of net assets meets the definition of, and has been accounted for, as an asset acquisition. Details of the acquisition were disclosed in Note 17 of the group’s annual financial statements for the year ended 30 June 2019. NOTE 21: INTERESTS IN OTHER ENTITIES Controlled entities The group’s principal subsidiaries at 30 June 2020 are set out below. Unless otherwise stated, they have share capital consisting solely of ordinary shares that are held directly by the group, and the proportion of ownership interests held equals the voting rights held by the group. The country of incorporation or registration is also their principal place of business. Name of Entity Parent entity Ramelius Resources Limited Subsidiaries of Ramelius Resources Limited Mt Magnet Gold Pty Limited RMSXG Pty Limited Ramelius USA Corporation Ramelius Operations Pty Limited Explaurum Limited Subsidiaries of Mt Magnet Gold Pty Limited Spectrum Metals Limited Subsidiaries of Spectrum Metals Limited Zebra Minerals Pty Limited Red Dirt Mining Pty Limited Subsidiaries of Ramelius Operations Pty Limited Edna May Operations Pty Limited Marda Operations Pty Limited Subsidiaries of Explaurum Limited Explaurum Operations Pty Limited Ninghan Exploration Pty Limited Country of incorporation Functional currency Percentage owned 2020 % Percentage owned 2019 % Australia Australian dollars Australia Australia USA Australia Australia Australian dollars Australian dollars US dollars Australian dollars Australian dollars Australia Australian dollars Australia Australia Australia Australia Australia Australia Australian dollars Australian dollars Australian dollars Australian dollars Australian dollars Australian dollars n/a 100 100 100 100 100 100 100 100 100 100 100 100 n/a 100 100 100 100 100 - - - 100 100 100 100 The parent entity and all subsidiaries of Ramelius, except for Ramelius USA Corporation and Spectrum Metals Limited (including all of its subsidiaries), form part of the closed group detailed at Note 30. Spectrum Metals Limited (and all of its subsidiaries) will join the closed group in the 2021 financial year. 125 Annual Report 2020NOTES TO THE FINANCIAL STATEMENTS Group structure (continued) NOTE 21: INTERESTS IN OTHER ENTITIES (continued) Joint operations The group has the following direct interests in unincorporated joint operations at 30 June 2020 and 30 June 2019: Joint operation project Joint operation partner Tanami Jumbulyer Nulla South Gibb Rock Coogee Farm-out Parker Dome Mt Finnerty Jupiter Tampia Hill Dreadnought Resources Limited Unlisted entity Chalice Gold Mines Limited Chalice Gold Mines Limited Unlisted entity Unlisted entity Unlisted entity Kinetic Gold# Tampiagold Pty Ltd and Goldoro Pty Ltd * Ramelius is earning into the joint ventures by undertaking exploration and evaluation activities. # Kinetic Gold is a subsidiary of Renaissance Gold Inc. The share of assets in unincorporated joint operations is as follows: Principal activity Gold Gold Gold Gold Gold Gold Gold Gold Gold Interest (%) 2020 - - 0%* 0%* Diluting 90% 0%* 0%* 0%* 90% 2019 85% 0%* 0%* 0%* Diluting 100% - - 0%* 90% Non-current assets Exploration and evaluation assets (Note 10) 2020 $’000 684 2019 $’000 2,490 (a) Recognition and measurement Under AASB 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. Ramelius has exploration related joint arrangements which are considered joint operations. Ramelius recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings. Unrecognised items NOTE 22: CONTINGENT LIABILITIES The Directors are of the opinion that the recognition of a provision is not required in respect of the following matters, as it is not probable that a future sacrifice of economic benefits will be required, or the amount is not capable of reliable measurement. (a) Bank guarantees The group has negotiated a number of bank guarantees in favour of various government authorities and service providers. The total nominal amount of these guarantees at the reporting date is $120,145 (2019: $370,145). These bank guarantees are fully secured by cash on term deposit. 126 Ramelius ResourcesNOTES TO THE FINANCIAL STATEMENTS Unrecognised items (continued) NOTE 23: COMMITMENTS (a) Gold delivery commitments Forward sale contracts are accounted for as sale contracts with revenue recognised once gold has been physically delivered. The physical gold delivery contracts are considered own use contracts and therefore do not fall within the scope of AASB 9 Financial Instruments: Recognition and Measurement. As a result, no derivatives are required to be recognised. Forward gold sale contract delivery commitments are shown below: Gold delivery commitments As at 30 June 2020 Within one year Between one and five years Total As at 30 June 2019 Within one year Between one and five years Total (b) Capital expenditure commitments Capital expenditure contracted but not provided for in the financial statements: Within one year Total capital expenditure commitments (c) Operating lease commitments Future minimum rentals payable on non-cancellable operating leases due: Within one year Between one and five years Total operating lease commitments Gold for physical delivery Oz 125,850 121,500 247,350 138,800 102,100 240,900 Contracted sales price A$/oz Committed gold sales value $’000 $2,046 $2,227 $2,135 $1,806 $1,873 $1,834 257,456 270,525 527,981 250,605 191,193 441,798 2020 $’000 3,575 3,575 2020 $’000 - - - 2019 $’000 1,509 1,509 2019 $’000 819 524 1,343 (d) Minimum exploration and evaluation commitments In order to maintain current rights of tenure to exploration tenements, the group is required to perform minimum exploration work to meet minimum expenditure requirements. These obligations are subject to renegotiation and may be farmed out or relinquished. These obligations are not provided for in the financial statements. Within one year Between one and five years Due later than five years Total minimum exploration and evaluation commitments 2020 $’000 5,077 17,572 21,580 44,229 2019 $’000 5,171 17,254 22,881 45,306 127 Annual Report 2020NOTES TO THE FINANCIAL STATEMENTS Other information NOTE 24: EVENTS OCCURRING AFTER THE REPORTING PERIOD No matters or circumstances have arisen since 30 June 2020 that have significantly affected, or may significantly affect: (a) The group’s operations in future financial years, (b) The results of operations in future financial years, or (c) The group’s state of affairs in future financial years. NOTE 25: RELATED PARTY TRANSACTIONS Transactions with related parties are on normal commercial terms and at conditions no more favourable than those available to other parties unless otherwise stated. Key management personnel compensation Short-term employee benefits1 Post-employment benefits Other long-term benefits Termination benefits Share-based payments Total key management personnel compensation 1. Short-term benefits as per Corporations Regulation 2M.3.03(1) Item 6. Detailed remuneration disclosures are provided in the Remuneration Report. (a) Subsidiaries Interests in subsidiaries are set out in Note 21. 2020 $’000 3,321,883 148,422 45,560 - 1,014,048 4,529,913 2019 $’000 3,108,089 172,749 (64,650) 299,583 268,148 3,783,919 (b) Transactions with other related parties There were no other transactions with related parties during the year. There were no amounts receivable from or payable to Directors and their related entities at reporting date. NOTE 26: SHARE BASED PAYMENTS (a) Options In November 2015 3,000,000 options over the ordinary fully paid shares in Ramelius Resources Limited were issued as approved by the shareholders at the 2015 Annual General Meeting. The table set out below summarises the options granted: 2020 2019 Avg ex price per option $0.20 $0.20 - - Number of options 1,500,000 (1,500,000) - - Avg ex price per option $0.20 $0.20 $0.20 $0.20 Number of options 3,000,000 (1,500,000) 1,500,000 1,500,000 As at 1 July Options exercised As at 30 June Vested and exercisable at 30 June 128 Ramelius Resources NOTES TO THE FINANCIAL STATEMENTS Other information (continued) NOTE 26: SHARE BASED PAYMENTS (continued) Share options outstanding at the end of the year have the following expiry dates and exercise prices: Grant date 26 November 2015 20 November 2015 Total Expiry date 11 June 2019 11 June 2020 Exercise price $0.20 $0.20 Weighted average remaining contractual life of options outstanding at the end of the year There were no options granted during the years ended 30 June 2020 and 30 June 2019. Share options 30 June 2020 Share options 30 June 2019 - - - - - 1,500,000 1,500,000 0.95 years (b) Performance rights Under the Performance Rights Plan, which was approved by shareholders at the 2016 Annual General Meeting, eligible employees are granted performance rights (each being an entitlement to an ordinary fully paid share) subject to the satisfaction of vesting conditions and on the terms and conditions as determined by the Board. Performance rights are issued for no consideration and have a nil exercise price. The amount of performance rights that vest depends on Ramelius’ total return to shareholders (TSR), including share price growth, dividends and capital returns, and ranking within a peer group. Once vested performance rights remain exercisable for a period of seven years. Performance rights issued under the plan carry no voting or dividend rights. The table set out below summarises the performance rights granted: As at 1 July Performance rights forfeited Performance rights lapsed Performance rights granted Performance rights exercised As at 30 June Vested and exercisable at 30 June 2020 Performance rights 2019 Performance rights 10,075,033 (618,601) - 3,684,003 (1,377,522) 11,762,913 1,224,625 6,900,914 (422,645) (143,019) 3,825,125 (85,342) 10,075,033 1,831,778 The fair value at grant date is independently determined using a Monte Carlo Simulations pricing model that takes into account the exercise price, the term of the performance right, the share price at grant date, expected price volatility of the underlying share and the risk-free rate for the term of the performance right. The expected price volatility is based on historic volatility (based on the remaining life of the performance right). Model inputs for performance rights granted during the year are as follows: Metric Exercise price Grant date Life Share price at grant date Expected price volatility Risk free rate 9 Oct 2019 $nil 9 Oct 2019 2.7 years $1.39 55% 0.60% Performance rights granted 29 Nov 2019 29 Nov 2019 $nil 29 Nov 2019 0.6 years $1.02 54% 0.76% $nil 29 Nov 2019 2.6 years $1.02 54% 0.63% 129 Annual Report 2020NOTES TO THE FINANCIAL STATEMENTS Other information (continued) NOTE 26: SHARE BASED PAYMENTS (continued) Performance rights outstanding at the end of the year have the following expiry date: Grant date 23 November 2016 23 November 2016 23 November 2016 22 December 2016 1 July 2017 31 July 2017 3 October 2017 5 September 2018 29 November 2018 9 October 2019 22 November 2019 22 November 2019 Total Expiry date 1 July 2024 1 July 2025 1 July 2026 11 June 2026 1 July 2027 1 July 2027 1 July 2027 1 July 2028 1 July 2028 1 July 2029 1 July 2027 1 July 2029 Performance rights 30 June 2020 Performance rights 30 June 2019 202,276 213,881 308,468 500,000 2,342,388 464,445 580,500 2,437,039 1,156,469 2,590,422 322,342 644,683 11,762,913 701,688 630,090 804,081 500,000 2,635,721 464,445 580,500 2,437,039 1,321,469 - - - 10,075,033 Weighted average remaining contractual life of performance rights outstanding at the end of the year 7.70 years 7.92 years (c) Expenses arising from share-based payment transactions Total expenses arising from share-based payment transactions recognised during the period as part of employee benefits expense were as follows: Performance rights Total share-based payment expense 2020 $’000 2,130 2,130 2019 $’000 651 651 (d) Recognition and measurement The group provides benefits to employees (including the Managing Director / Chief Executive Officer) in the form of share-based compensation, whereby employees render services in exchange for shares or options and/or rights over shares (equity-settled transactions). The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The group issues share-based remuneration in accordance with the employee share acquisition plan, the performance rights plan or as approved by the Board as follows: (i) Employee share acquisition plan The group operates an Employee Share Acquisition Plan where employees may be issued shares and/or options. Fair value of the equity to which employees become entitled is measured at grant date and recognised as an employee benefits expense over the vesting period with a corresponding increase in equity. Fair value of shares issued is determined with reference to the latest ASX share price. Options are valued using an appropriate valuation technique which takes vesting conditions into account. (ii) Performance rights plan The group has a Performance Rights Plan where key management personnel may be provided with rights to shares in Ramelius. Fair values of rights issued are recognised as an employee benefits expense over the relevant service period, with a corresponding increase in equity. Fair value of rights are measured at effective grant date and recognised over the vesting period during which key management personnel become entitled to the rights. There are a number of different methodologies that are appropriate to use in valuing rights. Fair value of rights granted is measured using the most appropriate method in the circumstances, taking into consideration the terms and conditions upon which the rights were issued. 130 Ramelius ResourcesNOTES TO THE FINANCIAL STATEMENTS Other information (continued) NOTE 26: SHARE BASED PAYMENTS (continued) (iii) Other long-term incentives The Board may at its discretion provide share rights either to recruit or as a long-term retention incentive to key executives and employees. The fair value of options and/or rights granted is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options and/or rights granted, which includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options and/or rights that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. Upon exercise of the rights, the balance of the Share-Based Payments Reserve relating to those rights remains in the share-based payments reserve until it is transferred to retained earnings. NOTE 27: REMUNERATION OF AUDITORS During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms: Deloitte Touche Tohmatsu Audit or review of financial reports: - Group Other assurance and agreed upon procedures under other legislation or contractual arrangements Other services: - Other Total remuneration of Deloitte Touche Tohmatsu NOTE 28: EARNINGS PER SHARE (a) Basic earnings per share Basic earnings per share attributable to the ordinary equity holders of the company (b) Diluted earnings per share Diluted earnings per share attributable to the ordinary equity holders of the company (c) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Share rights and options Weighted average number of ordinary shares used as the denominator in calculating diluted earnings per share 2020 $’000 156,175 - - 156,175 2019 $’000 105,000 6,250 13,200 124,450 2020 cents 2019 cents 16.43 16.13 3.74 3.67 2020 Number 2019 Number 690,240,811 12,922,406 703,163,217 584,112,265 11,448,559 595,560,824 131 Annual Report 2020NOTES TO THE FINANCIAL STATEMENTS Other information (continued) NOTE 28: EARNINGS PER SHARE (continued) (d) Calculation of earnings per share Basic earnings per share is calculated by dividing: - - the profit attributable to owners of the company, adjusted to exclude 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 earnings per share adjusts the figures used in determining basic earnings per share to take into account the: - after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, - weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. (e) Earnings used in the calculation of earnings per share Both the basic and diluted earnings per share have been calculated using the profit after tax as the numerator. (f) Classification of securities All ordinary shares have been included in basic earnings per share. (g) Classification of securities as potential ordinary shares Rights to shares granted to executives and senior managers are included in the calculation of diluted earnings per share and assume all outstanding rights will vest. Rights are included in the calculation of diluted earnings per share to the extent they are dilutive. Options have been included in determining diluted earnings per share to the extent that they are in the money (i.e. not antidilutive). Rights and options are not included in basic earnings per share. NOTE 29: ASSETS PLEDGED AS SECURITY The carrying amounts of assets pledged as security for current borrowings are: Current Floating charge Cash and cash equivalents Receivables Inventories Other assets Total current assets pledged as security Non-current Floating charge Financial assets Property, plant and equipment Development assets Exploration and development assets Total non-current assets pledged as security Total assets pledged as security 132 2020 $’000 164,951 3,221 97,553 4,475 270,200 624 78,058 208,268 26,038 312,988 583,188 2019 $’000 - - - - - - - - - - - Ramelius Resources NOTES TO THE FINANCIAL STATEMENTS Other information (continued) NOTE 30: DEED OF CROSS GUARANTEE Pursuant to ASIC Instrument 2016/785, wholly-owned controlled entities Mt Magnet Gold Pty Ltd (formerly Mt Magnet Gold NL), RMSXG Pty Ltd, Ramelius Operations Pty Ltd, Edna May Operations Pty Ltd, Marda Operations Pty Ltd (formerly Black Oak Minerals Limited), Explaurum Operations Pty Ltd, and Ninghan Exploration Pty Ltd are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of its financial reports and Directors’ Report. It is a condition of the Class Order that the Company and each of its eligible controlled entities enter into a Deed of Cross Guarantee. In December 2011, Ramelius Resources Limited, RMSXG Pty Ltd and Mt Magnet Gold Pty Ltd (the Closed group) entered into a Deed of Cross Guarantee. In March 2018 Edna May Operations and Ramelius Operations Pty Ltd joined the Closed group by entering the Deed of Cross Guarantee by way of an Assumption Deed. In April 2019 Explaurum Limited, Explaurum Operations Pty Ltd, and Ninghan Exploration Pty Ltd joined the Closed group by entering the Deed of Cross Guarantee by way of an Assumption Deed. The effect of the Deed is that Ramelius Resources Limited has guaranteed to pay any deficiency in the event of winding up of the abovementioned controlled entities under certain provisions of the Corporations Act 2001. Mt Magnet Gold Pty Ltd, RMSXG Pty Ltd, Ramelius Operations Pty Ltd, Edna May Operations Pty Ltd, Marda Operations Pty Ltd, Explaurum Limited, Explaurum Operations Pty Ltd, and Ninghan Exploration Pty Ltd have also given a similar guarantee in the event that Ramelius Resources Limited is wound up. Spectrum Metals Limited is required to prepare an audited financial report for the year ended 30 June 2020 as it was a disclosing entity during the year ended 30 June 2020. A Consolidated Statement of Comprehensive Income and Consolidated Balance sheet comprising the Closed group which are parties to the Deed of Cross Guarantee, after eliminating all transactions between parties to the Deed is set out below. Statement of comprehensive income Sales revenue Cost of production Gross profit Other expenses Other income Interest income Finance costs Profit before income tax Income tax expense Profit for the year from continuing operations Other comprehensive income Net change in fair value of available-for-sale assets Other comprehensive income for the year, net of tax 2020 $’000 460,486 (289,358) 171,128 (18,021) 1,346 996 (4,025) 151,424 (36,070) 115,352 655 655 2019 $’000 352,770 (309,161) 43,609 (14,961) 2,125 1,886 (2,193) 30,466 (8,579) 21,887 (50) (50) Total comprehensive income for the year 116,009 21,837 133 Annual Report 2020NOTES TO THE FINANCIAL STATEMENTS Other information (continued) NOTE 30: DEED OF CROSS GUARANTEE (continued) Balance sheet Current assets Cash and cash equivalents Trade and other receivables Inventories Other assets Total current assets Non-current assets Other receivables Other assets Available-for-sale financial assets Property, plant and equipment Development assets Exploration and evaluation expenditure Total non-current assets Total assets Current liabilities Trade and other payables Borrowings Lease liability Contingent consideration Tax payable Provisions Current liabilities Non-current liabilities Lease liability Contingent consideration Deferred tax liabilities Provisions Total non-current liabilities Total liabilities Net assets Equity Share capital Reserves Retained earnings Total equity 134 2020 $’000 164,951 3,221 97,553 4,475 270,200 2,745 171,309 624 78,057 208,268 26,038 487,041 757,241 82,126 23,475 16,643 6,262 21,272 9,200 158,978 13,846 6,923 21,061 38,720 80,550 239,528 517,713 370,781 (34,657) 181,589 517,713 2019 $’000 95,815 6,774 41,067 8,629 152,285 1,488 1,488 101 43,823 99,430 98,488 244,818 397,103 44,926 - - - - 6,852 51,778 45,987 12,121 7,741 65,849 117,627 279,476 214,218 (7,642) 72,900 279,476 Ramelius ResourcesNOTES TO THE FINANCIAL STATEMENTS Other information (continued) NOTE 31: PARENT ENTITY INFORMATION The financial information of the parent entity, Ramelius Resources Limited, has been prepared on the same basis as the consolidated financial statements, other than investments in controlled entities which were carried at cost less impairment. (a) Summary financial information Financial statement for the parent entity show the following aggregate amounts: Current assets Total assets Current liabilities Total liabilities Net assets Equity Share capital Reserves - Share-based payment reserve - Other reserves Retained losses Total equity (b) Income statement Profit / (loss) after income tax Total comprehensive income / (loss) (c) Commitments (i) Operating lease commitments Future minimum rentals payables on non-cancellable leases due: Within one year Later than one year but not later than five years Total operating lease commitments 2020 $’000 161,546 499,027 (34,709) (27,772) 471,255 370,781 3,288 (317) 97,503 471,255 122,476 122,410 - - - 2019 $’000 84,055 214,596 (12,735) (16,701) 197,895 214,218 2,032 (383) (17,972) 197,895 (25,104) (25,154) 351 280 631 (ii) Minimum exploration and evaluation commitments In order to maintain current rights of tenure to exploration tenements, Ramelius is required to perform minimum exploration work to meet minimum expenditure requirements. These obligations are subject to renegotiation and may be farmed out or relinquished. These obligations are not provided for in the parent entity financial statements. Within one year Later than one year but not later than five years Later than five years Total minimum exploration and evaluation commitments 2020 $’000 511 1,392 1,404 3,307 2019 $’000 698 1,748 1,742 4,188 135 Annual Report 2020NOTES TO THE FINANCIAL STATEMENTS Other information (continued) NOTE 31: PARENT ENTITY INFORMATION (continued) (d) Contingent liabilities The Directors are of the opinion that the recognition of a provision is not required in respect of the following matters, as it is not probable that a future sacrifice of economic benefits will be required, or the amount is not capable of reliable measurement. (i) Bank guarantees Ramelius has negotiated a number of bank guarantees in favour of various government authorities and service providers. The total nominal amount of these guarantees at the reporting date is $120,145 (2019: $370,145). These bank guarantees are fully secured by cash on term deposit. (e) Guarantees in relation to debts of subsidiaries In December 2011, Ramelius Resources Limited, RMSXG Pty Ltd and Mt Magnet Gold Pty Ltd (the Closed group) entered into a Deed of Cross Guarantee. In March 2018 Edna May Operations and Ramelius Operations Pty Ltd joined the Closed group by entering the Deed of Cross Guarantee by way of an Assumption Deed. In April 2019 Explaurum Limited, Explaurum Operations Pty Ltd, and Ninghan Exploration Pty Ltd joined the Closed group by entering the Deed of Cross Guarantee by way of an Assumption Deed. The effect of the Deed is that Ramelius has guaranteed to pay any deficiency in the event of winding up of the abovementioned subsidiaries under certain provisions of the Corporations Act 2001. The subsidiaries have also given a similar guarantee in the event that Ramelius is wound up. NOTE 32: ACCOUNTING POLICIES (a) New standards and interpretations not yet adopted The group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for an accounting period that begins on or after 1 July 2019. Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2020 reporting periods and have not been early adopted by the group. These accounting standards and interpretations are detailed below. The group has assessed that these new standards and interpretations will not have a material impact on the financial measurement, reporting, nor disclosures of the group’s financial report. AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material These amendments are intended to address concerns that the wording in the definition of ‘material’ was different in the Conceptual Framework for Financial Reporting, AASB 101 Presentation of Financial Statements and AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. The amendments address these concerns by: • Replacing the term ‘could influence’ with ‘could reasonably be expected to influence’. • Including the concept of ‘obscuring information’ alongside the concepts of ‘omitting’ and ‘misstating’ information in the definition of material. • Clarifying that the users to which the definition refers are the primary users of general purpose financial statements referred to in the Conceptual Framework. • Aligning the definition of material across IFRS Standards and other publications. AASB 2019-5 Amendments to Australian Accounting Standards – Disclosure of the Effect of New IFRS Standards Not Yet Issued in Australia Amends AASB 1054 Australian Additional Disclosures to add a requirement for entities that intend to be compliant with IFRS standards to disclose the information required by AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors (specifically paragraphs 30 and 31) for the potential effect of each IFRS pronouncement that has not yet been issued by the AASB. 136 Ramelius Resources DIRECTORS’ DECLARATION In the Directors’ opinion: (a) the financial statements and notes set out on pages 83 to 136 are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and (ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its performance for the financial year ended on that date, and (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable, and (c) at the date of this declaration, there are reasonable grounds to believe that the members of the extended Closed group identified in Note 30 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in Note 30. The ‘About this report’ section of the notes to the financial statements confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the Directors. K J Lines Chairman Perth 24 August 2020 137 Annual Report 2020 INDEPENDENT AUDITOR’S REPORT to the members of Ramelius Resources Limited Deloitte Touche Tohmatsu ABN 74 490 121 060 Tower 2, Brookfield Place 123 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia Tel: +61 8 9365 7000 Fax: +61 8 9365 7001 www.deloitte.com.au Independent Auditor’s Report to the members of Ramelius Resources Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Ramelius Resources Limited (the “Company”) and its subsidiaries (the “Group”) which comprises the consolidated balance sheet as at 30 June 2020, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial performance for the year then ended; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under 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 & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Liability limited by a scheme approved under Professional Standards Legislation Member of Deloitte Asia Pacific Limited and the Deloitte Network. 138 Ramelius Resources INDEPENDENT AUDITOR’S REPORT to the members of Ramelius Resources Limited Key Audit Matter How the scope of our audit responded to the Key Audit Matter Accounting for Development Assets As at 30 June 2020, the carrying value of development assets amounts to $208.3 million as disclosed in Note 9. During the year the Group incurred $107.5 million of capital expenditure related to mine development assets and recognised related amortisation expenses of $77.5 million. The accounting for both underground and open pit operations includes a number of estimates and judgements, including: • • the allocation of mining costs between operating and capital expenditure; and the determination of the units of production used to amortise mine properties. For underground operations, a key driver of the allocation of costs between operating and capital expenditure is the physical mining data associated with the different underground mining activities including the development of declines, lateral and vertical development, as well as capital non-sustaining costs. The allocation of costs for open pit operations is based on the ratio between actual ore and waste mined, compared with the ratio of expected ore and waste mined over the life of the respective open pit. In respect of the allocation of mining costs our procedures included, but were not limited to: • • obtaining an understanding of the key controls management has in place in relation to the capitalisation of both underground and open pit mining costs and the production of physical mining data; and on a sample basis, testing the mining costs through agreeing to source data. In respect of the allocation of mining costs for underground operations, our procedures included, but were not limited to: • assessing the appropriateness of the allocation of costs between operating and capital expenditure based on the nature of the underlying activity, and recalculating the allocation based on the underlying physical data. In respect to the deferred stripping costs our procedures included, but were not limited to: • • • • assessing the accounting policy against the appropriate accounting standards, including AASB 102 Inventories and AASB Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine; assessing the accuracy of the expected stripping ratios by agreeing key inputs to Reserves and Resources reports; assessing the accuracy of the actual stripping ratios by agreeing key inputs to production reports and stockpile surveys; and assessing the completeness and accuracy of costs associated with stripping activities. In respect of the Group’s unit of production amortisation calculations our procedures included, but were not limited to: • • • obtaining an understanding of the key controls management has in place in relation to the calculation of the unit of production amortisation rate; testing the mathematical accuracy of the rates applied; and agreeing the inputs to source documentation, including: - the allocation of contained ounces to the specific mine development assets; the contained ounces to the applicable reserves statement; and the reasonableness of the life of mine plan for the development asset. - - We also assessed the appropriateness of the disclosures included in Note 9 to the financial statements. 139 Annual Report 2020 INDEPENDENT AUDITOR’S REPORT to the members of Ramelius Resources Limited Key Audit Matter How the scope of our audit responded to the Key Audit Matter Recognition of Tax Losses As disclosed in Note 3(d), the Group recognised $10.1 million of deferred tax assets during the year ended 30 June 2020 relating to historic tax losses associated with Explaurum Operations Pty Limited (“Explaurum”), of which $3.0 million was utilised during the year, leaving $7.1 million remaining unused as at 30 June 2020. The recognition of deferred tax assets relating to historic tax losses involves significant judgement associated with: • • the availability of these historic losses to the Group; and the likelihood of the utilisation of such tax losses, which amongst other things requires the generation of sufficient future taxable profit by the Group to be probable. Our procedures, completed in conjunction with our internal tax experts included: • • • • obtaining an understanding of the key controls management has in place to assess the availability and recoverability of historic tax losses; reviewing the advice received from managements external tax expert as to the availability of historic Explaurum tax losses to the Group; assessing the independence, competence and objectivity of experts used by management; evaluating management’s assessment as to whether it is probable that sufficient taxable profit will be generated by the Group to utilise historic tax losses relating to Explaurum. These procedures included: i) assessing the reasonableness of the available fraction applied, which limits the annual rate at which transferred losses can be utilised by the Group; ii) assessing the forecast taxable profit for reasonableness including evaluating the future gold price assumptions for reasonableness, comparing the forecast production profiles by mine to related to life of mine models and resource and reserve statements, and comparing forecast operating costs to historical actual results and feasibility studies. We also assessed the appropriateness of the disclosures included in Note 3(d) to the financial statements. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 140 Ramelius Resources INDEPENDENT AUDITOR’S REPORT to the members of Ramelius Resources Limited Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as intentional omissions, involve collusion, fraud may misrepresentations, or the override of internal control. forgery, • 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, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group’s 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. 141 Annual Report 2020 INDEPENDENT AUDITOR’S REPORT to the members of Ramelius Resources Limited 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. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 70 to 79 of the Directors’ Report for the year ended 30 June 2020. In our opinion, the Remuneration Report of Ramelius Resources Limited, for the year ended 30 June 2020, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. DELOITTE TOUCHE TOHMATSU David Newman Partner Chartered Accountants Perth, 24 August 2020 142 Ramelius Resources SHAREHOLDER INFORMATION Additional Information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in this report is set out below. Shareholdings as at 12 October 2020 Substantial shareholders The number of shares held by substantial shareholders and their associates as disclosed in substantial holding notices given to the Company are set out below: Substantial shareholder Van Eck Associates Corporation Ruffer LLP Vanguard Group Voting Rights Number of fully paid ordinary shares held 78,149,819 54,920,903 42,747,141 Fully paid ordinary shares Other than voting exclusions as required by the Corporations Act 2001 and subject to any rights or restrictions attached to any class of shares, at a meeting of members, on a show of hands, each member present (in person, by proxy, attorney or representative) has one vote and on a poll, each member present (in person, by proxy, attorney or representative) has one vote for each fully paid share they hold. Options and Performance Rights There are no options on issue by the Company. Details of performance rights on issue by the Company as at 12 October 2020 are as follows: Expiry date 01/07/2024* 01/07/2025* 11/06/2026* 01/07/2026* 01/07/2027* 01/07/2028# 01/07/2029# Exercise price Number of Performance Rights Nil Nil Nil Nil Nil Nil Nil 101,138 129,593 500,000 241,043 1,095,275 3,758,508 3,361,661 Performance rights holders will be entitled on payment of the exercise price shown above to be allotted one ordinary fully paid share in the Company for each performance right exercised. * These performance rights are exercisable in whole or in part at any time until the expiry date. Any performance rights not exercised before expiry will lapse. # These performance rights are subject to vesting conditions and once vested are exercisable in whole or in part at any time until the expiry date. Any vested performance rights not exercised before expiry will lapse. 143 Annual Report 2020SHAREHOLDER INFORMATION (continued) Distribution of equity security holders Ordinary shares Range 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 Over Rounding Total Unmarketable parcels Range Total Holders 2,358 3,262 1,564 2,679 413 10,276 Units 1,081,749 9,356,242 12,677,564 86,722,073 698,984,083 808,821,711 Minimum Parcel Size Holders Minimum $ 500.00 parcel at $ 2.200 per unit 228 730 Units 0.13 1.16 1.57 10.72 86.42 0.00 100.00 Units 34,180 Performance Rights Holders of Unquoted 1 July 2024 Performance Rights Holders of Unquoted 1 July 2025 Performance Rights Holders of Unquoted 11 June 2026 Performance Rights Holders of Unquoted 1 July 2026 Performance Rights Holders of Unquoted 1 July 2027 Performance Rights Holders of Unquoted 1 July 2028 Performance Rights Holders of Unquoted 1 July 2029 Performance Rights - - - - 1 1 - - - 2 - 2 - - - 1 1 - - - 2 1 3 - - - - 5 5 - - - 12 13 25 - - - 17 10 27 Category 1 - 1000 1001 - 5,000 5001 – 10,000 10,001 – 100,000 100,001 and over Total security holders On market buy-back There is no current on-market buy-back. 144 Ramelius ResourcesSHAREHOLDER INFORMATION (continued) Twenty largest shareholders The name of the 20 largest holders of fully paid ordinary shares constituting a class of quoted equity securities on the Australian Securities Exchange Limited including the number and percentage held by those holders at 12 October 2020 are as follows: Rank Name Units % Units HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED CITICORP NOMINEES PTY LIMITED NATIONAL NOMINEES LIMITED BNP PARIBAS NOMINEES PTY LTD STRAMIG HOLDINGS PTY LTD BNP PARIBAS NOMS PTY LTD WEST TRADE ENTERPRISES PTY LTD MR RICHARD ARTHUR LOCKWOOD PATINA RESOURCES PTY LTD BNP PARIBAS NOMINEES PTY LTD WARBONT NOMINEES PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA CITICORP NOMINEES PTY LIMITED MRS AMANDA JANE CROSER NATIONAL NOMINEES LIMITED MR LEONID CHARUCKYJ HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED MS BO XU MARICH NOMINEES PTY LTD 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Total top 20 holders of ordinary fully paid shares Total remaining holders balance Unquoted and restricted equity securities Fully Paid Ordinary Shares There are no unquoted restricted fully paid ordinary shares on issue. 323,338,274 109,878,277 59,737,941 26,798,973 10,775,044 9,500,000 7,114,422 5,515,333 4,500,000 3,840,909 3,378,333 3,285,419 2,230,528 2,200,284 2,166,667 1,993,620 1,926,674 1,641,590 1,550,000 1,543,000 582,915,288 225,906,423 39.98 13.58 7.39 3.31 1.33 1.17 0.88 0.68 0.56 0.47 0.42 0.41 0.28 0.27 0.27 0.25 0.24 0.20 0.19 0.19 72.07 27.93 Performance Rights Details of options and performance rights on issue as at 12 October 2020 which are unquoted restricted securities held by employees as long- term incentives are as follows. Date until securities are restricted 01/07/2024* 01/07/2025* 11/06/2026* 01/07/2026* 01/07/2027* 01/07/2028** 01/07/2029** Number of unquoted securities on issue Number of holders Vesting Date Exercise price Exercisable until 101,138 129,593 500,000 241,043 1,095,275 3,758,508 3,361,661 1 2 1 3 5 25 27 - - - - - 01/07/2021 01/07/2022 Nil Nil Nil Nil Nil Nil Nil 01/07/2024 01/07/2025 11/06/2026 01/07/2026 01/07/2027 01/07/2028 01/07/2029 * These securities are vested performance rights which may not be transferred or used as collateral. ** These securities are unvested performance rights exercisable when vested which may not be transferred or used as collateral Annual Report 2020 145 R A M E L I U S R E S O U R C E S A N N U A L R E P O R T 2 0 2 0 RAMELIUS RESOURCES LIMITED ACN 001 717 540 ABN 51 001 717 540 Level 1, 130 Royal Street EAST PERTH WA 6004 PO Box 6070 EAST PERTH WA 6892 Telephone: (08) 9202 1127 Email: ramelius@rameliusresources.com.au Website: www.rameliusresources.com.au 

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