CORPORATE PARTICULARS ...................................................................................................................................... 1 CHAIRMAN AND MANAGING DIRECTOR’S REVIEW ................................................................................................. 2 OPERATIONS REPORT ................................................................................................................................................ 3 DIRECTORS' REPORT ............................................................................................................................................... 28 AUDITOR’S INDEPENDENCE DECLARATION .......................................................................................................... 38 DIRECTORS’ DECLARATION ..................................................................................................................................... 39 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ........................ 40 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ....................................................................................... 41 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ....................................................................................... 42 CONSOLIDATED STATEMENT OF CASH FLOWS .................................................................................................... 43 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS ...................................... 44 INDEPENDENT AUDIT REPORT TO THE MEMBERS OF HORIZON MINERALS LIMITED ..................................... 72 SHAREHOLDER INFORMATION ................................................................................................................................ 76 Horizon is an emerging mid-tier gold producer with high quality projects located in the heart of the West Australian goldfields. The Company is led by a Board and Management team with deep experience developing and operating successful gold mines within the Kalgoorlie region. Horizon has a large tenement holding which hosts over a million ounces of gold in Resources and has significant open cut and underground growth potential. The Company has adopted the 3rd Edition of the ASX Corporate Governance Recommendations. A summary statement which has been approved by the Board together with current policies and charters is available on the Company website at the following address www.horizonminerals.com.au. Chairman Ashok Parekh Managing Director Jonathan Price Non-Executive Director Peter Bilbe Non-Executive Director Jeff Williams (resigned 30 April 2020) Grant Haywood Bianca Taveira 163-167 Stirling Highway NEDLANDS WA 6009 Telephone 08 9386 9534 Email info@horizonminerals.com.au PO Box 1104 NEDLANDS WA 6909 Computershare Investor Services Pty Ltd Level 11 172 St Georges Terrace PERTH WA 6000 Telephone 1300 787 272 Rothsay Auditing Level 1, Lincoln House 4 Ventnor Avenue WEST PERTH WA 6005 Telephone 08 9486 7094 Australian Securities Exchange Home Exchange: Perth Code: HRZ Dear Shareholder The 2020 financial year has been one of significant growth for the Company and a year with improving sentiment and commodity prices for the resources sector in general. With continuing concerns around the global economy, trade wars and increased geopolitical tension, the safe haven of gold has seen a marked increase in the US$ gold price with current prices around the US$1,750 per ounce mark. With the Australian dollar gold price holding between $2,500-$2,600 and the industry’s focus on reducing costs of production, Australia is now globally competitive and attracting investment both domestically and internationally. Locally, Western Australia and the goldfields region has had another exceptional year with the mid-tier producers reporting continued record production, cash balances and performance metrics putting them well and truly on the world stage. Whereas organic growth had been the focus in 2019, more corporate activity is now clearly evident with the larger cashed up companies completing major acquisitions both domestically and overseas. The trend of the larger companies entering joint ventures with smaller developers and explorers has also continued in what was a challenging capital market for juniors. At the end of FY19, the Company successfully completed the merger with MacPherson Resources to form Horizon Minerals Ltd, a growing emerging mid-tier gold business in the heart of the Western Australian goldfields. The merger consolidated the large scale base load Boorara gold project with a number of high grade open pit and underground satellite projects all within 75km of Boorara. In December, the Company elected to withdraw from any further extensions in relation to the purchase of the Coolgardie gold project and reset its growth strategy centred on development of the current asset base. The Company commenced work on a consolidated Feasibility Study with the aim of generating an initial 5 year mine plan to underpin the construction of a stand-alone processing plant at Boorara, 10km east of Kalgoorlie-Boulder. As part of this Study, a close spaced grade control drilling program was completed across Boorara enabling an updated model for trial mining of three starter pits at the Regal and Crown Jewel deposits. Contract mining commenced in May and toll milling in July at the nearby Lakewood Mill. The aim of the trial is to test the tonnage and grade uplift potential of the orebodies with tighter spaced drilling to de-risk the larger scale development being evaluated as part of the Feasibility Study due for completion in the June Quarter 2021. A number of highly successful drilling campaigns were completed across the Company’s existing and newly acquired tenure and our Resource position has grown to 1.1 million ounces of gold. Over 30,000m have been completed at Boorara, Binduli, Rose Hill, Windanya, Baden Powell, Scotia and Black Flag. Drilling at the Binduli gold project had focussed initially on the Crake Prospect with excellent results released from two drilling campaigns enabling an updated resource to be released. Drilling was then completed at the Coote, Darter and Honeyeater prospects with larger scale follow up drilling programs planned for FY2021. Drilling at the Rose Hill project has delivered excellent high grade results with the project demonstrating both open pit and underground potential and the project considered a significant high grade feed source for the mine plan. In line with our strategy of focussed gold development within close proximity to Boorara, the Company divested its interest in the Menzies and Goongarrie gold projects for a total consideration of $8 million. Upside in the projects is retained through our significant shareholding in Kingwest Resources Ltd who acquired the assets. The Company completed a number of acquisitions during the year to further consolidate assets on the major shear zones and now has a strong landholding including the newly granted Yarmany and Lakewood project areas and the Rose Hill and Brilliant North projects as part of a nil cost asset swap with Northern Star Resources Ltd. Our non-gold joint venture partners progressed during the year as did discussions with new potential partners that can provide mutual benefit. The Joint Venture with RVT covering the world class 1.8Bt Richmond Vanadium project progressed well with a large scale drilling program completed, updated resource for Lilyvale and excellent metallurgical results as part of the Pre-Feasibility Study due for completion in the September Quarter 2020. We’d like to take the opportunity to thank all our Board members including Mr Jeff Williams who retired during the year, staff, contractors and you, our shareholders, for your support during the year. A special thank you to Hamptons, BMGS, Golden Mile Milling, Cardno and our other operations team members on a fantastic job in delivering a successful second mining operation. The Horizon team look forward to keeping you fully informed as the business grows in what will be another very exciting year ahead. JON PRICE Managing Director ASHOK PAREKH Chairman 30 September 2020, Perth, WA ISSUED CAPITAL At 30 June 2020, Horizon Minerals Limited had 452,975,200 fully paid ordinary shares on issue. COMPANY INVESTMENTS At 30 June 2020, Horizon held 7,151,109 fully paid ordinary shares and 595,926 listed options exercisable at 24 cents on or before 30 June 2021 (ASX: RWDOA) in Reward Minerals Ltd (ASX: RWD) valued at approximately $1,266,342. The Company also held 20,000,000 shares in Kingwest Resources Ltd (ASX: KWR) valued at $3M. At 30 June 2020, the Company had cash on hand of approximately $5.9M. OVERVIEW The Company continued to advance and build up its gold project portfolio in Western Australia. In addition, the Company’s joint venture partners were active across multiple earn in projects including the exciting Richmond vanadium project in Queensland. This year, trial mining operations at Boorara, mine evaluation and exploration were the main focus as part of the consolidated Feasibility Study and the regional drilling programs across the portfolio. The locations of all WA projects are shown in Figure 1. Figure 1 Horizon Minerals Ltd WA Projects 2020 OVERVIEW (continued) The Company operates 100% owned gold projects in the Kalgoorlie and Coolgardie Regions and has an earn-in joint venture at the Richmond vanadium project located in Queensland. Over 30,000m of drilling was completed during the 2020 financial year. New gold acquisitions to expand the Kalgoorlie and Coolgardie area portfolio included the Lakewood, Yarmany and Boorara gold projects (Figure 2). Technical programs on these projects included data compilation, exploration targeting, drilling, geological modelling and mine evaluation. Key activities conducted during the year are outlined below. Figure 2 Horizon Minerals Ltd Kalgoorlie Area Gold Projects Location Map BOORARA GOLD PROJECT AREA The Boorara project area comprises the 100% owned 507,000 ounce Boorara gold mine, the Golden Ridge project to the south and the Kanowna South and Balagundi prospects to the north (Figure 2). During the year, activities focussed on grade control drilling and mine development at the Regal, Crown Jewel and Royal deposits that make up the Boorara project. BOORARA GOLD PROJECT – MINING AND DEVELOPMENT The Boorara gold mine is located 10km east of Kalgoorlie in Western Australia (Figure 2 and 4). Grade control drilling (18,000M) was completed in December 2019 on a 10m X 5m drill spacing enabling a detailed geological model to be compiled and mine optimisation and design studies to be completed. A positive Feasibility Study was released to the ASX on 10 February 2020 with mining contractor, necessary approvals and a toll milling agreement in place in May 2020. Three trial pits are to be mined, Regal East, Regal West and Crown Jewel over an 8 month period with toll milling to be completed at the nearby Lakewood processing plant through to January 2021. The outcomes of the Feasibility Study are summarised in the Table below: Measure Total pit volume (MBCM) Stripping ratio (waste: ore) Mined ore (kt) Gold grade (g/t) Milling recovery average (%) Recovered gold (ounces) Capital costs (A$M) C1 costs (A$/oz) All in Sustaining Costs (AISC) (A$/oz) Free cash flow over 8 month mine life (A$M) FS outcome (A$2,400/oz) 0.520 5.5 FS outcome (A$2,600/oz) 0.520 5.5 159 1.86 91.5 8,714 0.44 1,569 1,682 5.4 159 1.86 91.5 8,714 0.44 1,569 1,682 7.1 Mining commenced (Figure 3) in May 2020 with 287,000 BCM mined by year end with approximately 61,000 tonnes of oxide and transitional ore mined at a fully diluted grade of 1.4g/t Au, in line with reserve model estimates for the upper oxide areas of the pits. The first Milling campaign commenced subsequent to year end in July 2020. Figure 3 Horizon Minerals Ltd Mining commences at the Boorara gold mine Regal East pit BOORARA GOLD PROJECT – MINING AND DEVELOPMENT (continued) The tightly spaced grade control drilling program was highly successful in delivering an uplift in tonnage and grade when compared to the global resource model (Figure 4) with a summary of results announced to the ASX on 14 and 21 January 2020 and including the following broad high grade zones of mineralisation: • • • • • • • • • 6m @ 21.16g/t Au from 33m (BGC11147) 25m @ 3.08g/t Au from 15m (BGC11149) 21m @ 2.65g/t Au from 17m (BGC10404) 21m @ 2.74g/t Au from 5m (BGC10526) 29m @ 2.44g/t Au from 22m (BGC10475) 25m @ 2.10g/t Au from 15m (BGC11167) 24m @ 2.17g/t Au from 1m (BGC10474) 25m @ 1.92g/t Au from 12m (BGC11148) 9m @ 7.83g/t Au from 1m (BGC10377) 10m @ 6.84g/t Au from 12m (BGC10334) 8m @ 6.61g/t Au from 19m (BGC11066) 4m @ 12.62g/t Au from 13m (BGC10363) 10m @ 7.87g/t Au from 10m (BGC10379) 15m @ 4.73g/t Au from 14m (BGC11109) 8m @ 5.85g/t Au from 17m (BGC10380) 13m @ 2.99g/t Au from 12m (BGC11132) 8m @ 4.24g/t Au from 4m (BGC11115) 10m @ 3.29g/t Au from 8m (BGC11107) Figure 4 Horizon Minerals Ltd Plan view of the Regal, Royal and Crown Jewel deposits On completion of the trial mining and mill reconciliations in the March Quarter 2021, an updated resource model will be compiled for Boorara enabling generation of reserves for the consolidated Feasibility Study. Boorara base load feed is an integral part of the mine plan and will sit along-side the proposed Boorara Mill. BOORARA GOLD PROJECT AREA – EXPLORATION The current Boorara resource comprises 1.8km of strike and sits with in the greater Boorara area covering over 25km of strike length from Golden Ridge in the south to Kanowna and Balagundi to the north (Figure 5). During the year, a detailed target generation study was completed across the portfolio and a number of high priority drill targets identified in previously untested areas. Both near mine extension drilling and new discovery drilling is planned in FY2021 across both the Boorara and Lakewood project areas. Figure 5 Horizon Minerals Ltd Boorara project area, geology and historic drilling results TEAL GOLD PROJECT AREA – EXPLORATION The Teal project area comprises the 100% owned Teal, Jacques Find, Yolande and Peyes Farm projects and is located 12km northwest of Kalgoorlie and 22km from the proposed Boorara Mill (Figures 2 and 6). Limited drilling was completed at the Teal project area during the year as the Company focussed on advancing the Boorara, Binduli and Rose Hill project areas. Technical work completed included resource model review, preliminary mining studies for Teal Stage 3, Jacques Find and Peyes Farm and planning for the FY2021 drilling program. This program will target additional high grade oxide and transitional open pit ore as demonstrated by the successful Teal Stages 1 and 2 developments completed in 2018 when the Company produced 22,000oz grading 3.2g/t Au and 94% recovery and generated $7 million in free cash flow at a A$1,650/oz gold price. Figure 6 Horizon Minerals Ltd Location Plan Teal-Jacques-Yolande drilling showing recent results The current Mineral Resource estimate for the Teal project area stands at 4.25Mt grading 2.11g/t Au for 289,000 ounces (at a 1g/t lower cut-off grade) (see Table 1 and Competent Persons Statement on Page 17). BINDULI GOLD PROJECT AREA – EXPLORATION The Binduli project is located 10km west of Kalgoorlie – Boulder immediately adjacent to the Company’s Teal project area (Figures 2 and 7). In FY20, 1,224m of resource extension and new discovery drilling was completed within the project area following up the successful 2018 and 2019 programs. The majority of the drilling was completed at the Crake prospect with further regional reconnaissance drilling completed at the Coote, Darter and Honeyeater prospects. Results from Crake were announced to the ASX on 20 August and included: • • • • • • • 3m @ 7.41g/t Au from 81m and 10m @ 1.78g/t Au from 102m (BRC19021) 5m @ 4.91g/t Au from 36m and 9m @ 1.58g/t Au from 65m (BRC19025) 3m @ 3.18g/t Au from 14m and 4m @ 2.47g/t Au from 55m (BRC19031) 3m @ 1.28g/t Au from 10m, 1m @ 2.91g/t Au from 17m, 1m @ 2.13g/t Au from 25m, 1m @ 5.19g/t Au from 32m and 14m @ 1.75g/t Au from 44m (BRC19012) 12m @ 1.65g/t Au from 32m (BRC19010) 10m @ 1.46g/t Au from 77m (BRC19029) 1m @ 3.00g/t Au from 57m and 7m @ 2.78g/t Au from 97m (BRC19027) The recent Crake results (Figure 7) showed good alignment with the current mineralisation model and gives greater confidence in the block model and grade. Most holes intersected +1g/t Au and finished within a barren volcanic footwall schist. Several eastern holes intersected shallower, up dip, mineralisation largely outside the resource area and warrants follow up drilling to help close it off. Given the success to date at Binduli, the project has been elevated to one of the top four core projects being advanced by the Company in the Kalgoorlie region as part of the consolidated Feasibility Study. Figure 7 Horizon Minerals Ltd Binduli gold project area showing recent drilling results As announced to the ASX on 10 December 2019, the new data was used to compile an updated independent Mineral Resource Estimate which is compliant with the JORC 2012 Code. The maiden Mineral Resource Estimate for the Crake project stands at 1.27Mt grading 1.81g/t Au for 74,000 ounces (at a 1g/t Au lower cut-off grade) (see Table 1 and Competent Persons Statement on Page 17). ROSE HILL GOLD PROJECT – EXPLORATION The Rose Hill project is located 0.5km east of Coolgardie and 35km west of Kalgoorlie – Boulder (Figures 2 and 8) and was acquired as part of an asset swap completed with Northern Star Resources Ltd as announced to the ASX on 4 February 2020. Since acquisition, the Company has completed a detailed review of the large geological data base comprising geochemical, geophysical and historic drilling datasets including additional drilling data retrieved to 500m depth and previous open pit and underground mine design work. During FY20, the company completed two drilling programs for 1,600m comprising validation, infill and extensional RC and diamond programs to grow the current mineral resource and advance the project to reserve status. Results from the programs were announced to the ASX on 4 February and 9 June 2020 and included: • • • • • • • 11m @ 8.79g/t Au from 43m (RHRC2006) 10m @ 6.28g/t Au from 28m (RHRC20001) 16m @ 4.10g/t Au from 93m (RHRC20012) 7m @ 7.26g/t Au from 27m (RHRC20009) 7m @ 3.76g/t Au from 45m (RHRC20007) 3.4m @ 17.92g/t Au from 78.7m (RHRCD20015) 3.7m @ 9.77g/t Au from 84.3m (RHRCD20014) Additional infill and extensional RC and diamond drilling is planned at Rose Hill in FY2021 with a focus on reserve conversion for potential open pit and underground mining as part of the initial 5 year mine pipeline. Figure 8 Horizon Minerals Ltd Blister Dam gold project ROSE HILL GOLD PROJECT – EXPLORATION (continued) As announced to the ASX on 4 February 2020, the new data was used to compile an updated independent Mineral Resource Estimate which is compliant with the JORC 2012 Code. The maiden Mineral Resource Estimate for the Rose Hill project stands at 1.2Mt grading 2.49g/t Au for 95,000 ounces (at a 0.7g/t Au lower cut-off grade) (see Table 1 and Competent Persons Statement on Page 17). BADEN POWELL AND WINDANYA GOLD PROJECTS – EXPLORATION The 100% owned Windanya and Baden Powell project areas are located 45km and 60km northwest of Kalgoorlie respectively and sit within the highly prospective Bardoc Tectonic Zone (Figures 2 and 9). During FY20, the company completed drilling programs totalling 4,020m following up from the successful reconnaissance programs completed in 2019. New mineralisation was discovered at the Capricorn prospect (Figure 9) as announced to the ASX on 12 November 2019 extending the known strike length to beyond 400m of strike with mineralisation open to the north, south and at depth. Figure 9 Horizon Minerals Ltd Capricorn gold prospect drilling highlights BADEN POWELL AND WINDANYA GOLD PROJECTS – EXPLORATION (continued) Results from the Capricorn programs (Figure 9) included: • • • • 12m @ 3.62g/t Au from 28m, including 1m @ 24.0g/t Au from 32m (WDRC19031) 5m @ 6.56g/t Au from 43m including 1m @ 21.60g/t Au from 46m (WDRC19028) 5m @ 6.15g/t Au from 66m including 1m @ 26.20g/t Au from 66m (WDRC19029) 10m @ 1.97g/t Au from 65m (WDRC19033) At Baden Powell (Figure 10), extension drilling continued to intersect mineralisation proximal to historic workings to the north of the small Baden Powell open pit. Results from the program as announced to the ASX on 12 November 2019 included: • • • • • • 6m @ 1.82g/t Au from 54m (BPRC19014) 5m @ 1.61g/t Au from 56m and 2m @ 1.10g/t Au from 70m (BPRC19011) 4m @ 1.57g/t Au from 29m (BPRC19013) 8m @ 2.79g/t Au from 76m* (BPRC19028) 5m @ 2.67g/t Au from 12m (BPRC19022) 3m @ 5.73 g/t Au from 18m (BPRC19022) Figure 10 Horizon Minerals Ltd Baden Powell gold prospect drilling highlights KALGOORLIE REGIONAL GOLD PROJECTS – EXPLORATION During the year, first pass exploration drilling continued on our regional project areas with 911m drilled at the Black Flag, Scotia, Olympia with mineralisation intercepted at all projects. Follow up drilling is planned as part of the FY2021 exploration program. In addition, significant field work, rock chip sampling, historic mine mapping, geochemical and geophysical reviews were undertaken to identify priority targets for drilling in FY2021. These prospects included Kanowna south, Balagundi, Golden Ridge, Nimbus, Lakewood, Yarmany, Windanya, Black Flag, Broads Dam and Silver Star. Work completed on new acquisitions at Lakewood and Yarmany included data compilation, data base review and desk top geological studies. The resultant drilling programs will commence in FY2021 pending final granting of the leases. The low cost acquisitions have increased the Company’s tenure to approximately 850km2. DIVESTMENT OF MENZIES AND GOONGARRIE GOLD PROJECTS As announced to the ASX on 9 July 2019, the Company agreed to divest its 100% interest in the Menzies and Goongarrie gold projects to Kingwest Resources Ltd (ASX: KWR) (“Kingwest”) for a total consideration of A$8 million on the following terms: • An initial deposit of $750,000. • On settlement: o A further $1 million in cash; and o Issuing 20M ordinary shares in Kingwest to Horizon at a deemed issue price of $0.15 per share subject to voluntary escrow from date of issue of (a) 18 months following settlement and (b) 3 months following the payment of the deferred consideration. • A deferred payment no later than 18 months after settlement of: o A further $1.625 million in cash; and o $1.625m in value of shares in Kingwest at a deemed price being the lower of $0.15 per share and the 30 day VWAP (subject to shareholder approval and Horizon not exceeding 19.9% ownership in Kingwest). Horizon is now a substantial shareholder in Kingwest with Board representation and has a right to process or purchase any ore from the sale tenements under standard commercial terms. For further details on the divestment, please see the announcement of 9 July and 18 September 2019. DIVESTMENT OF ANTHILL AND BLISTER DAM GOLD PROJECTS As announced to the ASX on 12 September 2019, the Company reached agreement with Northern Star Resources Limited (“Northern Star”) to an exchange of tenements in the WA goldfields for no cash consideration. The transaction involved Horizon divesting its 100% interest in Anthill, Blister Dam, New Mexico, White Flag and Kanowna North tenements and the acquisition of 100% interest in Northern Star’s Rose Hill, Brilliant North and Gunga West projects in Coolgardie and the Golden Ridge, Balagundi, Abattoir and Mt Monger projects in Kalgoorlie (Figure 11). DIVESTMENT OF ANTHILL AND BLISTER DAM GOLD PROJECTS (continued) Figure 11 Horizon Minerals Ltd Asset swap project locations M26/446 (JANET IVY) GOLD PRODUCTION ROYALTY Horizon owns a $0.50/t mining royalty that relates to ore mined and treated from Mining Lease M26/446 located approximately 10km west of Kalgoorlie-Boulder in Western Australia (Figure 2). The Company entered into a Deed for the sale of M26/446 in 2001 and it is now owned by Norton Gold Fields Ltd (“NGF”) which was delisted from the ASX on 1 July 2015. As part of the sale, the Company was prepaid $1,380,000 of the royalty as part of the acquisition cost, equivalent to a mining and treatment tonnage of 2.76Mt ($0.50/t). Mining has been conducted on a semi-continuous basis at the Janet Ivy deposit which is the largest of known deposits on M26/466 since 2009. During the year, royalties received from the royalty tenement totalled $10,435. Horizon anticipates further royalty payments on a quarterly basis for material scheduled by NGF to be treated. NANADIE WELL COPPER - EXPLORATION PROJECT The Nanadie Well Project is located approximately 100km south east of Meekatharra in the Murchison Mineral Field of WA and covers an area of ~145km2 (Figure 1). In December 2013 Horizon entered into a Farm-in and Joint Venture agreement with Mithril Resources Ltd (ASX: MTH) (“Mithril”) whereby Mithril could earn a 75% interest by spending $4M over 6 years. The project is highly prospective for Copper, gold, nickel, cobalt and platinum group elements. During the year and as announced to the ASX on 18 November 2019, the project returned to Horizon on a 100% basis and the Company completed a detailed geological review and a small drilling program to ensure the tenure remained in good standing. Subsequent to year end and as announced to the ASX on 14 July 2020, the Company divested its 100% interest in the project to Cyprium Metals Ltd (ASX: CYM) for $1.5 million in cash and shares. RICHMOND VANADIUM JV – EXPLORATION PROJECT (Intermin retains 25%) In March 2017, the Company finalised a strategic development JV with AXF Vanadium Pty Ltd, now Richmond Vanadium Technologies Pty Ltd (“RVT”). The JV covers Intermin’s 100% interest in the Richmond vanadium project in North West Queensland (Figures 12 and 13) which include metal rights at the nearby Julia Creek project which is owned by Global Oil Shale Plc. The project tenements cover 1,520km2 of Cretaceous Toolebuc Formation hosting shallow oxide ore within marine sediments. Figure 12 Horizon Minerals Ltd (formerly Intermin Resources Limited) Richmond Vanadium Project location Under the JV, RVT has earnt in to 25% of the project by spending A$1 million and committed to spend a further $5 million by March 2021 to earn in the remaining 50% inclusive of providing a pre-feasibility study. In FY20, RVT completed a 7,817m drilling program at the Lilyvale vanadium deposit (Figure 13) to infill previous drilling enabling an updated Mineral Resource Estimate to be compiled at an improved JORC Category for reserve generation studies to be completed. Figure 13 Horizon Minerals Ltd (formerly Intermin Resources Limited) Richmond Vanadium Project location RICHMOND VANADIUM JV – EXPLORATION PROJECT (Intermin retains 25%) (continued) As announced to the ASX on 20 May 2020, the drilling program was highly successful in intercepting remarkably consistent oxide mineralisation along section with the grade improving relative to the historic resource. The updated Mineral Resource estimate for the Lilyvale project stands at 560Mt grading 0.48% V2O5 for 2.60Mt of contained metal (at a 0.30% lower cut-off grade) (see Table 2 and Competent Persons Statement on Page 17). Importantly, over 76% of the Lilyvale resource has been upgraded to the Indicated JORC Category enabling detailed economic evaluation to be completed as part of the Pre-Feasibility Study due for release in the September Quarter 2020. The updated global Mineral Resource estimate for the Richmond project stands at 1,838Mt grading 0.364% V2O5 for 6.65Mt of contained metal (at a 0.30% lower cut-off grade) (see Table 2 and Competent Persons Statement on Page 13). During the year, RVT continued extensive metallurgical testwork on representative samples from the Lilyvale project at the Hunan Institute of Nonferrous Metals in China. Results from the concentration tests using simple screening, gravity and flotation mineral dressing techniques produced excellent results with concentrate comprising 21% of the original mass at an improved grade of >1.6% V2O5 and a 73% recovery. Downstream processing on the concentrate was then conducted with both commercial and proprietary flowsheets producing commercial grade vanadium flake and vanadium electrolyte. With the success of the pre-concentration and downstream tests, test work advanced to simulated production trials using semi-industrial scale samples through the entire process pathway from run of mine ore to final product. Results of these tests and the release of the Pre-Feasibility Study is expected for release in the September Quarter 2020. Horizon sees significant potential of vanadium to play an increasing role in both the steel industry and the emerging battery storage space and for the Richmond oxide sediment resource to be a considerable provider of vanadium well into the next century. The drilling, updated resource model and the pre-feasibility study is expected to be completed in 2020, ahead of the contracted earn in period. NIMBUS SILVER-ZINC PROJECT– EXPLORATION AND DEVELOPMENT The Nimbus project lies immediately adjacent to the Boorara gold mine (Figures 2 and 5) and was placed on care and maintenance in 2007 after producing 3.6Moz from 318kt processed at a grade of 353g/t Ag. The old milling circuit has since been removed and the area rehabilitated. The Project hosts a high-grade silver zinc Resource of 256kt @ 773g/t Ag and 13% Zn that has been estimated from the global Nimbus Resource of 12.1Mt @ 52g/t Ag, 0.9% Zn and 0.2g/t Au for a total of 20Moz Ag and 104kt Zn and 78koz Au (JORC 2012) (see Tables and Competent Persons Statement on Page 18). Nimbus is a shallow-water and low-temperature VHMS deposit with epithermal characteristics (i.e. a hybrid bimodal felsic deposit), which is consistent with its position near the margin of the Kalgoorlie Terrane. The current Discovery and East pits have been subject to extensive drilling highlighting significant potential to extend mineralisation along strike and at depth below 400m. Regional exploration has been limited to the north and south and considered highly prospective for further precious and base metal deposits. Extensive metallurgical test work has been completed on Nimbus ore with the Feasibility Study put on hold in 2014 due to depressed silver prices. In light of increasing silver and zinc prices, the Company is now reviewing options to create value for shareholders inclusive of retention, joint ventures and divestment and has received expressions of interest from a number of third parties in Australia and overseas. WHITE RANGE GOLD PROJECT (DISPOSED) The Company has disposed of its White Range Gold Project in the Northern Territory to Red Dingo Corporation Pty Ltd. The Company is currently attending to some clean up issues at the site prior to making application for return of environmental bonds held by the Department of Primary Industry and Resources in respect of the White Range tenements. MINERAL RESOURCES Table 1: Horizon Minerals Ltd – Summary of Gold Mineral Resources Competent Persons Statement - The information in this table that relates to Mineral Resources is based on information compiled by Messrs David O’Farrell and Andrew Pumphrey. Both are Members of the Australasian Institute of Mining and Metallurgy, Mr O’Farrell and Mr Pumphrey are full time employees of Horizon Minerals Ltd. The information was prepared under the JORC Code 2012. Messrs O’Farrell and Pumphrey have sufficient experience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity that they are undertaking to qualify as a Competent Person as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration, Results, Mineral Resource and Ore Reserves’. Messrs O’Farrell and Pumphrey consent to the inclusion in this report of the matters based on their information in the form and context in which they appear. Table 2: Horizon Minerals Ltd – Summary of V2O5 / Mo Resources Project (Res Cat) Rothbury (Inferred Lilyvale (Indicated) Lilyvale (Inferred) Manfred (Inferred) TOTAL Cut-off Tonnage Grade Metal content (Mt) grade % 0.30 0.30 0.30 0.30 (Mt) 1202 430 130 76 1,838 % V2O5 ppm Mo ppm Ni V2O5 0.312 0.50 0.41 0.345 0.364 259 240 213 369 256 151 291 231 249 193 3.75 2.15 0.53 0.26 6.65 Mo 0.31 0.10 0.03 0.03 0.46 Ni 0.18 0.1 0.03 0.02 0.36 Competent Persons Statement - The Information in this report that relates to Vanadium Mineral Resources is based on and fairly represents information and supporting documentation prepared by Mr Warwick Nordin, who is a Competent Person and a member of the Australasian Institute of Geoscientists (AIG). Mr Nordin is a full-time employee of Richmond Vanadium Technology Pty Ltd. Mr Nordin has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activities 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’. Mr Nordin consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. ProjectCut-offGradeMt Au (g/t)OzMtAu (g/t)Oz Mt Au (g/t)OzMtAu (g/t)OzTeal1.01.011.9663,6810.802.5064,4581.812.20128,000Jacques Find1.01.602.24114,8540.321.6817,1351.912.14131,970Peyes Farm0.311.6516,3130.221.7712,5470.531.7028,860Crake1.00.461.8527,4590.481.4922,5690.332.2223,7921.271.8273,820Rosehill0.70.802.4563,0000.402.5732,2001.202.4995,200Gunga west0.60.711.6036,4350.481.5023,4331.191.5659,869Golden Ridge1.00.471.8327,9210.051.712,7970.521.8230,718TOTAL0.461.8527,4595.372.00344,7732.602.11176,3628.432.02548,437 Measured IndicatedInferredTotal Resource Macphersons Resources Limited (a 100% subsidiary of Horizon) – Summary of Mineral Resources Boorara Gold Resource (at a 0.5 g/t Au cut-off grade) Category Tonnes Grade Ounces Measured Resource Indicated Resource Inferred Resource Total Resource Mt 6.11 7.26 3.08 16.45 Au (g/t) (k'000) 0.92 0.97 1.00 0.96 181 227 99 507 Nimbus All Lodes (bottom cuts 12 g/t Ag, 0.5% Zn, 0.3 g/t Au) Category Tonnes Grade Grade Grade Ounces Ounces Tonnes Measured Resource Indicated Resource Inferred Resource Total Resource Mt Ag (g/t) Au (g/t) Zn (%) Ag (Moz's) Au (k'000) (k'000) 3.62 3.18 5.28 12.08 102 48 20 52 0.09 0.21 0.27 0.20 1.2 1.0 0.5 0.9 11.9 4.9 3.4 20.2 10 21 46 77 45 30 29 104 Nimbus high grade silver zinc resource (500 g/t Ag bottom cut and 2800 g/t Ag top cut) Category Tonnes Grade Grade Ounces Tonnes Measured Resource Indicated Resource Inferred Resource Total Resource Mt 0 0.17 0.09 0.26 Ag (g/t) Zn (%) Ag (Moz's) (k'000) 0 762 797 774 0 12.8 13.0 12.8 0 4.2 2.2 6.4 0 22 11 33 Competent Persons Statement - The information in this table that relates to Mineral Resources is based on information compiled by Messrs David O’Farrell and Andrew Pumphrey. Both are Members of the Australasian Institute of Mining and Metallurgy, Mr O’Farrell and Mr Pumphrey are full time employees of Horizon Minerals Ltd. The information was prepared under the JORC Code 2012. Messrs O’Farrell and Pumphrey have sufficient experience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity that they are undertaking to qualify as a Competent Person as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration, Results, Mineral Resource and Ore Reserves’. Messrs O’Farrell and Pumphrey consent to the inclusion in this report of the matters based on their information in the form and context in which they appear. FORWARD LOOKING AND CAUTIONARY STATEMENTS Some statements in this report regarding estimates or future events are forward looking statements. They include indications of, and guidance on, future earnings, cash flow, costs and financial performance. Forward looking statements include, but are not limited to, statements preceded by words such as “planned”, “expected”, “projected”, “estimated”, “may”, “scheduled”, “intends”, “anticipates”, “believes”, “potential”, “could”, “nominal”, “conceptual” and similar expressions. Forward looking statements, opinions and estimates included in this announcement are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward looking statements are provided as a general guide only and should not be relied on as a guarantee of future performance. Forward looking statements may be affected by a range of variables that could cause actual results to differ from estimated results, and may cause the Company’s actual performance and financial results in future periods to materially differ from any projections of future performance or results expressed or implied by such forward looking statements. These risks and uncertainties include but are not limited to liabilities inherent in mine development and production, geological, mining and processing technical problems, the inability to obtain any additional mine licenses, permits and other regulatory approvals required in connection with mining and third party processing operations, competition for among other things, capital, acquisition of reserves, undeveloped lands and skilled personnel, incorrect assessments of the value of acquisitions, changes in commodity prices and exchange rate, currency and interest fluctuations, various events which could disrupt operations and/or the transportation of mineral products, including labour stoppages and severe weather conditions, the demand for and availability of transportation services, the ability to secure adequate financing and management’s ability to anticipate and manage the foregoing factors and risks. There can be no assurance that forward looking statements will prove to be correct. Statements regarding plans with respect to the Company’s mineral properties may contain forward looking statements in relation to future matters that can only be made where the Company has a reasonable basis for making those statements. This announcement has been prepared in compliance with the JORC Code (2012) and the current ASX Listing Rules. The Company believes that it has a reasonable basis for making the forward looking statements in the announcement, including with respect to any production targets and financial estimates, based on the information contained in this and previous ASX announcements. CORPORATE GOVERNANCE - RESERVES AND RESOURCES CALCULATIONS Due to the nature, stage and size of the Company’s existing operations, Horizon is of the opinion there would be no efficiencies gained by establishing a separate Mineral Reserves and Resources committee responsible for reviewing and monitoring the Company’s processes for calculating Mineral Reserves and Resources and for ensuring that the appropriate internal controls are applied to such calculations. However, the Company ensures that all Mineral Reserve and Resource calculations are prepared by competent, appropriately experienced geologists and are reviewed and verified independently by a qualified person. Project BINDULI Tenement Schedule as at 30 June 2020 Tenement Registered Holders Equity Notes E26/209 L26/261 M26/346 M26/499 M26/549 M26/621 P26/3888 P26/4014 P26/4056 P26/4256 P26/4316 P26/4317 P26/4319 P26/4320 P26/4321 P26/4322 P26/4323 P26/4324 P26/4325 P26/4326 P26/4327 P26/4328 P26/4329 P26/4330 P26/4332 P26/4333 P26/4334 P26/4335 P26/4336 P26/4337 P26/4338 P26/4339 P26/4340 P26/4341 P26/4342 P26/4343 P26/4344 P26/4345 P26/4350 MLA26/854 MLA26/855 PLA26/4229 PLA26/4230 PLA26/4231 PLA26/4318 PLA26/4331 BMG IRC BMG IRC BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Project Tenement Registered Holders Equity Notes Tenement Schedule as at 30 June 2020 (continued) BLACK FLAG P16/2820 P16/2821 P24/5143 P24/5144 P24/5145 P24/5146 P24/5147 P24/5148 P24/5149 P24/5150 P24/5151 P24/5152 P24/5153 P24/5154 P24/5155 P24/5156 P24/5157 P24/5158 P24/5159 P24/5160 ELA26/220 PLA24/5415 BURBANKS M15/731 CHADWIN P16/3121 P16/3156 P16/3157 COOLGARDIE P15/6381 P15/6382 COOLGARDIE L15/356 NORTH GOLDEN RIDGE M15/26 M15/518 M15/637 M15/1272 M15/1361 M15/1833 M15/1834 P15/5910 E25/543 M26/41 M26/433 M26/534 KANOWNA P26/4064 BELLE P26/4065 P26/4156 P27/2379 P27/2380 P27/2381 P27/2382 PLA26/4535 BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Tenement Schedule as at 30 June 2020 (continued) Project Tenement Registered Holders Equity Notes LAKEWOOD PLA26/4360 PLA26/4361 PLA26/4362 PLA26/4363 PLA26/4364 PLA26/4365 PLA26/4366 PLA26/4367 PLA26/4368 PLA26/4369 PLA26/4370 NANADIE E51/1040 WELL MLA51/887 PENFOLDS P26/4127 P26/4129 P26/4132 ROSEHILL M15/652 M15/1204 P15/6380 WHITE FLAG E26/168 M26/616 P26/3576 P26/3577 P26/3922 P26/3923 P26/3988 P26/3989 P26/3990 P26/4078 P26/4079 P26/4080 P26/4081 WINDANYA M24/919 M24/959 P24/4702 P24/4703 P24/4817 P24/4897 P24/5046 P24/5047 P24/5048 P24/5049 P24/5050 P24/5051 P24/5052 P24/5053 P24/5054 BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG HRZ HRZ BMG BMG BMG BMG BMG BMG BMG IRC IRC IRC BMG BMG IRC IRC IRC BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG 1 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Tenement Schedule as at 30 June 2020 (continued) Project Tenement Registered Holders Equity Notes WINDANYA P24/5055 YARMANY P24/5056 P24/5057 P24/5058 P24/5059 P24/5106 P24/5108 P24/5116 P24/5165 P24/5166 P24/5167 E16/470 E16/471 E16/492 E16/493 E16/494 E16/497 E16/499 E16/503 E16/506 E16/507 E16/510 E16/519 E16/521 E16/525 E16/526 E15/1723 P16/3212 P16/3213 ELA15/1655 BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG BMG 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Tenement Schedule as at 30 June 2020 (continued) Project Tenement Registered Holders Equity Notes NIMBUS/BOORARA E25/511 L25/32 L25/35 L25/36 L26/240 L26/252 L26/266 L26/270 L26/274 L26/275 M25/355 M26/29 M26/161 M26/277 M26/318 M26/490 M26/598 P25/2247 P25/2261 P25/2292 P25/2322 P25/2393 P25/2394 P25/2403 P25/2404 P25/2405 P25/2450 P25/2467 P25/2468 P25/2469 P25/2470 P25/2471 P25/2472 P25/2473 P25/2474 P25/2475 P25/2526 P25/2551 P25/2552 PLA25/2643 PLA25/2644 PLA25/2645 PLA25/2646 PLA25/2647 P26/4020 P26/4035 KOTC KOTC KOTC KOTC POLY KOTC POLY POLY POLY KOTC KOTC POLY POLY POLY POLY KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC POLY 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Tenement Schedule as at 30 June 2020 (continued) Project Tenement Registered Holders Equity Notes NIMBUS/BOORARA P26/4036 P26/4053 P26/4054 P26/4055 P26/4199 P26/4200 P26/4201 P26/4202 P26/4203 P26/4204 P26/4205 P26/4206 P26/4207 P26/4208 P26/4297 P26/4298 P26/4299 P26/4300 P26/4301 P26/4302 P26/4381 P26/4382 P26/4383 P26/4384 P26/4385 P26/4386 P26/4405 P26/4431 PLA26/4432 PLA26/4478 PLA26/4479 PLA26/4505 PLA26/4509 PLA26/4510 PLA26/4511 PLA26/4512 PLA26/4513 PLA26/4514 PLA26/4515 PLA26/4516 PLA26/4517 PLA26/4518 P27/2318 P27/2139 P27/2140 POLY KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Tenement Schedule as at 30 June 2020 (continued) Project Tenement Registered Holders Equity Notes NIMBUS/BOORARA P27/2141 P27/2142 P27/2146 P27/2147 P27/2148 P27/2265 P27/2266 P27/2267 P27/2268 P27/2269 P27/2270 P27/2271 P27/2272 P27/2273 P27/2274 P27/2275 P27/2276 P27/2408 PLA27/2429 PLA27/2431 PLA27/2432 PLA27/2433 PLA27/2434 PLA27/2435 PLA27/2436 PLA27/2437 PLA27/2438 KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC KOTC 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Joint Ventures Richmond JV EPM25163 EPM25164 EPM25258 EPM26425 EPM26426 M26/446 M26/833 M36/177 Royalties Janet Ivy Otto Bore HRZ/RVT HRZ/RVT HRZ/RVT HRZ/RVT HRZ/RVT NGF NGF PLT HRZ 75%/RVT 25% HRZ 75%/RVT 25% HRZ 75%/RVT 25% HRZ 75%/RVT 25% HRZ 75%/RVT 25% HRZ 0% HRZ 0% HRZ 0% 2 2 2 2 2 3 3 4 Abbreviations BMG Black Mountain Gold Ltd PLT Plutonic Operations Ltd (subsidiary of Barrick Asia Pacific Ltd) HRZ Horizon Minerals Limited POLY Polymetals (WA) Pty Ltd KOTC Kalgoorlie Ore Treatment Company Pty Ltd RVT Richmond Vanadium Technology Pty Ltd (formerly AXF Vanadium Pty Ltd) NGF Norton Gold Fields Ltd Notes (1) Royalty of $1 per tonne of ore mined and treated from M26/616 is payable to Pamela Jean Buchhorn. (2) An earn-in JV whereby RVT can earn 25% of the project area by spending A$1M within a 1 year period and maintaining the project in good standing – completed February 2018. RVT to solely contribute to further expenditure of $5m on the projects to earn a further 50% over a 3 year period. (3) Royalty of $0.50 per tonne of ore mined payable to HRZ after the first 2.76 million tonnes (prepaid). (4) HRZ is entitled to a royalty of 3% gold recovered from the Otto Bore tenements. Your Directors have the pleasure in presenting their report together with the financial statements of the Group (hereafter referred to as the Group) for the financial year ended 30 June 2020 and the auditor’s report thereon. DIRECTORS The following persons held office as Directors of Horizon Minerals Limited during the financial year and up to the date of this report: • • • • Peter Bilbe Jonathan Price Ashok Parekh Jeffrey Williams (resigned 30 April 2020) Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. INFORMATION ON DIRECTORS AND OFFICERS Peter Bilbe, B.Eng. (Mining) (Hons), MAusIMM, Chairman and Independent Non-Executive Director (Appointed 1 July 2016, Appointed Chairman 21 November 2016, resigned Chairman 1 July 2020) Mr Bilbe is a Mining Engineer with over 40 years’ experience in the Australian and International mining industry at the operating, corporate and business level. He has comprehensive experience in all facets of open pit and underground mining and processing operations including exploration, feasibility studies, construction and provision of mining contract services. Directorships held in other listed companies in the past 3 years: Independence Group NL (ASX: IGO) (Appointed 6 April 2009) - - Adriatic Metals PLC (ASX: ADT) (Appointed 16 February 2018) Jonathan Price, Managing Director (Appointed 1 January 2016) Mr Price has over 25 years’ experience in Australia and overseas across all aspects of the industry including exploration, development, construction and mining operations in the gold and advanced minerals sectors. Jon graduated as a metallurgist and holds a Masters in Mineral Economics from the Western Australian School of Mines. He then worked in various gold and advanced mineral operations including general manager of the Paddington gold and St Ives gold operations in the Western Australian goldfields. More recently, Jon was the founding Managing Director of Phoenix Gold Ltd, acquired by Evolution Mining Ltd. During his tenure, Jon oversaw the reconsolidation of underexplored tenure in the Western Australian goldfields and realised significant exploration success. Directorships held in other listed companies in the past 3 years: - Kingwest Resources Limited (ASX: KWR) (Appointed 18 September 2019) Ashok Parekh, Non-Executive Director (Appointed 14 June 2019, appointed Chairman 1 July 2020) Mr Ashok Parekh is a chartered accountant, of over 40 years’ experience, who owns a large accounting practice in Kalgoorlie, which he has operated for 35 years. He was awarded the Centenary Medal in 2003 by the Governor General of Australia, and was recently awarded the Meritorious Service Award by the Institute of Chartered Accountants, the highest award granted by the institute in Australia. Mr Parekh has over 35 years’ experience in providing advice to mining companies and service providers to the mining industry. He has spent many years negotiating with public listed companies and prospectors on mining deals which have resulted in new IPOs and the commencement of new gold mining operations. He has also been involved in the management of gold mining and milling companies in the Kalgoorlie region, and has been the Managing Director of some of these companies. He is well known in the West Australian mining industry and has a very successful background in the ownership of numerous businesses in the Goldfields. Directorships held in other listed companies in the past 3 years: - MacPhersons Resources Limited (Appointed 9 September 2009 – 13 June 2019 upon delisting) INFORMATION ON DIRECTORS AND OFFICERS (CONTINUED) Jeffrey Williams, Non-Executive Director (Appointed 14 June 2019, resigned 30 April 2020) Mr Jeffrey Williams has over 40 years’ industry experience, with 16 years’ experience as a professional mining engineer in Australia and seven years in the stockbroking industry, and is a Fellow of the Australasian Institute of Mining and Metallurgy. His mining experience ranges from mine planning, underground management and feasibility studies through to mine development. Mr Williams was the Managing Director of Mineral Deposits Ltd for 15 years and departed in late 2011. He secured the Sabodala gold and Grande Cote zircon projects in Senegal in West Africa, and commenced gold production in March 2009. Mr Williams has since been involved in other smaller mining companies on the ASX to develop exploration plans, mostly in Australia. Directorships held in other listed companies in the past 3 years: - MacPhersons Resources Limited (Appointed 9 September 2009 – 13 June 2019 upon delisting) Bianca Taveira, Company Secretary Mrs Taveira is an experienced company administrator and manager who has acted as Company Secretary to a number of unlisted public and ASX listed natural resource companies for over two decades. During this time Mrs Taveira has been involved in a number of initial public offerings, reverse takeover transactions, corporate transactions and capital raisings. Mrs Taveira has a corporate and compliance background and is experienced with administration of the shareholder registry, the ASX Listing Rules, mining tenement management and the Department of Mines regulations. Mrs Taveira is currently also the Company Secretary of Reward Minerals Ltd (ASX: RWD) and Yandal Resources Limited (ASX: YRL). CORPORATE INFORMATION Horizon Minerals Limited is a Company limited by shares that is incorporated and domiciled in Australia. PRINCIPAL ACTIVITIES The principal continuing activities during the year of the Group, constituted by Horizon Minerals Limited and the entities it controlled during the year, consisted of exploration for and mining of gold and other mineral resources. OPERATING RESULTS The net profit of the Group for the year ended 30 June 2020, after providing for income tax, amounted to $1,043,504 (2019: Loss $3,134,895). REVIEW OF OPERATIONS Exploration Activity Please refer to the Exploration and Development Activities of the Operations Report for detailed information on the Group’s exploration activities over the past year. SIGNIFICANT CHANGES IN STATE OF AFFAIRS • In July 2019, the Company divested 100% of its interest in the Menzies and Goongarrie gold projects to Kingwest Resources Limited (ASX: KWR). As per the ASX announcement on 9 July 2019, total consideration for the projects were $8M. The Company received an initial deposit of $750,000 and on settlement, a further $1M in cash and an issue of 20M ordinary shares in Kingwest, valued at $3M. A deferred payment of $3.25M is to be received no later than 18 months after settlement being a further $1.625M in cash and $1.625M in ordinary shares in Kingwest at a deemed issue price being the lower of $0.15 per share and the 30 day VWAP (subject to shareholder approval and Horizon not exceeding 19.9% ownership in Kingwest). The Company recognised a profit of $2,684,450 at June 2020 as a result of this transaction. • During the year ended 30 June 2020, the Company received formal notification from Focus Minerals Limited (“Focus”) under the Exclusivity Deed that Focus is unlikely to obtain the required internal, board and regulatory approvals necessary for it to proceed with the proposed sale of the Coolgardie gold project before the expiry of the Exclusivity Period on 17 December 2019. Horizon did not contemplate any further extension of the Exclusivity Period and the Exclusivity Deed has been terminated and the Exclusivity Deposit returned. SIGNIFICANT CHANGES IN STATE OF AFFAIRS (continued) • In March 2020, the Company entered into a loan agreement with Sparta AG, an unrelated party to borrow $4M to assist with mining operations. The loan is secured over Boorara Gold project mining tenements M26/29 and M26/318. The loan is for a period of 12 months, with an interest rate of 20% p.a. Additionally, 24 million unlisted options were issued in April 2020 to Sparta AG. Refer to Note 15 and Note 23(b) for further details. • In March 2020, the Company issued 25 million shares via a share placement plan at $0.08 to raise $2,000,000 before share issue costs. • In April 2020, Mr Jeffrey Williams resigned as Non-Executive Director. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR (a) Subsequent to year end, 2,400,000 Class E Performance Rights lapsed. (b) Nanadie Well Copper Project In July 2020, the Group reached an agreement with Cyprium Metals Limited (ASX: CYM) (“Cyprium”) to divest the Nanadie Well copper project near Meekatharra in the Murchison District of Western Australia. Horizon took 100% control of the Nanadie Well in the December quarter of 2019 following the withdrawal of its then joint venture partner. The divestment comprises exploration license E51/1040 and Mining License M51/887 covering 45km2. Under the Agreement, Cyprium will pay $1.5 million in cash and shares (priced on a 20 day VWAP basis) on the following terms: • • • • $250,000 in cash and $400,000 in Cyprium shares on completion $350,000 in Cyprium shares 12 months from completion $300,000 in Cyprium shares 24 months from completion $200,000 in Cyprium shares on a decision to mine from the tenure (c) Capital Raising In August 2020, the Group announced a Share Placement Plan for 115 million ordinary shares at $0.14 per share to raise $16.1 million before share issue costs. Settlement of the Placement will occur in two tranches: • • Tranche 1 comprises the issue of 57.5 million Placement Shares ($8.05 million) pursuant to Listing Rules 7.1 and 7.1A. No shareholder approval is required for the issue of shares in Tranche 1 which settled on 21 August 2020. Tranche 2, which is subject to shareholder approval at a General Meeting to be held on 25 September 2020, comprises the issue of a further 57.5 million Placement Shares ($8.05 million). New shares issued under the Placement will rank equally with existing ordinary shares on issue. Proceeds from the Placement and existing cash reserves will be used for the accelerated reserve conversion and resource growth exploration drilling program which will commence in September 2020. Drilling will comprise reverse circulation and diamond drilling at the core Boorara, Binduli, Rose Hill and Teal gold project areas. (d) In July 2020, Mr Peter Bilbe stepped down as Chairman, remaining as Non-Executive Director and Mr Ashok Parekh assumed the role of Chairman. There are no other matters or circumstances that have arisen since 30 June 2020 that have or may significantly affect the operations, results, or state of affairs of the Group in future financial periods. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS In the opinion of the Directors it would prejudice the interests of the Group to provide additional information, beyond that reported in this Annual Report, relating to likely developments in the operations of the Group and the expected results of those operations in financial years subsequent to 30 June 2020. COVID-19 IMPACT The full impact of the COVID-19 pandemic continues to evolve at the date of this report. The Company is therefore uncertain as to the full impact that the pandemic will have on its financial condition, liquidity and future results of operations during 2020 or 2021. Management continues to actively monitor the global situation and its impact on the Company’s financial condition, liquidity, operations, suppliers, industry and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition or liquidity for the 2020/21 financial year. The health and wellbeing of all Horizon employees remain a key focus in response to the ongoing COVID-19 pandemic. The work practices and measures implemented to mitigate COVID-19 related risks have so far proven successful with no known COVID-19 cases across our workforce and minimal disruption to our operations to date. DIVIDENDS PAID OR RECOMMENDED Since the end of the previous financial year, no amount has been paid or declared by way of dividend. The Directors do not recommend that any dividend be paid. MEETINGS OF DIRECTORS The number of directors’ meetings (including meetings of committees of Directors) held and attended by each of the Directors of the Group during the year were: Full Meetings of Directors Remuneration Committee Directors Eligible To Participate Number Attended Eligible To Participate Number Attended Peter Bilbe Jonathan Price Ashok Parekh Jeff Williams DIRECTORS INTERESTS 6 6 6 5 6 6 6 5 1 1 1 1 1 1 1 1 As at the date of this report interests of the Directors in the shares of the Company were:- Directors Direct Interest Indirect Interest Shares Unlisted Options Ordinary Shares Total Holdings Peter Bilbe Jonathan Price Ashok Parekh SHARES UNDER OPTION - 1,980,000 - 1,980,000 4,500,000 14,155,480 23,064,353 4,500,000 8,908,873 - - - Unissued ordinary shares of Horizon Minerals Limited under option as at the date of this report are as follows: Nature Expiry Date Unlisted Options Unlisted Options 30 June 2022 30 June 2022 Exercise Price of Options 12 cents 16 cents Number under Option 12,000,000 12,000,000 Option holders do not have any rights to participate in any issues of shares or other interests in the Company or any other entity. There have been no unissued shares or interests under option of any controlled entity within the Group during or since the end of the reporting period. No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate. AUDITED REMUNERATION REPORT The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001. REMUNERATION GOVERNANCE The role of the Remuneration Committee has been assumed by the full Board. The Board’s policy for determining the nature and amount of remuneration for board members and senior Executives of the Company is as follows: The objective of the Company’s policy is to provide remuneration that is competitive and appropriate. The Board ensures that executive reward satisfies the following key criteria for good reward governance practices: (i) (ii) (iii) (iv) competitiveness and reasonableness; acceptability to shareholders; transparency; and capital management. (a) Details of Remuneration The remuneration of the key management personnel of the Group are set out in the following tables: The key management personnel of the Consolidated Entity consisted of the following directors of Horizon Minerals Limited: Jonathan Price – Managing Director • Peter Bilbe – Chairman and Independent Non-Executive Director (resigned as Chairman 1 July 2020) • • Ashok Parekh – Non-Executive Director (appointed Chairman 1 July 2020) • Jeff Williams – Non-Executive Director (resigned 30 April 2020) And the following persons: • Grant Haywood – Chief Operating Officer Short Term Benefits Long Term Benefits Salary & Wages $ Directors’ Fee $ Share based payments $ Post Employment Superannuation $ Name Peter Bilbe (Chairman) Jonathan Price (Managing Director) Ashok Parekh (Non-Executive Director) Jeff Williams (Non-Executive Director - resigned 30 April 2020) Peter Hunt (Non-Executive Director - resigned 14 June 2019) Other KMP Grant Haywood (COO) Total Total Year 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Total $ 74,471 110,229 Performance Related % 15.45 35.40 364,570 7.89 513,063 19.00 47,222 6,364 41,063 6,364 - - - - - - - 5,463 6,175 22,043 29,932 4,097 552 3,563 552 - - 57,500 11,508 65,000 39,054 313,757 385,496 - - 28,770 97,635 43,125 5,812 37,500 5,812 - - - - - - - - - - - - 40,000 39,054 6,000 85,054 45.90 266,668 327,004 - - 14,385 48,817 580,425 138,125 54,663 21,910 29,491 57,076 302,963 4.70 405,312 12.00 830,289 712,500 116,624 224,560 72,702 1,126,386 The Company has no formal policy regarding the provision of Directors’ remuneration. Directors’ fees in total are determined by the shareholders in a general meeting. No cash bonuses have been issued to Directors. (a) Details of Remuneration (continued) Shareholders have approved Directors’ Fees in total up to $250,000 per annum. Directors are not under written contracts. Directors that are not on a salary may be paid consulting fees for specialist services beyond normal duties at commercial rates calculated according to the amount of time spent on Company business. In the year ended 30 June 2020, the directors have received share-based compensation for services as directors of the Company. Full details are included below. The share price of the Company has fluctuated with the markets and has also been influenced by the Company‘s investments in other ASX listed companies. Over the past five years the directors’ fees have relatively remained static and have not been influenced by the fluctuating share price. (b) Interests in the Shares of the Company Shares The number of shares in the Company held during the financial year by key management personnel of Horizon Minerals Limited, including their personally related parties, is set out below: 2020 Balance at the start of the year Shares sold Performance Rights Vested Exercise of Options Balance held at resignation Peter Bilbe 1,980,000 - Jonathan Price 4,818,493 (318,493) Ashok Parekh 23,064,353 Jeffrey Williams 2,367,578 Other KMP Grant Haywood 1,312,500 - - - TOTAL 33,542,924 (318,493) - - - - - - - - - - - - - Balance at the end of the year 1,980,000 4,500,000 23,064,353 - - - (2,367,578) - - 1,312,500 (2,367,578) 30,856,853 2019 Balance at the start of the year Balance held at appointment Shares sold Performance Rights Vested Exercise of Options Balance held at resignation Peter Bilbe 230,000 Jonathan Price 2,368,493 - - (300,000) Ashok Parekh Jeffrey Williams - - 23,064,353 2,367,578 Peter Hunt 6,411,699 Other KMP Grant Haywood 1,250,000 - - - - - - TOTAL 10,260,192 25,431,931 (300,000) - - - - - - - 1,750,000 2,750,000 - - - (6,411,699) - 62,500 - 1,312,500 4,562,500 (6,411,699) 33,542,924 Balance at the end of the year 1,980,000 4,818,493 23,064,353 2,367,578 - - - - (c) Interests in the Options of the Company Balance at the start of the year Balance held at appointment Options exercised during year Balance held at resignation Options lapsed during the year Balance at 30/06/20 Bal. vested and exercisable at 30/06/20 No. No. No. No. No. No. No. 2020 Peter Bilbe Jonathan Price Ashok Parekh - - - Jeffrey Williams 1,371,592 Other KMP Grant Haywood - TOTAL 1,371,592 - - - - - - - - - - - - - - - - - - - - - (1,371,592) - (1,371,592) - - - - - - - - - - - - 2019 Balance at the start of the year Balance held at appointment Options exercised during year Balance held at resignation Options lapsed during the year Balance at 30/06/19 Bal. vested and exercisable at 30/06/19 No. No. No. No. No. No. No. Peter Bilbe 1,790,000 Jonathan Price 2,750,000 Ashok Parekh Jeffrey Williams Peter Hunt Other KMP - - - Grant Haywood 62,500 - - - 1,371,592 - - (1,750,000) (2,750,000) - - - (62,500) TOTAL 4,602,500 1,371,592 (4,562,500) *Options are exercisable at $0.2912 on or before 9 December 2019 - - - - - - - (40,000) - - - - - - - - - - - 1,371,592* 1,371,592 - - - - (40,000) 1,371,592 1,371,592 (c) Share-Based Compensation (i) Performance Rights Issued November 2017 In the year ended 30 June 2018, the Company provided benefits to employees (including directors) of the Company in the form of share-based payment transactions, whereby performance rights convertible to ordinary shares were granted at nil consideration as an incentive to improve Director and shareholder goal congruence. See Note 23 for details. Details of performance rights over ordinary shares in the Company provided as remuneration to the Directors’ of Horizon Minerals Limited are set out below. When vesting conditions are met, each right is convertible into one ordinary share of Horizon Minerals Limited. Year ended 30 June 2020 Balance at beginning of year unvested Vested Lapsed/ cancelled Balance at end of year unvested Directors Peter Bilbe No. 800,000 Jonathan Price 2,000,000 Other KMP Grant Haywood 1,000,000 TOTAL 3,800,000 Year ended 30 June 2019 Value to be expensed* $ Value to be expensed* $ No. 15,687 39,216 19,609 74,512 - - - - - - - - No. No. 400,000 400,000 1,000,000 1,000,000 Value expensed in 2019/20 $ Value to be expensed* $ 11,508 28,770 4,179 10,446 500,000 500,000 14,385 5,224 1,900,000 1,900,000 54,663 19,849 Balance at beginning of year unvested Vested Lapsed/ cancelled Balance at end of year unvested Directors Value to be expensed* $ Value to be expensed* $ No. No. No. No. Value expensed in 2018/19 $ Value to be expensed* $ Peter Bilbe 800,000 54,741 Jonathan Price 2,000,000 136,851 Peter Hunt ** 800,000 54,741 Other KMP Grant Haywood 1,000,000 68,426 TOTAL 4,600,000 314,759 - - - - - - - - - - - - - - - 800,000 39,054 15,687 2,000,000 97,635 39,216 800,000 39,054 15,687 1,000,000 48,817 19,609 4,600,000 224,560 90,199 * Maximum value to be expensed in future periods if all vesting conditions are met. ** Balance held at resignation date, 14 June 2019. The performance rights were issued in classes with varying performance and vesting conditions (refer Note 23). Details of the number of rights issued per class are as follows: Directors Class A Class B Class C Class D Class E Class F Class G No. No. No. No. No. No. No. Peter Bilbe 75,000 75,000 75,000 400,000 400,000 Jonathan Price 333,333 333,333 333,334 1,000,000 1,000,000 Peter Hunt 75,000 75,000 75,000 400,000 400,000 Lorry Hughes 150,000 150,000 150,000 500,000 500,000 - - - - Other KMP Total No. 1,025,000 3,000,000 1,025,000 1,450,000 - - - - Grant Haywood 150,000 150,000 150,000 500,000 500,000 150,000 150,000 1,750,000 TOTAL 783,333 783,333 783,334 2,800,000 2,800,000 150,000 150,000 8,250,000 Performance Rights Further details on the performance and valuations attaching to the performance rights are included in Note 23a to the Financial Statements. The fair value of the rights was determined using a Hoadley’s Barrier 1 model. A total amount of $69,047 is included in the Statement of Financial Performance and Statement of Changes in Equity for the year ended 30 June 2020 (2019 - $273,377), of which $54,663 (2019 - $224,560) is attributable to KMP. The assessed fair value at grant date of performance rights granted to the individuals is allocated equally over the period from grant date to vesting date, and the amount is included in the remuneration tables above. Fair values at grant date are independently determined using a Hoadley’s Barrier 1 model that takes into account the vesting condition of the rights, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the rights. (ii) Options During the year ended 30 June 2020, there were no options exercised by directors. (e) Other Transactions with Key Management Personnel There were no other transactions with Key Management Personnel during the year. This is the end of the Audited Remuneration Report. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS During the financial year, the Group maintained an insurance policy which indemnifies the Directors and Officers of Horizon Minerals Limited in respect of any liability incurred in connection with the performance of their duties as Directors or Officers of the Group. The Group's insurers have prohibited disclosure of the amount of the premium payable and the level of indemnification under the insurance contract. NON-AUDIT SERVICES The Directors are satisfied that the provision of non-audit services, during the year, by the auditor or a related practice of the auditor is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. No non-audit services have been provided by the Company’s auditors in year ended 30 June 2020. Remuneration paid to the Company’s auditors is detailed in Note 20 of this report. AUDITOR’S INDEPENDENCE DECLARATION In accordance with section 307C of the Corporations Act 2001, the Directors have obtained a Declaration of Independence from Rothsay Auditing, the Group’s auditor, as presented on page 38 of this Annual Report. ENVIRONMENTAL REGULATION The Group’s exploration and mining operations are subject to environment regulation under the laws of the Commonwealth and the States. The Company holds exploration/mining tenements in Western Australia, Northern Territory and Queensland and thus is subject to the Mining Acts of these states, each with specific conditions relating to environmental management. In some instances bonds are held by the Company’s bank in favour of the Minister for Mines to be released to the Company when the Minister is satisfied that conditions imposed on tenement licences have been met. In some jurisdictions Cash Bonds must be lodged with the relevant Department until conditions are fulfilled. Bonds currently in place in respect of the Company’s tenement holdings are tabulated below. Tenement Number Tenement Name MLs150, 151 White Range Bond Held $ 257,927* *Pursuant to the White Range Mining Tenement Sale Agreement dated 18 January 2013 the Purchaser Red Dingo Corporation Pty Ltd is required to replace the Security Bond allowing refund of the current $257,927 to Horizon Minerals Limited. The Directors advise that during the year ended 30 June 2020, no claim has been made by any competent authority that any environmental issues, no condition of license or notice of intent has been breached, and no claim has been made for increase of bond. The Directors have considered compliance with the National Greenhouse and Energy Reporting Act 2007 which requires entities to report annual greenhouse gas emissions and energy use. For the measurement period 1 July 2019 to 30 June 2020 the directors have assessed that there are no current reporting requirements, but may be required to do so in the future. PROCEEDINGS ON BEHALF OF COMPANY No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Group was not a party to any such proceedings during the year. This report is made in accordance with a resolution of directors, and signed for on behalf of the board by: JON PRICE Managing Director Perth, WA 30 September 2020 The Directors of the Company declare that, in the opinion of the Directors: 1. The financial statements, comprising the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and accompanying notes, set out on pages 40 to 71 are in accordance with the Corporations Act 2001 including: (a) (b) complying with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting requirements; giving a true and fair view of the financial position as at 30 June 2020 and of the performance for the year ended on that date of the Group; and The Company has included in the notes to the financial statements an explicit and unreserved Statement of Compliance with International Financial Reporting Standards. The Directors have been given the declaration by the Managing Director required by Section 295A. In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. 3. 4. This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Directors by: JON PRICE Managing Director Perth, WA 30 September 2020 Continuing Operations Gold royalty Interest income Other income Total revenue from Continuing Operations Cost of sales Exploration and evaluation expenditure Depreciation expenses Net change in fair value of financial assets at fair value through profit or loss Employee benefits expense Share based payments Building and occupancy costs Loss on sale of property, plant & equipment Consultancy and professional fees Impairment loss on tenements Scheme of arrangement transaction costs Interest expenses and finance charges Impairment of receivables Other expenses Note 2020 $ 2019 $ 2 3 4 9 - 241,406 58,382 58,557 3,056,443 2,758,203 3,114,825 3,058,166 - - (1,719,380) (46,816) (128,803) (26,262) 660,881 (622,146) (543,708) (471,051) 23 (650,924) (273,377) 4 & 13 (113,449) (86,303) - (983) (450,380) (400,956) - - (194,099) (1,734,427) (245,479) (244,561) - - (354,898) (617,261) 12 4 15 8(i) Profit/(Loss) from continuing operations before income tax 1,043,504 (3,134,895) Income tax (expense)/benefit Profit/(Loss) for the year Profit/(Loss) for the year and total comprehensive income attributable to owners of Horizon Minerals Limited Basic earnings/(loss) per share Diluted earnings/(loss) per share 6 - - 1,043,504 (3,134,895) 1,043,504 (3,134,895) 2020 2019 19 19 0.24 cents (1.29) cents 0.24 cents (1.29) cents The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. Current assets Cash and cash equivalents Trade and other receivables Mining production expenditure Total current assets Non-current assets Financial assets at fair value through profit or loss Other assets Property, plant and equipment Note 2020 $ 2019 $ 7 8 5,895,535 4,951,288 3,729,020 557,218 12c 2,504,762 - 12,129,317 5,508,506 9 10 11 4,266,342 605,461 257,927 257,927 2,577,398 2,694,350 Exploration, evaluation and development expenditure 12a/b 35,755,748 37,210,890 Right of use assets Total non-current assets Total assets Current liabilities Trade and other payables Borrowings Lease liability Total current liabilities Non-current liabilities Lease liability Provisions Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Accumulated losses Total equity 13 162,544 - 43,019,959 40,768,628 55,149,276 46,277,134 14 15 13 13 16 3,387,031 990,214 4,245,479 49,526 - - 7,682,036 990,214 120,235 - 930,035 2,257,424 1,050,270 2,257,424 8,732,306 3,247,638 46,416,970 43,029,496 17a 18a 18b 51,439,580 49,746,534 1,817,330 1,166,406 (6,839,940) (7,883,444) 46,416,970 43,029,496 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. Group Contributed Equity Asset Revaluation Reserve Share based payment Reserve Accumulated Losses Total Equity $ $ $ $ $ Balance at 1 July 2018 27,523,594 144,976 748,053 (4,748,549) 23,668,074 Shares issued during the year 22,261,670 Performance rights issued during the year Shares issue costs Options issued during the year Total comprehensive profit/(loss) for the year - (38,730) - - - - - - - - 273,377 - - - - - - - 22,261,670 273,377 (38,730) - (3,134,895) (3,134,895) Balance at 30 June 2019 49,746,534 144,976 1,021,430 (7,883,444) 43,029,496 Balance at 1 July 2019 49,746,534 144,976 1,021,430 (7,883,444) 43,029,496 Shares issued during the year Performance rights issued during the year Shares issue costs Options issued during the year Total comprehensive profit/(loss) for the year 2,000,000 - (306,954) - - - - - - - - 69,047 - 581,877 - - - - 2,000,000 69,047 (306,954) 581,877 - 1,043,504 1,043,504 Balance at 30 June 2020 51,439,580 144,976 1,672,354 (6,839,940) 46,416,970 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. Cash flows from operating activities ATO cash flow boost Receipts from customers Payments to suppliers and employees Interest received Note 2020 $ 2019 $ 82,350 - 560,724 699,036 (2,786,814) (5,504,354) 59,677 57,463 Net cash inflow/(outflow) from operating activities 22a (2,084,063) (4,747,855) Cash flows from investing activities Payments for property, plant and equipment Payments for purchase of tenements Proceeds from sale of tenements (11,851) (10,451) (10,000) - 1,750,000 2,500,000 Payments for exploration, evaluation and mine development expenditure (4,066,876) (4,504,280) Payments for mine production costs Cash gained on merger with MacPhersons Resources Ltd Payments for purchase of investments (288,896) - - - 592,832 (214,533) Net cash inflow/(outflow) from investing activities (2,627,623) (1,636,432) Cash flows from financing activities Proceeds from borrowings Proceeds from issues of shares Proceeds from options exercised Share issue costs Payments for lease liability Net cash (outflow)/inflow from financing activities Net increase/(decrease) in cash and cash equivalents 4,000,000 2,000,000 - - - 1,077,128 (306,954) (38,729) (37,113) - 5,655,933 1,038,399 944,247 (5,345,888) Cash and cash equivalents at the beginning of the financial year 4,951,288 10,297,176 Cash and cash equivalents at the end of the financial year 7 5,895,535 4,951,288 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity This financial report of Horizon Minerals Limited (‘the Company’) for the year ended 30 June 2020 comprises the Company and its subsidiaries (collectively referred to as ‘the Consolidated Entity or the Group’). Horizon Minerals Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The financial report was authorised for issue in accordance with a resolution of Directors dated 30 September 2020. The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial report. 1a Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Australian Accounting Interpretations and the Corporations Act 2001. The functional and presentation currency of Horizon Minerals Limited is in Australian Dollars. Compliance with IFRSs The financial statements of Horizon Minerals Limited also comply with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB). New Accounting Standards and Interpretations In the year ended 30 June 2020, the Company has reviewed and adopted all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2019. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the company for the annual reporting period ended 30 June 2020. The Company has also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the year ended 30 June 2020. As a result of this review the Directors have determined that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change is necessary to Company accounting policies. Historical Cost Convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets. Critical Accounting Estimates The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 30. 1b Principles of consolidation (i) Subsidiaries The consolidated financial statements comprise the financial statements of Horizon Minerals Limited and its controlled entities, Black Mountain Gold Ltd and MacPhersons Resources Limited. MacPhersons Resources Limited was acquired on 14 June 2019 pursuant to a Scheme of Arrangement (refer to Note 24) including its subsidiaries (refer Note 27). As at 30 June 2020, Horizon Minerals Limited and its subsidiaries together are referred to in this financial report as the Consolidated Entity or the Group. Control exists where the Company has the capacity to dominate the decision-making in relation to the financial and operating policies of another entity so that the other entity operates with the Company to achieve the objectives of the Company. All inter-company balances and transactions between entities in the Group, including any unrealised profits and losses have been eliminated on consolidation. Non-controlling interests in the results and equity of the consolidated entities are shown separately in the consolidated statement of comprehensive income and consolidated statement of financial position respectively. Where control of an entity is obtained during a financial year, its results are included in the consolidated statement of comprehensive income from the date on which control commences. They are de-consolidated from the date that control ceases. 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 1b Principles of consolidation (continued) (ii) Joint ventures Joint ventures entered into are not separate legal entities but rather are contractual arrangements between the participants for the sharing of costs and output and do not in themselves generate revenue and profit. Details of the joint ventures are set out in Note 32. 1c Income tax The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Current and deferred tax balances attributable to amounts recognised directly in other comprehensive income/equity are also recognised directly in other comprehensive income/equity. The charge for current income tax expense is based on the profit for the year adjusted for any non- assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the reporting date. 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 taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. The Group is consolidated for income tax purposes effective 1 July 2016. 1d Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and amounts collected on behalf of third parties. Revenue is recognised for major business activities as follows: (i) Sale of gold Revenue from the sale of goods is measured at the fair value of the consideration received or receivable. Revenue is recognised when the significant risk and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably and the amount of revenue can be measured reliably. (ii) Interest income Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 1d Revenue recognition (continued) (iii) Other services Other debtors are recognised at the amount receivable and are due for settlement within 30 days from the end of the month in which services were provided. 1e Mineral prospects and exploration expenditure thereon The Group’s policy with respect to exploration expenditure is to write off all costs unless the directors and management are of the view that there is a reasonable prospect that the costs may be recovered in future income years. Costs that may reasonably be expected to be recovered are capitalised to the statement of financial position as a non-current asset and accumulated separately for each area of interest. Such expenditure comprises net direct cash and where applicable, an apportionment of related overhead expenditure. Each area of interest is limited to a size related to a known or probably mineral resource capable of supporting a mining operation. Expenditure is not carried forward in respect of any area of interest unless the Group’s right to tenure to that area of interest is current. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. At 30 June 2020, the Directors considered that the carrying value of the mineral tenement interests of the Group was as shown in the accounts and did not need adjusting. Exploration and evaluation assets are transferred to Development Phase assets once technical feasibility and commercial viability of an area of interest is demonstrable. Exploration and evaluation assets are tested for impairment, and any impairment loss is recognised, prior to being reclassified. 1f Mine properties and mining assets Mine properties represents the acquisition cost and/or accumulated exploration, evaluation and development expenditure in respect of areas of interest in which mining has commenced. Mine development costs are deferred until commercial production commences. When commercial production is achieved mine development is transferred to mine properties, at which time it is amortised on a unit of production basis based on ounces mined over the total estimated resources related to this area of interest. Significant factors considered in determining the technical feasibility and commercial viability of the project are the completion of a feasibility study, the existence of sufficient resources to proceed with development and approval by the board of Directors to proceed with development of the project. Deferred stripping costs Stripping is the process of removing overburden and waste materials from surface mining operations to access the ore. Stripping costs are capitalised during the development of a mine and are subsequently amortised over the life of mine on a units of production basis, where the unit of account is ounces of gold sold. 1g Non-derivative financial assets existing on or acquired after 1 July 2009 The classification and measurement model for financial assets existing on or acquired after 1 July 2009, the date the Group adopted AASB 9, is outlined below. Financial assets at amortised cost and the effective interest rate method A financial asset is measured at amortised cost if the following conditions are met: • • • the objective of the Group’s business model is to hold the asset to collect contractual cash flows; the contractual cash flows give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal outstanding; and the group does not irrevocably elect at initial recognition to measure the instrument at fair value through profit or loss to minimise an accounting mismatch. 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 1g Non-derivative financial assets existing on or acquired after 1 July 2009 (continued) Amortised cost instruments are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition the carrying amount of amortised cost instruments is determined using the effective interest method, less any impairment losses. Financial assets at fair value through profit or loss Financial assets other than equity instruments that do not meet the above amortised cost criteria are measured at fair value through profit or loss. This includes financial assets that are held for trading and investments that the Group manages based on their fair value in accordance with the Group’s documented risk management and/or investment strategy. Equity instruments are measured at fair value through profit or loss unless the Group irrevocably elects at initial recognition to present the changes in fair value in other comprehensive income as described below. Upon initial recognition, financial assets measured at fair value through profit or loss are recognised at fair value and any transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss. 1h Impairment of assets Mining tenements assets and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash flows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. 1i Plant and equipment Plant and equipment is stated at historical cost less depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit and loss during the financial period in which they are incurred. Depreciation is calculated on a diminishing value basis to write off the net cost of each item of plant and equipment over its expected useful life to the Group. The expected useful lives are as follows: Plant and equipment 5 - 10 years. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount (Note 1h). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the profit and loss. 1j Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful debts. Trade receivables are due for settlement no more than 30 days from the date of recognition. Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off. An allowance account (provision for impairment of trade receivables) is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is recognised in the profit and loss. 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 1k Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid, together with assets ordered before the end of the financial year. The amounts are unsecured and are usually paid within 30 days of recognition. 1l Employee benefits (i) Wages and salaries, annual leave and sick leave Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Annual leave has been accrued as at 30 June 2020. (ii) Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experiences of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Long service leave has been accrued as at 30 June 2020. (iii) Share-based payments Share-based compensation benefits are provided to directors through the granting of options and performance rights. The fair value of options and performance rights granted by the Group are 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 performance rights granted, which includes any market performance conditions but excludes the impact of any service and non-market performance vesting conditions and the impact of any non-vesting conditions. Non-market vesting conditions are included in assumptions about the number of options and performance rights 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 that are expected to vest based on the non-marketing vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. 1m Cash and cash equivalents For statement of cashflows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid instruments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position. 1n Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the profit and loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not incremental costs relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a straight- line basis over the term of the facility. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 1o Leases AASB 16 replaces AASB 117 Leases. AASB 16 removes the classification of leases as either operating leases or finance leases-for the lessee – effectively treating all leases as finance leases. AASB 16 is applicable to annual reporting periods beginning on or after 1 July 2019. Impact on operating leases AASB 16 will change how the Company accounts for leases previously classified as operating leases under AASB 117, which were off-balance sheet. On initial application of AASB 16, for all leases (except as noted below), the Company will: • Recognise right-of-use assets and lease liabilities in the consolidated statement of financial position, initially measured at the present value of the future lease payments. • Recognise depreciation of right-of-use assets and interest on lease liabilities in the consolidated statement of profit or loss. • Separate the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within operating activities) in the consolidated cash flow statement. Lease incentives (e.g. rent-free period) will be recognised as part of the measurement of the right- of-use assets and lease liabilities whereas under AASB 117 they resulted in the recognition of a lease liability incentive, amortised as a reduction of rental expenses on a straight-line basis. Under AASB 16, right-of-use assets will be tested for impairment in accordance with AASB 136 Impairment of Assets. This will replace the previous requirement to recognise a provision for onerous lease contracts. For short-term leases (lease term of 12 months or less) and leases of low-value assets (such as personal computers and office furniture), the Company will opt to recognise a lease expense on a straight-line basis as permitted by AASB 16. The Company has applied AASB 16 retrospectively with the effect of initially applying this standard recognised at the date of initial application, being 1 July 2019. There is no material impact to profit or loss or net assets on the adoption of this new standard in the current or comparative periods, refer to Note 13 for further detail. 1p Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Company is the current bid price: the appropriate quoted market price for financial liabilities is the current ask price. The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. 1q Goods and services tax Revenues, expenses and assets are recognised net of the amount of associated goods and services tax (GST), unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the taxation authority, are presented as operating cash flows. 1r Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of acquisition as part of the purchase consideration. 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 1r Contributed equity (continued) If the entity reacquires its own equity instruments, e.g. as the result of a share buy-back, those instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity. 1s Provisions Provisions for legal claims recognised when the Group has a present legal obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. 1t Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the steering committee that makes strategic decisions. 1u Borrowing costs Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the assets for its intended use or sale. Other borrowing costs are expensed. 1v Earnings per share (i) (ii) Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company 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 Diluted earnings per share adjusted the figures used in the determination of 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 and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. 1w Rehabilitation costs The Group’s mining, extraction and processing activities give rise to obligations for site rehabilitation. Rehabilitation obligations can include facility decommissioning and dismantling; removal or treatment of waste materials; land rehabilitation; and site restoration. The extent of work required and the associated costs are estimated based on feasibility estimates using current restoration standards and techniques. Provisions for the cost of each rehabilitation program are recognised at the time that environmental disturbance occurs. Rehabilitation provisions are initially measured at the expected value of future cash flows required to rehabilitate the relevant site. At each reporting date the rehabilitation liability is re-measured to account for any new disturbance, updated cost estimates, changes to the estimated lives of operations and new regulatory requirements. 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 1x Business combinations The acquisition method of accounting is used to account for all business combinations, including business combinations involving entities or business under common control, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred, and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre−existing equity interest in the subsidiary. Acquisition−related costs are expensed as incurred. Identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The excess of the consideration transferred, the amount of any non−controlling interest in the acquiree and the acquisition−date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. These provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date. 2 INTEREST INCOME 3 OTHER INCOME ATO Cash Flow Boost Profit on sale of tenement interest Recovery of administration costs Other income 4 EXPENSES Profit/(loss) before income tax includes the following specific expenses: Cost of sales Mining and processing costs* Cost of sales Building and occupancy costs 2020 $ 2019 $ 58,382 58,557 186,776 - 2,684,450 2,500,000 122,658 120,526 62,559 137,677 3,056,443 2,758,203 - - 1,719,380 1,719,380 Rental expense - right of use asset 26,645 70,495 Rental abatement – COVID-19 relief – right of use asset Interest expense – right of use asset (refer Note 13) Amortisation – right of use asset (refer Note 13) Other Building and occupancy costs (12,382) 12,413 44,330 42,443 113,449 - - - 15,808 86,303 Scheme of Arrangement transaction costs (refer Note 24) - 1,734,427 * Mining and processing costs for year ended 30 June 2019 includes balance of monies paid in settlement of mining dispute as per ASX announcement dated 19 December 2018, net of amounts previously set aside. Refer to Note 28(d). 5 SEGMENT INFORMATION Management has determined the operating segments based on the reports reviewed by the Board that are used to make strategic decisions. The Board considers that the reportable segments are defined by the nature of the exploration activities. As such there are two reportable segments being Vanadium/Molybdenum tenements and Gold tenements. 2020 Revenue Profit/(loss) before income tax Vanadium/ Molybdenum $ - - Gold $ 2,684,450 324,241 Total $ 2,684,450 324,241 Total segment assets 756,367 44,231,032 44,987,399 2019 Revenue Profit/(loss) before income tax Vanadium/ Molybdenum $ Gold $ Total $ - - 241,406 241,406 (2,571,306) (2,571,306) Total segment assets 756,367 44,915,306 45,671,673 5a Segment revenue Segment revenue reconciles to revenue from continuing operations as follows: Segment revenue Interest revenue Other revenue Revenue from continuing operations 2020 $ 2019 $ 2,684,450 241,406 58,382 58,557 371,993 2,758,203 3,114,825 3,058,166 5b Segment profit/(loss) Segment profit/(loss) reconciles to total comprehensive income as follows: Segment profit/(loss) before income tax Interest revenue 324,241 (2,571,306) 58,382 58,557 Net change in value of financial assets at fair value through profit & loss 660,881 (622,146) Unallocated costs net of other revenue Profit/(Loss) after income tax - - 1,043,504 (3,134,895) 2020 $ 2019 $ 44,987,399 45,671,673 10,161,877 605,461 55,149,276 46,277,134 5 5c SEGMENT INFORMATION (CONTINUED) Segment assets Segment assets reconcile to total assets as follows: Segment assets Unallocated assets Total assets 5d Segment liabilities The Group’s liabilities are not reported to management on an individual segment basis, but rather reported on a consolidated basis. 6 6a INCOME TAX The prima facie income tax expense on pre-tax accounting loss reconciles to the income tax expense in the financial statements as follows: Profit/(Loss) from continuing operations before income tax expense 1,043,504 (3,134,895) Income tax expense/(benefit) calculated at 27.5% (2019: 27.5%) 286,964 (862,096) Capital raising cost allowable (53,659) (36,776) 233,305 (898,872) Movements in unrecognised timing differences 400,848 308,278 Expenses that are not deductible in determining taxable profit 268,734 325,532 Movement in share revaluations Tax losses recouped Unused tax losses not recognised as a deferred tax asset Income tax benefit reported in the Statement of Profit or Loss and Other Comprehensive Income (181,742) 171,090 (721,145) - - - 93,972 - 6b Unrecognised deferred tax balances: The following deferred tax assets (2020: 27.5%, 2019: 27.5%) have not been brought to Account: Unrecognised deferred tax asset – tax losses Unrecognised deferred tax asset – capital losses 3,477,045 3,073,250 15,563 15,563 Unrecognised deferred tax liability – capitalised exploration expenses (4,369,860) (3,592,398) Unrecognised deferred tax asset/(liability) – share investments 52,956 234,698 Unrecognised deferred tax asset – other temporary differences 78,161 88,246 Net deferred tax assets/(liability) not brought to account (746,135) (180,641) 2020 $ 2019 $ 6 6c INCOME TAX (CONTINUED) The taxation benefits of tax losses and timing not brought to account will only be obtained if: assessable income is derived of a nature and of amount sufficient to enable the benefit from the deductions to be realised; conditions for deductibility imposed by the law are complied with; and no changes in tax legislation adversely affect the realisation of the benefit from the deductions. 6d In June 2019, Horizon acquired 100% of the issued capital of MacPhersons Resources Ltd and its subsidiaries – Refer Note 24 for details. As at that date, it is estimated that MacPhersons Resources Ltd and its subsidiaries had approx. $17M of unrecognised tax losses that have not been brought to account as an asset. The group is currently assessing these losses to determine the extent to which these losses are available to be recouped from future assessable income. 7 CASH AND CASH EQUIVALENTS Cash at bank and on hand 5,895,535 4,951,288 Reconciliation to cash at the end of the year The above figures are reconciled to cash at the end of the financial year as shown in the cash flow statement as follows: Balances as above Balances per statement of cash flows 8 TRADE AND OTHER RECEIVABLES Trade receivables (i) Other receivables – ATO receivables 5,895,535 4,951,288 5,895,535 4,951,288 48,183 423,690 376,110 76,740 Other receivables – sale of tenement – deferred payment (ii) 3,250,000 - Prepayment and other receivables Accrued interest Term deposit – bonds & credit card security deposit 37,602 38,367 25 1,321 17,100 17,100 3,729,020 557,218 (i) During the year ended 30 June 2020, $244,561 of receivables was determined unrecoverable and impaired. (ii) During the year, the Company divested 100% of its interest in the Menzies and Goongarrie gold projects to Kingwest Resources Limited (ASX: KWR). As per the ASX announcement on 9 July 2019, total consideration for the projects were $8M. The Company received an initial deposit of $750,000 and on settlement, a further $1M in cash and an issue of 20M ordinary shares in Kingwest, valued at $3M. A deferred payment of $3.25M is to be received no later than 18 months after settlement being a further $1.625M in cash and $1.625M in ordinary shares in Kingwest at a deemed issue price being the lower of $0.15 per share and the 30 day VWAP (subject to shareholder approval and Horizon not exceeding 19.9% ownership in Kingwest). 2020 $ 2019 $ 4,266,342 605,461 4,266,342 605,461 8 TRADE AND OTHER RECEIVABLES (CONTINUED) Term deposits The deposits have maturity periods of between 3 and 12 months, but can be readily convertible to cash at short notice, at interest rates of 1% (2019: 2.4% and 2.5%). Refer to Note 29 regarding risk exposures. Term deposits with a maturity over three months are included in current receivables. Effective interest rates and credit risk Information concerning the effective interest rate and credit risk of both current and non-current receivables is set out below. Interest rate risk All receivable balances are non-interest bearing. Credit rate risk There is no concentration of credit risk with respect to current and non-current receivables. Refer to Note 29 for further information on the Group’s risk management policies. Due to short term nature, fair value approximates carrying value. 9 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS Shares in listed companies at market value Included is $1,266,342 (2019: $605,461) of shares and options held in Reward Minerals Ltd and $3,000,000 of shares held in Kingwest Resources Limited. The net change in fair value on financial assets at fair value through profit or loss for the year was a gain of $660,881 (2019 Loss: $622,146). All financial assets at fair value through profit or loss are denominated in Australian currency. Refer to Note 29 for further information concerning the price and foreign currency risk. 10 OTHER ASSETS Security deposits 257,927 257,927 257,927 257,927 The security deposits arise from monies held in trust accounts or lodged with appropriate authorities in relation to mining tenements held. The Group has restricted access to these funds, but they are expected to be reimbursed in the future. 11 PROPERTY, PLANT & EQUIPMENT Plant and equipment at cost Accumulated depreciation and impairment Total plant and equipment Property at cost Accumulated depreciation and impairment Total property Motor vehicles – at cost Accumulated depreciation Total motor vehicles RECONCILIATIONS 11a Plant and equipment Carrying amount at beginning of the year Additions Additions acquired under Scheme of Arrangement Disposals Depreciation Carrying amount at end of year 11b Property Carrying amount at beginning of the year Additions acquired under Scheme of Arrangement Depreciation Carrying amount at end of year 11c Motor Vehicle Carrying amount at beginning of year Additions acquired under Scheme of Arrangement Depreciation Carrying amount at end of year 2020 $ 2019 $ 4,543,998 4,532,147 (2,290,967) (2,190,256) 2,253,031 2,341,891 518,054 518,054 (227,800) (210,989) 290,254 307,065 324,544 324,544 (290,431) (279,150) 34,113 45,394 2,577,398 2,694,350 2,341,891 109,610 11,851 10,452 - - 2,253,892 (9,877) (100,711) (22,186) 2,253,031 2,341,891 307,065 93,546 - 216,889 (16,811) (3,370) 290,254 307,065 45,394 - - 46,100 (11,281) (706) 34,113 45,394 2020 $ 2019 $ 35,375,688 12,717,664 3,900,262 3,736,124 1,835,202 - - 19,115,999 10,000 (5,365,404) - - - (194,099) 35,755,748 35,375,688 1,835,202 1,094,946 (1,835,202) - - - - 740,256 - 1,835,202 35,755,748 37,210,890 - 2,504,762 - 2,504,762 2,504,762 - - - - - 12 EXPLORATION, EVALUATION, DEVELOPMENT AND PRODUCTION EXPENDITURE During the year ended 30 June 2020, the Group incurred and capitalised the following exploration, evaluation, development and production expenditure: 12a Exploration and evaluation phase Carrying amount at beginning of the year Capitalised during the year Reclassification of mine properties Tenements acquired under Scheme of Arrangement Purchases of tenements Sale of tenements Impairment loss on tenements * Carrying amount at end of year 12b Mine properties Carrying amount at beginning of the year Reclassification of mine properties** Capitalised during the year Amortised during the year Carrying amount at end of year Total exploration and mine properties 12c Mining production expenditure Carrying amount at beginning of the year Capitalised during the year*** Amortised during the year Carrying amount at end of year Total mining production * Impairment of mining tenements During the year ended 30 June 2020, there were no impairment losses recorded. An impairment loss of $194,099 was recorded against the mining tenements as at 30 June 2019 to reduce the carrying value to what is anticipated to be at least the market value of the tenements. The ultimate recoupment of expenditure above relating to the exploration and evaluation phase is dependent upon the successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. ** Reclassification of mine properties The Group has reclassified prior allocated mine development expenditure as exploration expenditure. *** Mine production expenditure Costs relate to Boorara Gold Project, of which mining commenced in May 2020. These costs will be expensed in line with revenue recognised from this project. 13 RIGHT-OF-USE ASSET AND LEASE LIABILITY Amounts recognised in the consolidated statement of financial position Right-of-use asset Property – head office lease At July 2019 Amortisation At 30 June 2020 Lease liability At 1 July 2019 Lease payments Interest expense At 30 June 2020 Current lease liability Non-current lease liability Total lease liability Amounts recognised in the consolidated statement of profit or loss Amortisation of right-of-use asset Property – office lease amortisation 2020 $ 2019 $ 206,874 (44,330) 162,544 206,874 (49,526) 12,413 169,761 49,526 120,235 169,761 44,330 44,330 - - - - - - - - - - - - The total cash outflow for the lease in the twelve months to 30 June 2020 was $49,526. On 1 July 2019, the Company held one lease for the head office based in Nedlands. The lease was renewed on 22 February 2020 for a further two year period with an option to extend for another two years thereafter. The office lease was reclassified from an operating lease as payments were made each month under the previous AASB117, to recognising a lease liability and a ROU asset in its balance sheet under the new AASB16. Refer to Note 1o for further details. 14 TRADE AND OTHER PAYABLES Trade payables Accrued expenses Accrued employee entitlements 2020 $ 2019 $ 3,102,808 669,320 41,850 155,992 242,373 164,902 3,387,031 990,214 2020 $ 2019 $ 4,000,000 245,479 4,245,479 - - - 15 BORROWINGS Loan funds borrowed Accrued interest During the year ended 30 June 2020, the Group obtained external financing. The loan is secured over mining tenements M26/29 and M26/318, being the Boorara Gold Project for a period of 12 months, carrying an interest rate of 20% p.a. In addition to loan funds borrowed, unlisted options were issued to the borrower as follows: • 12,000,000, with an exercise price of $0.12 expiring 30 September 2022. • 12,000,000, with an exercise price of $0.16 expiring 30 September 2022. 16 PROVISIONS Rehabilitation of mine site Stamp duty 17 CONTRIBUTED EQUITY 17a Share capital 930,035 1,057,424 - 1,200,000 930,035 2,257,424 2020 No. 2019 No. 2020 $ 2019 $ At the beginning of the year 427,975,200 227,192,119 49,746,534 27,523,594 Shares issued under Scheme of Arrangement Options conversion Shares issued at $0.08 Capital raising costs - - 192,586,736 8,196,345 - - 21,184,541 1,077,129 25,000,000 - - - 2,000,000 - (306,954) (38,730) Total Contributed Equity 452,975,200 427,975,200 51,439,580 49,746,534 17b Terms and conditions of contributed equity Ordinary shares Ordinary shares have no par value. Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company. 17 CONTRIBUTED EQUITY (CONTINUED) 17c Options Unlisted Options No. Unlisted Options No. Unlisted Options No. Unlisted Options No. Unlisted Options No. Total No. Exercise Price $0.25 $0.2912 $0.6988 $0.12 $0.16 Expiry date 31 Aug 2019 9 Dec 2019 28 Feb 2020 30 Sept 2022 30 Sept 2022 Balance at 1 July 2019 500,000 2,743,184 219,456 - - 3,462,640 Issued during the year - - - 12,000,000 12,000,000 24,000,000 Expired during the year (500,000) (2,743,184) (219,456) Exercised during the year Balance at 30 June 2020 - - - - - - - - - - (3,462,640) - 12,000,000 12,000,000 24,000,000 Listed Options No. Unlisted Options No. Unlisted Options No. Unlisted Options No. Unlisted Options No. Unlisted Options No Total No. Balance at 1 July 2018 24,620,579 2,500,000 1,750,000 500,000 - - 29,370,579 Issued under Scheme of Arrangement - Expired during the year (20,674,234) - - - - Exercised during the year (3,946,345) (2,500,000) (1,750,000) - - - 2,743,184 219,456 2,962,640 - - - - (20,674,234) (8,196,345) Balance at 30 June 2019 - - - 500,000 2,743,184 219,456 3,462,640 17d Performance Rights As at 30 June 2020, there were 2,400,000 performance rights on issue that, if the vesting conditions are met, could result in the issue of 2,400,000 ordinary shares in the Company. These performance rights lapsed on 1 July 2020. 18 RESERVES AND ACCUMULATED LOSSES 18a (i) Asset revaluation reserve Opening balance Closing Balance (ii) Share based payments reserve Opening balance Performance rights issued during the year Options issued under borrowings agreement Closing Balance Total Reserves 18b Accumulated losses Opening balance Profit/ (loss) for the year Closing balance Asset Revaluation Reserve The Asset Revaluation Reserve is used to record increments and decrements on the revaluation of non-current assets. Share Based Payments Reserve The Share Based Payments Reserve is used to recognise the fair value of shares, options and performance rights granted as remuneration. 19 EARNINGS PER SHARE Operating profit/(loss) after tax attributable to members of Horizon Minerals Limited Basic earnings (loss) per share Diluted earnings (loss) per share Weighted average number of ordinary shares outstanding during the year used in the calculation of basic earnings per share. 20 REMUNERATION OF AUDITORS Remuneration for audit services and review of the financial reports of the parent entity or any entity in the Group to Rothsay Auditing. No other fees were paid or payable for services provided by the auditor of the parent, related practices or non-related audit firms. Rothsay Auditing 2020 $ 2019 $ 144,976 144,976 144,976 144,976 1,021,430 748,053 69,047 273,377 581,877 - 1,672,354 1,021,430 1,817,330 1,166,406 (7,883,444) (4,748,549) 1,043,504 (3,134,895) (6,839,940) (7,883,444) 1,043,504 (3,134,895) 0.24 cents (1.29) cents 0.24 cents (1.29) cents Number Number 435,029,995 243,487,887 2020 $ 2019 $ 55,000 55,000 41,500 41,500 21 KEY MANAGEMENT PERSONNEL DISCLOSURES 21a Details of remuneration Short-term benefits Post-employment benefits Share based payments 22 STATEMENT OF CASH FLOWS 22a Reconciliation of net cash from operating activities to Profit/(Loss) after income tax Operating Profit/(Loss) after income tax Depreciation Net change in fair values of financial assets at fair value through profit or loss Profit on sale of tenement (Gain)/loss on disposal of plant and equipment Impairment loss on tenements Share based payment Other Movement in assets and liabilities: Provisions Receivables Prepayments Lease liabilities Trade creditors and accruals 2020 $ 2019 $ 718,550 829,124 57,076 72,702 54,663 224,560 830,289 1,126,386 1,043,504 (3,134,895) 128,803 26,262 (660,881) 622,146 (2,634,596) (2,500,000) - 983 (127,389) 194,099 650,924 273,377 (95,081) (20,257) (1,142,624) 1,154,728 321,993 307,712 765 (14,434) (841) - 444,953 (1,671,169) Net cash inflow/(outflow) from operating activities (2,084,063) (4,747,855) 23 SHARE BASED PAYMENTS 23a Year ended 30 June 2020 In November 2017, directors and employees were granted 10,000,000 performance rights. The performance rights were granted at nil consideration, do not have an exercise price and will lapse if the vesting conditions are not met. The Performance Rights are issued under the Company’s Employee Incentive Scheme (EIS) approved by shareholders at the General Meeting held of 17 October 2016. The issue to Directors was approved at the Annual General Meeting on 23 November 2017. Each Performance Right will, at the election of the holder, vest and convert to one fully paid ordinary share, subject to the satisfaction of certain Performance Conditions. 23 SHARE BASED PAYMENTS (CONTINUED) 23a Year ended 30 June 2020 (continued) The Performance Conditions relating to Performance Rights on issue during the previous and current income year are as follows: • • • Class D Performance Rights – Prior to 1 July 2019 the volume weighted average price of the Company’s Shares over 20 consecutive trading days on which the Shares trade is 25 cents or more. Class E Performance Rights – Prior to 1 July 2020 the volume weighted average price of the Company’s Shares over 20 consecutive trading days on which the Shares trade is 30 cents or more. Class F Performance Rights – Prior to 1 July 2018 the volume weighted average price of the Company’s Shares over 5 consecutive trading days on which the Shares trade is 18 cents or more. Set out below is a summary of the performance rights granted: Number granted 3,300,000 3,300,000 300,000 6,900,000 Class D Class E Class F Total Grant date 23-Nov-17 23-Nov-17 23-Nov-17 Expiry date of milestone achievements 01-Jul-19 01-Jul-20 01-Jul-18 Share price hurdle 25 cents 30 cents 18 cents Fair value per right* 0.0938 0.1019 0.135 Total fair value that would be recognised over the vesting period if rights are vested 262,640 285,320 40,500 588,460 Number cancelled at 30 June 2018 500,000 500,000 0 1,000,000 Number vested at 30 June 2018 0 0 300,000 300,000 Number remaining at 30 June 2018 2,800,000 2,800,000 0 5,600,000 Number remaining at 30 June 2019 2,800,000 2,800,000 0 5,600,000 Number cancelled at 30 June 2020 2,800,000 400,000 0 3,200,000 Number remaining at 30 June 2020 0 2,400,000 0 2,400,000 Amount expensed in 2018 98,770 66,005 40,500 205,275 Amount expensed in 2019 163,870 109,507 Amount expensed in 2020 0 69,047 0 0 273,377 69,047 23 SHARE BASED PAYMENTS (CONTINUED) 23a Year ended 30 June 2020 (continued) The fair value of the rights was determined using Hoadley’s Barrier 1 model that takes into account the vesting condition of the rights, and was based on the following inputs: Assumptions Spot price Vesting hurdle Exercise price Expiry period (years) Expected future volatility Risk free rate Dividend yield Class D $0.135 $0.25 Nil 1-Jul-19 90% 1.79% Nil Rights Class E $0.135 $0.30 Nil 1-Jul-20 90% 1.91% Nil Class F n/a $0.18 Nil 1-Jul-18 90% 1.79% Nil During the year ended 30 June 2020, $69,047 was recognised as a share based payment made to directors and employees, with the fair value being recognised over the vesting period. 23b Option issue In April 2020, 24,000,000 unlisted options were issued pursuant to the Group’s loan agreement with a third party. During the year ended 30 June 2020, $581,877 was expensed to share based payments. The fair value of these options granted was calculated using the Black-Scholes option valuation methodology and applying the following inputs: Weighted average exercise price (cents) Weighted average life of the options (years) Weighted average underlying share price (cents) Expected share price volatility Risk-free interest rate Grant date Expiry date Value per option Total value granted 24 BUSINESS COMBINATION 12,000,000 0.12 2.208 0.065 100% 0.92% 15 April 2020 30 June 2022 $0.026 $316,155 12,000,000 0.16 2.208 0.065 100% 0.92% 15 April 2020 30 June 2022 $0.022 $265,722 Acquisition On 14 June 2019, Horizon acquired 100% of MacPhersons Resources Limited and its subsidiaries’ Kalgoorlie Ore Treatment Company Pty Ltd and Polymetals (WA) Pty Ltd under a Scheme of Arrangement, under which Horizon issued 192,586,736 ordinary shares to MacPhersons Resources’ shareholders. The Company also issued 2,962,640 unlisted replacement options to MacPhersons Resources’ option holders with various exercise prices and expiry dates. The total cost of the combination was $21,184,541 and comprised an issue of shares and options. The consolidated entity issued 192,586,736 ordinary shares with a fair value of 11 cents each, based on the quoted price of the share on Horizon Minerals Ltd on the Implementation Date of the Scheme of Arrangement. The 2,962,640 unlisted replacement options were valued based with the Black-Scholes valuation method. Key variables in the option valuation include the price of date of issue of 11 cents, a risk free rate of 1.5% and volatility of 75%. Consideration transferred On the acquisition date, 14 June 2019, the fair value of consideration transferred was recorded as: Shares issued, at fair value Options issued, Black-Scholes valuation Total purchase consideration $ 21,184,541 - 21,184,541 24 BUSINESS COMBINATION (CONTINUED) Assets acquired and liabilities assumed at the date of acquisition The Consolidated Entity recognised the fair values of the identifiable assets and liabilities of MacPhersons Resources as follows. Cash Trade and other receivables Exploration Property, plant and equipment Trade and other payables Provisions Net identifiable assets acquired Net cash inflow from transaction Net cash acquired under scheme of arrangement Net cash inflow $ 592,832 69,944 19,117,827 2,517,630 (110,996) (1,002,696) 21,184,541 592,832 592,832 Impact of acquisition on the results of the consolidated entity If the business combination had taken place at the beginning of the year ended 30 June 2019, the loss of the Consolidated Entity for year ended 30 June 2019 would have been $5,547,173 and the revenue from continuing operations would have been $3,163,143. 2020 $ 2019 $ 2,945,000 3,700,000 3,000,000 4,000,000 3,000,000 4,500,000 8,945,000 12,200,000 25 COMMITMENTS FOR EXPENDITURE 25a Exploration expenditures Commitments for minimum expenditure requirements on the mineral exploration assets it has an interest in are payable as follows: Within one year Later than one year but not later than five years Later than five years 26 RELATED PARTY TRANSACTIONS 26a Directors / Key Management Personnel Other transactions with Director related entities Transactions with related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. Disclosures relating to Key Management Personnel are set out in Note 21 and the Remuneration Report. 26b Subsidiaries See Note 27 for further details regarding subsidiaries. 27 INVESTMENT IN CONTROLLED ENTITIES The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in Note 1(b): Name of Entity Direct Subsidiaries Black Mountain Gold Ltd MacPhersons Resources Limited CGP Minerals Pty Ltd CGP Assets Pty Ltd Indirect Subsidiaries Kalgoorlie Ore Treatment Company Pty Ltd Polymetals (WA) Pty Ltd Country of Incorporation Class of Shares Equity Holding 2020 % 2019 % Australia Australia Australia Australia Australia Australia Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary 100 100 100 100 100 100 100 100 100 100 100 100 MacPhersons Resources Limited was acquired on 14 June 2019 pursuant to a Scheme of Arrangement (refer to Note 24). The indirect subsidiaries are direct subsidiaries of MacPhersons Resources Limited. Horizon Minerals Ltd, incorporated in Australia, is the ultimate parent entity of the Group. 28 CONTINGENT LIABILITIES 28a Native title claims have been made with respect to areas which include tenements in which Horizon Minerals Limited and the controlled entity have interests. The entities are unable to determine the prospects for success or otherwise of the claims and, in any event, whether or not, and to what extent, the claims may significantly affect them or their projects. 28b Security bonds are held with respect to tenements held in Northern Territory. Bonds are set by the Department of Primary Industry and Resources, however there is no certainty that such bonds will be adequate to cover any environmental damage. Horizon Minerals Limited and its controlled entities are not able to determine the nature or extent of any further liability in view of changing environmental requirements. 28c Horizon Minerals Limited has been advised of a potential liability arising as a result of the storage of laboratory waste material at the White Range project site and is currently awaiting approval from the NT Environmental Protection Authority to bury the material at White Range. As at the date of this report, the potential liability for the rectification remains unquantifiable. 28d The Company announced to the ASX on 30 April 2018, that it had received a purported cost variation claim from Resource Mining relating to the Teal Stage 1 project up until September 2017 and that it was working to resolve this and any additional claims that may be forthcoming from Resource Mining. The Company subsequently received a further purported cost variation claim from Resource Mining for Teal Stages 1 and 2 through to project completion. This further purported cost variation claim adopts a different methodology to the previous claim. In December 2018, Horizon and Resource Mining agreed to a full and final settlement of this matter. The total disputed variation claims amount was split on a 50:50 basis, while the remaining net operating cash was split 75% to Horizon and 25% to Resource Mining as originally agreed under the mining contract between the parties. 29 FINANCIAL RISK MANAGEMENT The Group's activities expose it to a variety of financial risks; market risk (including fair value interest rate risk foreign currency risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. Risk management is carried out by the Board of Directors, who identify, evaluate and manage financial risks as they consider appropriate. 29a Market risk Price risk The Group is exposed to equity securities price risk. This arises from investments held by the Group and classified on the statement of financial position as financial assets at fair value through profit and loss of $4,266,342 (2019: $605,461). The investments assets are classified as financial asset at fair value through profit and loss and any changes to their value is recognised in profit and loss when incurred. The group have used an equity price change of 70% upper and lower representing a reasonable possible change based upon the weighted average historic share price volatility over the last 12 months on the investment portfolio held. If the value of the investments held had moved in accordance with the volatility, and all other factors kept constant, the impact on the profit and loss for the year ended 30 June 2020 would have been ± $2,896,439 (2019: ± $423,823). Fair value interest rate risk Refer to (e) below. 29b Credit risk Credit risk is the risk of financial loss to the Group is a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers. Presently, the Group undertakes mining, exploration and evaluation activities exclusively in Australia. At the balance sheet date there were no significant concentrations of credit risk. (i) Cash and cash equivalents The Group limits its exposure to credit risk by only investing in liquid securities and only with major Australian financial institutions. (ii) Trade and other receivables The Group’s trade and other receivables relate to gold sales, GST refunds and other income. The Group has determined that its credit risk exposure on all other trade receivables is low, as customers are considered to be reliable and have short contractual payment terms. Management does not expect any of these counterparties to fail to meet their obligations. The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at the reporting date was: Cash and cash equivalents Trade and other receivables Total Carrying Amount 2020 $ 2019 $ 5,895,535 4,951,288 3,729,020 557,218 9,624,555 5,508,506 29 FINANCIAL RISK MANAGEMENT (CONTINUED) 29c Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through the ability to raise further funds on the market and the ability to close-out market positions. Due to the dynamic nature of the underlying businesses, the Board aims at maintaining flexibility in funding through management of its cash resources. Maturities of financial liabilities. 30 June 2020 Group Less than 6 months 6 – 12 months Between 1 and 2 years Between 2 and 5 years Over 5 years Total contractual cash flows Carrying Amount (assets)/ liabilities Interest Rate (% p.a.) Non-derivatives $ $ $ $ $ $ $ Non-interest bearing payables 3,387,031 - Fixed rate borrowings - 4,000,000 Total non-derivatives 3,387,031 4,000,000 - - - - - - - - - - - - 30 June 2019 Group Less than 6 months 6 – 12 months Between 1 and 2 years Between 2 and 5 years Over 5 years Total contractual cash flows Non-derivatives $ Non-interest bearing payables 291,623 Fixed rate borrowings - Total non-derivatives 291,623 $ - - - $ - - - $ - - - $ - - - $ - - - 3,387,031 - 4,000,000 20% 7,387,031 Carrying Amount (assets)/ liabilities $ 291,623 - 291,623 Interest Rate (% p.a.) - - 29d Cash flow and fair value interest rate risk As the Group has no significant variable interest-bearing assets, the Group's income and operating cash flows are not exposed to changes in market interest rates. 29e Fair value measurements The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair value measurement hierarchy: (a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1), (b) 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 2), and (c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3). 29e Fair value measurements (continued) The following table presents the group’s assets and liabilities measured and recognised at fair value at 30 June 2020 and 30 June 2019: At 30 June 2020 Assets Financial assets at fair value through profit or loss Level 1 Level 2 Level 3 Total - Trading Securities Other financial assets - Security deposits Total assets At 30 June 2019 Assets 4,266,342 257,927 4,524,269 - - - - - - 4,266,342 257,927 4,524,269 Level 1 Level 2 Level 3 Total Financial assets at fair value through profit or loss - Trading Securities Other financial assets - Security deposits Total assets 605,461 257,927 863,388 - - - - - - 605,461 257,927 863,388 The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1. The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities. Specific valuation techniques used to value financial instruments include: • The use of quoted market prices or dealer quotes for similar instruments. 29f Capital risk management In employing its capital (or equity as it is referred to on the statement of financial position) the Group seeks to ensure that it will be able to continue as a going concern and provide value to shareholders by way of increased market capitalisation. The Group has invested its available capital in intangible assets such as acquiring and exploring mining tenements and in investments. As is appropriate at this stage, the Group is funded predominantly by equity. 30 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (i) Exploration & Evaluation Expenditure The Group’s accounting policy for exploration and evaluation is set out in Note 1(e). If, after having capitalised expenditure under this policy, the Directors conclude that the Group is unlikely to recover the expenditure by future exploration or sale, then the relevant capitalised amount will be written off to the Statement of Comprehensive Income. 31 PARENT ENTITY FINANCIAL INFORMATION Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Accumulated losses Total equity Profit/(Loss) for the year 32 JOINT VENTURES 2020 $ 2019 $ 8,426,112 7,459,106 42,545,639 39,060,120 50,971,751 46,519,226 5,201,313 1,783,235 220,235 100,000 5,421,548 1,883,235 45,550,203 44,635,991 51,439,580 49,746,534 1,817,330 1,166,406 (7,706,707) (6,276,949) 45,550,203 44,635,991 (1,429,758) (2,715,930) Horizon Minerals Limited and its controlled entity Black Mountain Gold Ltd (BMG) have interests in unincorporated joint ventures as follows: Name of Joint Venture Notes Exploration For 2020 2019 Otto Bore Nanadie Well*** Richmond a b c Gold Copper Vanadium 3% gross gold royalty 3% gross gold royalty 100% 75% 100% 100% A joint venture is not a separate legal entity. It is a contractual arrangement between the participants for the sharing of costs and output and does not in itself generate revenue and profit. 32a Barrick (PD) Australia Limited, through its subsidiary Barrick (Plutonic) Limited, earned a 75% interest in the Otto Bore Tenements. Horizon elected in 2000 to assign the tenements to Plutonic and revert to a 3% gross gold royalty. 32b In December 2013, Mithril Resources Ltd (MTH) and its wholly owned subsidiary Minex (West) Pty Ltd entered into a farm-in and joint venture agreement with Horizon Minerals Limited to acquire up to 75% interest of the Nanadie Well Gold Project. Minex may acquire a 60% interest in the Tenements by expending $2M, Minex may elect to acquire a further 15% interest (for a total 75% interest) by expending a further $2M in a two year period with a minimum ground exploration cost of at least $400,000 each year of the 2 year period. ***The Nanadie Well project was divested subsequent to 30 June 2020. Refer to Note 34(b) for further detail. 32c In March 2017, the Company finalised a strategic development JV with Richmond Vanadium Technology Pty Ltd (“RVT”) (formerly AXF Vanadium Pty Ltd), a wholly owned subsidiary of the AXF Group. The JV covers Horizon’s 100% interest in the Richmond vanadium project in North West Queensland which include metal rights at the nearby Julia Creek project which is owned by Global Oil Shale Plc. The project tenements cover 1,520km 2 of Cretaceous Toolebuc Formation. In February 2018, RVT had committed to the second stage expenditure commitment of A$5 million over 3 years inclusive of a Feasibility Study. 33 JOINT OPERATIONS A Mining and Finance Heads of Agreement was executed with Resource Mining Pty Ltd (“RM”) on 7 October 2016 in relation to the development of the Teal Gold Project Stage 1 (TS1) as announced to the ASX on 19 July 2016. Under the agreement, the net operating cash from mining operations was split 75% to Horizon and 25% to RM. As at 30 June 2018, final ore processing at TS1 was completed, and profit shares due to RM had been included as payables at 30 June 2018. In December 2018, RM and Horizon agreed a further settlement of disputed amounts and all payments were made pursuant to the settlement agreement by 31 December 2018. Refer to Note 28(d) for further information. 34 EVENTS OCCURRING AFTER REPORTING DATE (a) Subsequent to year end, 2,400,000 Class E Performance Rights lapsed. (b) Nanadie Well Copper Project In July 2020, the Group reached an agreement with Cyprium Metals Limited (ASX: CYM) (“Cyprium”) to divest the Nanadie Well copper project near Meekatharra in the Murchison District of Western Australia. Horizon took 100% control of the Nanadie Well in the December quarter of 2019 following the withdrawal of its then joint venture partner. The divestment comprises exploration license E51/1040 and Mining License M51/887 covering 45km2. Under the Agreement, Cyprium will pay $1.5 million in cash and shares (priced on a 20 day VWAP basis) on the following terms: • • • • $250,000 in cash and $400,000 in Cyprium shares on completion $350,000 in Cyprium shares 12 months from completion $300,000 in Cyprium shares 24 months from completion $200,000 in Cyprium shares on a decision to mine from the tenure (c) Capital Raising In August 2020, the Group announced a Share Placement Plan for 115 million ordinary shares at $0.14 per share to raise $16.1 million before share issue costs. Settlement of the Placement will occur in two tranches: • • Tranche 1 comprises the issue of 57.5 million Placement Shares ($8.05 million) pursuant to Listing Rules 7.1 and 7.1A. No shareholder approval is required for the issue of shares in Tranche 1 which settled on 21 August 2020. Tranche 2, which is subject to shareholder approval at a General Meeting to be held on 25 September 2020, comprises the issue of a further 57.5 million Placement Shares ($8.05 million). New shares issued under the Placement will rank equally with existing ordinary shares on issue. Proceeds from the Placement and existing cash reserves will be used to progress its exploration activities over various projects. (d) In July 2020, Mr Peter Bilbe stepped down as Chairman, remaining as Non-Executive Director and Mr Ashok Parekh assumed the role of Chairman. There are no other matters or circumstances that have arisen since 30 June 2020 that have or may significantly affect the operations, results, or state of affairs of the Group in future financial periods. Additional information required by the Australian Stock Exchange Limited Listing Rules, and not disclosed elsewhere in this report. SHAREHOLDINGS The numbers of ordinary shares held by the substantial shareholders as at 21 September 2020 were: Michael Ruane and entities 49,947,052 9.78% UNQUOTED SECURITIES OPTIONHOLDINGS Nature Expiry Date Exercise Price of Options Number under Option Number of Holders Unlisted options 30 June 2022 Unlisted options 30 June 2022 12 cents 16 cents 12,000,000 12,000,000 1 1 The holder of the above unlisted options is Sparta AG, an unrelated party. CLASS OF SHARES AND VOTING RIGHTS As at 21 September 2020 there were 3,168 holders of the ordinary shares and 1 holder of unlisted options of the Company. The voting rights attached to the shares are: • • at a meeting of members or classes of members each member entitled to vote may vote in person or by proxy or by attorney; and on a show of hands every person present who is a member has one vote, and on a poll every person present in person or by proxy or attorney has one vote for each ordinary share held. DISTRIBUTION OF SHAREHOLDERS (as at 21 September 2020) Category Number of Shareholders 1 1,001 5,001 10,001 100,001 – – – – – 1,000 5,000 10,000 100,000 over TOTAL HOLDERS 153 460 545 1,515 495 3,168 The number of shareholders holding less than a marketable parcel as at 21 September 2020 was 414. TWENTY LARGEST SHAREHOLDERS (as at 21 September 2020) Rank Name No of Shares % of holding 1 2 3 4 5 6 7 8 9 BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD29,253,176 5.73 SPARTA AG TYSON RESOURCES PTY LTD 25,125,000 4.92 24,588,502 4.82 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 21,504,835 4.21 BILL BROOKS PTY LTD 19,314,702 3.78 KESLI CHEMICALS PTY LTD 16,990,397 3.33 BNP PARIBAS NOMINEES PTY LTD 16,379,466 3.21 GOLDFIELDS HOTELS PTY LTD 13,259,653 2.60 DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT 9,159,760 1.79 10 KESLI CHEMICALS PTY LTD 8,368,153 1.64 11 MR WILLEM RAVESTEYN + MRS ROSEMARY ANNE RAVESTEYN 8,365,000 1.64 12 CITICORP NOMINEES PTY LIMITED 7,824,465 1.53 13 BOND STREET CUSTODIANS LIMITED 7,702,285 1.51 14 MR ASHOK PAREKH 15 BANKS PTY LTD 6,720,799 1.32 6,449,588 1.26 16 J&D BANKS PTY LTD 6,335,762 1.24 17 CS THIRD NOMINEES PTY LIMITED 5,526,907 1.08 18 MR JONATHAN PAUL PRICE 19 MR GODFREY WENNESS 4,500,000 0.88 4,400,000 0.86 20 BOND STREET CUSTODIANS LIMITED 4,389,094 0.86 Top 20 holders of FULLY PAID ORDINARY SHARES (Total) 246,157,544 48.22 Total Remaining Holders Balance 264,317,656 51.78 H o r i z o n M i n e r a l s L i m i t e d A n n u a l R e p o r t 2 0 1 6 P a g e 7 8