Impact Minerals Limited Annual Report 2020

Plain-text annual report

Impact Minerals Limited ABN 52 119 062 261 Annual Report 2020 Corporate Directory BOARD OF DIRECTORS Peter Unsworth Dr Michael Jones Managing Director Paul Ingram Non-Executive Director Dr Markus Elsasser Non-Executive Director Non-Executive Chairman AUDITORS Bentleys Audit and Corporate (WA) Pty Ltd London House Level 3, 216 St Georges Terrace Perth, WA 6000 COMPANY SECRETARY Bernard Crawford REGISTERED OFFICE & PRINCIPAL PLACE OF BUSINESS 26 Richardson Street West Perth, WA 6005 Telephone: +61 (8) 6454 6666 Facsimile: +61 (8) 6314 6670 Email: info@impactminerals.com.au Web: www.impactminerals.com.a SHARE REGISTRY Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace Perth, WA 6000 Telephone: +61 (8) 9323 2000 Facsimile: +61 (8) 9323 2033 SECURITIES EXCHANGE LISTING The Company is listed on the Australian Securities Exchange Ltd (“ASX”) Home Exchange: Perth, Western Australia ASX Code: IPT Perth HQ Broken Hill Broken Hill Broken Hill Commonwealth Impact Minerals Ltd Annual Report 2020 1 Impact Minerals Limited Impact Minerals Limited is an exploration company listed on the ASX in November 2006. The Company manages extensive tenement holdings of nearly 4,000 square kilometres within Australia featuring signiﬁcant potential for high-grade mineral deposits of gold, silver, lead, zinc, copper, nickel and PGM’s. The Directors of the Company have extensive experience in mineral exploration and a strong history of exploration success, business development and corporate management. Impact Minerals intends to build wealth for its shareholders through a vigorous campaign of project generation and discovery of major mineral deposits to move towards proﬁtable mining operations. Contents 2 Chairman’s Letter 3 Review of Operations 33 Directors’ Report 44 Auditor’s Independence Declaration 45 Consolidated Statement of Profit or Loss and Other Comprehensive Income 46 Consolidated Statement of Financial Position 47 Consolidated Statement of Changes in Equity 48 Consolidated Statement of Cash Flows 49 Notes to the Consolidated Financial Statements 70 Directors’ Declaration 71 Independent Auditor’s Report 76 Shareholder Information 78 Tenement Schedule 2 Impact Minerals Ltd Annual Report 2020 Chairman’s Letter Dear Fellow Shareholder, The year to 30th June 2020 has been an active and rewarding one for your Company. Before I mention the key highlights, which are presented in more detail in the Review of Operations, I would like to commend our Managing Director, Dr Mike Jones, for his tremendous untiring efforts in managing the Company’s activities. Earlier in the ﬁrst half of the year, markets were under pressure for explorers and capital raising was difficult. Your Directors reluctantly resolved to reduce staff levels and remuneration, including for your Directors. The remaining Impact staff have responded positively and worked tirelessly to take the Company forward. Great progress has been made at our Commonwealth Project where we hold about 1,000 square kilometres in the Lachlan Fold Belt in NSW, prospective for massive sulphide deposits of gold, silver and base metals as well as porphyry copper-gold. In January Impact announced details of four priority undrilled prospects for porphyry copper- gold identiﬁed near the Alkane Resources Limited Boda-Kaiser discovery. All four prospects have characteristics suggesting they are parts of large porphyry or other intrusive related copper-gold systems. In August of this year, Dr Jones announced that with the Aspley Prospect (one of the four prospects referred to above), near textbook examples of the zones of metal assemblages expected around major alkaline, porphyry copper-gold complexes had been deﬁned over about 4 square kilometres. Exploration has been fast-tracked to identify speciﬁc drill targets. The announcement followed the raising of $3.25 million to bring the Company’s cash holding to in excess of $5 million. The raising is being directed to proposed drilling at Commonwealth and for another drill programme at Broken Hill which is now in progress. The Broken Hill programme is targeted at high grade palladium and other platinum group metals at Red Hill and other prospects. The Blackridge conglomerate-hosted gold project in Queensland proved to be frustrating. In November last year, for commercial reasons, Impact resolved to not exercise its option to purchase several mining lease applications. As a result, the planned trial mining operation did not proceed. However in July of this year, Impact made two new 100% owned applications for exploration permits at Blackridge, giving the Company 150 square kilometres or about 90% of the southern part of the large Miclere-Blackridge gold ﬁeld that produced over 300,000 oz of gold. The new leases include ground previously held under the option to purchase that was not exercised. Currently further work is being undertaken on the Miclere-Blackridge ground for a potentially larger exploration/development play. More details on the Company’s activities and projects are set out in the Review of Operations. We are looking forward to an exciting few months ahead of us, despite problematic logistical issues caused by the Covid 19 virus, because of increasingly positive activity and results at Commonwealth and Broken Hill. During the year our Non-Executive Director, Eamon Hannon, resigned from the Board to concentrate on his role as Managing Director of Buxton Resources Limited. During his short period of tenure, Eamon’s professional input was greatly appreciated. Peter Unsworth Chairman Impact Minerals Ltd Annual Report 2020 3 Review of Operations Impact Minerals Limited is an Australian Exploration Company listed on the Australian Stock Exchange (ASX-IPT). The company is a project generator and developer and explores a portfolio of tenement holdings (~3,800 sq km) within major mining regions of Australia featuring signiﬁcant potential for high-grade mineral deposits of gold, silver, lead, zinc, copper, cobalt, nickel and platinum group metals. The company has ﬁve active exploration projects, each containing multiple targets for high-grade mineral discoveries: COMMONWEALTH PROJECT: 903 sq km in the Lachlan Fold Belt in New South Wales prospective for volcanogenic massive sulphide deposits of gold, silver and base metals as well as porphyry copper-gold. BROKEN HILL PROJECT: 816 sq km in the Broken Hill region prospective for silver-lead-zinc, nickel- copper-platinum group metals and copper-cobalt-gold deposits. ARKUN PROJECT: 1,900 sq km centred between York and Corrigin 100 km east of Perth prospective for nickel-copper-platinum group metals and gold. BLACKRIDGE PROJECT: 150 sq km covering Permian sedimentary rocks near Clermont in central Queensland and prospective for conglomerate-hosted gold deposits. CLERMONT PROJECT: 70 sq km in the Anakie Inlier and also close to Clermont which is prospective for epithermal and quartz vein-hosted gold deposits. No work was done at Clermont during the year. 4 Impact Minerals Ltd Annual Report 2020 Review of Operations 1. COMMONWEALTH GOLD-SILVER-BASE METAL PROJECT (IPT 100%) The signiﬁcant exploration potential for large porphyry copper-gold deposits at Impact Minerals Limited’s (ASX:IPT) 100% owned Commonwealth project in the Lachlan Fold Belt copper- gold province in New South Wales was conﬁrmed and enhanced by work completed during the year. Relevant ASX announcements by Impact were released on 22nd August 2019, 22nd November 2019, 23rd April 2020 and 23rd June 2020. Four prospects, Boda South, Apsley, Spicers Creek and Greenobbys were the focus of work and were identiﬁed from reconnaissance ﬁeld checking, new rock chip assays and interpretation of regional magnetic data. This work was prompted by the recent discovery of signiﬁcant porphyry copper-gold mineralisation at Boda by Alkane Resources Limited (ASX: ALK) (Figures 2 and 3). At Boda, which lies immediately along trend from Impact’s tenements, a signiﬁcant drill intercept of 1,167 metres at 0.55 g/t gold and 0.25% copper including a higher grade “core” of 96.8 metres at 4 g/t gold and 1.5% copper was recently reported (ALK ASX Release 23rd March 2020). Figure 1: Location of Impact’s Commonwealth, Pine Hill and Day Dawn Projects covering about 900 km2 of the Lachlan Fold Belt of NSW, home to many signiﬁcant gold and copper mines. The Boda deposit is currently about 400 metres wide (true width), shows strong zonation of metals and alteration minerals with higher grade copper-gold associated with magnetite in so called skarn-related alteration. The magnetite can be identiﬁed as an anomaly in regional magnetic data (ALK ASX Release 23rd March 2020). In addition, Alkane has shown that Boda is hosted by rocks of a speciﬁc high potassium alkaline geochemistry called shoshonites. Importantly these are of the same chemistry and age (Ordovician) as the host rocks at Cadia-Ridgeway and North Parkes (Figure 1) and are generally accepted as crucial components to the formation of giant porphyry copper-gold deposits globally. All four of Impact’s prospects have characteristics suggesting they are parts of large porphyry or other intrusive-related copper-gold systems including: 1. Signiﬁcant copper and/or gold with associated pathﬁnder metals in recent rock chip assays. 2. Alteration minerals that suggest they lie within the outer (propylitic) to middle- inner (potassic) zones of such intrusive-related systems, the prospective centres of which may lie only within a few hundred metres of the areas sampled, either at depth or along trend; and 3. A spatial association with unexplained magnetic anomalies and which, like Boda, could be a direct indication of signiﬁcant copper-gold mineralisation. Impact Minerals Ltd Annual Report 2020 5 Review of Operations continued Furthermore, new rock chip data and maps from the Geological Survey of New South Wales conﬁrm that there are extensive areas of copper- rich shoshonite and related high potassium rocks of Ordovician age at the Apsley, Spicers Creek and Boda South prospects (Figure 3). In addition, standard element ratio plots show that the shoshonites are also part of an igneous differentiation trend in which the rocks become more potassic (K2O- bearing) and, very importantly, more copper-rich as they evolve towards shoshonite compositions (Figure 3). Furthermore, the prospects also have extensive areas of copper+/- gold mineralisation as well as important pathﬁnder metal assemblages and alteration mineral assemblages typical of porphyry copper gold systems as described separately for each prospect below. These features constitute a major breakthrough for Impact as it indicates that many of the crucial fundamental components required to form a large porphyry copper- gold deposit are present at these prospects. Figure 2: Priority prospects for follow up work and geology of the Commonwealth Project. Note the location of the Boda-Kaiser prospects (Alkane Resources) and the Lady Ilse prospect (Magmatic Resources Limited. 6 Impact Minerals Ltd Annual Report 2020 Review of Operations continued Key features identiﬁed at Apsley by Impact include: 1. Widespread and abundant copper oxides and fresh copper sulphides (malachite, azurite, chalcopyrite and bornite) which occur over at least a 2 square kilometre sized area with rock chip assays of up to 8.1% copper and 23 g/t silver with associated anomalous molybdenum, tellurium, tungsten and gold in places (Figure 4 and Figure 5). 2. The alteration mineral and pathﬁnder metal assemblages are mostly typical of the outer distal zones of porphyry copper systems (Figure 5: chlorite- albite (propylitic) alteration with pathﬁnder metal assemblages of Tl-Li-Sb-As and Cu-Bi-Te-Se). Copper is widespread in the outer zones of many porphyry copper gold deposits, for example North Parkes. Figure 3: Major element ratio plot for Boda South (triangles) together with Apsley (squares) and Spicers Creek (circles) with copper results coloured by grade. An igneous differentiation trend towards copper-bearing high potassium-shoshonite rocks is evident; this is common to major porphyry copper deposits in the Lachlan Fold Belt. 1.1 APSLEY A highly prospective target zone of about 2 square kilometres in size that has not been previously drilled has now been identiﬁed at Apsley. The Apsley target is centred 8 km south of Wellington and covers a number of magnetic anomalies within Ordovician basalts and andesites (Figures 2 and 4). These are direct analogies to the magnetic response at Boda associated with the skarn mineralisation and parent porphyry intrusion (Figure 4). Impact’s work indicates that a major copper mineralised system is present at the prospect, potentially sourced from a buried porphyry intrusion with high grade copper-gold mineralisation that may lie within a few hundred metres from surface. Figure 4: Airborne magnetic image (RTP 2VD) of the Apsley Prospect with copper assay results, interpreted alteration zones and possible parent intrusion at depth. The anomalous copper samples are adjacent to the magnetic anomalies which may represent skarn mineralisation. Warmer colours on the image represent stronger magnetic responses. Impact Minerals Ltd Annual Report 2020 7 Review of Operations continued 3. Higher grade copper assays occur in focussed zones of more proximal sericite-potassic altered shoshonites and related high- potassium rocks. These zones are interpreted to lie along faults that have tapped a mineralised intrusion at depth (Figures 4 and 6). 4. The entire area of extensive copper mineralisation is associated with several signiﬁcant magnetic anomalies which may represent skarn assemblages or parent porphyry intrusions directly associated with higher grade mineralisation at depth. Figure 5: Apsley Prospect: Sample AP01: volcanic rock with extensive bornite (purple) and chalcopyrite (yellow) as well as copper oxides and carbonates (green) within moderately magnetic volcanic rock. Figure 6: Industry-standard Feldspar-Sodium (Na)-Potassium (K) General Element Ratio plots showing alteration minerals (left) and the same samples coloured by copper results (right) for Apsley (squares) and Spicers Creek (circles). A clear trend of increasing copper towards more proximal inner alteration assemblages is very evident and consistent with being related to signiﬁcant porphyry copper-gold systems (note the two prospects are many kilometres apart and thus two separate systems are present). GEOCHEMICAL EXPLORATION FOR PORPHYRY COPPER-GOLD DEPOSITS A key driver in the exploration for large porphyry copper-gold deposits is to develop an understanding of the nature and distribution of the distinct zones of commodity metals, pathﬁnder metals and associated alteration minerals that form around such deposits in order to provide vectors to the high grade cores. The zones, which are well understood in the scientiﬁc literature, vary from outer (distal) zones commonly characterised by chlorite-albite-epidote (propylitic) alteration and pathﬁnder metals such as antimony-arsenic-lithium-bismuth- tellurium-silver; to middle-inner zones (proximal) characterised by sericite-K feldspar (potassic) alteration and the pathﬁnder metals molybdenum-gold-copper-tungsten-tin. These zones can be readily identiﬁed in industry-standard geochemical graphs such as potassium-aluminium-sodium molar ratio plots shown here (46 samples in total for Apsley and 23 samples from Spicers Creek). 8 Impact Minerals Ltd Annual Report 2020 Review of Operations continued 1.2 SPICERS CREEK The Spicers Creek target occurs in the north east of the Commonwealth project and comprises a number of intriguing magnetic anomalies within Ordovician and Devonian volcanic and intrusive rocks (Figures 2 and 7). A highly prospective target zone about 200 metres wide and at least 1,000 metres long has been identiﬁed at the south eastern part of the Spicers Creek prospect which is undrilled (Figure 7). Key features identiﬁed at Spicers Creek by Impact include: 1. Copper oxides and fresh copper sulphides (chalcopyrite, chalcocite, bornite, azurite, and malachite) occur intermittently over 700 metres of trend within a zone at least 1,000 metres long and up to 200 metres wide that contains smoky quartz veins within epidote-garnet skarn altered maﬁc schists with later cross-cutting porphyry dykes. One stand-out rock chip sample returned 6.8 g/t gold, 14.4% copper and 83 g/t silver with strongly elevated molybdenum (46 ppm), bismuth (185 ppm), tellurium (18 ppm) and tungsten (88 ppm). The other rock chip samples returned values of up to 132 ppb gold, 4.7 g/t silver and 0.7% copper. Figure 7: Image of magnetic data showing rock chip assay results, interpreted alteration zones and underlying geology at the Spicers Creek prospect. Warm colours in the magnetic image represent zones of stronger magnetic response. 2. The alteration mineral assemblages indicate strong moderate to strong sericite alteration of shoshonite and related rocks and this is associated with the strongest copper results (Figure 6). The pathﬁnder metal assemblages of moderately elevated Tl-Li-Sb-As, Bi-Te-Se and Cu-Au-Bi-Mo is a mix of both outer and inner assemblages. This suggests the alteration zones have been “telescoped” along a fault that may have tapped a mineralised intrusion at depth or along trend. 3. The magnetic data indicates the prospect area sampled is coincident with a broad weak linear magnetic anomaly about 1,000 metres long. Several other much stronger unexplained magnetic anomalies up to 1,000 metres long occur in the northwest of the prospect area and all of these are targets for skarn-related mineralisation (Figure 7). Further work along trend to the north west is required. Impact Minerals Ltd Annual Report 2020 9 Review of Operations continued 1.3 BODA SOUTH PROSPECT The Boda South prospect, which is undrilled, covers the faulted southern contact of the Boda Intrusive Complex (BIC), host to the Boda-Kaiser mineralisation and which is Ordovician in age (Figures 2 and 8). As demonstrated at Apsley and Spicers Creek, Boda South also contains the fundamental characteristics required to potentially host a signiﬁcant porphyry copper- gold deposit: 1. Copper-bearing Ordovician shoshonites with weak to moderate copper assays of up to 0.1% with copper increasing as the rocks become more potassium rich (shoshonitic - Figure 2). 2. Metal assemblages of up to 40 ppm bismuth and 21 ppm tellurium as well as moderate epidote-chlorite alteration indicate the area may lie in the upper phyllic to outer (propylitic) zone of a porphyry copper-gold system. Typical values of both these pathﬁnders documented above known deposits are in the order of about 1 to 5 ppm. 3. An association with two sub- parallel magnetic anomalies within the BIC as evident in regional magnetic data (Figure 8). This is a similar position to the Boda deposit, located about 3,000 metres along trend to the north, where the high grade copper-gold mineralisation discovered by Alkane also occurs between two magnetic units of the BIC (Figure 2 and ALK: ASX Release 23rd March 2020). Given the prospective nature of the BIC, modelling of magnetic data is required to determine the depth to the intrusive complex at Boda South. 1.4 GREENOBBYS The Greenobbys prospect lies a few kilometres east of Boda South and covers the variably magnetic western margin of the very potassium-rich Wuuluman Granite which is of Carboniferous age (Figures 2 and 8). These rocks are much younger than the Boda Intrusive Complex and are in a different geological setting. Figure 8: Airborne magnetic image of the Boda South and Greenobbys Prospects with gold assay results and interpreted alteration zones. Warmer colours on the image represent stronger magnetic responses. Key features identiﬁed at Greenobbys include: 1. Several north west trending zones of rubbly outcrop of quartz and potassium feldspar (“K-feldspar”) veins that each extend over at least 500 metres of trend. These zones are parallel to faults noted on the government Geological Survey maps and also the controlling faults at the rich Bodangora Mine located 4 km to the west and which produced about 250,000 ounces of gold at greater than 20 g/t in similar quartz veins (owned by Magmatic Resources Limited; Figure 2). 2. The veins show a gradation from coarse K-feldspar with lesser quartz (pegmatite), to K-feldspar and grey quartz in equal proportions to creamy white quartz with little or no K-feldspar (Figure 9). 3. The quartz dominant veins are vuggy and contain boxwork gossan formed by the weathering of sulphides including pyrite (Figure 9). There are a number of shallow pits along the vein system. 10 Impact Minerals Ltd Annual Report 2020 Review of Operations continued Figure 9: Gradation of veins from K-feldspar dominant (left photo) to quartz-dominant (right photo) with increasing boxwork gossan (dark brown colour) from weathered sulphides. These veins contain up to 9.5g/t gold (six samples with more than 1 g/t gold) and 215 g/t silver (four samples with more than 1 ounce per tonne) (Figure 8). In addition, the veins contain a remarkable array of pathﬁnder metals that are anomalous on a regional scale compared to Impact’s other prospects in particular bismuth (up to 754 ppm), molybdenum (up to 519 ppm) and tellurium (up to 40 ppm). Other pathﬁnder metals present include selenium-thallium-antimony- arsenic-lead-barium and tungsten as well as the rare metals indium and rhenium. In addition, preliminary interpretation suggests the metals are associated with sericite-adularia alteration. All of these features are interpreted to indicate the veins are related to ﬂuids released from a potassium rich granite, possibly the host Wuuluman Granite, and which may represent a “telescoped” epithermal system covering at least several hundred square metres. The veins are open along trend and at depth. There is no drilling recorded in the area. Telescoping refers to the signiﬁcant overlap between proximal and distal metal and mineral assemblages and suggests the possible rapid collapse of the parent hydrothermal system. This is encouraging for the discovery of bonanza gold-silver veins. The scale and size of the vein and alteration system is very encouraging and further ﬁeld checking and sampling is warranted. 1.5 NEXT STEPS FOR INTRUSIVE RELATED GOLD DEPOSIT EXPLORATION Impact’s work strongly supports the potential for the Commonwealth Project to host not only signiﬁcant porphyry copper-gold deposits but also intrusion-related epithermal gold-silver deposits. Further work is now required to reﬁne and rank these target areas for drilling. At present the Apsley target is ranked as the most prospective and a detailed soil geochemistry survey was completed in June 2000 and an interpretation of the results is in progress. In addition, a detailed airborne magnetic and radiometric survey covering Impact’s priority areas was also completed recently and a detailed interpretation is in progress. All of this new data will be interpreted and synthesised to help deﬁne follow up work programmes which will include drilling in 2020 and 2021. 1.6 COMMONWEALTH AND SILICA HILL DEPOSITS During the year Impact announced a signiﬁcant increase in resources at the Commonwealth gold-silver- zinc-lead-copper deposit including a maiden resource for the silver-rich Silica Hill prospect (Figure 9) (ASX Release August 22nd 2019). The new resource contains 88,800 ounces of gold and 3.3 million ounces of silver all of which occurs from surface to a depth of 250 metres and well within range of potential open pit mining. The Mineral Resources at Commonwealth and Silica Hill were prepared in accordance with the JORC 2012 Code by independent resource consultants Optiro and follows several drill programmes across the project area completed in late 2018. Impact Minerals Ltd Annual Report 2020 11 Review of Operations continued The updated Inferred Resource for the Commonwealth deposit at a cut-off of 0.5 g/t gold is (Figure 10): COMMONWEALTH (MAIN SHAFT TO COMMONWEALTH SOUTH) Resource Classification Cut-off 0.5 g/t gold Tonnes Gold (g/t) Contained gold (oz) Silver (g/t) Contained silver (oz) Zinc (%) Lead (%) Copper (%) Inferred 912,000 2.4 70,800 44 1,300,000 1.20% 0.50% 0.08 A separate Inferred Mineral Resource (included within the overall resource) has also been calculated for the massive sulphide lens at Main Shaft alone to demonstrate the high grade nature of such deposits that are the principal target for Impact’s exploration programme. The Main Shaft Inferred Resource is: MAIN SHAFT MASSSIVE SULPHIDE LENS Resource Classification Cut-off 0.5 g/t gold Tonnes Gold (g/t) Contained gold (oz) Silver (g/t) Contained silver (oz) Zinc (%) Lead (%) Copper (%) Inferred 142,000 4.5 20,600 161 737,500 4.6 1.7 0.2 At Silica Hill the maiden Inferred Resource at a 50 g/t silver cut-off is: SILICA HILL Resource Classification Cut-off 50 g/t silver Lode Tonnes (t) Silver (g/t) Contained silver (oz) Gold (g/t) Contained gold (oz) Inferred Inferred North 397,000 South 313,000 TOTAL 710,000 89 87 88 1,136,000 871,000 2,007,000 1 0.5 0.8 12,900 5,100 18,000 The resources are open along trend and at depth and extensive further resource deﬁnition and extensional drilling is required to follow up key intercepts at Main Shaft, Commonwealth South and Silica Hill as outlined below. The Company conﬁrms that it is not aware of any new information or data that materially affects the resources reported above and in the relevant market announcements, and that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply. Figure 10: Block model of the resource from Commonwealth South (left) to Main Shaft (right). The high grade blocks in red and pink show that the deposit is open along trend and at depth. 12 Impact Minerals Ltd Annual Report 2020 Review of Operations continued 1.7 FURTHER EXPLORATION AT MAIN SHAFT At Main Shaft the massive sulphide lens is still open at depth and along trend to the north and south east. For example the resource is open to the north down plunge from drill hole CMIPT084 and at depth below drill holes CMIPT021 and CMIPT082 (Figures 11 and 12). Hole CMIPT084 returned: 5.7 metres at 3.8 g/t gold, 347 g/t silver, 10.8% zinc and 3.7% lead from 52.1 metres down hole; including 0.7 metres at 15.6 g/t gold, 245 g/t silver, 8.6% zinc and 1.9% lead; and 0.5 metres at 4.9 g/t gold, 917 g/t silver, 10.2% zinc and 4.6% lead from 56.9 metres. Hole CMIPT021 returned: 8.1 metres at 6 g/t gold, 193 g/t silver, 5.9% zinc, 2.3% lead and 0.16% copper from 71 metres; including 2.9 metres at 9.3 g/t gold, 201 g/t silver, 11.6% zinc, 4.7% lead and 0.2% copper. Figure 11: Location of drill assays from the 2018 drill programme at Main Shaft and Silica Hill (yellow labels). The Main Shaft resource is labelled “Massive Sulphide Resource”. The Silica Hill Prospect is in the centre of the map. Impact Minerals Ltd Annual Report 2020 13 Review of Operations continued Hole CMIPT083 returned: 4 metres at 3.3 g/t gold 129 g/t silver, 7% zinc and 1.9% lead from 96.4 metres down hole; including 2.1 metres at 5.1 g/t gold, 239 g/t silver, 12.8% zinc and 3.5% lead. Figure 12: Long section through the upper zone of mineralisation along the Commonwealth deposit and showing signiﬁcant areas that require drill testing. In addition Hole CMIPT083 at Main Shaft also intersected a narrow high grade massive sulphide unit about 30 metres below the Main Shaft unit and together with other drill holes conﬁrms the discovery of a second massive sulphide unit that is at least 100 metres by 150 metres in dimension and is untested at depth (Figures 11 and 13). 14 Impact Minerals Ltd Annual Report 2020 Review of Operations continued The second massive sulphide unit returned: 1 metre at 3.1 g/t gold, 57 g/t silver, 9.4% zinc and 4.2% lead and 0.2% copper from 143 metres down hole; including 0.3 metres at 0.8 g/t gold, 150 g/t silver, 30.2% zinc and 13.5% lead. Figure 13: Second massive sulphide unit in Hole CMIPT083: massive and brecciated massive sphalerite (red-brown) with lesser galena. Up to 3% chalcopyrite (yellow) is present in places. 1.8 FURTHER EXPLORATION AT COMMONWEALTH SOUTH At Commonwealth South, at the southern end of the Commonwealth Resource, two diamond drill holes completed in late 2018 identiﬁed signiﬁcant extensions to the near- surface resource both along trend and at depth (Figures 12 and 14). Hole CMIPT086 returned: 8 metres at 5.0 g/t gold, 20 g/t silver, 1.3% zinc and 0.5% lead from 94 metres down hole; including 5 metres at 7.7 g/t gold, 25 g/t silver 2.1% zinc and 0.7% lead; which includes 0.5 metres at 34.3 g/t gold, 40 g/t silver, 5.8% zinc and 2.3% lead from 97.6 metres. Hole CMIPT087 returned: 6 metres at 1.5 g/t gold, 22 g/t silver, 0.8% zinc and 0.1% lead from 96.8 metres down hole; including 0.35 metres metres at 8.9 g/t gold, 21 g/t silver, 3.5% zinc and 0.6% lead. 12.5 metres at 0.65 g/t gold, 3.7 g/t silver, 0.25% zinc from 116.5 metres down hole; including 5 metres at 1.2 g/t gold, 3.6 g/t silver and 0.2% zinc from 188.2 metres. A signiﬁcant number of drill holes have now intersected a lower zone of mineralisation over the entire length of the Commonwealth deposit. The grade appears to be improving at depth, and is very poorly tested. In addition follow up drilling is required immediately down plunge to the south of drill hole CMIPT017 (Figure 12) which returned: 7 metres at 25.5 g/t gold, 62 g/t silver, 3.8% zinc, 1.6% lead and 0.1% copper from 88 metres; including 4 metres at 41.8 g/t (1.3 ounces per tonne) gold, 93 g/t silver, 5.5% zinc, 2.3% lead from 90 metres. A second lower zone of mineralisation has also been intersected at Commonwealth South from about 115 metres down hole with increasing gold grades at depth. The best result is from Hole CMIPT087 and is the deepest intercept in the zone and which returned (Figure 14): Impact Minerals Ltd Annual Report 2020 15 Review of Operations continued The disseminated mineralisation between the veins has helped form thick zones of near-surface modest grade mineralisation with the potential for bulk open pit mining. For example discovery hole CMIPT011 returned bonanza-grade silver within a thick zone of silver- gold mineralisation as follows: 48.6 metres at 137 g/t silver (4.4 ounces) and 0.5 g/t gold from 122 metres down hole; including 23 metres at 224 g/t silver (7.2 ounces) and 1.0 g/t gold from 147.7 metres; which includes 0.9 metres at 3,146 g/t silver (101 ounces) and 2.4 g/t gold from 148.1 metres. In addition Hole CMIPT077 returned: 22.5 metres at 1.7 g/t gold and 276 g/t silver from 166.7 metres down hole; including 0.3 metres at 1.8 g/t gold and 4,200 g/t (135 ounces or 0.42%) silver from 174.4 metres; and also including 0.8 metres at 13.6 g/t gold and 40 g/t silver from 187.7 metres. And Hole CMIPT074 returned: 21.8 metres at 0.6 g/t gold and 273 g/t silver from 137.9 metres down hole; including 0.5 metres at 0.5 g/t gold and 1,485 g/t (48 ounces) silver from 143 metres; and 0.4 metres at 1.6 g/t gold and 6,240 g/t (200 ounces or 0.62%) silver from 148.5 metres. Three diamond drill holes have also established that there is a low grade silver halo of up to 10 g/t silver around the Silica Hill mineralisation that is at least 500 m by 500 m in dimension (Figure 11). For example Hole CMIPT072 returned 146 metres at 0.04 g/t gold and 5 g/t silver. In addition CMIPT078 drilled at the eastern end of the northern mineralised zone returned the thickest intercept of gold and silver to date in this zone and indicates improving grades to the east and returned: 117 metres at 0.3 g/t gold and 11 g/t silver. Figure 14: Commonwealth South. NE-SW Cross-section showing drill results for Holes 086 and 087 and showing upper and lower zones of mineralisation. 1.9 FURTHER EXPLORATION AT SILICA HILL Silica Hill is a virgin discovery by Impact and is located 60 metres to 250 metres north east of Main Shaft (Figures 11 and 15). The mineralisation comprises a North Lode and South Lode both comprising high grade veins and disseminations of sulphide with gold and extensive visible silver minerals including the antimony and arsenic sulphosalts: proustite- pyrargyrite. These minerals are exceptionally rare in Australia and contribute to some exceptional silver grades in speciﬁc veins. There are also zinc and lead credits to the mineralisation at Silica Hill with the sulphides present being similar to those at Commonwealth-Main Shaft. They are interpreted as being part of the same overall mineralised system. 16 Impact Minerals Ltd Annual Report 2020 Review of Operations continued This attests to the scale of the mineralised system at Silica Hill which is still open in all directions and further deeper drilling is required. South lode long-section looking NNE North lode long-section looking SSW Figure 15: Resource block model of Impact’s Silica Hill discovery.Up to 3% chalcopyrite (yellow) is present in places. 1.10 NEXT STEPS Impact’s review of its Lachlan Fold Belt portfolio has reinforced the Company’s belief that its tenements have signiﬁcant prospectivity for the discovery of a major porphyry copper gold deposit. This is in addition to the potential for the discovery of further massive sulphide deposits similar to Commonwealth and which shows strong similarities to the world class Eskay Creek project in the famous Golden Triangle of British Columbia (ASX Release 13 April 2018). Preliminary ﬁeld work on some of the priority targets has already identiﬁed areas of copper-gold-silver mineralisation that require follow up soil geochemistry programmes and further synthesis and review of previous exploration data. Work thus far has focussed on the Commonwealth project but work is also required on the Pine Hill and Day Dawn projects to the south (Figure 1). In addition research continues into the possible genetic links between porphyry copper gold mineralisation in the Lachlan Fold Belt and the unique high sulphidation massive sulphide deposit at Commonwealth. Impact has previously proposed that the Commonwealth deposit is the product of submarine venting of ﬂuids from a buried porphyry copper system (Figure 16 and ASX Release 13 April 2018). This is a potentially powerful model for generating new exploration targets in rocks of Lower Silurian age, extensive tracts of which are present on Impact’s licences in the region. Impact Minerals Ltd Annual Report 2020 17 Review of Operations continued Figure 16: Conceptual model for the upper parts of porphyry copper-gold systems: most models for porphyry-to-epithermal transitions are based on work done in sub-aerial environments. In submarine environments the epithermal mineralisation may be characterised by gold rich high sulphidation volcanogenic massive sulphide deposits such as Commonwealth. ABOUT THE MINERAL RESOURCE ESTIMATE AT COMMONWEALTH The mineralisation at Commonwealth-Main Shaft is typical of a volcanogenic massive sulphide (VMS) type system, containing high grade gold, silver, zinc, lead and copper mineralisation which occurs at the upper contact of a porphyritic rhyolite with the overlying volcanic sedimentary rocks. Mineralisation at Commonwealth South occurs at both the upper and lower contacts of the porphyritic rhyolite and is dominated by 1 50 mm thick stringers and disseminations, often associated with intense brecciation and faulting along the contacts of the porphyritic rhyolite. The Commonwealth Resource strike length is 400 m and it is open along trend in particular to the south. The mineralisation has been deﬁned to a maximum depth of 150 m and is still open. Fourteen new holes were drilled into the project in the last drilling campaign by Impact. The total number of holes drilled at the Commonwealth Project by Impact and previous explorers in a number of separate drill campaigns is 132. Of these holes, 66 intersected the mineralisation wireframe and were used in the estimation. Although some of the holes are historical, Impact has twinned some of the higher grade intersections and these have largely conﬁrmed the grades and widths. The average depth of the drill holes is 52 metres highlighting the shallow nature of the deposit. Holes were drilled with a variety of azimuths and dips to ensure the mineralised units were intersected at optimal angles. Quality control measures employed by Impact included the use of certiﬁed standards (1% of total sample population), ﬁeld duplicates (2% of total sample population) and blanks (2% of total sample population). No previous quality assurance/quality control (QAQC) has been carried out at the Commonwealth Project. Analysis of the standards and blanks showed acceptable to good levels of accuracy in the assaying and little contamination. The duplicate samples matched the originals with a high degree of precision. The drill hole database was reviewed and validated. The top cuts used were gold 30 ppm, silver 500 ppm, copper 1% and zinc 10%. Three-dimensional solid wireframes were constructed from sectional interpretations of the mineralisation using a nominal 0.5 g/t gold cut-off grade. Drill hole intercepts were composited downhole to 1 m lengths and gold, silver, copper, zinc, lead and arsenic grade estimation was carried out using ordinary kriging with hard boundaries. Three search passes, with increasing search distances and decreasing minimum sample numbers, were employed to fully inform the model. All elements ﬁlled all cells in the ﬁrst three search passes. The Commonwealth Mineral Resource estimate has been classiﬁed as an Inferred Mineral Resource in accordance with the guidelines of the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code, 2012). Mineral Resources have been classiﬁed on the basis of conﬁdence in geological and grade continuity, geological modelling conﬁdence, grade continuity and limited QAQC. No Measured or Indicated Mineral Resources have been deﬁned. The Mineral Resource estimate for the Commonwealth Project has been reported above a 0.5 ppm gold cut-off grade. The estimate has been depleted for previous historic mining. 18 Impact Minerals Ltd Annual Report 2020 Review of Operations continued ABOUT THE MINERAL RESOURCE ESTIMATE AT SILICA HILL The mineralisation at Silica Hill lies between 60 m and 200 m north east of the Commonwealth deposit. The mineralisation at Silica Hill comprises a stockwork of veins and disseminations of gold, silver, zinc, lead and copper minerals typical of certain epithermal styles of mineralisation. Visible silver minerals such as proustite and pyrargyrite are common. The mineralisation is hosted by a large flow banded rhyolite flow or sill with large phenocrysts of quartz and feldspar throughout the unit. Within the rhyolite is a second porphyry unit of a different composition that separates the two main zones of mineralisation. The Silica Hill Resource strike length is 500 metres and it is open along trend in particular to the south. The mineralisation has been defined to a maximum depth of 290 metres and is still open. The Mineral resource comprises two limbs, one being south-south west dipping lode (South Lode) that truncates a north- northeast steeply dipping lode (North Lode). These Mineral resources have a total strike length of 240 metres and extend vertically to about 190 metres below surface for the North Lode and to 290 metres below surface for the South Lode. The horizontal width is variable ranging from 4 metres to 40 metres and averaging 20 metres where the two limbs are separate and 75 metres wide where the two limbs join. Thirty four drill holes, 10 RC and 24 diamond, have been completed at Silica Hill, all drilled by Impact. Of these holes, 32 intersected the mineralisation wireframe and were used in the estimation. Quality control measures employed during drill programmes by Impact included the use of certified standards (1% of total sample population), field duplicates (2% of total sample population) and blanks (2% of total sample population). Analysis of the standards and blanks showed acceptable to good levels of accuracy in the assaying and little contamination. The duplicate samples matched the originals with a high degree of precision. The drill hole database was reviewed and validated. Three-dimensional solid wireframes were constructed from sectional interpretations of the mineralisation using a nominal 15 g/t silver cut-off grade. Drill hole intercepts were composited downhole to 1 m lengths and gold and silver grade estimation was carried out using top-cut ordinary kriging with hard boundaries. The top cuts used were respectively 525 g/t silver and 4.8 g/t gold for the north lode and 350 g/t silver and 2.5 g/t gold for the south lode. Three search passes, with increasing search distances and decreasing minimum sample numbers, were employed to fully inform the model. For silver 15% of the blocks and for gold 6% of the blocks did not receive an estimate in the first three passes. These blocks were assigned the nearest estimated grade. The Mineral Resource estimate for Silica Hill has been reported above a 50 g/t silver cut-off grade. The Silica Hill Mineral Resource estimate has been classified as an Inferred Mineral Resource in accordance with the guidelines of the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code, 2012). Mineral Resources have been classified on the basis of confidence in geological and grade continuity, geological modelling confidence, grade continuity and limited QAQC. No Measured or Indicated Mineral Resources have been defined. The review of exploration activities and results contained in this report is based on information compiled by Dr Mike Jones, a Member of the Australian Institute of Geoscientists. He is a director of the Company and works for Impact Minerals Limited. He has sufficient experience which is relevant to the style of mineralisation and types of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Mike Jones has consented to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report which relates to Mineral Resources at Commonwealth-Main Shaft is based upon information compiled by Susan Havlin, who is a Member of the Australasian Institute of Mining and Metallurgy. Susan Havlin is an employee of Optiro Pty Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which she is undertaking to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Susan Havlin consents to the inclusion in the release of a summary based upon her information in the form and context in which it appears. The information in this report which relates to Mineral Resources at Silica Hill is based upon information compiled by Kahan Cervoj, who is a Member of the Australasian Institute of Mining and Metallurgy. Kahan Cervoj is an employee of Optiro Pty Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Kahan Cervoj consents to the inclusion in the release of a summary based upon his information in the form and context in which it appears. Impact Minerals Ltd Annual Report 2020 19 Review of Operations continued 2. BROKEN HILL PROJECT (IPT 100%) During the year Impact commenced a major review of its Broken Hill nickel-copper-platinum group metal (PGM) project in the light of record palladium prices and signiﬁcant increases in the price of all precious metals. Plans progressed for a major drill programme at the Broken Hill project to test three prospects with signiﬁcant potential for the discovery of nickel-copper-PGM in a belt of maﬁc-ultramaﬁc rocks that is about 40 km long stretching from Moorkai in the north east to the Little Broken Hill area in the south west. Three key prospects, Red Hill, Platinum Springs and Little Broken Hill Gabbro, have been identiﬁed (Figure 17). Relevant ASX announcements by Impact were released on 14th February 2020, 7th May 2020 and 1st July 2020. At Broken Hill, Impact and others have discovered some of the highest grades of all six Platinum Group Metals (platinum, palladium, rhodium, osmium, ruthenium, iridium) in Australia, together with exceptional nickel-copper grades. For example at the Red Hill Prospect, exceptional grades were returned from drilling by Impact including a stand-out intercept of: 1.2 metres at 254 g/t (9.5 ounces) palladium, 10.4 g/t platinum, 10.9 g/t gold, 7.4% nickel, 1.8% copper, 19 g/t silver, 0.5% cobalt, 4.6 g/t rhodium, 7.2 g/t iridium, 5.6 g/t osmium and 3.1 g/t ruthenium (ASX Announcement 26th October 2015). Figure 17: Impact’s ground holdings in the Broken Hill area showing key prospects including Red Hill, Platinum Springs and Little Broken Hill Gabbro. A total of 12 out of 13 of Impact’s drill holes at Red Hill returned robust widths and grades of similar mineralisation within 70 metres of surface (Figure 18). The mineralisation is open along trend and at depth and follow-up drilling to test for extensions to this remarkable mineralisation is now underway. At Red Hill, the mineralisation comprises variably weathered sulphide mineralisation hosted in veins and faults associated with ultramaﬁc dykes and brittle felsic pegmatites. The dykes are interpreted as apophyses from the main Red Hill intrusion and future exploration will focus on tracking the dykes back towards the intrusion at depth (Figure 18). The mineralisation extends over a strike length of at least 100 metres and down to a depth of about 60 metres below surface. It is open along trend to the north and south as well as at depth (Figure 18). 20 Impact Minerals Ltd Annual Report 2020 Review of Operations continued At Platinum Springs, drilling by Impact in 2015 returned a very high grade intercept of magmatic massive sulphide mineralisation that returned: 0.6 metres at 11.5 g/t platinum, 25.6 g/t palladium, 1.4 g/t gold, 7.6% copper, 7.4% nickel and 44.3 g/t silver, 1.3 g/t rhodium, 1.7 g/t iridium, 2.0 g/t osmium and 0.8 g/t ruthenium (ASX Announcements 3rd February 2016 and 31st March 2016). 2.1 HIGH GRADE RARE PGM’S AT RED HILL During the year high grades of the rare platinum group elements rhodium, iridium, osmium and ruthenium were returned from new assays from seven previously drilled diamond drill holes at Red Hill. The drill holes had previously only been assayed for palladium and platinum (Figure 18 and ASX Releases October 23rd 2015, October 26th 2015, November 2nd 2015, November 9th 2015, December 8th 2015, January 29th 2016 and March 3rd 2017. Seven holes with high grades of palladium and platinum were selected for full-suite PGE analysis by ﬁre assay (with nickel sulphide collection) for rhodium, iridium, osmium, ruthenium, palladium, platinum and gold. These particular holes were selected because they intersected up and down-dip extensions of the previously reported spectacular intercept from RHD012 (Figure 18 and ASX Release October 23rd 2015). This hole returned: 3.5 metres at 162.4 g/t (5.3 ounces) 7PGE comprising: 5.7 g/t rhodium, 2.6 g/t iridium, 2.0 g/t osmium, 1.1 g/t ruthenium, 144 g/t (4.6 ounces) palladium, 5 g/t platinum, 6 g/t gold, 2.9% nickel, 2.3% copper and 14.5 g/t silver from 67.3m down hole. This intercept also includes the high grade intercept mentioned above. Figure 18: Drill hole location plan for Red Hill showing the location of the recently reported assay results (see ASX Release 7th May 2020 for details). Impact Minerals Ltd Annual Report 2020 21 Review of Operations continued The seven drill holes all returned exceptional assays for the rare PGE’s and the results are tabulated below and summarised in Figure 18. Ir g/t Rh g/t Ru g/t Au g/t Cu% Ni% Ag ppm Hole ID RHD001 From To Metres Au) Pt g/t 7PGM (incl. 46.00 78.00 32.00 5.2 including 57.27 62.40 5.10 10.9 also including 71.60 75.80 including 57.27 58.47 4.20 1.20 RHD006 52.00 77.00 25.00 12.7 17.9 5.7 including 57.88 58.42 0.54 24.5 RHD008 including 0.00 29.00 29.00 8.50 9.00 0.50 10.9 41.9 also including 13.00 13.65 0.65 35.2 Pd g/t 2.3 3.3 5.4 4.9 3.0 8.4 5.1 25.8 4.0 1.5 3.7 4.9 7.9 1.3 0.7 2.5 4.3 7.9 also including 27.70 28.30 0.60 54.5 19.2 29.7 RHD014 31.00 35.70 including 32.40 34.00 RHD015 58.10 62.00 including 60.50 61.00 4.70 1.60 3.90 0.50 RHD017 41.00 55.00 14.00 including 43.60 44.20 RHD019 37.40 43.70 including 37.4 37.9 0.60 6.30 0.50 6.1 9.7 5.5 14.5 3.3 10.4 5.6 15.2 1.8 2.4 2.4 3.0 1.2 3.8 1.6 5.0 3.7 6.6 2.0 5.9 1.6 2.9 3.4 8.8 Os g/t 0.3 1.1 0.6 1.8 0.3 4.0 0.8 3.4 5.2 0.9 0.1 0.1 0.3 0.4 0.1 1.1 0.1 0.4 1.2 0.7 1.8 0.3 5.1 0.9 3.6 7.0 1.2 0.1 0.1 0.3 0.5 0.1 1.2 0.1 0.3 0.3 0.3 0.9 0.5 1.6 0.3 3.8 0.8 2.6 7.2 0.9 0.1 0.1 0.2 0.4 0.1 0.8 0.1 0.3 0.2 0.5 0.5 0.7 0.2 2.4 0.4 1.5 3.8 0.5 0.0 0.1 0.1 0.1 0.1 0.5 0.0 0.1 0.1 0.2 0.4 0.1 0.2 0.1 0.4 0.8 0.1 2.1 0.2 0.4 0.1 0.3 0.1 0.1 0.3 0.4 1.0 1.9 2.6 3.1 0.9 1.2 2.3 9.4 5.3 12.2 0.6 1.0 1.4 0.5 0.3 1.8 0.9 0.9 0.5 0.9 0.5 2.0 0.6 1.9 0.4 0.6 1.2 0.5 0.5 0.2 0.3 0.3 0.4 0.9 0.5 0.5 11 18 35 20 7 6 58 155 8 147 5 8 13 4 10 79 14 40 Table 1: Composite assay results for the 7PGM (including gold) together with previously reported copper, nickel and silver. There are some stand out results, for example Hole RHD008 which returned: 29.0 metres at 10.9 g/t 7PGM comprising: 0.8 g/t rhodium, 0.9 g/t iridium, 0.8 g/t osmium, 0.4 g/t ruthenium, 5.1 g/t palladium, 2.5 g/t platinum and 0.4 g/t gold, 2.3% copper, 0.4% nickel and 58 g/t silver from surface. This intercept also included two veins of very high grade mineralisation that returned: 0.65 metres at 35.2 g/t (1.1 ounces) 7PGM comprising: 7.2 g/t rhodium, 7.0 g/t iridium, 5.2 g/t osmium, 3.8 g/t ruthenium, 4.0 g/t palladium, 7.9 g/t platinum, 0.01 g/t gold, 5.3% copper, 1.2% nickel and 8 g/t silver from 13.0 metres; and 0.6 metres at 54.5 g/t (1.7 ounces) 7GM comprising: 0.9 g/t rhodium, 1.2 g/t iridium, 0.9 g/t osmium, 0.5 ruthenium, 29.7 g/t palladium, 19.2 g/t platinum, 2.1 g/t gold, 12.2% copper, 0.5% nickel and 147 g/t silver from 27.7 metres. The extensive nature of the rare PGM’s in the seven drill holes suggests it is likely that the other ﬁve mineralised holes drilled at Red Hill will also contain the same metals. This is important for future metallurgical process test work. 2.2 DISCUSSION AND NEXT STEPS These new PGE results conﬁrm again that the mineralisation at Red Hill and other prospects in the Broken Hill area such as Platinum Springs and Little Darling Creek, is exceptional even on a global scale. This is because it is unusual to get such high grades of all the PGE’s together, and in addition it also contains gold. Previous work by Impact has shown that this is because the parent magmas are sourced from the deep mantle and were intruded into the middle to upper crust during the break up of the supercontinent Rodinia about 800 million years ago (Figure 19 and ASX Release March 6th 2019). 22 Impact Minerals Ltd Annual Report 2020 Review of Operations continued Figure 19: Position of the proposed mantle plume head (red circle) responsible for the breakup of Rodinia showing the location of Broken Hill in relation to the Jinchuan and Lengshuiqing Ni-Cu-Co-PGE deposits at about 800 million years ago (after Huang et al., 2015). At this time Broken Hill was close to Jinchuan in China, one of world’s major nickel-copper-PGE deposits (>500 Mt at 1.2% nickel, 0.7% copper and 0.4 g/t total PGE), and which is of the same age as the ultramaﬁc intrusions at Red Hill and Platinum Springs (Figure 19). Accordingly Impact views the Broken Hill province as having exceptional prospectivity for magmatic nickel- copper sulphides. A major drill programme of aircore, reverse circulation and diamond drilling was started to test the three priority prospects: Red Hill, Platinum Springs and the Little Broken Hill Gabbro-Rockwell Trend (Figure 17). Assays are awaited. In April 2020 Impact received a grant of $75,000 from the $2 million New Frontiers Cooperative Drilling grants programme awarded by the Department of Planning, Industry and Environment of the New South Wales Government. At the Little Broken Hill Gabbro- Rockwell Trend an extensive programme of aircore drilling will test a 4 kilometre long part of the intrusive complex which is under shallow cover and which has not been previously drill tested. The grant, which is awarded on the technical merit of the proposed drill programme, will be used to drill test speciﬁc targets at Little Broken Hill Gabbro. Impact Minerals Ltd Annual Report 2020 23 Review of Operations continued 3. ARKUN PROJECT, WA (IPT 100%) In mid 2020 Impact made applications for eight 100% owned Exploration Licences that comprise a major new project prospective for nickel-copper-platinum group metals and gold in the emerging new province for these metals in the south west Yilgarn Craton of Western Australia (Figure 20). This follows the recent signiﬁcant nickel-copper-PGM discovery at Julimar by Chalice Gold NL. Relevant ASX announcements by Impact were released on 29th May 2020 and 10th June 2020. Anglo American plc, one of the world’s leading mining companies and an active explorer for nickel- copper and platinum group metals, lodged Exploration Licence applications covering a vast area of some 10,130 square kilometres shortly after Impact released its ﬁrst announcement on Arkun (ASX: IPT Release 29 May 2020). Anglo’s applications directly surround three sides of Impact’s Arkun project (Figure 21). The Arkun project, which is centred between York and Corrigin 130 km east of Perth, was identiﬁed as an area of anomalous nickel-copper- gold anomalies in publicly available regional geochemistry data sets. A subsequent interpretation of regional magnetic data by Impact identiﬁed the area as lying within a major deformation zone or mobile belt that trends NW-SE from the Moora-Julimar- Yarawindah area through Arkun and which may contain deformed and metamorphosed equivalents of those rocks (Figures 20 and 21). Figure 20: Location and Regional Geology of the Arkun Project and showing key nickel- copper-PGE deposits and recent discoveries. Figure 21: Regional magnetic image showing major structures in the South West Terrane of the Yilgarn Craton. The Julimar-Yarawindah-Moora area is at the north western end of the interpreted mobile belt. 24 Impact Minerals Ltd Annual Report 2020 Review of Operations continued This belt is generally not recognised in many regional geology maps and yet is self-evident in the magnetic data. This is a signiﬁcant breakthrough in understanding for Impact. The mobile belt is about 500 km long and up to 30 km wide, and is of a scale that suggests it may mark an ancient terrane boundary or proto-craton margin. Such geological provinces (of varying ages) are well known around the world as prospective terranes for hosting major nickel-copper-PGE deposits with examples such as Nova-Bollinger and Mawson (Proterozoic age – Figure 12), the Thomson fold belt in Canada and the recent discoveries at Yarawindah and Julimar in Western Australia (Figures 20 and 21). In addition, the project is centred on a signiﬁcant WNW-trending gravity high evident in regional gravity data and numerous “eye structures” visible in regional magnetic data and similar to those at Nova-Bollinger. Such gravity and magnetic anomalies are used as targeting criteria for similar deposits throughout the Albany-Fraser Province and globally (ASX Release 29 May 2020). Regional Geochemical Anomalies The Arkun project also covers several soil and rock chip geochemical anomalies for nickel, copper and gold in regional and proprietary datasets with widely spaced samples (Figure 22). Nickel values range up to 96 ppm, copper values up to 174 ppm and gold up to 11.5 ppb. Although these absolute values are modest, the entire area is dominated by sandy soils developed on various substrates. It is well known that such sandy soils may signiﬁcantly dilute soil geochemistry responses and background values are estimated to less than 10 ppm for nickel and copper and no more than 1 ppb for gold. Accordingly, the anomalous samples are about 10 to 20 times background. Impact considers these responses to be signiﬁcant given the vast distances between samples. Figure 22: Images of the regional soil geochemistry data showing sample locations, and nickel, copper and gold results. Nickel values range up to 96 ppm (CSIRO data only), copper values up to 174 ppm and gold up to 11.5 ppb (proprietary data, no nickel assays). Warmer colours represent higher assay values. Impact Minerals Ltd Annual Report 2020 25 Review of Operations continued NEXT STEPS The eight tenement applications (E70/5430-34, E70/5490 and E70/5504-05) are now pending grant, a process expected to take about 5 months. Impact has commenced reconnaissance work including ﬁeld checking and rock chip sampling along gazetted roads and tracks to help accelerate exploration prior to grant. In addition, an interpretation of the surface geology will be completed to assess the effectiveness of the previous soil geochemistry surveys to determine the best surface geochemistry technique for the area. A detailed interpretation of the bedrock geology from the magnetic data will be completed to help identify other priority areas for follow up. 4. BLACKRIDGE GOLD PROJECT (IPT 100%) Impact’s Blackridge project covers 150 square kilometres and comprises three 100% owned Exploration Permits (EPM26806, EPM27410 and EPM27571) and one granted Mining Lease ML2386 (Figure 24) which lies in the centre of the project area (ASX Release August 31st 2018). The project covers about 90% of the southern part of the Blackridge- Miclere gold ﬁeld located near Clermont in central Queensland (Figure 23). The gold produced at Blackridge was mostly hosted in basal conglomerates of Permian- aged sedimentary basins which include the mined coal measures that unconformably overlie the Anakie metamorphic rocks of Middle Ordovician age and older (Figures 23 and 24). The unconformity is present at surface over about 1,500 metres of trend at Blackridge. Much of the lease is covered by loose gravel with only a few outcrops of conglomerate and schist in places. This cover, within which small gold nuggets have been found by prospectors over many years, has hindered previous exploration and there has been no recent systematic exploration in the area. Figure 23: Location and regional geology of the Blackridge Project. 26 Impact Minerals Ltd Annual Report 2020 Review of Operations continued Figure 24: Tenure and geology of the Blackridge Project. Impact Minerals Ltd Annual Report 2020 27 Review of Operations continued During the year Impact completed a major bulk sampling programme at Blackridge with a view to trial mining of its mining lease in conjunction with four other mining leases over which Impact held an option to purchase a 95% interest. The option lapsed in November 2019 because commercial terms could not be negotiated with the holder of the mining lease. Since that time Impact has consolidated its ground holding in the area and is now considering its options to progress the project. The increased ground position at Blackridge was warranted by the results of the bulk sampling programme which conﬁrmed the potential for signiﬁcant volumes of free digging oxide material with exceptional gold recoveries of at least 95% and probably as high as +98% using simple wet gravity processing (ASX Release September 18th 2019). Following successful results from a Phase 1 sample program in 2018, comprising samples weighing up to 1 tonne, a second-hand mobile water processing plant capable of processing up to 50 tonnes of material per day was purchased and commissioned by Impact for a second phase of bulk sampling (ASX Releases October 23rd 2018 and June 18th 2019). For each sample, a panned concentrate was collected and sent for gravimetric ﬁre assay at Intertek Laboratories in Perth. In addition the tailings from the panned samples (“panned tailings”) were sent for cyanide leaching by the Leachwell method at ALS Laboratories in Townsville to check for potential losses of gold by Impact’s processing methodology to the ﬁne tailings. In addition the trenches and samples were detected for gold nuggets using a handheld metal detector. The results shown in Figure 26 and Figure 25 show examples of the panned concentrates and also the weights and sizes of the nuggets found in the trenches. It is appropriate given the nature of the material sampled to report the results in grams per loose cubic metre as was done previously (ASX Release October 23rd 2018). Figure 25: Examples of the panned concentrates from Foxes Lead on ML2386 and picture of nuggets from all trenches. All gold is the property of Impact Minerals Limited. 28 Impact Minerals Ltd Annual Report 2020 Review of Operations continued Figure 26: Gold results, previous gold production, geology and mining lease locations for the central Blackridge project area. All results are presented in grams per loose cubic metre. The second phase sample results are highlighted in the yellow call out boxes. Impact Minerals Ltd Annual Report 2020 29 Review of Operations continued 4.1 GOLD RESULTS Twelve trenches were dug at varying intervals of between 50 metres and a few hundred metres over a strike length of 1,000 metres (Figure 26). All samples were free digging indicating there are potentially large volumes of easily mineable oxide material in at least the top 4 to 5 metres of the proﬁle at Blackridge (Figure 27). The depth of the oxide material is unknown but previous drilling in the area indicates relatively easily processed material may be present down to at least 25 metres or more in many places (ASX Release May 29th 2018). In addition, every trench returned gold with values ranging from 0.07 g/m3 to 2.17 g/m3 at an average of 0.36 g/m3 (Table 2). The values were calculated from the panned concentrate, the Leachwell assays and the weight of nuggets. It is remarkable that these concentrates represent back calculated head grades of less than 10 parts per billion and attest to the unique processing characteristics of the oxide-hosted gold. Eight of the 12 trenches returned gold nuggets and the grades are mostly inﬂuenced by the number of nuggets in the sample. In particular Trench BRC015 returned 11.5 grams of nuggets from 12 tonnes of rock to give a grade of 2.17 g/m3 (Figures 25 and 26). Trench BRC015 lies close to the start of “Foxes Lead”, one of the high- grade “runs” mined in the late 1800’s and early 1900’s (Figure 26 and ASX Release October 23rd 2018). Previous production data from this era indicates that the number of nuggets is likely to signiﬁcantly increase as the high-grade runs are approached with reported grades commonly of more than one ounce per tonne (Figure 27, ASX Release October 23rd 2018). Figure 27: Photographs showing the free digging nature of the oxide material in the top 4 to 5 metres and also the target unconformity. Samples were taken approximately 1.5 metres above to 0.5 metres below the unconformity. There are large volumes of free-digging material across the Blackridge project. These leads are quite robust and extend continuously down dip for at least 1,500 metres in places (Figure 26). Numerous leads may be present along the unconformity within the area of the mining leases. These new results suggest that the basal unconformity could be weakly to moderately mineralised over the entire 1,000 metres of trend sampled and that it is potentially mineralised for a further 500 metres to the south, past the Hard Hill prospect (Figure 26). In addition Impact considers it possible that further closer spaced sampling could return more nuggets along the entire unconformity and in particular close to the high grade leads, thus potentially increasing the average grade. If this were the case, then there would be clear potential at Blackridge for a large bulk mining operation. 30 Impact Minerals Ltd Annual Report 2020 Review of Operations continued 4.2 GOLD IN THE SOIL PROFILE OVER ML2386 The area immediately east of the main target unconformity on ML2386 and MLAs 100158 and 159 comprises a well-developed soil proﬁle over the Anakie metamorphic basement rocks and loose scree of both Anakie and Permian rocks (Figure 26). This area has been prospected extensively for gold nuggets over the years using hand held metal detectors. Two samples of the soil, which weighed 0.7 t and 0.6 t, were processed and returned 0.04 g/m3 and 0.17 g/m3 (Figure 26). The samples were taken from areas where several small nuggets weighing up to a few grams had been recently found by prospectors. Accordingly, the in situ grades would have been higher if these nuggets were to be incorporated into the amount of gold recovered. These results indicate there is potential for gold to be hosted in large volumes of loose free digging soil in the top few metres over much of the granted mining lease ML2386 (Figure 26). 4.3 RESULTS OF CYANIDE LEACHING ON THE PANNED TAILINGS The panned tailings from the samples were sent for cyanide leaching to check that no signiﬁcant gold had been missed by the sluicing and panning process. The total weight of panned tailings was 330 kg which came from a total of 168.7 tonnes of original bulk sample material (Table 2). This represents a mass concentration of almost 100 to one. Two 3 kg samples were sub-sampled from each of the tailings samples and leached with cyanide. This is a total of 102 kg or 31% of the total tailings. For the A samples, assays between 0.5 g/t and 43 g/t gold and averaging 9.3 g/t gold were returned. For the B samples, gold assays between 0.1 g/t and 25.7 g/t gold and averaging 7.5 g/t were returned. These results equate to an average head grade of less than 25 parts per billion when back calculated to the original sample weights of between 10.4 tonnes and 14.7 tonnes. This is unsurprising given the very high mass concentration and it should be noted that this does not reﬂect the primary head grade. These are very low values and attest to the efficacy of the wet gravity operation and therefore demonstrate the exceptional liberation characteristics of the gold particles in the oxide material at Blackridge. However, the absolute gold grades in the tailings themselves are exceptional with an overall average grade of all material leached of 8.4 g/t (average of the A plus B sample). This upgrade has been achieved mostly by the removal of the coarse barren pebbles in the host conglomerate by the sluicing process and the concentration of very low levels of gold. Accordingly, signiﬁcant tonnages of tailings generated by a large scale operation could be a potentially very valuable resource if re-processed by other methods, in particular towards the end of any mine life. Further test work on the liberation of the gold in the tailings is warranted. Table 2: Results of the Bulk Sampling Programme at Blackridge. TRENCH AND SAMPLE DETAILS PANNED CONCENTRATE GRAVIMETRIC LEACHWELL ASSAYS NUGGETS Totals (Con+Ave Leachwell+Nuggets) Overall Depth (m) Sample Interval From Sample Interval To Bulk Sample Weight (t) Sample ID Sample ID Sample Weight g Assay Value g/t Original Sample weight kg A Sample Gold g/t B Sample Gold g/t Weight of gold (g) Gold g/t Gold g/m3 Trench ID Prospect Easting Northing RESULTS FROM 11 TRENCHES BRC015 Foxes 560095 7496330 BRC016 Foxes BRC017 Foxes BRC018 Foxes 560129 7496291 560125 7496240 560128 7496189 BRC019 Foxes 560116 7496315 BRC020 Foxes 560061 7496339 BRC021 Harveys 560055 7495545 BRC022 Smiths 560077 7495452 BRC024 Harveys 560048 7495511 BRC025 Cumberland 560123 7495717 4 1.5 1.5 4 1.5 5 4 3 2 2 BRC026 Foxes 560103 7496313 2.5 RESULTS FROM PROFILE IN 12th TRENCH BRC023 Foxes 560085 7496299 BRC023 Foxes 560085 7496299 RESULTS FROM PHASE 1 SAMPLES BRC009 Foxes 560109 7496318 BRC010 Flats BRC011 Flats 560233 7496168 560377 7496020 RESULTS OF OVERSIZE Oversize Foxes N/A N/A 2 4 1.60 0.30 0.70 2.5 0.5 0.5 2.5 0.5 2 2 1.5 0.5 0.5 1 0 2 0.6 0 0 4 1.5 1.5 4 1.5 5 4 3 2 2 2.5 2 4 1.6 0.3 0.7 12 12.2 14.7 12.8 13.6 13.4 14.2 13.8 12.8 13 11.6 12.4 12.2 0.9055 0.732 0.6005 10.4 10687 10689 10691 10693 10695 10697 10699 10871 10882 10884 10886 10875 10880 10619 10620 10621 40.20 78.73 30.63 27.28 22.92 46.52 3.03 7.48 3.69 4.65 3.91 2.62 1.28 2.43 5.83 14.26 105447 46583 17696 119698 38204 20400 147881 66824 388443 83062 256769 131417 30064 194403 1854 2919 10688 10690 10692 10694 10696 10698 10700 10872 10883 10885 10887 10876 10881 10877 10878 10879 17.97 19.82 24.5 24.07 23.19 17.1 19.39 16.71 19.94 18.63 30 14.76 17.93 12.41 12.24 12.8 17.15 13 8 19.05 8.04 0.486 2.82 2.05 43.5 4.56 15.8 0.585 0.453 3.27 17.4 1.14 13.85 4.58 11.6 19.65 11.35 0.149 3.53 3.67 25.7 4.33 14.15 0.741 1.435 3.9 6.84 0.148 1.36 0.38 0.08 0.21 0.22 0.09 0.07 0.04 0.17 0.09 0.20 0.05 0.00 0.73 0.03 0.11 2.17 0.61 0.13 0.33 0.34 0.14 0.12 0.07 0.27 0.14 0.32 0.08 0.01 1.17 0.04 0.17 11.5 0.63 0.43 1.81 0.48 0.65 0.76 0.28 – – – – – – – – – 10873 4.49 152035 10874 28.56 0.784 2.28 0.08 0.12 Impact Minerals Ltd Annual Report 2020 31 Review of Operations continued 4.4 ESTIMATE OF GOLD RECOVERY It is estimated that gold recoveries are in the range 95-98%. This is based on: a. the very low values of gold back calculated from the oversize sample from the ﬁrst six trenches; b. the lack of nuggets in the oversize material; c. the very clean nature of the original pebbles in the oversize material; that is, no matrix or clay attached to the pebbles; and d. the very low levels of gold in the panned ﬁnes as determined by cyanide leaching. The most likely loss of signiﬁcant gold would have been undetected nuggets in the oversize material or loose material in the trenches and in the tailings from the sluice. These are not considered material at this stage of exploration. 4.5 NEXT STEPS The bulk sampling programme has demonstrated the potential for large volumes of easily mined and easily processed material from surface to a depth of at least 5 metres with exceptional liberation characteristics of the contained gold. Further sampling is required to establish the grade distribution in the proﬁle above the target unconformity horizon, as this will have a signiﬁcant inﬂuence on the strip ratio of any potential open pit mine. Previous drilling has demonstrated that gold is present sporadically throughout the entire 100 metre thick sedimentary package at Blackridge (ASX Release May 29th 2018). In addition further sampling at closer spaced intervals is required along the unconformity from north to south to determine if zones of better grade are present (Figure 26). The next most practical step forward for Impact would be to commence much larger sampling programmes on its granted mining lease. Impact is considering its options for doing this work which will include discussions with various speciality contractors. TRENCH AND SAMPLE DETAILS PANNED CONCENTRATE GRAVIMETRIC LEACHWELL ASSAYS NUGGETS Totals (Con+Ave Leachwell+Nuggets) Overall Depth (m) Sample Interval From Sample Interval To Bulk Sample Weight (t) Sample ID Sample Weight g Assay Value g/t Sample ID Original Sample weight kg A Sample Gold g/t B Sample Gold g/t Weight of gold (g) Gold g/t Gold g/m3 10687 10689 10691 10693 10695 10697 10699 10871 10882 10884 10886 10875 10880 10619 10620 10621 40.20 78.73 30.63 27.28 22.92 46.52 3.03 7.48 3.69 4.65 3.91 2.62 1.28 2.43 5.83 14.26 105447 46583 17696 119698 38204 20400 147881 66824 388443 83062 256769 131417 30064 194403 1854 2919 10688 10690 10692 10694 10696 10698 10700 10872 10883 10885 10887 10876 10881 10877 10878 10879 17.97 19.82 24.5 24.07 23.19 17.1 19.39 16.71 19.94 18.63 30 14.76 17.93 12.41 12.24 12.8 17.15 13 8 19.05 8.04 0.486 2.82 2.05 43.5 4.56 15.8 0.585 0.453 3.27 17.4 1.14 13.85 4.58 11.6 19.65 11.35 0.149 3.53 3.67 25.7 4.33 14.15 0.741 1.435 3.9 6.84 0.148 Oversize Foxes N/A N/A 10.4 10873 4.49 152035 10874 28.56 0.784 2.28 11.5 0.63 0.43 – 1.81 – 0.48 – – 0.65 0.76 0.28 – – – – – 1.36 0.38 0.08 0.21 0.22 0.09 0.07 0.04 0.17 0.09 0.20 0.05 0.00 0.73 0.03 0.11 2.17 0.61 0.13 0.33 0.34 0.14 0.12 0.07 0.27 0.14 0.32 0.08 0.01 1.17 0.04 0.17 0.08 0.12 Trench ID Prospect Easting Northing RESULTS FROM 11 TRENCHES BRC015 Foxes 560095 7496330 BRC016 Foxes BRC017 Foxes BRC018 Foxes 560129 7496291 560125 7496240 560128 7496189 BRC019 Foxes 560116 7496315 BRC020 Foxes 560061 7496339 BRC021 Harveys 560055 7495545 BRC022 Smiths 560077 7495452 BRC024 Harveys 560048 7495511 BRC025 Cumberland 560123 7495717 RESULTS FROM PROFILE IN 12th TRENCH BRC023 Foxes 560085 7496299 BRC023 Foxes 560085 7496299 RESULTS FROM PHASE 1 SAMPLES BRC010 Flats BRC011 Flats 560233 7496168 560377 7496020 RESULTS OF OVERSIZE BRC026 Foxes 560103 7496313 2.5 4 1.5 1.5 4 1.5 5 4 3 2 2 2 4 1.60 0.30 0.70 2.5 0.5 0.5 2.5 0.5 2 2 1.5 0.5 0.5 1 0 2 0 0 4 1.5 1.5 4 1.5 5 4 3 2 2 2 4 2.5 12 12.2 14.7 12.8 13.6 13.4 14.2 13.8 12.8 13 11.6 12.4 12.2 1.6 0.3 0.7 0.9055 0.732 0.6005 BRC009 Foxes 560109 7496318 0.6 32 Impact Minerals Ltd Annual Report 2020 Financial Report Impact Minerals Ltd Annual Report 2020 33 Directors’ Report Your Directors present their report on the consolidated entity consisting of Impact Minerals Limited (“the Company”) and its subsidiaries (“the Group” or “the Consolidated Entity”) and its subsidiaries at the end of the year ended 30 June 2020. DIRECTORS The following persons were Directors of Impact Minerals Limited during the whole of the financial year and up to the date of this report unless noted otherwise: – Peter Unsworth, Non-Executive Chairman – Michael Jones, Managing Director – Paul Ingram, Non-Executive Director – Markus Elsasser, Non-Executive Director – Eamon Hannon, Non-Executive Director (resigned 10 September 2019) PRINCIPAL ACTIVITIES The principal activity of the Group during the financial year was exploration for deposits of nickel, gold, copper and platinum group elements. FINANCIAL RESULTS The consolidated loss of the Group after providing for income tax for the year ended 30 June 2020 was $1,685,165 (2019: $7,293,169). DIVIDENDS No dividends have been paid or declared since the start of the financial year. No recommendation for the payment of a dividend has been made by the Directors. OPERATIONS AND FINANCIAL REVIEW During the year Impact has expanded and progressed exploration across its portfolio of five projects. At the 903 km2 Commonwealth Project in the prolific copper-gold province of the Lachlan Fold Belt in NSW, the significant exploration potential for large intrusive-related copper-gold deposits was confirmed and enhanced following the discovery of the Boda-Kaiser copper-gold deposit by Alkane Resources Limited (ASX:ALK). Boda lies 3 km along trend from Impact’s tenements. Impact has identified five priority prospects for similar mineralisation with rock chip samples from all five returning encouraging results. Work is now focussed on identifying specific drill targets on the priority Apsley target. In addition, an increase in resources at the Commonwealth gold-silver-zinc-lead deposit and a maiden resource for the nearby Silica Hill deposit were also released. These deposits are now being reviewed for further exploration as they are open at depth below high grade drill intercepts. A review of the 816 km2 Broken Hill nickel-copper-platinum group metal project in the light of record palladium prices and significant increases in the prices of all precious metals highlighted the potential for high grade massive sulphide deposits at three targets. Drilling is now in progress at all three areas. At the Blackridge gold project in central Queensland Impact has increased its ground holding to establish itself as the largest ground holder in the historic Micelere-Blackridge gold field. Discussions are in progress to attempt trial mining at the project which is characterised by nuggetty gold that is difficult to effectively drill out. At the nearby Clermont gold project, a review of previous high grade drill intercepts has identified a 2 km long target area that requires follow up drilling. A new 100% owned project, Arkun, located 120 km east of Perth was secured during the year. The project covers 1,900 km2 of the along trend extension of deformed equivalents of the host rocks at the Julimar nickel-copper-PGE discovery of Chalice Gold Mines Limited (ASX:CHN). Anglo American plc, one of the world’s top 10 mining companies, staked a vast ground holding of about 10,000 km2 around the Arkun project on the day of Impact’s first announcement on Arkun. It is evident that this part of WA is an emerging exploration hotspot and Impact now controls a significant ground holding there. The tenements are due for grant in late 2020 and on-ground work will commence immediately afterwards. 34 Impact Minerals Ltd Annual Report 2020 Directors’ Report continued FINANCIAL As at 30 June 2020, the Group had net assets of $13,377,076 (2019: $11,859,834) including cash and cash equivalents of $2,431,426 (2019: $2,002,624). RESPONSE TO COVID-19 Impact is continuing to review the ongoing situation relating to the COVID-19 pandemic and the implications for the health and wellbeing of our employees, contractors and stakeholders. The Company has been pro-active with respect to its response to COVID-19 and has developed operational procedures and plans in line with official health advice and government directives. Impact will continue to operate within these guidelines and will adapt its procedures as required. The impact on the Group’s operations to date has not been material and whilst the situation with regards to COVID-19 remains uncertain, the Company remains an active explorer across its projects and does not foresee, at this time, that it will have a material impact on future operations. Competent Persons Statement The review of operations contained in this report is based on information compiled by Dr Mike Jones, a Member of the Australian Institute of Geoscientists. He is a director of the Company and works for Impact Minerals Limited. He has sufficient experience which is relevant to the style of mineralisation and types of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as deﬁned in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Dr Jones has consented to the inclusion in the report of the matters based on his information in the form and context in which it appears. Impact Minerals conﬁrms that it is not aware of any new information or data that materially affects the information included in previous market announcements and in the case of mineral resource estimates, that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS Signiﬁcant changes in the state of affairs of the Group during the ﬁnancial year were as follows: – In August 2019 Impact announced a signiﬁcant increase in resources at the Company’s 100% owned Commonwealth gold-silver-zinc-lead-copper project 95 km north of Orange in New South Wales including a maiden resource for the silver-rich Silica Hill Prospect (see IPT ASX Release dated 22 August 2019). – In mid 2020 Impact made applications for eight 100% owned Exploration Licences prospective for nickel-copper- platinum group metals and gold in the emerging province in the south west Yilgarn Craton of Western Australia (the Arkun Project). EVENTS SINCE THE END OF THE FINANCIAL YEAR On 28 July 2020, the Company completed a placement to sophisticated and professional investors of 216,333,333 ordinary shares at an issue price of 1.5 cents per share raising $3,245,000 before costs. The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has not signiﬁcantly impacted the Group up to 30 June 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided. Other than the above, there has not arisen in the interval between the end of the ﬁnancial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect signiﬁcantly the operations, the results of those operations, or the state of affairs of the Group in future ﬁnancial years. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS The Directors are not aware of any developments that might have a signiﬁcant effect on the operations of the Group in subsequent ﬁnancial years not already disclosed in this report. Impact Minerals Ltd Annual Report 2020 35 Directors’ Report continued ENVIRONMENTAL REGULATION The Group is subject to signiﬁcant environmental regulation in respect of its exploration activities. Tenements in Western Australia, New South Wales and Queensland are granted subject to adherence to environmental conditions with strict controls on clearing, including a prohibition on the use of mechanised equipment or development without the approval of the relevant government agencies, and with rehabilitation required on completion of exploration activities. These regulations are controlled by the Department of Mines, Industry Regulation and Safety (Western Australia), the Department of Industry (New South Wales) and the Department of Natural Resources and Mines (Queensland). Impact Minerals Limited conducts its exploration activities in an environmentally sensitive manner and the Group is not aware of any breach of statutory conditions or obligations. Greenhouse gas and energy data reporting requirements 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. The Directors have assessed that there are no current reporting requirements for the year ended 30 June 2020, however reporting requirements may change in the future. INFORMATION ON DIRECTORS Peter Unsworth B.Com (Non-Executive Chairman), Director since 28 April 2006 Experience and expertise Mr Unsworth, formerly a chartered accountant, has more than 40 years’ experience in the corporate finance, investment, and securities industries and has a wealth of management experience with both public and private companies. A former Executive Director with a leading Western Australian stockbroking company, Mr Unsworth has been a Director of a number of public exploration and mining companies. He is a former Director and Chairman of the Western Australian Government owned Gold Corporation (operator of The Perth Mint). Other current directorships None Former directorships in last three years Stealth Global Holdings Limited (appointed July 2018, retired October 2019) Special responsibilities Chair of the Board Interests in shares and options Ordinary shares – Impact Minerals Limited Unlisted options – Impact Minerals Limited 15,994,098 32,000,000 Michael Jones PhD, MAIG (Managing Director), Director since 31 March 2006 Experience and expertise Dr Jones completed undergraduate and post-graduate studies in Mining and Exploration Geology at Imperial College, London. His PhD work on gold mineralisation saw him move to Western Australia in 1988 to work for Western Mining Corporation exploring for gold and nickel deposits in the Yilgarn. From 1994, he consulted to the exploration and mining industry specialising in the integration of geological field mapping and the interpretation of geochemical, geophysical and remotely sensed data for target generation. Dr Jones has worked on over 80 projects both in Greenfields and near mine exploration in a wide variety of mineralised terrains and was the founding Director of Lithofire Consulting Geologists in Perth, Australia. He was also the team leader during the discovery of a significant gold deposit at the Higginsville Mining Centre, near Kalgoorlie and an iron ore deposit near Newman, both in Western Australia. Other current directorships Former directorships in last three years None None Special responsibilities Managing Director Interests in shares and options Ordinary shares – Impact Minerals Limited Unlisted options – Impact Minerals Limited 7,715,052 71,000,000 36 Impact Minerals Ltd Annual Report 2020 Directors’ Report continued Paul Ingram B.AppSc, AIMM, MICA (Non-Executive Director), Director since 27 September 2009 Experience and expertise Mr Ingram is a geologist with extensive experience in managing major mineral exploration programs for several publicly listed companies and has been involved in the mining sector for over forty years. He has designed and implemented innovative techniques for exploration in remote areas and has managed projects in countries throughout Australia and east Asia. Other current directorships A-Cap Resources Limited (Director since June 2009) Former directorships in last three years None Special responsibilities None Interests in shares and options Ordinary shares – Impact Minerals Limited Unlisted options – Impact Minerals Limited 580,680 17,000,000 Markus Elsasser PhD (Non-Executive Director), Director since 9 August 2012 Experience and expertise Dr Markus Elsasser is a German financier and investor in the mineral resources industry. He is Head of the Elsasser family office ‘M. Elsasser & Cie AG 1971’ in Dusseldorf, Germany. Dr Elsasser has previously been Director of Finance at the Dow Chemical Company in Germany. He has extensive General Management experience with former appointments as Managing Director in Australia and Singapore in the chemical and food industries. Other current directorships Former directorships in last three years None None Special responsibilities None Interests in shares and options Ordinary shares – Impact Minerals Limited Unlisted options – Impact Minerals Limited 23,310,402 17,000,000 COMPANY SECRETARY Bernard Crawford B.Com, CA, MBA, AGIA ACG (appointed 4 April 2016) Mr Crawford is a Chartered Accountant with over 25 years’ experience in the resources industry in Australia and overseas. He has held various positions in finance and management with NYSE, TSX and ASX listed companies. Mr Crawford is the CFO and/or Company Secretary of a number of public companies. He holds a Bachelor of Commerce degree from the University of Western Australia, a Master of Business Administration from London Business School and is a Member of Chartered Accountants Australia and New Zealand and the Governance Institute of Australia. Impact Minerals Ltd Annual Report 2020 37 Directors’ Report continued MEETINGS OF DIRECTORS The number of formal meetings of the Company’s Board of Directors held during the year ended 30 June 2020, and the number of meetings attended by each Director were: Peter Unsworth Michael Jones Paul Ingram Markus Elsasser Eamon Hannon(1) (1) Resigned 10 September 2019. Number of meetings attended Number of meetings eligible to attend 6 6 6 5 – 6 6 6 6 – The directors also have a number of informal meetings with management during the year, both in person and by conference call. RETIREMENT, ELECTION AND CONTINUATION IN OFFICE OF DIRECTORS Mr Unsworth, being a Director retiring by rotation who, being eligible, will offer himself for re-election at the Annual General Meeting. 38 Impact Minerals Ltd Annual Report 2020 Directors’ Report continued REMUNERATION REPORT (AUDITED) The Directors present the Impact Minerals Limited 2020 Remuneration Report, outlining key aspects of the Company’s remuneration policy and framework, and remuneration awarded this year. The report contains the following sections: a) Key management personnel covered in this report b) Remuneration governance and the use of remuneration consultants c) Executive remuneration policy and framework d) Relationship between remuneration and the Group’s performance e) Non-executive director remuneration policy f) Voting and comments made at the Company’s 2019 Annual General Meeting g) Details of remuneration h) Service agreements i) Details of share-based compensation and bonuses j) Equity instruments held by key management personnel k) Loans to key management personnel l) Other transactions with key management personnel. A) KEY MANAGEMENT PERSONNEL COVERED IN THIS REPORT Non-Executive and Executive Directors (see pages 35 to 36 for details about each director) Name Position Peter Unsworth Non-Executive Chairman Michael Jones Managing Director Paul Ingram Non-Executive Director Markus Elsasser Non-Executive Director Eamon Hannon(1) Non-Executive Director (1) Resigned 10 September 2019. B) REMUNERATION GOVERNANCE AND THE USE OF REMUNERATION CONSULTANTS The Company does not have a Remuneration Committee. Remuneration matters are handled by the full Board of the Company. In this respect the Board is responsible for: – the over-arching executive remuneration framework; – the operation of the incentive plans which apply to executive directors and senior executives (the executive team), including key performance indicators and performance hurdles; – remuneration levels of executives; and – non-executive director fees. The objective of the Board is to ensure that remuneration policies and structures are fair and competitive and aligned with the long-term interests of the Company. In addition, all matters of remuneration are handled in accordance with the Corporations Act requirements, especially with regards to related party transactions. That is, none of the Directors participate in any deliberations regarding their own remuneration or related issues. Independent external advice is sought from remuneration consultants when required, however no advice was sought during the year ended 30 June 2020. Impact Minerals Ltd Annual Report 2020 39 C) EXECUTIVE REMUNERATION POLICY AND FRAMEWORK In determining executive remuneration, the Board aims to ensure that remuneration practices are: – competitive and reasonable, enabling the Company to attract and retain key talent; – aligned to the Company’s strategic and business objectives and the creation of shareholder value; – transparent and easily understood; and – acceptable to shareholders. All executives receive consulting fees or a salary, part of which may be taken as superannuation, and from time to time, options. The Board reviews executive packages annually by reference to the executive’s performance and comparable information from industry sectors and other listed companies in similar industries. All remuneration paid to specified executives is valued at the cost to the Group and expensed. Options are valued using a Black-Scholes option pricing model. D) RELATIONSHIP BETWEEN REMUNERATION AND THE GROUP’S PERFORMANCE Emoluments of Directors are set by reference to payments made by other companies of similar size and industry, and by reference to the skills and experience of Directors. Fees paid to Non-Executive Directors are not linked to the performance of the Group. This policy may change once the exploration phase is complete and the Group is generating revenue. At present the existing remuneration policy is not impacted by the Group’s performance including earnings and changes in shareholder wealth (e.g. changes in share price) with the exception of incentive options issued to Directors, subject to shareholder approval. The Board has not set short term performance indicators, such as movements in the Company’s share price, for the determination of Non-Executive Director emoluments as the Board believes this may encourage performance which is not in the long-term interests of the Company and its shareholders. The Board has structured its remuneration arrangements in such a way it believes is in the best interests of building shareholder wealth in the longer term. The Board believes participation in the Company’s Incentive Option Scheme motivates key management and executives with the long-term interests of shareholders. E) NON-EXECUTIVE DIRECTOR REMUNERATION POLICY The Board policy is to remunerate Non-Executive Directors at commercial market rates for comparable companies for their time, commitment and responsibilities. Non-Executive Directors receive a Board fee but do not receive fees for chairing or participating on Board committees. Board members are allocated superannuation guarantee contributions as required by law, and do not receive any other retirement benefits. From time to time, some individuals may choose to sacrifice their salary or consulting fees to increase payments towards superannuation. The maximum annual aggregate Non-Executive Directors’ fee pool limit is $250,000 as approved by shareholders at the Company’s 2016 Annual General Meeting (“AGM”) held on 9 November 2016. Fees for Non-Executive Directors are not linked to the performance of the Group. Non-Executive Directors’ remuneration may also include an incentive portion consisting of options, subject to approval by shareholders. F) VOTING AND COMMENTS MADE AT THE COMPANY’S 2019 ANNUAL GENERAL MEETING Impact Minerals Limited received more than 98% of “yes” votes on its Remuneration Report for the 2019 financial year. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices. Directors’ Reportcontinued40 Impact Minerals Ltd Annual Report 2020 Directors’ Report continued G) DETAILS OF REMUNERATION The following table show details of the remuneration received by the Group’s key management personnel for the current and previous ﬁnancial year. Short-term employment benefits Post- employment benefits Salary & fees $ Non- monetary benefit $ Super- annuation $ Share-based payments Shares $ Options $ Total $ % of remuneration to total from shares and options % 50,000 246,879 20,000 21,900 3,742 342,521 53,750 262,209 24,583 26,919 25,410 392,871 – – – – – – – – – – – – 4,750 – 1,900 – – 6,650 5,106 – 2,336 – – 7,442 – – – – – – – – – – – – 121,027 175,777 252,379 499,258 66,090 66,090 – 87,990 87,990 3,742 505,586 854,747 26,033 65,083 13,016 13,016 – 117,148 84,889 327,292 39,935 39,935 25,410 517,461 68.9 50.6 75.1 75.1 – – 30.7 19.9 32.6 32.6 – – Name 2020 Directors P Unsworth M Jones P Ingram M Elsasser E Hannon (1) TOTALS 2019 Directors P Unsworth M Jones P Ingram M Elsasser E Hannon(1) TOTALS (1) Resigned 10 September 2019. No components of remuneration are linked to the performance of the Group. H) SERVICE AGREEMENTS M Jones, Managing Director Dr Jones is remunerated pursuant to an ongoing Consultancy Services Agreement. Dr Jones was paid fees of $246,879 for the year ended 30 June 2020. The notice period (other than for gross misconduct) is three months. I) DETAILS OF SHARE-BASED COMPENSATION AND BONUSES Options Options over ordinary shares in Impact Minerals Limited are granted under the Employee Option Acquisition Plan (“Option Plan”). Participation in the Option Plan and any vesting criteria are at the Board’s discretion and no individual has a contractual right to participate in the Option Plan or to receive any guaranteed beneﬁts. Any options issued to Directors of the Company are subject to shareholder approval. Options issued to Directors in the 2020 ﬁnancial year were approved by shareholders at the 2019 Annual General Meeting. Further information on the fair value of share options and assumptions is set out in Note 23 to the ﬁnancial statements. Impact Minerals Ltd Annual Report 2020 41 Directors’ Report continued J) EQUITY INSTRUMENTS HELD BY KEY MANAGEMENT PERSONNEL The following tables detail the number of fully paid ordinary shares and options over ordinary shares in the Company that were held during the ﬁnancial year and the previous ﬁnancial year by key management personnel of the Group, including their close family members and entities related to them. Options 2020 Directors Opening balance at 1 July Granted as remuneration Options exercised Net change (other) Balance at 30 June Vested but not exercisable Vested and exercisable Vested during the year P Unsworth 19,333,335 18,000,000 M Jones 41,250,001 36,000,000 P Ingram 8,000,000 10,000,000 M Elsasser 8,000,000 10,000,000 – – – – (5,333,335) 32,000,000 – 19,000,000 8,000,000 (6,250,001) 71,000,000 – 43,000,000 20,000,000 (1,000,000) 17,000,000 (1,000,000) 17,000,000 – – 10,000,000 4,000,000 10,000,000 4,000,000 TOTALS 76,583,336 74,000,000 – (13,583,336) 137,000,000 – 82,000,000 36,000,000 2019 Directors P Unsworth 11,333,335 12,000,000 – (4,000,000) 19,333,335 M Jones 21,250,001 30,000,000 – (10,000,000) 41,250,001 P Ingram 4,000,000 6,000,000 M Elsasser 4,000,000 6,000,000 – – (2,000,000) 8,000,000 (2,000,000) 8,000,000 TOTALS 40,583,336 54,000,000 – (18,000,000) 76,583,336 – – – – – 7,333,335 2,000,000 11,250,001 5,000,000 2,000,000 1,000,000 2,000,000 1,000,000 22,583,336 9,000,000 During the year, no ordinary shares in the Company were issued as a result of the exercise of remuneration options. Shareholdings 2020 Directors P Unsworth M Jones P Ingram M Elsasser TOTALS 2019 Directors P Unsworth M Jones P Ingram M Elsasser TOTALS Opening balance at 1 July Granted as remuneration Options exercised Net change (other) Balance at 30 June 15,994,098 7,715,052 580,680 23,310,402 47,600,232 15,994,098 7,715,052 580,680 23,310,402 47,600,232 – – – – – – – – – – – – – – – – – – – – – – – – 15,994,098 7,715,052 580,680 23,310,402 – 47,600,232 – – – – – 15,994,098 7,715,052 580,680 23,310,402 47,600,232 42 Impact Minerals Ltd Annual Report 2020 Directors’ Report continued The assessed fair value at grant date of options granted to individuals is allocated equally over the period from grant date to vesting date, (and the amount included in the remuneration tables above). Fair values at grant date are determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. K) LOANS TO KEY MANAGEMENT PERSONNEL There were no loans to individuals or members of key management personnel during the ﬁnancial year or the previous ﬁnancial year. L) OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL There were no other transactions with key management personnel during the ﬁnancial year or the previous ﬁnancial year. END OF REMUNERATION REPORT (AUDITED) SHARES UNDER OPTION Unissued ordinary shares of the Company under option at the date of this report are as follows: Date options granted 29 Sep 2015 and 13 May 2016 8 Nov 2018 8 Nov 2018 8 Nov 2019 and 15 Nov 2019 TOTAL Expiry date Issue price of shares Number under option 29 Sep 2020 $0.07 15,500,000 30 Nov 2021 $0.03 40,000,000 30 Nov 2022 $0.0375 20,000,000 5 Nov 2023 $0.0149 97,000,000 172,500,000 No option holder has any right under the options to participate in any other share issue of the Company or any other entity. SHARES ISSUED ON THE EXERCISE OF OPTIONS In August 2020, the Company issued 1,357,324 ordinary shares upon the cashless exercise of 4,000,000 options with an exercise price of $0.0149 and expiring on 5 November 2023. The terms of the Company’s Directors’ and Employees’ Option Acquisition Plan provides for a Cashless Exercise Facility (“Facility”). CORPORATE GOVERNANCE STATEMENT The Company’s 2020 Corporate Governance Statement has been released as a separate document and is located on the Company’s website at http://www.impactminerals.com.au/corporate-governance/. PROCEEDINGS ON BEHALF OF THE GROUP No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS During the ﬁnancial year, the Company paid a premium to insure the Directors and Officers of the consolidated entity against any liability incurred as a Director or Officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits the disclosure of the nature of the liabilities covered or the amount of the premium paid. The Group has not entered into any agreement with its current auditors indemnifying them against claims by a third party arising from their position as auditor. Impact Minerals Ltd Annual Report 2020 43 Directors’ Report continued NON-AUDIT SERVICES The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the Group are important. Details of the amounts paid or payable to the auditor (Bentleys Audit and Corporate (WA) Pty Ltd) for audit and non- audit services provided during the year are set out in Note 18. During the year ended 30 June 2020, no fees were paid or were payable for non-audit services provided by the auditor of the consolidated entity (2019: $Nil). AUDITOR’S INDEPENDENCE DECLARATION A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on the following page. Signed in accordance with a resolution of the Directors. Peter Unsworth Chairman Perth, 28 September 2020 44 Impact Minerals Ltd Annual Report 2020 Auditor’s Independence Declaration To the Board of Directors Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 As lead audit partner for the audit of the financial statements of Impact Minerals Limited for the year ended 30 June 2020, I declare that to the best of my knowledge and belief, there have been no contraventions of: − − the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and any applicable code of professional conduct in relation to the audit. Yours Faithfully, BENTLEYS Chartered Accountants DOUG BELL CA Partner Dated at Perth this 28th day of September 2020 Impact Minerals Ltd Annual Report 2020 45 Consolidated Statement of Proﬁt or Loss and Other Comprehensive Income for the year ended 30 June 2020 Revenue from operating activities Other income Corporation and administration expense Depreciation expense Employee benefits expense Impairment of exploration expenditure Loss on disposal of controlled entity Occupancy expense Loss before tax from continuing operations Income tax expense Loss for the year from continuing operations Other comprehensive income Items that will not be reclassified to profit or loss Change in the fair value of financial assets Items that may be reclassified to profit or loss Exchange rate differences on translating foreign operations Notes 3(a) 3(a) 9 3(b) 10 25 Consolidated 2020 $ 2019 $ 20,703 45,337 477,526 1,848,663 (546,103) (496,807) (39,388) (31,188) (888,680) (305,162) (113,146) (8,262,146) (504,731) – (91,346) (91,866) (1,685,165) (7,293,169) 5 – – (1,685,165) (7,293,169) – – (506,456) 73 Other comprehensive income for the year (net of tax) (1,685,165) (506,383) Total comprehensive loss for the year attributable to the owners of Impact Minerals Limited (1,685,165) (7,799,552) Cents per share Cents per share Loss per share attributable to the owners of Impact Minerals Limited Basic and diluted loss per share 17 (0.12) (0.55) The Consolidated Statement of Proﬁt or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 46 Impact Minerals Ltd Annual Report 2020 Consolidated Statement of Financial Position ASSETS Current assets Cash and cash equivalents Trade and other receivables Other current assets Total current assets Non-current assets Property, plant and equipment Exploration expenditure Other non-current assets Total Non-Current Assets Total assets LIABILITIES Current liabilities Trade and other payables Short-term provisions Total Current Liabilities Total liabilities Net assets EQUITY Issued capital Option reserve Foreign currency translation reserve Financial asset reserve Transactions with non-controlling interest Accumulated losses Total equity Notes Consolidated 2020 $ 2019 $ 6 7 8 9 10 11 12 13 2,431,426 2,002,624 72,433 35,234 23,320 – 2,539,093 2,025,944 37,549 71,760 10,946,163 9,777,828 151,055 195,183 11,134,767 10,044,771 13,673,860 12,070,715 210,496 86,288 296,784 296,784 145,231 65,650 210,881 210,881 13,377,076 11,859,834 14 46,931,843 44,900,024 15 (a) 15 (b) 1,005,268 577,577 – – (504,747) (506,456) 15 (c) (1,161,069) (1,161,069) 16 (33,398,966) (31,445,495) 13,377,076 11,859,834 The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. as at 30 June 2020Impact Minerals Ltd Annual Report 2020 47 Consolidated Statement of Changes in Equity for the year ended 30 June 2020 Issued capital $ Option reserve $ Foreign currency translation reserve $ Financial asset reserve $ Transactions with non- controlling interest $ Accumulated losses $ Total equity $ At 1 July 2018 44,900,024 1,418,620 (504,820) Total comprehensive loss for the year Other comprehensive income Total comprehensive loss for the year (net of tax) Transactions with owners in their capacity as owners Fair value of options issued Fair value of options expired – – – – – – – – 73 (506,456) 73 (506,456) – – – 137,279 (978,322) – – – – (1,161,069) (25,130,648) 19,522,107 – – – – – (7,293,169) (7,293,169) – (506,383) (7,293,169) (7,799,552) – 137,279 978,322 – At 30 June 2019 44,900,024 577,577 (504,747) (506,456) (1,161,069) (31,445,495) 11,859,834 At 1 July 2019 44,900,024 577,577 (504,747) (506,456) (1,161,069) (31,445,495) 11,859,834 Total comprehensive loss for the year Other comprehensive income Total comprehensive loss for the year (net of tax) Transactions with owners in their capacity as owners Transfer to retained earnings Derecognition of foreign exchange reserve – – – – – Shares issued 2,135,505 Share issue costs (103,686) – – – – – – – Fair value of options issued Fair value of options expired – – 665,841 (238,150) At 30 June 2020 46,931,843 1,005,268 – – – – – – – 506,456 504,747 – – – – – – – – – – – – – – – – – – – – (1,685,165) (1,685,165) – – (1,685,165) (1,685,165) (506,456) – – – – – 504,747 2,135,505 (103,686) 665,841 238,150 – (1,161,069) (33,398,966) 13,377,076 The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. 48 Impact Minerals Ltd Annual Report 2020 Consolidated Statement of Cash Flows for the year ended 30 June 2020 Cash flows from operating activities Payments to suppliers and employees Interest received Other income received Research and development tax rebate Cash flow boost Notes Consolidated 2020 $ 2019 $ (792,814) (1,028,616) 18,071 5,757 47,386 – 287,189 1,357,076 33,540 – Net cash flows from/(used in) operating activities 24 (448,257) 375,846 Cash flows from investing activities Payments for property, plant and equipment Payments for exploration activities Proceeds from disposal of tenements Proceeds from disposal of financial assets Proceeds from non-refundable deposit on Broken Hill JV Net cash flows used in investing activities Cash flows from financing activities Proceeds from issue of shares Share issue costs Net cash flows from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year (5,176) (93,319) (1,214,584) (2,582,462) 100,000 340,758 – – 422,580 25,219 (1,119,760) (1,887,224) 2,100,505 (103,686) 1,996,819 – – – 428,802 (1,511,378) 2,002,624 3,514,002 Cash and cash equivalents at end of the year 6 2,431,426 2,002,624 The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. Impact Minerals Ltd Annual Report 2020 49 Notes to the Consolidated Financial Statements for the year ended 30 June 2020 NOTE 1: CORPORATE INFORMATION The consolidated ﬁnancial report of Impact Minerals Limited for the year ended 30 June 2020 was authorised for issue in accordance with a resolution of the Directors on 28 September 2020. Impact Minerals Limited is a for-proﬁt company incorporated in Australia and limited by shares which are publicly traded on the Australian Securities Exchange. The nature of the operation and principal activities of the consolidated entity are described in the attached Directors’ Report. The principal accounting policies adopted in the preparation of these consolidated ﬁnancial statements are set out below and have been applied consistently to all periods presented in the consolidated ﬁnancial statements and by all entities in the consolidated entity. NOTE 2: STATEMENT OF COMPLIANCE These general purpose ﬁnancial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001. Compliance with IFRS The consolidated ﬁnancial statements of Impact Minerals Limited also comply with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). New and amended accounting standards and interpretations adopted by the Group The following standard and interpretation relevant to the operations of the Group and effective from 1 July 2019 have been adopted. The adoption of this standard and interpretation did not have any impact on the current period or any prior period but may impact future periods. – AASB 16 Leases; and – AASB Interpretation 23 Uncertainty over Income Tax Treatments. Impact of adoption of AASB 16: Leases (“AASB 16”) AASB 16 Leases requires lessees to account for all leases under a single on-balance sheet model. The standard includes two recognition exemptions for lessees namely leases of ’low-value’ assets and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset. The Group has adopted AASB 16 Leases however its current leases fall within either the ’low-value’ or ‘short- term’ recognition exemptions. The adoption of this standard has had no impact on the current or previous reporting period and as such there have been no adjustments to the opening balance of retained earnings. AASB Interpretation 23 Uncertainty over Income Tax Treatments This Interpretation clariﬁes the application of the recognition and measurement criteria in AASB 112 Income Taxes when there is uncertainty over income tax treatments. The Interpretation addresses (a) whether an entity considers uncertain tax treatments separately; (b) the assumptions an entity makes about the examination of tax treatments by taxation authorities; (c) how an entity determines taxable proﬁt (tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and (d) how an entity considers changes in facts and circumstances. The adoption of this Interpretation has had no impact on the current or previous reporting period and as such there have been no adjustments to the opening balance of retained earnings. New accounting standards and interpretations The following new and amended accounting standards and interpretations relevant to the operations of the Group have been published but are not mandatory for the current ﬁnancial year. The Group has decided against early adoption of these standards and has not yet determined the potential impact on the ﬁnancial statements from the adoption of these standards and interpretations. 50 Impact Minerals Ltd Annual Report 2020 Notes to the Consolidated Financial Statements continued NOTE 2: STATEMENT OF COMPLIANCE (CONTINUED) New accounting standards and interpretations (continued) New or revised requirement Application date of standard Application date for Group AASB 2018-6: Amendments to Australian Accounting Standards – Definition of a Business 1 Jan 2020 1 Jul 2020 The Standard amends the definition of a business in AASB 3 Business Combinations. The amendments clarify the minimum requirements for a business, remove the assessment of whether market participants are capable of replacing missing elements, add guidance to help entities assess whether an acquired process is substantive, narrow the definitions of a business and of outputs, and introduce an optional fair value concentration test. AASB 1018-7: Amendments to Australian Accounting Standards – Definition of Material 1 Jan 2020 1 Jul 2020 This Standard amends AASB 101 Presentation of Financial Statements and AAS 108 Accounting Policies, Changes in Accounting Estimates and Errors to align the definition of ‘material’ across the standards and to clarify certain aspects of the definition. The amendments clarify that materiality will depend on the nature or magnitude of information. An entity will need to assess whether the information, either individually or in combination with other information, is material in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. a) Basis of measurement Historical cost convention These consolidated ﬁnancial statements have been prepared under the historical cost convention, except where stated. 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 where appropriate. b) Going concern The ﬁnancial report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business. On 28 July 2020, the Company completed a placement to sophisticated and professional investors of 216,333,333 ordinary shares at an issue price of 1.5 cents per share raising $3,245,000 before costs. The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has not signiﬁcantly impacted the group up to 30 June 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided. c) Principles of consolidation Subsidiaries The consolidated ﬁnancial statements incorporate the assets and liabilities of all subsidiaries of the Company as at 30 June 2020 and the results of all subsidiaries for the year then ended. The Company and its subsidiaries together are referred to in this ﬁnancial report as the Group or the consolidated entity. Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its investment with the entity and has the ability to affect those returns through its power to direct the activities of the entity. The acquisition method of accounting is used to account for business combinations by the Group. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Impact Minerals Ltd Annual Report 2020 51 Notes to the Consolidated Financial Statements continued NOTE 2: STATEMENT OF COMPLIANCE (CONTINUED) c) Principles of consolidation (continued) Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling interests in the results and equity of subsidiaries are shown separately in the Consolidated Statement of Proﬁt or Loss and Other Comprehensive Income, Consolidated Statement of Financial Position, and the Consolidated Statement of Changes in Equity respectively. d) Critical accounting judgements and key sources of estimation uncertainty The application of accounting policies requires the use of judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. e) 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, who is responsible for allocating resources and assessing performance of the operating segments, has been identiﬁed as the Board of Directors of Impact Minerals Limited. f) Functional and presentation of currency The consolidated ﬁnancial statements are presented in Australian dollars, which is the Group’s functional and presentational currency. g) Leases Leases in which a signiﬁcant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classiﬁed as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to proﬁt or loss as incurred over the period of the lease. Leases in which a signiﬁcant portion of the risks and rewards of ownership are transferred to the Group as lessee are classiﬁed as ﬁnance leases. At the commencement date of a lease, the Group recognises a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). The Group separately recognises the interest expense on the lease liability and the depreciation expense on the right-of-use asset. h) Employee beneﬁts Short-term obligations Liabilities for wages and salaries, including non-monetary beneﬁts, annual leave and accumulating sick leave expected to be settled within 12 months after the end of the period in which the employees render the related service, are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave and accumulating sick leave is recognised in the provision for employee beneﬁts. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. All other short-term employee beneﬁt obligations are presented as payables. The obligations are presented as current liabilities in the Statement of Financial Position if the entity does not have an unconditional right to defer settlement for at least 12 months after the reporting date, regardless of when the actual settlement is expected to occur. Other long-term obligations The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end of the period in which the employees render the related service, 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 end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outﬂows. Share-based payments The Group provides beneﬁts to employees of the Company in the form of share options. The fair value of options granted is recognised as an employee beneﬁts expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using a Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were granted. 52 Impact Minerals Ltd Annual Report 2020 Notes to the Consolidated Financial Statements continued NOTE 2: STATEMENT OF COMPLIANCE (CONTINUED) h) Employee beneﬁts (continued) The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, on a straight-line basis over the vesting period. The amount recognised as an expense is adjusted to reﬂect the actual number that vest. The dilutive effect, if any, of outstanding options is reﬂected as additional share dilution in the computation of earnings per share. Termination beneﬁts Termination beneﬁts are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these beneﬁts. The Group recognises termination beneﬁts when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination beneﬁts as a result of an offer made to encourage voluntary redundancy. Beneﬁts falling due more than 12 months after the end of the reporting period are discounted to present value. No termination beneﬁts, other than accrued beneﬁts and entitlements, were paid during the period. i) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of associated 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. j) Financial instruments Financial assets Initial recognition and measurement Financial assets are classiﬁed, at initial recognition, as subsequently measured at amortised cost, fair value through Other Comprehensive Income (OCI), and fair value through proﬁt or loss. The classiﬁcation of ﬁnancial assets at initial recognition depends on the ﬁnancial asset’s contractual cash ﬂow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a signiﬁcant ﬁnancing component or for which the Group has applied the practical expedient, the Group initially measures a ﬁnancial asset at its fair value plus, in the case of a ﬁnancial asset not at fair value through proﬁt or loss, transaction costs. In order for a ﬁnancial asset to be classiﬁed and measured at amortised cost or fair value through OCI, it needs to give rise to cash ﬂows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. The Group’s business model for managing ﬁnancial assets refers to how it manages its ﬁnancial assets in order to generate cash ﬂows. The business model determines whether cash ﬂows will result from collecting contractual cash ﬂows, selling the ﬁnancial assets, or both. Purchases or sales of ﬁnancial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e. the date that the Group commits to purchase or sell the asset. Financial assets designated at fair value through OCI (equity instruments) This is the category most relevant to the Group. Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the deﬁnition of equity under IAS 32 Financial Instruments: Presentation and are not held for trading. The classiﬁcation is determined on an instrument-by- instrument basis. Gains and losses on these ﬁnancial assets are never recycled to proﬁt or loss. Dividends are recognised as other income in the statement of proﬁt or loss when the right of payment has been established, except when the Group beneﬁts from such proceeds as a recovery of part of the cost of the ﬁnancial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment. Derecognition A ﬁnancial asset (or, where applicable, a part of a ﬁnancial asset or part of a group of similar ﬁnancial assets) is primarily derecognised (i.e. removed from the Group’s consolidated statement of ﬁnancial position) when: – The rights to receive cash ﬂows from the asset have expired; or – The Group has transferred its rights to receive cash ﬂows from the asset or has assumed an obligation to pay the received cash ﬂows in full without material delay to a third party under a ‘pass- through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. Impact Minerals Ltd Annual Report 2020 53 Notes to the Consolidated Financial Statements continued NOTE 2: STATEMENT OF COMPLIANCE (CONTINUED) j) Financial instruments (continued) The Group considers a ﬁnancial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a ﬁnancial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A ﬁnancial asset is written off when there is no reasonable expectation of recovering the contractual cash ﬂows. Financial liabilities Initial recognition and measurement Financial liabilities are classiﬁed, at initial recognition, as ﬁnancial liabilities at fair value through proﬁt or loss, loans and borrowings, payables as appropriate. All ﬁnancial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s ﬁnancial liabilities include trade and other payables. NOTE 3: REVENUE AND EXPENSES a) Revenue from operating activities Interest income Gain on sale of tenements Research and development tax rebate Other government rebates Other income Total revenue from operating activities Consolidated 2020 $ 2019 $ 20,703 45,337 100,000 1,099,031 287,189 84,580 712,183 – 5,757 37,449 498,229 1,894,000 Revenue is measured at fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. Interest income is recognised as it accrues. Amounts received or receivable from the Australian Tax Office (ATO) in respect of the Research and Development Tax Rebate (R&D Rebate) are recognised in Other Income for the year in which the claim is lodged with the ATO. Management assesses its research and development activities and expenditures to determine if these are likely to eligible under the R&D Rebate. b) Employee beneﬁts expense Wages, salaries and other remuneration expenses Directors’ fees Superannuation fund contributions Share-based payment expense (Note 23) Total employee benefits expense 112,578 95,642 14,619 665,841 888,680 18,433 130,662 18,788 137,279 305,162 NOTE 4: SEGMENT INFORMATION The Group operates in one geographical segment, being Australia and in one operating category, being mineral exploration. Therefore, information reported to the chief operating decision maker (the Board of Impact Minerals Limited) for the purposes of resource allocation and performance assessment is focused on mineral exploration within Australia. The Board has considered the requirements of AASB 8: Operating Segments and the internal reports that are reviewed by the chief operating decision maker in allocating resources and have concluded at this time that there are no separately identiﬁable segments. 54 Impact Minerals Ltd Annual Report 2020 Notes to the Consolidated Financial Statements continued NOTE 5: INCOME TAX a) Major components of income tax expense are as follows: Current income tax expense/(benefit) Deferred income tax expense/(benefit) Income tax expense reported in the Consolidated Statement of Profit or Loss and Other Comprehensive Income b) The prima facie tax on loss from ordinary activities before income tax is reconciled to the income tax as follows: Consolidated 2020 $ 2019 $ – – – – – – Loss from ordinary activities before income tax expense (1,685,165) (7,293,169) Prima facie tax benefit on profit from ordinary activities before income tax at 27.5% (2019: 27.5%) Tax effect of permanent differences: – Share-based expense – Non-deductible expenses – Government grant received – Benefit of capital loss for which a DTA was not recognised – Tax losses not recognised Income tax expense/(benefit) on pre-tax profit c) Deferred tax assets and (liabilities) are attributable to the following: Accrued expenses Capital raising costs Exploration expenditure Plant and equipment Provision for employee entitlements Other Tax losses d) Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of the following items as the Directors do not believe it is appropriate to regard realisation of future tax benefits as probable: – Tax losses – Capital losses (463,420) (2,005,622) 183,106 142,773 37,752 5,259 (102,237) (195,850) – (302,234) 239,778 2,460,695 – – 7,554 6,598 72,504 72,990 (2,310,030) (1,984,799) (10,326) 23,729 2,514 18,053 96 (80) 2,216,473 1,884,724 – – 5,943,960 5,819,026 651,887 488,929 6,595,847 6,307,955 The income tax expense or beneﬁt for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Impact Minerals Ltd Annual Report 2020 55 Notes to the Consolidated Financial Statements continued NOTE 5: INCOME TAX (CONTINUED) The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. 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. The Company and its wholly-owned Australian controlled entities have formed a tax consolidated group. The head entity of the tax consolidated group is Impact Minerals Limited. No deferred tax asset has been recognised in the Consolidated Statement of Financial Position in respect of the amount of either these losses or other deferred tax expenses. Should the Company not satisfy the Continuity of Ownership Test, the Company will be able to utilise the losses to the extent that it satisﬁes the Same Business Test. NOTE 6: CASH AND CASH EQUIVALENTS Cash at bank and on hand Short-term deposits Consolidated 2020 $ 2019 $ 631,426 502,624 1,800,000 1,500,000 2,431,426 2,002,624 Cash and cash equivalents includes cash on hand, deposits held at call with ﬁnancial institutions, other short-term, highly liquid investments with original maturities of three months or less. The weighted average interest rate for the year was 1.16% (2019: 1.92%). The Group’s exposure to interest rate risk is set out in Note 22. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of cash and cash equivalents mentioned above. NOTE 7: TRADE AND OTHER RECEIVABLES Current GST Government grants/rebates Other Consolidated 2020 $ 2019 $ 15,992 51,040 5,401 72,433 17,534 – 5,786 23,320 Trade receivables are normally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. A provision for doubtful 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 the receivables. The amounts held in trade and other receivables do not contain impaired assets and are not past due. Based on the credit history of these trade and other receivables, it is expected that these amounts will be received when due. The Group’s ﬁnancial risk management objectives and policies are set out in Note 22. Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value. 56 Impact Minerals Ltd Annual Report 2020 Notes to the Consolidated Financial Statements continued NOTE 8: OTHER CURRENT ASSETS Deposits NOTE 9: PROPERTY, PLANT AND EQUIPMENT Leasehold improvements –´At cost –´Accumulated depreciation Total leasehold improvements Office equipment –´At cost –´Accumulated depreciation Total office equipment Site equipment –´At cost –´Accumulated depreciation Total site equipment Computer equipment –´At cost –´Accumulated depreciation Total computer equipment Total property, plant and equipment Consolidated 2020 $ 35,234 35,234 2019 $ – – Consolidated 2020 $ 2019 $ 7,400 7,400 (7,400) (7,400) – – 71,000 71,000 (69,997) (68,449) 1,003 2,551 92,252 92,252 (69,835) (45,157) 22,417 47,095 177,708 172,531 (163,579) (150,417) 14,129 37,549 22,114 71,160 Property, plant and equipment is stated at historical cost less accumulated depreciation. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. 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. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to proﬁt or loss during the reporting period in which they are incurred. 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. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the Statement of Proﬁt or Loss and Other Comprehensive Income. Impact Minerals Ltd Annual Report 2020 57 Notes to the Consolidated Financial Statements continued NOTE 9: PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Movement in carrying amounts Movements in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the year: Leasehold improvements $ Office equipment $ Site equipment $ Computer equipment $ Total $ 2,551 47,095 – – 22,114 5,177 71,760 5,177 (1,548) (24,678) (13,162) (39,388) 1,003 22,417 14,129 37,549 2020 – Consolidated Balance at the beginning of the year Additions Depreciation expense Carrying amount at the end of the year 2019 – Consolidated Balance at the beginning of the year Additions Depreciation expense – – – – 197 – 668 3,924 4,978 59,999 3,786 29,396 (197) (2,041) (17,882) (11,068) 9,629 93,319 (31,188) 71,760 Carrying amount at the end of the year – 2,551 47,095 22,114 NOTE 10: EXPLORATION AND EVALUATION Opening balance Exploration expenditure incurred during the year Impairment expense Closing balance Consolidated 2020 $ 2019 $ 9,777,828 15,441,823 1,281,481 2,598,151 (113,146) (8,262,146) 10,946,163 9,777,828 Exploration and evaluation expenditure, including the costs of acquiring licences and permits, are capitalised as exploration and evaluation assets on an area of interest basis. Costs incurred before the Group has obtained the legal rights to explore an area are recognised in the Statement of Proﬁt or Loss and Other Comprehensive Income. Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either: i) ii) the expenditures are expected to be recouped through successful development and exploitation or from sale of the area of interest; or activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and signiﬁcant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical feasibility and commercial viability, and facts and circumstances suggest that the carrying amount exceeds the recoverable amount. For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates. The cash generating unit shall not be larger than the area of interest. Once the technical feasibility and commercial viability of the extraction of minerals in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are ﬁrst tested for impairment and then reclassiﬁed to mineral property and development assets within property, plant and equipment. When an area of interest is abandoned or the directors decide that it is not commercial, any accumulated costs in respect of that area are written off in the ﬁnancial period the decision is made. 58 Impact Minerals Ltd Annual Report 2020 Notes to the Consolidated Financial Statements continued NOTE 11: OTHER NON-CURRENT ASSETS Deposits paid Other non-current assets Closing balance NOTE 12: TRADE AND OTHER PAYABLES Trade creditors Other payables and accruals Consolidated 2020 $ 2019 $ 151,055 185,750 – 151,055 9,433 195,183 Consolidated 2020 $ 129,911 80,585 210,496 2019 $ 98,728 46,503 145,231 These amounts represent liabilities for goods and services provided to the Group prior to the end of the ﬁnancial year and which are unpaid. Trade creditors are unsecured, non-interest bearing and are normally settled on 30-day terms. The Group’s ﬁnancial risk management objectives and policies are set out in Note 22. Due to the short-term nature of these payables, their carrying value is assumed to approximate their fair value. NOTE 13: PROVISIONS Short-term Employee entitlements NOTE 14: CONTRIBUTED EQUITY a) Share capital Ordinary shares fully paid Consolidated 2020 $ 2019 $ 86,288 86,288 65,650 65,650 Consolidated 2020 $ 2019 $ 46,931,843 44,900,024 Impact Minerals Ltd Annual Report 2020 59 Notes to the Consolidated Financial Statements continued NOTE 14: CONTRIBUTED EQUITY (CONTINUED) b) Movements in ordinary shares on issue Balance at 30 June 2018 Balance at 30 June 2019 Share issued during the year: – Placement(a) – Share issue(b) – Transaction costs Balance at 30 June 2020 Consolidated Number $ 1,321,679,789 44,900,024 1,321,679,789 44,900,024 233,389,496 2,100,505 4,425,345 35,000 – (103,686) 1,559,494,630 46,931,843 (a) (b) In February 2020, the Company raised $2,100,505 (before costs) via a placement of 233,389,496 new shares at an issue price of 0.9 cents each. In May 2020, the Company issued 4,425,345 new shares as part consideration for geological consulting services in relation to the identiﬁcation of, and application for, ﬁve tenements in the Yilgarn Craton in Western Australia. Ordinary shares are classiﬁed as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. 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. c) Movements in options on issue Balance at beginning of the financial year Options granted Options expired Balance at the end of the financial year Refer to Note 23 for details of share based payments. NOTE 15: RESERVES a) Option reserve Option reserve Opening balance Fair value of options issued Transfer to retained earnings upon expiry/lapse of options Balance at the end of the financial year Consolidated 2020 Number 2019 Number 590,910,556 629,339,128 101,000,000 60,000,000 (515,410,556) (98,428,572) 176,500,000 590,910,556 Consolidated 2020 $ 2019 $ 577,577 665,841 1,418,620 137,279 (238,150) (978,322) 1,005,268 577,577 The options reserve is used to recognise the fair value of options issued to employees and contractors. The details of share based payments made during the reporting period are shown at Note 23. 60 Impact Minerals Ltd Annual Report 2020 Notes to the Consolidated Financial Statements continued NOTE 15: RESERVES (CONTINUED) b) Foreign currency translation reserve The foreign currency translation reserve for the prior year records exchange differences arising on the translation of the foreign controlled Botswana subsidiary Icilion Investments (Pty) Ltd (Icilion). During the reporting period Icilion was de-registered. c) Transactions with non-controlling interest The transactions with non-controlling interest reserve records items related to the acquisition of shares in Invictus Gold Limited. NOTE 16: ACCUMULATED LOSSES Balance at the beginning of the financial year Net loss attributable to members Transfer from financial asset reserve Transfer from share option reserve upon lapse of options Balance at the end of the financial year NOTE 17: LOSS PER SHARE Basic and diluted loss per share Consolidated 2020 $ 2019 $ (31,445,495) (25,130,648) (1,685,165) (7,293,169) (506,456) – 238,150 978,322 (33,398,966) (31,445,495) 2020 Cents (0.12) 2019 Cents (0.55) The following reﬂects the income and share data used in the calculations of basic and diluted loss per share: Profits/(losses) used in calculating basic and diluted loss per share (1,685,165) (7,293,169) 2020 $ 2019 $ Weighted average number of ordinary shares used in calculating basic loss per share 2020 Number 2019 Number 1,401,776,231 1,321,679,789 Basic loss per share Basic loss per share is calculated by dividing the loss attributable to owners of the Group, excluding any costs of servicing equity other than ordinary shares by the weighted average number of ordinary shares outstanding during the ﬁnancial year, adjusted for bonus elements in ordinary shares issued during the year. Impact Minerals Ltd Annual Report 2020 61 Notes to the Consolidated Financial Statements continued NOTE 18: AUDITOR’S REMUNERATION Audit services Bentleys Audit and Corporate (WA) Pty Ltd – Audit and review of the financial reports Total remuneration NOTE 19: CONTINGENT ASSETS AND LIABILITIES Contingent assets The Group had contingent assets in respect of: Consolidated 2020 $ 2019 $ 35,000 35,000 35,000 35,000 Future bonus and royalty payments In September 2018 the Company completed the sale of its wholly owned subsidiary Drummond East Pty Ltd, the holder of its seven Pilbara licences, to Pacton Gold Inc. (Pacton). Under the terms of the Sale Agreement Pacton must pay a CAD$500,000 Bonus to the Company upon publishing a measured, indicated or inferred gold resource of more than 250,000 ounces on the licences. The Company retains a 2% NSR royalty on the licences with Pacton retaining the right to buy back 1% of the royalty for CAD$500,000 at any time. Contingent liabilities The Group had contingent liabilities in respect of: Future royalty payments In March 2016, Impact Minerals Limited completed the acquisition of tenement E7390 from Golden Cross Resources Limited (“Golden Cross”) for $60,000 cash. Golden Cross retains a royalty equal to 1% of gross revenue on any minerals recovered from the tenement. At its election, Impact has the right to buy back the royalty for $1.5 million cash at any time up to a decision to mine, or, leave the royalty uncapped during production. NOTE 20: EVENTS OCCURRING AFTER THE REPORTING PERIOD On 11 August 2020, the Company completed a placement to sophisticated and professional investors of 216,333,333 ordinary shares at an issue price of 1.5 cents per share raising $3,245,000 before costs. There have been no other events subsequent to the reporting date which are sufficiently material to warrant disclosure. NOTE 21: COMMITMENTS In order to maintain an interest in the exploration tenements in which the Group is involved, the Group is committed to meet the conditions under which the tenements were granted. The timing and amount of exploration expenditure commitments and obligations of the Group are subject to the minimum expenditure commitments required as per the Mining Act 1978 (Western Australia), the Mining Act 1992 (New South Wales) and the Mineral Resources Act 1989 (Queensland) and may vary signiﬁcantly from the forecast based upon the results of the work performed which will determine the prospectivity of the relevant area of interest. As at balance date, total exploration expenditure commitments on granted tenements held by the Group that have not been provided for in the ﬁnancial statements and which cover the following 12-month period amount to $1,093,837 (2019: $934,729). For the period greater than 12 months to ﬁve years, commitments amount to $7,971,526 (2019: $5,272,085). These obligations are also subject to variations by farm-out arrangements, or sale of the relevant tenements.´ 62 Impact Minerals Ltd Annual Report 2020 Notes to the Consolidated Financial Statements continued NOTE 21: COMMITMENTS (CONTINUED) Commitments in relation to the lease of office premises are payable as follows: Within one year Later than one year but not later than five years Later than five years NOTE 22: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES Financial risk management Overview The Group has exposure to the following risks from their use of ﬁnancial instruments: – Interest rate risk – Credit risk – Liquidity risk – Commodity risk. Consolidated 2020 $ 2019 $ 20,002 40,004 – – – – 20,002 40,004 This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reﬂect changes in market conditions and the Group’s activities. The Board oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Group’s principal ﬁnancial instruments are cash, short-term deposits, receivables and payables. Interest rate risk Interest rate risk is the risk that the value of a ﬁnancial instrument or cash ﬂows associated with the instrument will ﬂuctuate due to changes in market interest rates. Interest rate risk arises from ﬂuctuations in interest-bearing ﬁnancial assets and liabilities that the Group uses. Interest-bearing assets comprise cash and cash equivalents which are considered to be short-term liquid assets. It is the Group’s policy to settle trade payables within the credit terms allowed and therefore not incur interest on overdue balances. Impact Minerals Ltd Annual Report 2020 63 Notes to the Consolidated Financial Statements continued NOTE 22: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) Interest rate risk (continued) The following table sets out the carrying amount, by maturity, of the ﬁnancial instruments that are exposed to interest rate risk: Floating interest rate $ Fixed interest rate maturing in 1 year or less $ Over 1 to 5 years $ More than 5 years $ Non- interest bearing $ Total $ Consolidated – 2020 Financial assets Cash and cash equivalents 631,426 1,800,000 Trade and other receivables – – Weighted average interest rate 0.56% 1.47% 631,426 1,800,000 Financial liabilities Trade and other payables Weighted average interest rate Consolidated – 2019 Financial assets – – – – – – Cash and cash equivalents 501,994 1,500,000 Trade and other receivables – – Weighted average interest rate 0.85% 2.30% 501,994 1,500,000 Financial liabilities Trade and other payables Weighted average interest rate – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 2,431,426 72,433 72,433 72,433 2,503,859 – – 210,496 210,496 210,496 210,496 – – 630 2,002,624 23,320 23,320 23,950 2,025,944 – – 145,231 145,231 – 145,231 145,231 – Fair value sensitivity analysis for ﬁxed rate instruments The Group does not account for any ﬁxed rate ﬁnancial assets or liabilities at fair value through proﬁt or loss. Therefore, a change in interest rates at the reporting date would not affect proﬁt or loss. 64 Impact Minerals Ltd Annual Report 2020 Notes to the Consolidated Financial Statements continued NOTE 22: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) Interest rate risk (continued) Cash ﬂow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity and proﬁt or loss by the amounts shown below: Consolidated – 2020 Financial assets Cash and cash equivalents Cash flow sensitivity (net) Consolidated – 2019 Financial assets Cash and cash equivalents Cash flow sensitivity (net) Carrying value at period end $ Profit or loss Equity 100 bp increase $ 100 bp decrease $ 100 bp increase $ 100 bp decrease $ 2,431,426 17,793 17,793 (17,793) (17,793) 17,793 17,793 (17,793) (17,793) 2,002,624 23,455 23,455 (23,455) (23,455) 23,455 23,455 (23,455) (23,455) Credit risk Credit risk is the risk of ﬁnancial loss to the Group if a customer or counterparty to a ﬁnancial instrument fails to meet its contractual obligations and arises principally from the Group’s receivables from customers and investment securities. The Group trades only with recognised, creditworthy third parties. It is the Group policy that all customers who wish to trade on credit terms are subject to credit veriﬁcation procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not signiﬁcant. The maximum exposure to credit risk is the carrying value of the receivable, net of any provision for doubtful debts. With respect to credit risk arising from the other ﬁnancial assets of the Group, which comprise cash and cash equivalents, the Group’s exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. This risk is minimised by reviewing term deposit accounts from time to time with approved banks of a sufficient credit rating which is AA and above. Exposure to credit risk 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 Consolidated 2020 $ 2019 $ 2,431,426 2,002,624 72,433 23,320 2,503,859 2,025,944 Impact Minerals Ltd Annual Report 2020 65 Notes to the Consolidated Financial Statements continued NOTE 22: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) Foreign currency risk Exposure to foreign exchange risk may result in the fair value or future cash ﬂows of a ﬁnancial instrument ﬂuctuating due to movement in foreign exchange rates of currencies in which the Group holds ﬁnancial instruments which are other than the AUD functional currency of the Group. The Group’s exposure to foreign currency risk is minimal at this stage of its operations. Commodity price risk The Group’s exposure to commodity price risk is minimal at this stage of its operations. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its ﬁnancial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group’s objective is to maintain a balance between continuity of funding and ﬂexibility. The following are the contractual maturities of ﬁnancial liabilities: Consolidated – 2020 Trade and other payables Trade and other receivables Consolidated – 2019 Trade and other payables Trade and other receivables Carrying amount $ Contractual cash flows $ 6 months or less $ 210,496 210,496 72,433 72,433 145,231 145,231 23,320 23,320 – – – – – – – – 210,496 210,496 72,433 72,433 145,231 145,231 23,320 23,320 Fair value of ﬁnancial assets and liabilities The fair value of cash and cash equivalents and non-interest bearing ﬁnancial assets and ﬁnancial liabilities of the Group is equal to their carrying value. Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and beneﬁts for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The management of the Group’s capital is performed by the Board. The capital structure of the Group consists of net debt (trade payables and provisions detailed in Notes 12 and 13 offset by cash and bank balances) and equity of the Group (comprising contributed issued capital, reserves, offset by accumulated losses detailed in Notes 14, 15 and 16). The Group is not subject to any externally imposed capital requirements. None of the Group’s entities are subject to externally imposed capital requirements. 66 Impact Minerals Ltd Annual Report 2020 Notes to the Consolidated Financial Statements continued NOTE 23: SHARE-BASED PAYMENTS Share Option Plan The Group has a Director and Employee Option Acquisition Plan (“Option Plan”) for Directors, employees and contractors of the Group. In accordance with the provisions of the Option Plan, as approved by shareholders at the 2018 Annual General Meeting, executives and employees may be granted options at the discretion of the Directors. Options issued to Directors are subject to approval by shareholders. Each share option converts into one ordinary share of Impact Minerals Limited on exercise. No amounts are paid or are payable by the recipient on receipt of the option. The options carry neither rights of dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. The following share-based payment arrangements were in existence during the reporting period: Option series Number Grant date Expiry date Vesting date Exercise price 27(1) 28 31(1) 32 38 39 40(2) 41(2) 42 43 12,500,000 29 Sep 2015 29 Sep 2019 29 Sep 2017 12,500,000 29 Sep 2015 29 Sep 2020 29 Sep 2018 3,000,000 13 May 2016 29 Sep 2019 29 Sep 2017 3,000,000 13 May 2016 29 Sep 2020 29 Sep 2018 40,000,000 8 Nov 2018 30 Nov 2021 30 Nov 2019 $0.045 $0.07 $0.045 $0.07 $0.03 20,000,000 8 Nov 2018 30 Nov 2022 30 Nov 2020 $0.0375 37,000,000 7 Nov 2019 5 Nov 2023 Immediate 37,000,000 7 Nov 2019 5 Nov 2023 5 Nov 2020 13,500,000 15 Nov 2019 5 Nov 2023 Immediate 13,500,000 15 Nov 2019 5 Nov 2023 5 Nov 2020 $0.0149 $0.0149 $0.0149 $0.0149 Fair value at grant date $0.0149 $0.0143 $0.0133 $0.0132 $0.00382 $0.00432 $0.00677 $0.00677 $0.00677 $0.00677 (1) Expired during the reporting period. (2) Options issued to Directors at the 2019 Annual General Meeting. Fair value of share options granted during the year The fair value of share options at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the share price at grant date, the expected price volatility of the underlying share and the risk-free rate for the term of the option. The fair value of share options issued during the year was $665,841 (2019: $137,279). The model inputs for options granted during the year ended 30 June 2020 are as follows: Inputs Exercise price Grant date Vesting date Expiry date Share price at grant date Expected price volatility Risk-free interest rate Expected dividend yield Issue 40 Issue 41 Issue 42 Issue 43 $0.0149 $0.0149 $0.0149 $0.0149 7 Nov 2019 7 Nov 2019 15 Nov 2019 18 Nov 2019 Immediate 5 Nov 2020 Immediate 5 Nov 2020 5 Nov 2023 5 Nov 2023 5 Nov 2023 5 Nov 2023 $0.01 110% 0.86% 0% $0.01 110% 0.86% 0% $0.008 $0.008 110% 0.86% 0% 110% 0.86% 0% Impact Minerals Ltd Annual Report 2020 67 Notes to the Consolidated Financial Statements continued NOTE 23: SHARE-BASED PAYMENTS (CONTINUED) Share Option Plan (continued) Movements in share options during the year Movement in the number of share options on issue during the year: Outstanding at the beginning of the year Granted during the year Expired during the year Outstanding at the end of the year Exercisable at the end of the year 2020 2019 Number of options 590,910,556 101,000,000 (515,410,556) 176,500,000 106,000,000 Weighted average exercise price $ 0.04 0.01 0.04 0.03 0.03 Number of options 629,339,128 60,000,000 (98,428,572) 590,910,556 530,910,556 Weighted average exercise price $ 0.04 0.03 0.03 0.04 0.04 The weighted average remaining contractual life of share options outstanding at the end of the year was 2.54 years (2019: 1.13 years). Share options outstanding at the end of the year Share options issued and outstanding at the end of the year have the following exercise prices: Expiry date 29 September 2019 15 June 2020 (listed) 29 September 2020 30 November 2021 30 November 2022 5 November 2023 Totals Exercise price $ 2020 Number 2019 Number 0.045 0.04 0.07 0.03 0.0375 0.0149 – – 15,500,000 499,910,556 15,500,000 15,500,000 40,000,000 40,000,000 20,000,000 20,000,000 101,000,000 – 176,500,000 590,910,556 68 Impact Minerals Ltd Annual Report 2020 Notes to the Consolidated Financial Statements continued NOTE 24: RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES Cash flows from operating activities Profit/(Loss) for the year Non–cash flows in profit/(loss): – Depreciation – Share–based remuneration – Exploration expenditure write-off – Government grants receivable – Gain on sale of tenements – Loss on disposal of controlled entity – Non–refundable deposit Changes in assets and liabilities – Decrease/(Increase) in trade and other receivables – – Increase/(Decrease) in trade creditors and accruals Increase/(Decrease) in provisions Net cash from/(used in) operating activities Non-cash investing and ﬁnancing activities There were no non-cash investing and ﬁnancing activities during the year. NOTE 25: RELATED PARTY DISCLOSURE a) Parent entity Impact Minerals Limited Ordinary Australia b) Subsidiaries Class Country of incorporation Aurigen Pty Ltd Siouville Pty Ltd Icilion Investments (Pty) Ltd(i) Invictus Gold Limited Drummond West Pty Ltd(ii) Endeavour Minerals Pty Ltd(iii) Blackridge Exploration Pty Ltd(iv) Class Country of incorporation Ordinary Australia Ordinary Australia Ordinary Botswana Ordinary Australia Ordinary Australia Ordinary Australia Ordinary Australia Consolidated 2020 $ 2019 $ (1,685,165) (7,293,169) 39,388 665,841 31,188 137,279 113,146 8,262,146 (51,040) – (100,000) (1,099,031) 504,731 – – (25,219) 1,927 42,277 20,638 644,554 (148,185) (133,717) 448,257 375,846 Ownership 2020 % – Ownership 2020 % 100 100 – 100 100 100 100 2019 % – 2019 % 100 100 100 100 100 100 100 (i) Icilion Investments (Pty) Ltd was de-registered on 2 June 2020. Upon de-registration there was a loss on disposal of $504,731, relating to foreign exchange. (ii) Drummond West Pty Ltd is a wholly owned subsidiary of Invictus Gold Limited. (iii) Endeavour Minerals Pty Ltd is a wholly owned subsidiary of Invictus Gold Limited. (iv) Blackridge Exploration Pty Ltd is a wholly owned subsidiary of Drummond West Pty Ltd. Impact Minerals Ltd Annual Report 2020 69 Notes to the Consolidated Financial Statements continued NOTE 25: RELATED PARTY DISCLOSURE (CONTINUED) c) Key management personnel compensation Short-term employee benefits Post-employment benefits Share-based payments 2020 $ 2019 $ 342,521 392,871 6,650 505,586 854,747 7,442 117,148 517,461 Detailed remuneration disclosures are provided in the Remuneration Report on pages 38 to 42. A total of $246,879 (2019: $262,209) was capitalised as exploration expenditure. NOTE 26: PARENT ENTITY DISCLOSURE Financial Performance Profit/(loss) for the year Other comprehensive income Total comprehensive profit/(loss) Financial Position ASSETS Current assets Non-current assets TOTAL ASSETS LIABILITIES Current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Option reserve Financial asset reserve Transactions with non-controlling interest Accumulated losses TOTAL EQUITY 2020 $ 2019 $ (1,446,475) (6,301,123) – (506,456) (1,446,475) (6,807,579) 2,539,093 2,023,694 8,820,060 7,730,064 11,359,153 9,753,758 293,906 208,003 293,906 208,003 11,065,247 9,545,755 46,931,843 44,900,024 1,005,268 577,577 – (506,456) (1,161,069) (1,161,069) (35,710,795) (34,264,321) 11,065,247 9,545,755 No guarantees have been entered into by Impact Minerals Limited in relation to the debts of its subsidiaries. Impact Minerals Limited’s commitments are disclosed in Note 21. 70 Impact Minerals Ltd Annual Report 2020 Directors’ Declaration The Directors of Impact Minerals Limited declare that: 1. in the Directors’ opinion, the financial statements and notes set out on pages 45 to 69 and the Remuneration Report in the Directors’ Report are in accordance with the Corporations Act 2001, including: a. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its performance, for the financial year ended on that date; and b. complying with Australian Accounting Standards (including the Australian Accounting Interpretations), Corporations Regulations 2001 and mandatory professional reporting requirements. 2. the financial statements also comply with International Financial Reporting Standards as disclosed in Note 2; and 3. there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they become due and payable. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 by the Managing Director and Chief Financial Officer for the financial year ended 30 June 2020. Signed in accordance with a resolution of the Directors. Peter Unsworth Chairman Perth, Western Australia 28 September 2020 Directors’ Declarationfor the year ended 30 June 2020Impact Minerals Ltd Annual Report 2020 71 Independent Auditor’s Report to the Members Independent Auditor's Report To the Members of Impact Minerals Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Impact Minerals Limited (“the Company”) and its subsidiaries (“the Consolidated Entity”), which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion: a. the accompanying financial report of the Consolidated Entity is in accordance with the Corporations Act 2001, including: (i) (ii) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2020 and of its financial performance for the year then ended; and complying with Australian Accounting Standards and the Corporations Regulations 2001. b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 2. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our the Auditor’s responsibilities under Responsibilities for the Audit of the Financial Report section of our report. We are those standards are further described in independent of the Consolidated Entity in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independent Auditor’s Report72 Impact Minerals Ltd Annual Report 2020 Independent Auditor’s Report To the Members of Impact Minerals Limited (Continued) Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How our audit addressed the key audit matter Exploration and Evaluation- $10,946,163 Our procedures included, amongst others: (Refer to Note 10) Assessing management’s determination of its Exploration and evaluation expenditure is a key audit areas of interest for consistency with the definition matter due to: in AASB 6. This involved analysing the tenements The significance of the balance to the in which the Consolidated Entity holds an interest Consolidated Entity’s consolidated financial and the exploration programmes planned for position. those tenements; The level of judgement required in evaluating For each area of interest, we assessed the management’s application of the requirements of Consolidated Entity’s rights to tenure by AASB 6 Exploration for and Evaluation of Mineral corroborating to government registries and Resources. AASB 6 is an industry specific evaluating agreements in place with other parties accounting standard requiring the application of as applicable; significant judgements, estimates and industry We tested the additions to capitalised expenditure knowledge. This includes specific requirements for the year by evaluating a sample of recorded for expenditure to be capitalised as an asset and expenditure for consistency to underlying records, subsequent requirements which must be the capitalisation requirements of the complied with for capitalised expenditure to Consolidated Entity’s accounting policy and the continue to be carried as an asset. requirements of AASB 6; The assessment of impairment of exploration and We considered the activities in each area of evaluation expenditure requiring judgement. interest to date and assessed the planned future activities for each area of interest by evaluating budgets for each area of interest; We assessed each area of interest for one or more of the following circumstances that may indicate impairment of the capitalised expenditure: the licenses for the right to explore expiring in the near future or are not expected to be renewed; substantive expenditure for further exploration in the specific area is neither budgeted or planned; decision or intent by the Consolidated Entity to discontinue activities in the specific area of interest due to lack of commercially viable quantities of resources. Independent Auditor’s ReportcontinuedImpact Minerals Ltd Annual Report 2020 73 Independent Auditor’s Report To the Members of Impact Minerals Limited (Continued) Key audit matter How our audit addressed the key audit matter data indicating that, although a development in the specific area is likely to proceed, the carrying amount of the exploration asset is unlikely to be recovered in full from successful development or sale. Other Information The directors are responsible for the other information. The other information comprises the information included in the Consolidated Entity’s annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 2, the directors also state in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report complies with International Financial Reporting Standards. In preparing the financial report, the directors are responsible for assessing the Consolidated Entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Consolidated Entity or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. Independent Auditor’s Reportcontinued74 Impact Minerals Ltd Annual Report 2020 Independent Auditor’s Report To the Members of Impact Minerals Limited (Continued) As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: − − − − − − Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Consolidated Entity’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Consolidated Entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Consolidated Entity to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Consolidated Entity to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Consolidated Entity audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Independent Auditor’s ReportcontinuedImpact Minerals Ltd Annual Report 2020 75 Independent Auditor’s Report continued Independent Auditor’s Report To the Members of Impact Minerals Limited (Continued) Report on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2020. The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with s 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. Auditor’s Opinion In our opinion, the Remuneration Report of Impact Minerals Limited, for the year ended 30 June 2020, complies with section 300A of the Corporations Act 2001. BENTLEYS Chartered Accountants DOUG BELL CA Partner Dated at Perth this 28th day of September 2020 76 Impact Minerals Ltd Annual Report 2020 Shareholder Information Shareholder Information as at 24 September 2020 Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as follows. 1. DISTRIBUTION OF HOLDERS OF EQUITY SECURITIES Analysis of number of equity security holders by size of holding: 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over Total The number of holders of less than a marketable parcel of ordinary fully paid shares is 524. 2. SUBSTANTIAL SHAREHOLDERS Substantial shareholders (i.e. shareholders who hold 5% or more of the issued capital): MRS SUSANNE BUNNENEBERG ABC BETEILIGUNGEN AG Shareholders 146 106 109 1,665 1,533 3,559 Number of shares Percentage held 200,199,999 205,489,541 11.27 11.57 3. VOTING RIGHTS (a) Ordinary shares Each shareholder is entitled to receive notice of and attend and vote at general meetings of the Company. At a general meeting, every shareholder present in person or by proxy, representative of attorney will have one vote on a show of hands and on a poll, one vote for each share held. (b) Options No voting rights. 4. QUOTED SECURITIES ON ISSUE The Company has 1,777,185,287 quoted shares on issue. 5. ON-MARKET BUY BACK There is no current on-market buy back. 6. UNQUOTED EQUITY SECURITIES Options exercisable at $0.07 on or before 29 September 2020 Options exercisable at $0.03 on or before 30 November 2021 Options exercisable at $0.0375 on or before 30 November 2022 Options exercisable at $0.0149 on or before 5 November 2023 Number on issue Number of holders 15,500,000 40,000,000 20,000,000 97,000,000 10 5 5 8 Impact Minerals Ltd Annual Report 2020 77 Shareholder Information continued 7. TWENTY LARGEST HOLDERS OF QUOTED ORDINARY SHARES Shareholder J P MORGAN NOMINEES AUSTRALIA LIMITED ABC BETEILIGUNGEN AG WHALE WATCH HOLDINGS LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED DEUTSCHE BALATON AKTIENGESELLSCHAFT BNP PARIBAS NOMINEES PTY LTD ABC BETEILIGUNGEN AG CITICORP NOMINEES PTY LIMITED SUTTON NOMINEES PTY LTD MS CHUNYAN NIU AVIANA HOLDINGS PTY LTD TRAIST PTY LIMITED MR YUNG WING HO + MRS KATHERINE KAM LING HO CHINA GROWTH MINERALS LIMITED PRISAP PTY LTD (INNES SUPER FUND A/C> YANARA NOMINEES PTY LTD P J ENTERPRISES PTY LIMITED MR BRADLEY JOHN KENNEY TOWNS CORPORATION PTY LTD LATSOD PTY LTD MCNEIL NOMINEES PTY LIMITED Number of shares Percentage held 289,453,894 1 6 . 2 9 116,254,948 55,839,784 54,068,600 33,300,000 23,658,881 21,745,052 18,797,520 18,025,964 13,333,333 13,157,895 12, 500,000 12,069,888 11,840,470 11,500,000 11,287,356 10,385,913 9,800,000 8,780,000 8,000,000 8,000,000 761,799,498 6.54 3.14 3.04 1.87 1.33 1.22 1.06 1.01 0.75 0.74 0.70 0.68 0.67 0.65 0.64 0.58 0.55 0.49 0.45 0 . 4 5 42.87 78 Impact Minerals Ltd Annual Report 2020 Tenement Schedule Project / Tenement Location Status IPT Interest at end of quarter Commonwealth Project New South Wales EL5874 EL8212 EL8252 EL8504 EL8505 EL8632 Broken Hill Project New South Wales EL7390 EL8234 EL8636 EL8674 EL8609 ELA5977 ELA5978 ELA6033 Clermont Project Queensland EPM14116 Blackridge Project Queensland EPM26806 ML2386 EPM27571 EPM27410 Arkun Project Western Australia E70/5430 E70/5431 E70/5432 E70/5433 E70/5434 E70/5490 E70/5504 E70/5505 Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Application Application Application Granted Granted Granted Application Application Application Application Application Application Application Application Application Application 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% – – – 100% 100% 100% – – – – – – – – – – Impact Minerals Ltd Annual Report 2020 79 26 Richardson Street, West Perth, Western Australia 6005 T. +61 (08) 6454 6666 F. +61 (08) 6314 6670 Email: info@impactminerals.com.au Website: www.impactminerals.com.au

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