King River Resources Limited
Annual Report 2021

Plain-text annual report

(ACN 100 714 181) Annual Report For the year ended 30 June 2021 Page 3 4 14 15 16 17 18 19 20 41 46 Contents Corporate Directory Au Directors Declaration Statement of Comprehensive Income Statement of Financial Position Statement of Cash Flows Statement of Changes in Equity Notes to the Consolidated Financial Statements Independent Audit Report ASX Additional Information Page 2 Corporate Directory ACN: 100 714 181 ASX Code: KRR King River Resources Limited shares are listed on the Australian Stock Exchange (ASX) DIRECTORS Anthony Barton (Chairman) Leonid Charuckyj (Director) Greg MacMillan (Director) COMPANY SECRETARIES Greg MacMillan Kathrin Gerstmayr REGISTERED OFFICE 254 Adelaide Tce Perth WA 6000 Tel: Fax: Email: info@kingriverresources.com.au (08) 9221 8055 (08) 9325 8088 SOLICITORS Fairweather Corporate Lawyers 589 Stirling Highway Cottesloe WA 6011 BANKERS ANZ Banking Corporation Perth WA 6000 SHARE REGISTER Automic Group Level 2, 267 St Georges Terrace Perth WA 6000 AUDITORS Ernst and Young 11 Mounts Bay Road Perth WA 6000 INTERNET ADDRESS www.kingriverresources.com.au CORPORATE GOVERNANCE STATEMENT www.kingriverresources.com.au/investors/corporate-governance/ Page 3 Directors Report The directors submit their report for King River Resources for the year ended 30 June 2021. DIRECTORS entities follows below. The directors were in office for the entire period unless otherwise stated. No director has served as a director of any other ASX Listed Company in the past 3 years unless mentioned below. Anthony Barton Chairman Appointed 21 May 2007 Mr Barton has been involved in founding and growing a number of successful listed public companies. He has extensive experience in capital markets, corporate finance, funds management and venture capital and has had advisory roles in the incorporation and listing of many Australian based resource companies. Mr Barton is the founding Executive Chairman of the boutique investment bank Australian Heritage Group. He is a graduate of the Royal Melbourne Institute of Technology with a Bachelor of Business (Accountancy) degree and has in excess of 40 years of commercial experience having also acted in senior executive and director capacities for two leading Australian stockbroking firms. Leonid Charuckyj Director Appointed 13 December 2011 Mr. Charuckyj (B.E. and M.Eng-Sc. Melbourne University) has had extensive experience over a broad range of technical, engineering, management and corporate roles including senior positions in government, public and private industry both in Australia and overseas. His focus has been on the environmental, pollution control and waste management industries and on the energy and mining industries amongst others. This has included such diverse roles as representing Australia as an expert engineering advisor in the Middle East, developing and commercialising new technologies (both in the public company arena and for major international groups), and managing all aspects of an industrial minerals development from mine and processing to product development and marketing. Gregory MacMillan Director - Appointed 2 July 2014 Joint Company Secretary - Appointed 9 August 2012 Mr. MacMillan has wide ranging corporate, financial, capital markets and commercial experience over the last 35 years. Greg has held the positions of director, company secretary, chief financial officer, and corporate finance executive in numerous companies across the finance, mining and commercial sectors. Greg holds a Bachelor of Business degree, is a Certified Practicing Accountant and a Chartered Company Secretary. COMPANY SECRETARY Kathrin Gerstmayr Joint Company Secretary Appointed 4 April 2019 Ms. Gerstmayr commenced her career working for a chartered accounting and business advisory firm as tax manager, before moving into senior finance roles in a variety of industries. She holds a Bachelor of Commerce degree (Professional Accounting and Marketing Management), is a Certified Practicing Accountant and a Chartered Company Secretary. NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES King River has established a portfolio of 100% owned tenements covering approximately 3,274 square kilometres in the East Kimberley region in Western Australia. The principal activities of the entities within the Group during the year were focusing on exploration and development of the tenements in the East Kimberley region of Western Australia. King River has also established a portfolio of 100% owned tenements covering approximately 7,705 square kilometres, in the Tennant Creek region of the Northern Territory. Page 4 Directors Report OPERATIONS REPORT The primary focus of King River Resources during the 2021 financial year is the advancement of metallurgical studies on the , and the completion of the Kwinana e optimal process route High Purity Alumina Pre-feasibility study on 16 June 2021. The C to produce high purity alumina, vanadium, titanium, magnesium and iron. The Company has also enjoyed further success with high grade gold and base metals exploration at Mt Remarkable, located some 120 kilometres South of Speewah, and Treasure Creek, located in the Tennant Creek region of the Northern Territory. INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY As at the date of this report, the interests of the directors in the shares of the Company were Anthony Barton Leonid Charuckyj Greg MacMillan Total Chairman Director Director Ordinary Shares Options Over Ordinary Shares 104,660,1571 18,162,1212 35,468,1093 158,290,387 2,272,7301 900,0002 909,0923 4,081,822 ¹ 40,778,058 of the shares and 909,092 options are held by Mr AP Barton and Mrs CH Barton as trustee for the Barton Family Superannuation Fund of which Mr Barton is a director and a beneficiary, 25,022,244 of the shares and 454,546 options are held by Barton & Barton Pty Ltd of which Mr Barton is a director and shareholder, 31,992,238 of the shares and 454,546 options are held by Universal Oil (Australia) Pty Ltd of which Mr Barton is a director and a shareholder, and 6,867,617 of the shares and 454,546 options are held by Harvey Springs Estate Pty Ltd of which Mr Barton is a director and a shareholder. 2 1,050,699 shares and 450,000 4,939,754 of the shares are held by Mr L Charuckyj & Mrs CM Charuckyj as trustee for the ZETA Super Fund of which Mr Charuckyj is a trustee and beneficiary, 12,171,668 of the shares and 450,000 options are held by Temtor Pty Ltd of which Mr Charuckyj is a director and shareholder. 3 35,468,109 shares and 909,092 of the options are held by GDM Services Pty Ltd as trustee for the GDM Services Trust and GDM Services Superannuation Fund of which Mr MacMillan is a director and beneficiary. CORPORATE STRUCTURE King River is a company limited by shares that is incorporated and domiciled in Australia. King River has fully owned subsidiaries: - Speewah Mining Pty Ltd - Treasure Creek Pty Ltd - Kimberley Gold Pty Ltd - Whitewater Minerals Pty Ltd - ARC Specialty Metals Pty Ltd The Group has prepared a consolidated financial report incorporating the entities (being 100% owned subsidiaries) that it controlled during the financial year. REVIEW OF CONSOLIDATED FINANCIAL CONDITION The consolidated entity recorded an operating loss after income tax of $968,842 (2020: $1,115,536 loss). There was no dividend declared or paid during the year. CAPITAL STRUCTURE As at the date of this report the Company had 1,553,524,947 (2020: 1,553,524,947) fully paid ordinary shares. There were also 152,443,342 (2020: 152,443,342) listed options over ordinary shares on issue and 7,000,000 unlisted options over ordinary shares on issue (2020: 7,000,000). Details of the terms of the unlisted options are outlined in Note 18 of the consolidated financial statements. CASH FROM OPERATIONS The net cash outflow used for operating activities was $742,479 (2020: $632,732). The cash balance at year end was $6,124,217 (2020: $578,179). LOSS PER SHARE Basic and diluted loss per share (cents) Share price 2021 (0.06) 0.026 2020 (0.09) 0.033 2019 (0.06) 0.028 2018 (0.09) 0.097 2017 (0.07) 0.007 Page 5 Directors Report SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS During the financial year the following significant change was shares and 119,110,007 attaching options. The issue price for each share under this SPP was $0.033 plus 1 free attaching option for every 2 shares issued. Each option has an exercise price of $0.06 and expiry date of 31 July 2022. On 27 July 2020 the Company completed a Placement from professional and sophisticated investors and raised $2,000,000 from the issue of 66,666,669 shares and 33,333,335 attaching options. The issue price for each share under the Placement was $0.03 plus 1 free attaching option for every 2 shares issued. The options have an exercise price of $0.06 and an expiry of 31 July 2022. The impact of the Coronavirus (COVID-19) pandemic is ongoing and while event has had no significant impact on the consolidated entity up to 30 June 2021, 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. SIGNIFICANT EVENTS AFTER THE BALANCE DATE LIKELY DEVELOPMENTS AND EXPECTED RESULTS Pre- . The Kwinana High Purity Alumina PFS was completed on 16 June 2021 and demonstrated the potential for King River to be a producer of high value, high purity, alumina sourced from an industrial chemical feedstock and utilising the new KRR ARC HPA process. Kwinana High Purity Alumina was the completion of or the ASX website with report dated 16 June 2021. Work has commenced on the development of a Mini-Pilot Plant to demonstrate the ARC HPA process works at a larger scale for the Definitive Feasibility Studies and to produce market samples. ENVIRONMENTAL REGULATION AND PERFORMANCE performance obligations are monitored by the Board and subjected from time to time to Government agency audits and site environmental performance obligations. No environmental breaches have occurred or have been notified by any Government agencies during the year ended 30 June 2021. SHARES UNDER OPTION As at the date of this report, there were 159,443,342 unissued ordinary shares under granted options. Date Options Granted 14-August- 2019 19-August-2020 Expiry Date 14-Aug-2022 31-July-2022 Issue Price of Shares Number Under Option $0.06 $0.06 7,000,000 152,443,342 159,443,342 SHARES ISSUED ON EXERCISE OF OPTIONS During or since the end of the financial year, there were no shares issued on options exercised. Refer to Note 16 of the consolidated financial statements for further details of the options. Option holders do not have any right, by virtue of the option, to participate in any issue of the Company or any related body corporate. Page 6 Directors Report INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company has entered into and the Constitution against legal proceedings, damage, loss, liability, cost, charge, expense, outgoing or payment (including legal expenses on a solicitor/client basis) suffered, paid or incurred by the officers in connection with the Officers being an officer of the Company, the employment of the officer with the Company or a breach by the Company of its obligations under the D&O Deed. Also pursuant to the D&O Deed, the Company must insure the Officers against liability and provide access to all board papers relevant to defending any claim brought against the Officers in their capacity as officers of the Company. The Company has paid insurance premiums of $31,205 (2020: $26,488) in respect of liability for any current and future directors, Company secretary, executives remuneration. Please also note Director Liability insurance premiums was paid in the 2022 financial year. ROUNDING The amounts contained in this report and in the financial report have been rounded to the nearest dollar. REMUNERATION REPORT (AUDITED) This report details the nature and amount of remuneration for each director of King River Resources Limited, and for the executives in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report, key management personnel (KMP) of the Company and the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of the Company. encompasses the chief executive and senior executives of the Company. Details of key management personnel (i) Directors A Barton L Charuckyj G MacMillan (ii) Executives K Rogers A Chapman Chairman Director Director / Company Secretary Chief Geologist Project Geologist Other than as detailed above there are no other Executives of the Company. 1. Remuneration Committee The Remuneration Committee of the Board of Directors of King River is responsible for determining and reviewing compensation arrangements for the directors and executives. The Remuneration Committee assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and executive team. Such officers are given the opportunity to receive their base emolument in a variety of forms including cash and fringe benefits such as motor vehicles and expense payment plans. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Company. 2. Use of Independent Remuneration Consultants During the year ended 30 June 2021 no external remuneration consultants were engaged to assist the Group in any capacity. 3. Remuneration Policy e to provide maximum stakeholder benefit from the retention of high quality Board and executive team by remunerating directors and key executives fairly and appropriately with reference to relevant employment market conditions. long term development and success, to ensure remuneration is fair and reasonable (taking into account all relevant factors, and within appropriate controls or limits), that all remuneration packages are reviewed annually or on an ongoing basis in accordance with management's remuneration packages, and that retirement benefits or termination payments (other than notice periods) will not be provided or agreed other than in exceptional circumstances. Page 7 Directors Report remuneration policy aligns with achievement of strategic objectives and creation of long term value for shareholders. The Company assesses each employee annually based upon the individual performance in carrying out the agreed responsibilities of the employee which have been developed in consideration of the term goals. The performance incentive component is reflected as part of the increase in salary and the issue of equity based compensation for each employee on an annual basis. The Company has a formal policy to prohibit executives from entering into arrangements to protect the value of unvested long term incentive awards. The Company performance related payments and long term incentive awards are under ongoing review and will be included when deemed appropriate given the Company position and performance at the time. The table to 30 June 2021: Description Revenue 30-Jun-21 30-Jun-20* 30-Jun-19* 30-Jun-18* 30-Jun-17* $6,094 $1,764 $4,466 $931 $453 Net loss before tax ($968,842) ($1,115,536) ($806,862) ($871,803) ($422,996) Net loss after tax ($968,842) ($1,115,536) ($806,862) ($871,803) ($422,996) Share price at end of year $0.026 $0.032 $0.028 $0.097 Market capitalisation $40.39m $39.96m $34.68m $113.8m Basic loss cents per share Diluted loss cents per share 0.06 0.06 0.09 0.09 0.06 0.06 0.09 0.09 $.007 $6.07m 0.07 0.07 *Comparatives have not been adjusted for the changes due to the adoption of AASB 15 and AASB 9 in 2019 and AASB 16 in 2020. 4. Non Executive Director Remuneration 4.1 Fixed Remuneration The aggregate remuneration of non executive directors will not exceed the maximum approved amount of $150,000 approved at Annual General Meeting on 24 April 2007. The board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable by shareholders. The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst directors is reviewed annually. The board considers fees paid to non executive directors of comparable companies when undertaking the annual review as well as additional time commitment of directors who serve on one or more sub committees and assistance to the Company with new investment opportunities. Each of the non executive directors during the financial year received a salary of $43,800 per annum inclusive of superannuation where superannuation is paid. Non executive directors are encouraged to hold shares in the Company; these are to be purchased by the director on market. It is considered good corporate governance for directors to have a stake in the company on whose board he or she sits. Remuneration of non executive directors for the year ended 30 June 2021 is disclosed in Table 1 under the remuneration section of this report. 4.2 Variable Remuneration Non executive directors do not receive performance based bonuses or additional remuneration for their membership of subsidiary boards or committees. Short Term Incentives 4.3 Variable Remuneration During the financial year, the Company had no contractual obligations to provide long term incentives to non executive directors. Long Term Incentives 5. Executive Director Remuneration The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the company so as to: reward executives for Company and individual performance; align the interests of executives with those of shareholders; link reward with the strategic goals and performance of the company; and ensure total remuneration is competitive by market standards. Executive remuneration comprises of: base pay and benefits; and long term incentives through equity based compensation. Page 8 Directors Report 5.1 Fixed Remuneration Base pay and benefits Base pay is structured as a total employment cost package that may be delivered as combination of cash and salary sacrifice Executives are offered a competitive base pay. Reference is made to industry benchmarks to ensure that the base pay is set to competitive with comparable positions of responsibility. There is no guaranteed base pay increases for any executive contract. 5.2 Variable Remuneration During the financial year the Company had no contractual obligations to provide short term incentives to the Key Management Personnel and Executives of the Company. Short Term Incentives 5.3 Variable Remuneration During the financial year the Company had no contractual obligations to provide long term incentives to the Key Management Personnel and Executives of the Company. Long Term Incentives 5.4 Employment Contract Executive - Ken Rogers (Chief Geologist) The Company has entered into an employment agreement with Mr Rogers for the provision of technical geological services based on daily rates for the provision of services. Their services can be terminated by giving a 4 week notice by either party. 5.5 Consulting Contract Executives - Andrew Chapman (Project Geologist) The Company has entered into a contractor agreement with Mr Chapman for the provision of technical geological services based on daily rates for the provision of services. Their services can be terminated by giving a 4 week notice by either party. 6. Remuneration of Key Management Personnel and Executives of the Company Details of the remuneration of each director of King River, each of the executives of the Company and the consolidated entity for the year ended 30 June 2021 are set out in the following tables. Table 1: Remuneration for the year ended 30 June 2021 Short Term Post-Employment Share Based Payments Salary & Fees $ Cash Bonus $ 43,800 43,800 43,800 131,400 61,776 161,859 223,635 355,035 - - - - 33,8443 - 33,844 - Superannuation Options $ - - - - 9,084 - 9,084 9,084 $ - - - - - - - - Loan Plan Shares $ Total $ - - - - 13,9952 - 13,995 13,995 43,800 43,800 43,800 131,400 118,699 161,859 280,558 411,958 30 June 2021 Directors A Barton L Charuckyj G MacMillan Sub Total1 Executives K Rogers A Chapman Sub Total Total 1 Performance Based Remuneration as % of Total % - - - - 40% - 17% 12% 2On 14 August 2019 the Company issued 10,000,000 shares to Mr Rogers at the market price of 3.2 cents per share. 5,000,000 of the shares were escrowed until the completion of the prefeasibility study which was completed on 16 June 2021 and the 5,000,000 shares were released from escrow on 1 July 2021. 5,000,000 of the shares are subject to trading restrictions and escrowed until the completion of a bankable feasibility study. The shares have been funded by a limited recourse loan from the Company with a 4-year term and zero interest rate. The fair value per share at grant date is $0.0254 and the expense for the period relating to the loan plan shares is $13,995 the remaining future expense is $65,473. Please refer to section 6.2 Equity Based Compensation (Loan Plan Shares) and Note 18 Share-Based Payment . 3Mr Rogers received a cash bonus in light of his services in finalising the PFS and his contribution to the Company. Page 9 Directors Report Table 2: Remuneration for the year ended 30 June 2020 Short Term Salary & Fees $ Cash Bonus $ 43,800 43,800 40,000 127,600 61,776 136,672 198,448 326,048 - - - - - - - - Post Employment Superannuation $ - - 3,800 3,800 5,869 - 5,869 9,669 Share Based Payments Options $ - - - - - - - - Loan Plan Shares $ Total $ - - - - 174,5322 - 174,532 174,532 43,800 43,800 43,800 131,400 242,177 136,672 378,849 510,249 Performance Based Remuneration as % of Total - - - - 72% - 46% 34% 30 June 2020 Directors A Barton L Charuckyj G MacMillan Sub Total1 Executives K Rogers A Chapman Sub Total Total 1 2On 14 August 2019 the Company issued 10,000,000 shares to Mr Rogers at the market price of 3.2 cents per share. The shares will be subject to trading restrictions and 5,000,000 of the shares will be escrowed until the completion of the PFS and 5,000,000 of the shares will be escrowed until the completion of a bankable feasibility study. The shares have been funded by a limited recourse loan from the Company with a 4-year term and zero interest rate. The fair value per share at grant date is $0.0254 and the remaining future expense is $79,468. Please refer to Note 18 Share-Based Payment. By way of cash preservation measure, the Director fees for February 2020 through to June 2020 were accrued and payments deferred until August 2020. 6.1 Equity Based Compensation Options 2021 During the year, no unlisted options were issued to executives as an alternate remuneration to cash. Table 1: Compensation Option Holdings of Key Management Personnel during the year ended 30 June 2021 30 June 2021 Balance at Beginning of Period Granted as Remuner- ation Options Exercised Options Expired 1 July 2020 Balance at End of Period 30 June 2021 Vested at 30 June 2021 Not Total Exercisable Exercisable Executives A Chapman Total 5,000,000 5,000,000 - - - - - - 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 - - On 14 August 2019 the Company issued 5,000,000 options to Andrew Chapman with an exercise price of 6 cents per share and an expiry date of 14 August 2022. The options will be subject to exercise restrictions and will vest upon defining a minimum Inferred resource (at either the Tennant Creek Project or the Mt Remarkable Region) of no less than 250,000 ounces of Au at an average grade of no less than 6 grams per tonne. The fair value per option at grant date is $0.0068 and if vesting conditions are met the future expense to be recognised is $33,872. Page 10 Directors Report 6.2. Equity Based Compensation Shares 2021 Table 1: Shareholdings of Key Management Personnel during the year ended 30 June 2021 30 June 2021 Directors A Barton 1 L Charuckyj 2 G MacMillan 3 Executives K Rogers4 A Chapman Total Balance 1 July 2020 Ord Granted as Remuneration Ord On Exercise of Options Ord Net Change Other Ord Balance 30 June 2021 Ord 100,114,702 16,362,121 33,649,928 3,800,120 - 153,926,871 - - - - - - - - - - - - 4,545,455 1,800,000 1,818,181 104,660,157 18,162,121 35,468,109 606,062 - 4,406,182 - 8,769,698 162,696,569 ¹ 40,778,058 of the shares are held by Mr AP Barton and Mrs CH Barton as trustee for the Barton Family Superannuation Fund of which Mr Barton is a director and a beneficiary. 25,022,244 of the shares are held by Barton & Barton Pty Ltd of which Mr Barton is a director and shareholder. 31,992,238 of the shares are held by Universal Oil (Australia) Pty Ltd of which Mr Barton is a director and a shareholder. 6,867,617 of the shares are held by Harvey Springs Estate Pty Ltd of which Mr Barton is a director and a shareholder. 2 1,050,699 shares . 4,939,754 of the shares are held by Mr L Charuckyj & Mrs CM Charuckyj as trustee for the ZETA Super Fund of which Mr Charuckyj is a trustee and beneficiary. 12,171,668 of the shares are held by Temtor Pty Ltd of which Mr Charuckyj is a director and shareholder. 3 35,468,109 of the shares are held by GDM Services Pty Ltd as trustee for the GDM Services Trust and GDM Services Superannuation Fund of which Mr MacMillan is a director and beneficiary. 4 4,406,182 Loan Plan Shares During the year, no Loan Plan Shares were issued to executives as an alternate remuneration to cash. Table 2: Loan Plan Shares of Key Management Personnel during the year ended 30 June 2021 30 June 2021 Executives K Rogers Total Balance 1 July 2020 Ord 10,000,000 10,000,000 Fair value per share at issue date Balance 30 June 2021 Ord Issue Date Expiry Date1 14 August 2019 $0.0254 10,000,0002 14 August 2023 10,000,000 1 The limited recourse loan in respect of the Loan Plan Shares has to be fully repaid 4 years after grant date of the Loan Plan Shares. 2 At the date of this report, there is 5,000,0000 escrowed loan plan shares and 10,000,000 escrowed loan plan shares as at 30 June 2021. On 14 August 2019 the Company issued 10,000,000 Loan Plan Shares to the Mr Rogers at the market price of 3.2 cents per share. The PFS was completed on 16 June 2021, of which 5,000,000 shares were released from escrow on 1 July 2021. 5,000,000 of the shares are subject to trading restrictions will be escrowed until the completion of a bankable feasibility study on either the Speewah Project or the High Purity Alumina Project. The shares have been funded by a limited recourse loan from the Company with a 4-year term and zero interest rate, the loan is repayable at the end of the term or from the proceeds of any shares sold after escrow release. In the event that any shares sold are less than 3.2 cents the Company will only recoup the value of the shares sold at the respective price in repayment of the loan, or part thereof. Please refer to Note 18 Share-Based Payment. The Loan Plan Shares were provided at no cost to the recipients. The Loan Plan Shares have been accounted for as an in-substance option award. The fair value of the equity instrument granted was estimated as at the date of grant using the Black and Scholes model taking into account the terms and conditions upon which the shares were granted. Please refer to Note 18 Share Based Payments. Speewah Project towards are more direct industrial aluminium feedstock pr Project arose as a result of work upon the Speewah Project in assessing HPA products and resulting in the Company developing ibility focus towards HPA Project, on 29 January 2021 the Company varied the terms of the Loan Plan Share Restriction Period to also enable the restriction to be satisfied he Page 11 Directors Report and end on the relevant development of the HPA Project. As the award has non-market based vesting conditions, the modification of the award did not give rise to an incremental fair value at the date of modification. The share price at the date of modification is $0.029. 6.3 Related Party Transactions Director and the Company Secretary, have entered into an occupancy and administration agreement with King River in respect of providing occupancy and administration commencing March 2009. The total value of the occupancy and administration services provided by AHG during the year was $4,909 (2020: $4,909). All services provided by companies associated with directors were provided on commercial terms. Harvey Springs Estate Pty Ltd , a company controlled by Mr Anthony Barton, had entered into a loan facility agreement in the amount of $500,000 with King River to fund ongoing development and working capital. The loan facility was non-interest bearing and unsecured with the maturity date being 30 June 2021. The loan facility was drawn down in full before 30 June 2020 to fund prefeasibility expenditure and working capital. The loan was repaid in full on 18 August 2020. All equity transact Mr Anthony Barton and his associate entities acquired 4,545,455 ordinary shares and 2,272,730 attaching options at $0.033 per share and nil per option pursuant to the Share Purchase Plan acceptance. Mr Leonid Charuckyj and his associate entities acquired 1,800,000 ordinary shares and 900,000 attaching options at $0.033 per share and nil per option pursuant to the Share Purchase Plan acceptance. Mr Greg MacMillan and his associate entities acquired 1,818,181 ordinary shares and 909,092 attaching options at $0.033 per share and nil per option pursuant to the Share Purchase Plan acceptance. Mr Kenneth Rogers acquired 606,062 ordinary shares and 303,032 attaching options at $0.033 per share and nil per option pursuant to the Share Purchase Plan acceptance. 6.4 Voting and comments made at the company's 2020 Annual General Meeting ('AGM') At the 2020 AGM, 97.26% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2020. The company did not receive any specific feedback at the AGM regarding its remuneration practices. End of Remuneration Report DIRECTORS MEETINGS The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each director was as follows: Directors Meetings 5 Number of Meetings Held Number of Meetings Attended Anthony Barton Leonid Charuckyj Greg MacMillan 5 5 5 1. During the year the Directors approved 14 circular resolutions which were signed by all Directors of the Company 2. All committees of directors are made up of the full Board. Reference to meeting refers to meeting conducted specifically to deal with the particular business of that Committee. COMMITTEE MEMBERSHIP The role of the Audit, Remuneration and Nomination Committees is carried out by the full Board in accordance with the appropriate charters. The Board considers that no efficiencies or benefits would be gained by establishing separate committees. Page 12 Directors Report CORPORATE GOVERNANCE In recognising the need for the highest standards of corporate behaviour and accountability, the directors of King River support located on the Company website www.kingriverresources.com.au/investors/corporate-governance/. INDEMNIFICATION OF AUDITORS To the extent permitted by law and professional regulations, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year. AUDITOR INDEPENDENCE Section 370C of the Corporation Act 2001 requires our auditors, Ernst & Young, to provide the directors of the Company with an Independence Declaration in relation to the audit of the consolidated financial report. This Independence Declaration is disclosed on page 13 of this 2021. NON AUDIT SERVICES ring the year ended 30 June 2021. Signed in accordance with a resolution of the directors. Mr Greg MacMillan Director 24 September 2021 Page 13 In accordance with a resolution of the directors of King River Resources Limited, I state that: In the opinion of the directors: (a) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including: (i for the year ended on that date; and 30 June 2021 and of its performance (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; (b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 2(a); (c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable, subject to the matters set out in Note 2(e) to the financial report; (d) there are reasonable grounds to believe that the Company and the subsidiaries identified in Note 5 will be able to meet any obligations or liabilities to which they are or may become subject to, by virtue of the Deed of Cross Guarantee between the Company and that subsidiary; and (e) this declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2021. On behalf of the Board Mr Greg MacMillan Director 24 September 2021 Page 15 Statement of Comprehensive Income FOR THE YEAR ENDED 30 JUNE 2021 Consolidated 2021 2020 Notes $ $ 6(a) 2(f), 6(b) 6(c) 6(c) 6(d) 18 6(e) 7 benefits expenses Revenue Other income Compliance costs Depreciation expense Finance costs Insurance expense Other administration expenses Share-based payments Write-off of capitalised exploration expense Loss before income tax expense Income tax benefit Net loss for the year after tax Other Comprehensive Income Total Comprehensive Loss for the Year Total Comprehensive Loss for the Year is attributable to: Owners of King River Resources Limited 6,094 - 1,764 385,064 (131,400) (131,400) (217,527) (198,766) (59,668) (1,521) (43,051) (70,314) (1,277) (46,457) (327,172) (330,362) (13,995) (180,602) (968,842) - (188,058) (535,730) (1,115,536) - (968,842) (1,115,536) - - (968,842) (1,115,536) (968,842) (968,842) (1,115,536) (1,115,536) Loss per share Basic loss per share (cents per share) Diluted loss per share (cents per share) 9 9 (0.06) (0.06) (0.09) (0.09) The above statement of other comprehensive income should be read in conjunction with the accompanying notes Page 16 Statement of Financial Position AS AT 30 JUNE 2021 Assets Current Assets Cash and cash equivalents Other receivables Other current assets Total Current Assets Non Current Assets Deferred exploration expenditure Plant and Equipment Right of use asset Total Non Current Assets Total Assets Liabilities Current Liabilities Trade and other payables Loan and borrowings Lease liabilities Total Current Liabilities Non-Current Liabilities Lease liabilities Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total Equity Consolidated 2021 2020 Notes $ $ 10(a) 10(b) 10(c) 2(f), 11 12 13 14 14 15 15 16(a) 16(b) 2(f) 6,124,217 578,179 423,130 49,389 34,412 6,581,759 8,303 635,871 18,173,969 207,540 76,552 18,458,061 25,039,820 16,155,543 39,587 107,445 16,302,575 16,938,446 213,033 296,657 - 500,000 33,435 246,468 43,395 43,395 289,863 55,597 852,254 55,260 55,260 907,514 24,749,957 16,030,932 49,408,241 39,734,369 1,898,115 1,884,120 (26,556,399) (25,587,557) 24,749,957 16,030,932 The above statement of financial position should be read in conjunction with the accompanying notes. Page 17 Statement of Cash Flows FOR THE YEAR ENDED 30 JUNE 2021 Consolidated 2021 2020 Notes $ $ Cash Flows from Operating Activities Interest received Payments to suppliers and employees Interest and other finance costs paid Payment of director fees in arrears Net cash used in operating activities 10(a) Cash Flows from Investing Activities Exploration Incentive Scheme grant received Research & Development tax incentive received 2(f) Payment for exploration and evaluation Payment for property, plant & equipment Net cash used in investing activities Cash Flows from Financing Activities Proceeds from share issues Payment of share issue costs Proceed from loan Payment of loan Repayment of principal portion of lease liabilities Net cash from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and Cash Equivalents at end of year 10(a) 6,094 (703,252) (1,521) (43,800) (742,479) 1,764 (633,219) (1,277) - (632,732) 45,552 - - 500,322 (2,679,120) (2,708,348) (193,106) (1,909) (2,826,674) (2,209,935) 9,861,230 (187,368) - (500,000) (58,671) 9,115,191 5,546,038 578,179 6,124,217 - - 500,000 - (46,094) 453,906 (2,388,761) 2,966,940 578,179 The above statement of cash flows should be read in conjunction with the accompanying notes. Page 18 Statement of Changes in Equity FOR THE YEAR ENDED 30 JUNE 2021 Consolidated At 1 July 2020 Loss for the year Total comprehensive income for the year Issued Capital Note 16(a) Equity Benefits Reserve Note 16(b) Accumulated Losses Total Equity Notes $ $ $ $ 39,734,369 1,884,120 (25,587,557) 16,030,932 - - - - (968,842) (968,842) (968,842) (968,842) Transaction with owners in their capacity as owners: Loan Plan Shares 14 August 2019 18(a) Issue of Shares Placement 27 July 2020 Issue of Shares Share Purchase Plan 19 August 2020 Share issue costs net tax Balance at 30 June 2021 At 1 July 2019 - 2,000,000 7,861,239 (187,367) 13,995 - - - - - - - 13,995 2,000,000 7,861,239 (187,367) 49,408,241 1,898,115 (26,556,399) 24,749,957 39,734,369 1,696,062 (22,907,025) 18,523,406 Prior period adjustment 2(f) - - (1,564,996) (1,564,996) Balance at 1 July 2019 - restated Loss for the year Total comprehensive income for the year Transaction with owners in their capacity as owners: Loan Plan Shares 14 August 2019 Options Granted 14 August 2019 18(a) 18(a) 39,734,369 1,696,062 (24,472,021) 16,958,410 - - - - - - (1,115,536) (1,115,536) (1,115,536) (1,115,536) 174,532 13,526 - - 174,532 13,526 Balance at 30 June 2020 39,734,369 1,884,120 (25,587,557) 16,030,932 The above statement of changes in equity should be read in conjunction with the accompanying notes. Page 19 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 1. CORPORATE INFORMATION is a Company domiciled in Australia and publicly listed on the Australian King River Resources 254 Stock Exchange (ASX). The Company was incorporated on 28 May 2002. The address of Adelaide Tce, Perth WA 6000. The consolidated financial statements as at and for the year ended 30 June 2021 comprise the Company and its subsidiaries The consolidated financial report was authorised for issue by the directors on the 24 September 2021 in accordance with a resolution of the directors. 2. BASIS OF PREPARATION (a) Statement of compliance The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting and other authoritative pronouncements issued by the Australian Accounting Standards Board, and the Corporations Act 2001. The consolidated financial repor and interpretations adopted by the International Accounting Standards Board (IASB). (b) Basis of measurement Unless stated otherwise, the consolidated financial statements have been prepared on the historical cost basis. (c) Functional and presentation currency unctional currency. (d) Use of estimates and judgements The preparation of financial statements in conformity requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. (e) Going Concern Basis of Preparation The Group incurred a net loss after income tax of $968,842 for the year ended 30 June 2021 (2020: $1,115,536) and a net cash inflow of $5,546,038 (2020: outflow of $2,388,761). As at 30 June 2021 the Group had cash and cash equivalents of $6,124,217 (2020: $578,179) and a net current asset surplus of $6,335,291 (2020: $216,383 deficit). The directors are satisfied that at the date of signing of the financial report, there are reasonable grounds to believe that the Group will be able to continue to pay its debts as and when they fall due and that it is appropriate for the financial statements to be prepared on a going concern basis. (f) Prior period adjustment During the year management reviewed the accounting treatment applied to Research and Development (R&D) Tax Incentives received by the Group and accounted for as government grants in line with AASB 120 Accounting for Government Grants and Disclosure of Government Assistance. overnment grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is offset against the related asset. In prior years, R&D Tax Incentives received relating to Deferred Exploration Expenditure were recognised in income . Accordingly, a prior year adjustment has been processed to reclassify relevant amounts to Deferred Exploration Expenditure . The impact of the restatement on the accumulated loss at 30 June 2019 is $1,564,996. The Statement of Comprehensive Income for year ended 30 June 2020 has not been restated as the impact was not considered material. The receipt of the Research and Development tax refund relating to an asset is recognised as cash inflow from investing activities. The comparative information in the Statement of Cash Flows has been restated for this reclassification adjustment. All Deferred Exploration Expenditure relating to R&D Tax Incentives received prior to 2014 was written off in 2013 when the Group determined that the Deferred Exploration Expenditure relating to the processing of vanadium and titanium was fully impaired. Page 20 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 2. BASIS OF PREPARATION continued (f) Prior period adjustment continued Below summarises the impact of the adjustment on the Statement of Financial Position as at 30 June 2020: Statement of Financial Position Non-Current Assets Deferred exploration expenditure Total Non-Current Assets Total Assets Net Assets Equity Accumulated losses Total Equity Balance as at 30 June 2020 (pre-correction) Prior period correction Restated balance as at 30 June 2020 $ $ $ 17,720,539 (1,564,996) 16,155,543 17,867,571 (1,564,996) 16,302,575 18,503,442 (1,564,996) 16,938,446 17,595,928 (1,564,996) 16,030,932 (24,022,561) (1,564,996) (25,587,557) 17,595,928 (1,564,996) 16,030,932 (g) Changes in accounting policies From 1 July 2020 the Group has adopted all new and amended Accounting Standards and Interpretations, mandatory for annual periods beginning 1 July 2020. The application of these new and amended Accounting Standards and Interpretations’ did not have a material impact on the financial position or performance of the Group. Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective, have not been adopted by the Group for the annual reporting period ended 30 June 2021. Management are of the view that these standards and amendments will not have a significant impact of the financial statements. Page 21 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 3. SIGNIFICANT ACCOUNTING POLICIES (a) Principles of Consolidation The consolidated financial report comprises the financial statements of King River Resources Limited and its controlled entities the wholly owned companies Speewah Mining Pty Ltd, Treasure Creek Pty Ltd, Kimberley Gold Pty Ltd, Whitewater Minerals Pty Ltd and ARC Specialty Metals Pty Ltd. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with its investee and has ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has; . King River Resources Power over the investee (eg, existing rights that give it the current ability to direct the relevant activities of the investee) Exposure, or rights, to variable returns from its involvement with the investee, and The ability to use its power over the investee to affect its returns. When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including; - The contractual arrangement with the other vote holders of the investee - Rights arising from other contractual arrangements - The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non- controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to policies. All inter-company balances and transactions between entities in the consolidated entity, including any unrealised profits or losses, have been eliminated on consolidation. Where controlled entities have entered or left the consolidated entity during the year, their operating results have been included/excluded from the date control was obtained, or until the date control ceased. There are no minority interests in the equity of the controlled entity. (b) Income Tax and Other Taxes Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or amount are those that are enacted or substantively enacted by the balance sheet date. Deferred income tax is provided for on all temporary differences at balance date between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each financial year end and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Page 22 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 3. SIGNIFICANT ACCOUNTING POLICIES continued (b) Income Tax and Other Taxes continued Deferred income tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. Tax consolidation legislation The head entity, King River and the subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The Group has applied the group allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group. In addition to its own current and deferred tax amounts, King River also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. (c) Financial Instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets Initial recognition and measurement On initial recognition a financial asset is classified and measured at: a. Amortised cost; b. Fair Value through Other Comprehensive Income (FVOCI) equity investment; or c. FVOCI d. Fair Value through Profit or Loss (FVTPL) The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. A financial asset (unless it is a trade receivable without a significant financing component that is initially measured at the transaction price) is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition. In order for a financial asset to be classified and measured at amo debt investment; st and is performed at an instrument level. Financial assets at amortised cost (debt instruments) This category is the most relevant to the Group. For financial assets measured at amortised cost, these assets are subsequently measured using the effective interest method. The amortised cost is reduced by impairment losses. Interest income and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss. The Group financial assets consist of cash and cash equivalents and other receivables. Impairment of financial assets In relation to the financial assets carried at amortised cost, an expected credit loss model is applied. For short term receivables, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward- looking factors specific to the debtors and the economic environment. The Group considers a financial asset in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. Financial liabilities Initial recognition and measurement All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly financial liabilities include trade and other payables and loans and borrowings. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Trade and other payables are designated as other financial liabilities and are measured at amortised cost. Page 23 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 3. SIGNIFICANT ACCOUNTING POLICIES continued (c) Financial Instruments continued Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss. (d) Plant and Equipment Plant and equipment are measured on the cost basis less accumulated depreciation and impairment losses. Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Impairment Carrying values of assets are reviewed at each financial year end to determine whether there are any indicators of impairment that may indicate the carrying values may not be recoverable in whole or in part. Where an asset does not generate cash flows that are largely independent it is assigned to a cash generating unit and the recoverable amount test applied to the cash generating unit as a whole. Recoverable amount is determined as the greater of fair value less costs of disposal and value in use. An impairment exists if the carrying value of the asset is determined to be in excess of its recoverable amount, in which case the asset or cash generating unit is written down to its recoverable amount. Depreciation The depreciable amount of plant and equipment is depreciated on a straight line basis over its useful life to the Group commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets. Class of Fixed Asset Plant and equipment Depreciation Rate 10-50% An asset s residual value and useful life is reviewed, and adjusted if appropriate, at each balance sheet date. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement. (e) Shares in controlled entities Investments in controlled entities are measured at cost in the separate financial statements of the Parent. The Company assesses whether it is necessary to recognise any impairment loss in the investment in subsidiaries following any significant changes in the underlying assets or operations of the relevant subsidiary. (f) Exploration and Evaluation Expenditure Expenditure Exploration and evaluation expenditure is capitalised provided the rights to tenure of the area of interest is current and either: the exploration and evaluation activities are expected to be recouped through successful development and exploitation of the area of interest or, alternatively, by its sale; or exploration and evaluation activities in the area of interest have not at the reporting date reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or relating to, the area of interest is continuing. When the technical feasibility and commercial viability of extracting a mineral resource have been demonstrated then any capitalised exploration and evaluation expenditure is reclassified as capitalised mine development. Prior to reclassification, capitalised exploration and evaluation expenditure is assessed for impairment. Impairment The carrying value of capitalised exploration and evaluation expenditure is assessed for impairment at the cash generating unit level whenever facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amount. An its estimated recoverable amount. One or more of the following facts and circumstances indicate that an entity should test exploration and evaluation assets for impairment: (a) the period for which the entity has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be renewed; (b) substantive expenditure on further exploration the carrying amount of an asset or cash-generating unit exceeds impairment exists when Page 24 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 3. SIGNIFICANT ACCOUNTING POLICIES continued (f) Exploration and Evaluation Expenditure continued for and evaluation of mineral resources in the specific area is neither budgeted nor planned; (c) exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area; (d) sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale. In any such case, or similar cases, the entity shall perform an impairment test. Any impairment loss is recognised as an expense. (g) Leases Group as Lessee The Company entered into agreements to occupy two warehouse storage facilities in March 2019. Right-of-use assets A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever the shorter. Where the Company expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over the estimated useful life. Right-of-use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. The Company has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. Lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate e. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of-use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. (h) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. obligation at the balance sheet date. If the effect of the time value of money is material, provisions are discounted using a pre-tax rate that reflects the time value of money and the risks specific to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs. (i) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST. Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. Page 25 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 3. SIGNIFICANT ACCOUNTING POLICIES continued (j) Share Based Payment Transactions Equity settled transactions The Group provides benefits to directors and employees (including senior executives) of the Group in the form of share based payments, whereby employees render services in exchange for shares or rights over shares (equity settled transactions). The cost of these equity settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of shares is determined by the price on grant date and of options using the Black & Scholes model, further details of which are given in Note 18. In valuing equity settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of King River (market conditions) if applicable. The cost of equity settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects: (i) (ii) the extent to which the vesting period has expired; and No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition. If the terms of an equity settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. If an equity settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share. (k) Employee Benefits Wages, salaries and annual leave Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of measured at the amounts expected to be paid when the liabilities are settled. Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee, departures, and period of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. (l) Contributed Equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (m) Earnings Per Share Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for: costs of servicing equity (other than dividends); the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and other non discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; Page 26 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 3. SIGNIFICANT ACCOUNTING POLICIES continued (m) Earnings Per Share continued divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. Losses have an anti-dilutive effect. Therefore, the basic and diluted earnings for the current and prior period have remained the same. (n) Government grants Government grants are recognised where there is reasonable assurance that the grant will be received, and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is offset against the related asset. 4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (a) Significant accounting judgements involving estimations, which have the most significant effect on the amounts recognised in the consolidated financial statements: (i) Capitalisation of exploration and evaluation expenditure Under AASB 6 Exploration for and Evaluation of Mineral Resources, the Group has the option to either expense exploration and evaluation expenditure as incurred, or to capitalise such expenditure (provided certain conditions are satisfied). The Group has elected, when the conditions in AASB 6 are met, to capitalise these costs. (ii) Coronavirus (COVID-19) pandemic Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the consolidated entity based on known information. This consideration extends to the nature of , staffing and geographic regions in which the consolidated entity operates. Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the consolidated entity unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID- 19) pandemic. (iii) Research and development tax incentives Research and development rebates are recognised when there is reasonable assurance that the rebate will be received. Management judgement is required to assess that the rebate meets the recognition criteria and in determining the measurement of the rebate including the assessment of the eligibility and appropriateness of the apportionment of eligible expenses based on research and development activities undertaken by the consolidated entity and taking into consideration relevant legislative requirements. Further, the Research and Development Tax Incentive program in Australia is a self-assessment regime and there is a four year period from the date of lodgement where the claim may be subject to a review the Australian Taxation Office or Ausindustry, with any amounts overclaimed being potentially subject to full repayment with interest and penalties. (b) Significant accounting estimates and assumptions The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events and are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities with the next annual reporting period are: (i) Determination of mineral resources and ore reserves Page 27 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS continued (b) Significant accounting estimates and assumptions continued The information on mineral resources and ore reserves were prepared by or under the supervision of Competent Persons as defined in the JORC code. The amounts presented are based on the mineral resources and ore reserves determined under the JORC code. There are numerous uncertainties inherent in estimating mineral resources and ore reserves and assumptions that are valid at the time of estimation may change significantly when new information becomes available. (ii) Share based payment transactions The Group measures the cost of equity settled transactions with employees and suppliers by reference to the fair value of the equity instrument at the date at which they are granted. The expense recognised is based on an assessment of the probability of the vesting. The fair value is determined by using a Black and Scholes model, using the assumptions detailed in Note 18. The accounting estimates and assumptions relating to equity settled share based payments would have no impact on the carrying amounts of the assets and liabilities within the next annual reporting period but may impact income and expenses. (iii) Impairment of capitalised exploration and evaluation expenditure The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, profits and net assets will be reduced in the period in which this determination is made. In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. To the extent it is determined in the future that this capitalised expenditure should be written off, profits and net assets will be reduced in the period in which this determination is made. 5. PARENT ENTITY INFORMATION Parent Current Assets1 Non-current Assets Total Assets Current Liabilities Non-current Liabilities Total Liabilities Contributed Equity Accumulated Losses Option Reserve Total Equity Loss for the year Total Comprehensive loss for the year 2021 $ 6,262,978 79,863 6,342,841 101,666 43,395 145,061 49,408,241 (45,108,576) 1,898,115 6,197,780 (3,341,077) (3,341,077) 2020 $ 465,316 112,107 577,423 672,802 53,631 726,433 39,734,369 (41,767,499) 1,884,120 (149,010) (3,196,773) (3,196,773) 1Loan receivables from the subsidiaries of King River have been written down to fair value in the parent entity information and recorded in profit and loss. Guarantees As a condition of the Corporations Instrument 2016/785, King River Resources Limited, Speewah Mining Pty Ltd, Treasure Creek have Pty Ltd, Kimberley Gold Pty Ltd, Whitewater Minerals Pty Ltd and ARC Specialty Metals Pty Ltd entered into a deed of cross guarantee. The effect of the deed is that King River Resources Limited has guaranteed to pay any deficiency in the event of winding up of the controlled entity or if it does not meet its obligations under the terms of overdrafts, loans, leases or other liabilities subject to the guarantee. The controlled entity has also given a similar guarantee in the event that King River Resources Limited is wound up or if it does not meet its obligations under the terms of overdrafts, loans, leases or other liabilities subject to the guarantee. Page 28 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 6. REVENUES AND EXPENSES (a) Interest Revenue Interest revenue calculated using the effective interest rate method (b) Other Income Research & Development Tax Incentive1 1 Please refer to Note 2(f) Prior Period Adjustment (c) Expenses Depreciation expenses: depreciation right of use asset depreciation plant and equipment wages and fees superannuation contribution expense (excluding sharebased payments): (d) Other administration expenses Administration and bookkeeping fees Travel and accommodation Media and investor relations Office expenses Short term lease expenses Other expenses (e) Tenement Expenses Consolidated 2021 $ 2020 $ 6,094 1,764 - - 385,064 385,064 (33,425) (26,243) (59,668) (131,400) - (131,400) (84,066) (7,645) (97,550) (61,227) (47,347) (29,337) (327,172) (52,054) (18,260) (70,314) (127,600) (3,800) (131,400) (74,909) (33,566) (107,262) (45,678) (54,396) (14,551) (330,362) During the financial year, the following tenement licences were allowed to expire or were surrendered and the total capitalised tenement costs in the amount of $180,602 incurred were written off. Speewah E80/4961 Speewah E80/4962 Speewah E80/4973 (88,394) (56,895) (35,313) (180,602) Page 29 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 7. INCOME TAX (a) The components of tax expense comprise: Current income tax Current income tax expense / (benefit) Deferred income tax Relating to the origination and reversal of temporary differences Adjustments in respect of deferred income tax of previous years Total income tax expense as reported in the profit or loss (b) The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax expense as follows: Profit / (Loss) Before Income Tax Prima facie tax payable on profit from ordinary activities before income tax at 30% (2020: 27.5%) Add: Tax Effect of: Movement in deferred tax assets not brought to account Permanent differences Deferred Tax Assets and Liabilities Deferred Tax Assets (DTA) Capital raising costs Tax losses Less: tax losses foregone in lieu of JMEI claim in the 2021 financial year Other Accrued expenses DTA to offset DTL Unrecognised DTA Deferred Tax Liabilities (DTL) Exploration Fixed assets Other Deferred tax assets to offset DTL Consolidated 2021 $ 2020 $ - - - - - - - - (968,842) (1,115,536) (290,653) (306,771) 281,945 8,708 - 360,487 (53,716) - 30 June 2020 Movement 30 June 2021 55,278 7,856,585 - 30,486 9,556 (4,907,273) 3,044,632 35,133 1,535,891 (659,709) (7,437) 2,519 (624,452) 281,945 (4,873,148) (4,577) (29,547) 4,907,273 (579,043) (51,991) 6,581 624,452 - - 90,411 9,392,476 (659,709) 23,049 12,075 (5,531,725) 3,326,577 (5,452,191) (56,568) (22,966) 5,531,725 - The Company and its subsidiary form a tax consolidated group. The consolidated financial statements have been prepared on this basis of the formation of a consolidated group. The above DTA amounts are not recognised in the accounts on the basis the Company does not meet the DTA recognition test, as profits are not forecast for the period ended 30 June 2021. 8. SEGMENT REPORTING The Consolidated Entity operates in one geographical area being Australia (Western Australia and Northern Territory) and one industry, being exploration for the year to 30 June 2021. The Chief Operating Decision Makers are the Board of Directors and management of the Group. There is only one operating segment identified being exploration activities in Australia based on internal reports reviewed by the Chief Operating Decision Makers in assessing performance and allocation of resources. The accounting policies applied for internal reporting purposes are consistent with those applied in the preparation of the financial statements. Page 30 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 Consolidated 2021 $ 2020 $ 9. LOSS PER SHARE Loss used in calculation of basic and diluted earnings per share (968,842) (1,115,536) Weighted average number of ordinary shares for the purposes of basic earnings per share Effect of dilution - share options Weighted average number of ordinary shares adjusted for effect of dilution Number Number 1,515,960,601 - 1,247,826,282 - 1,515,960,601 1,247,826,282 As at 30 June 2021 the Company has 10,000,000 Loan Plan Shares accounted for as in-substance options (2020: 10,000,000), 7,000,000 unlisted options (2020: 7,000,000), and 152,443,342 (2020: 412,867,511) listed options on issue. These options are not considered to be dilutive as the issue of the shares are contingent on certain vesting conditions or conversion of the options to ordinary shares will decrease the loss per share. There have been no other transactions involving ordinary shares or potential ordinary shares subsequent to the balance date that would significantly change the number of ordinary shares or potential ordinary shares outstanding for the reporting period. 10. CURRENT ASSETS (a) Cash and cash equivalents balance Cash at bank and on hand Cash at bank bank security deposits1 Consolidated 2021 $ 2020 $ 6,112,062 12,155 6,124,217 566,024 12,155 578,179 Cash at bank earns interest at floating rates based on daily bank deposit rates. 1The bank security deposits of $12,155 is made up of two bank accounts in the name of King River for security of the bank guarantees in the amount of $5,555 and $6,600 on the warehouse leases. Reconciliation of net loss after tax to net cash flows from operations Profit/(Loss) for the year Share-based payments Depreciation Capitalise Exploration Cost written off Other income1 (Increase)/decrease in assets: - current receivables - other current assets Increase/(decrease) in liabilities: - Trade and other current payables Net Cash flow used in Operating Activities 1Please refer to Note 2(f) Prior Period Adjustment. (b) Other Receivables GST recoverable Research & Development tax rebate receivable (c) Other current assets Prepayments Security deposit (968,842) 13,995 59,668 180,602 - - (4,833) (23,069) (742,479) 40,666 382,464 423,130 13,136 21,276 34,412 (1,115,529) 188,058 70,314 535,730 (500,322) 115,258 3,060 70,699 (632,732) 49,389 - 49,389 8,303 - 8,303 Allowance for impairment loss Other receivables which are primarily from the ATO are non-interest bearing and are generally paid on 30 day settlement terms. Other receivables are neither past due nor materially impaired at 30 June 2021 and 30 June 2020. Fair value Due to the short-term nature of the other receivables, their carrying value approximates their fair value. Page 31 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 11. DEFERRED EXPLORATION EXPENDITURE At Cost Balance at beginning of the year Prior period adjustment2 Balance at beginning of the year - restated 2 Expenditure incurred Capitalise Tenement cost written off1 Research & Development Incentive Received Exploration Incentive Scheme Total Exploration Expenditure 1 Please refer to Note 6. Revenue and Expenses (e). 2 Please refer to Note 2(f) Prior Period Restatement. Consolidated 2021 $ 2020 $ 16,155,543 - 16,155,543 2,622,903 (180,602) (382,464) (41,411) 18,173,969 15,429,679 (1,564,996) 13,864,683 2,826,590 (535,730) - - 16,155,543 The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phases are dependent on the successful development and commercial exploitation or sale of the respective areas. As at 30 June 2021 there are no indicators of impairment under AASB 6 related to Deferred Exploration Expenditure. Consolidated 12. PLANT AND EQUIPMENT Gross carrying amount Accumulated depreciation at cost Net carrying amount At beginning of year, net accumulated depreciation Acquired Disposals Depreciation charge for the year At end of year, net accumulated depreciation The useful life of the assets was estimated between 2 and 20 years for 2021 and 2020. 13. RIGHT OF USE ASSET Leased warehouse storage TRADE AND OTHER PAYABLES 14. Trade payables Accruals Loan funding1 Other payables 2021 $ 314,117 (106,577) 207,540 39,587 193,106 - (25,153) 207,540 2020 $ 121,011 (81,424) 39,587 55,938 1,909 - (18,260) 39,587 76,552 76,552 107,445 107,445 171,799 40,250 - 984 213,033 260,832 34,750 500,000 1,075 796,657 1 Harvey Springs Estate Pty Ltd, a company controlled by Mr Anthony Barton, had entered into a loan facility agreement in the amount of $500,000 with King River to fund ongoing development and working capital. The loan facility was non-interest bearing and unsecured with the maturity date being 30 June 2021. The loan facility was drawn down in full before 30 June 2020 to fund prefeasibility expenditure and working capital and repaid in full in August 2020. Trade payables and other creditors are non-interest bearing and are normally settled on 30 day terms. Due to the short term nature of these payables, their carrying value approximates their fair value. Page 32 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 14. TRADE AND OTHER PAYABLES continued Changes in liabilities arising from financing liabilities Loans Current lease liabilities (Note 15) Non-current lease liabilities (Note 15) Total liabilities from financing activities 1 July 2020 $ 500,000 Cash flows $ (500,000) Other $ 30 June 2021 $ - 55,597 55,260 (58,671) 36,509 - (11,865) 610,857 (558,671) 24,644 - 33,435 43,395 76,830 LEASE LIABILITIES 15. Leased warehouse storage - current Leased warehouse storage - non-current 16. CONTRIBUTED EQUITY AND RESERVES (a) Contributed Equity Consolidated Issued capital at beginning of year as at 1 July 2020 Fully paid ordinary shares carry one vote per share and carry the right to dividends Movements in ordinary shares on issue Placement 27 July 2020 Issue of Shares Issue of Shares Share Purchase Plan 19 August 2020 Capital Raising Fees net of tax Consolidated 2021 $ 33,435 43,395 76,830 2020 $ 55,597 55,260 110,857 2021 Number $ 1,248,638,5531 39,734,369 66,666,669 238,219,725 - 2,000,000 7,861,239 (187,367) Issued capital at end of year as at 30 June 2021 1,553,524,9471 49,408,241 1 Number of shares is inclusive of the 10,000,000 Loan Plan Shares accounted for as in-substance options. Refer to Note 18(b) Loan Plan Shares. Movement in options on issue Number Exercise Price Listed Options on Issue as at 1 July 2020 Granted Attaching options Placement and Share Purchase Plan Exercised Expired 31 July 2020 Listed Options on Issue as at 30 June 2021 412,867,511 152,443,342 - (412,867,511) 152,443,342 12 cents 6 cents - 12 cents 6 cents shares and 119,110,007 attaching options. The issue price for each share under this SPP was $0.033 plus 1 free attaching option for every 2 shares issued. Each option has an exercise price of $0.06 and expiry date of 31 July 2022. On 27 July 2020 the Company completed a Placement from professional and sophisticated investors and raised $2,000,000 from the issue of 66,666,669 shares and 33,333,335 attaching options. The issue price for each share under the Placement was $0.03 plus 1 free attaching option for every 2 shares issued. The options have an exercise price of $0.06 and an expiry of 31 July 2022. There were no other significant movements in equity after the 2021 reporting period until the lodgement of this report. Page 33 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 16. CONTRIBUTED EQUITY AND RESERVES continued (a) Contributed Equity Consolidated continued Unlisted Options on Issue as at 1 July 2020 Granted Expired Options on Issue as at 30 June 2021 Refer note 18 (b) Summaries of Options Granted. Issued capital at beginning of year as at 1 July 2019 Fully paid ordinary shares carry one vote per share and carry the right to dividends Movements in ordinary shares on issue Loan Plan Shares 22 August 20191 Capital Raising Fees net of tax Number 7,000,000 Exercise Price 6 cents - - - - 7,000,000 6 cents 2020 Number $ 1,238,638,553 39,734,369 10,000,0001 - - - Issued capital at end of year as at 30 June 2020 1,248,638,553 39,734,369 1 On 14 August 2019 the Company issued 10,000,000 shares to the Chief Geologist at the market price of 3.2 cents per share. The shares will be subject to trading restrictions and 5,000,000 of the shares will be escrowed until the completion of the prefeasibility study and 5,000,000 of the shares will be escrowed until the completion of a bankable feasibility study. The shares have been funded by a limited recourse loan from the Company with a 4-year term and zero interest rate. Refer to Note 6.2 Equity Based Compensation (Loan Plan Shares) and Note 18 Recognised Share-Based Payment Expenses, which includes the pro rata expense of the value for the relevant period. The Share Based Payment amount is recognised in the Reserves and not Issued Capital. Movement in options on issue Number Exercise Price Listed Options on Issue as at 1 July 2019 Granted Exercised Expired Listed Options on Issue as at 30 June 2020 Unlisted Options on Issue as at 1 July 2019 Granted 14 August 2019 Expired 30 June 2020 Options on Issue as at 30 June 2020 412,867,511 - - - 412,867,511 Number 4,500,000 7,000,0001 (4,500,000) 7,000,000 12 cents - - - 12 cents Exercise Price 10 cents 6 cents 10 cents 6 cents 1 On 14 August 2019 the Company issued 5,000,000 options to Project Geologist with an exercise price of 6 cents per share and an expiry date of 14 August 2022. The options are subject to exercise restrictions and will vest upon defining a minimum Inferred resource (at either the Tennant Creek Project or the Mt Remarkable Region) of no less than 250,000 ounces of Au at an average grade of no less than 6 grams per tonne. On 14 August 2019 the Company issued 2,000,000 options to a contractor with an exercise price of 6 cents per share and an expiry date of 14 August 2022. Excludes 10,000,000 Loan Plan Shares accounted for as in-substance options. Refer to Note 18(b) Loan Plan Shares. Terms and conditions of contributed equity Ordinary shares 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. On a show of hands, every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote. As per the Corporations Act 2001 the Company does not have authorised capital and ordinary shares do not have a par value. Page 34 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 16. CONTRIBUTED EQUITY AND RESERVES continued (a) Contributed Equity Consolidated continued 16(b) Reserves Reserves At 30 June 2019 Share based payments At 30 June 2020 Share based payments At 30 June 2021 Equity Benefits Reserve $ 1,696,062 188,058 1,884,120 13,995 1,898,115 Nature and Purpose of Equity Benefits Reserve This reserve is used to record the value of equity benefits provided to directors, employees and external service providers as part of their fees and remuneration. During the 2020 year, the following options expired and were issued: - - - 2,000,000 unlisted options exercisable at $0.06 on or before 14 August 2022 were issued to contractors of the Company. These options all vested immediately. 5,000,000 unlisted options exercisable at $0.06 on or before 14 August 2022 were issued to Project Geologist of the Company. These options have vesting conditions. 4,500,000 unlisted options exercisable at $0.10 expired 30 June 2020. Consolidated 2021 $ 2020 $ 17. COMMITMENTS Exploration Expenditure Commitment In order to conditions under which the tenements were granted. These amounts change annually and are also based on whether term of extensions are granted for each tenement. Within 1 year 1,775,350 1,938,800 18. SHARE BASED PAYMENTS (a) Recognised share-based payment expenses On 14 August 2019 the Company issued 10,000,000 Loan Plan Shares to the Chief Geologist at the market price of 3.2 cents per share. The PFS was completed on 16 June 2021, of which 5,000,000 shares were released from escrow on 1 July 2021. 5,000,000 of the shares are subject to trading restrictions will be escrowed until the of a bankable feasibility study. The shares have been funded by a limited recourse loan from the Company with a 4-year term and zero interest rate, the loan is repayable at the end of the term or from the proceeds of any shares sold after escrow release. In the event that any shares sold are less than 3.2 cents the Company will only recoup the value of the shares sold at the respective price in repayment of the loan, or part thereof. The Loan Plan Shares have been accounted for as an in-substance option award. The fair value of the equity instrument granted was estimated as at the date of grant using the Black and Scholes model taking into account the terms and conditions upon which the shares were granted. Please refer to Note 18(g). The value brought to account as a share-based payment expense in the year ended 30 June 2021 was $13,995. Project arose as a result of work upon the Speewah Project in assessing HPA products and resulting in the Company developing January 2021 the Company varied the terms of the Loan Plan Share Restriction Period to also enable the restriction to be satisfied and end on the relevant development of the HPA Project. As the award has non-market based vesting conditions, the modification of the award did not give rise to an incremental fair value at the date of modification. he Page 35 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 18. SHARE BASED PAYMENTS continued (b) Summaries of options granted The following table illustrates the number and weighted average exercise prices (WAEP) and movements of share options issued during the year to contractors & employees. Options outstanding at the beginning of the year Granted during the year Converted during the year Expired during the year Outstanding at the end of the year Exercisable at the end of the year 2021 2020 Number WAEP Number WAEP 7,000,000 - - - 7,000,000 2,000,000 0.06 - - - 0.06 0.06 4,500,000 7,000,000 - (4,500,000) 7,000,000 2,000,000 0.10 0.06 - 0.10 0.06 0.06 There were 7,000,000 options on issue as at 30 June 2021 (2020: 7,000,000). Only 2,000,000 are vested immediately and exercisable. 5,000,000 have vesting conditions. Loan Plan Shares 2021 2020 Number WAEP Number WAEP Loan Plan Shares outstanding at the beginning of the year Issued during the year Released during the year Expired during the year Loan Plan Share outstanding at the end of the year Escrowed at the end of the year 10,000,000 - - - 10,000,000 10,000,000 0.0254 - - - 0.0254 0.0254 - 10,000,000 - - 10,000,000 10,000,000 - 0.0254 - - 0.0254 0.0254 There were 10,000,000 Loan Plan Shares which have been accounted for as an in-substance options award (2020: 10,000,000) at 30 June 2021, the 10,000,000 Loan Plan Shares have vesting conditions. Refer to section 6.2 Equity Based Compensation for details of Loan Plan Shares accounted for as in substance options. (c) Weighted average remaining contractual life The weighted average remaining contractual life for the options outstanding as at 30 June 2021 is 1.12 year (2020: 2.12 years). (d) Range of exercise price and weighted average share price at the date of exercise The exercise price for options outstanding at the end of the year was: 2021 0.06 Class O (7,000,000) Options 2020 0.06 There were no options exercised during the 2021 financial year. Class O 7,000,000 options expire on 14 August 2022. (e) Weighted average fair value There were no options granted during the year ended 30 June 2021 (2020: 7,000,000). There were no options expired during the year ended 30 June 2021 (2020: 4,500,000). Page 36 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 18. SHARE BASED PAYMENTS continued (f) Option pricing model The fair value of the equity-settled share options granted under the option plan is estimated as at the date of grant using a Black- Scholes model taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used for the year ended 30 June 2021. Grant Date Options Issued Volatility (%) Risk free interest rate (%) Discount rate (%) Historic share price previous to grant date ($) Expected life of options (months) Options exercise price ($) Fair value at grant date ($) 14 August 2019 7,000,000 50 0.69 0.94 0.036 36 0.06 0.0068 The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of options granted were incorporated into the measurement of fair value. (g) Share pricing model The fair value of the equity-settled share granted under the Loan Plan Shares issued to Chief Geologist is estimated as at the date of grant using a Black-Scholes model taking into account the terms and conditions upon which the shares were granted. The following table lists the expense inputs to the model used for the year ended 30 June 2021. Grant Date Options Issued Volatility (%) Risk free interest rate (%) Discount rate (%) Historic share price previous to grant date ($) Expected life of options (months) Fair value at grant date ($) 14 August 2019 10,000,000 100 0.71 0.94 0.032 48 0.0254 The expected life of the shares is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. 19. FINANCIAL RISK MANAGEMENT assets and liabilities such as loan and borrowings, lease liabilities, receivables and trade payables, which arise directly from its operations. Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in notes 10 and 14 to the consolidated financial statements. The Group manages its exposure to a variety of financial risks: market risk (including interest rate risk), credit risk, liquidity risk and cash flow interest rate risk in accordance with the approved Group policies. Primary responsibility for the identification and control of financial risks rests with the Board. The Board reviews and agrees policies for managing each of the risks identified. The Group uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels of exposure to interest rate and foreign exchange risk and assessment of market forecast for interest rate and foreign exchange. The Group manages credit risk by only dealing with recognised, creditworthy, third parties and liquidity risk is monitored through the development of future rolling cash flow forecasts. Commodity price risk Presently the Group is not exposed to commodity price risk. Page 37 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 FINANCIAL RISK MANAGEMENT continued 19. Interest rate risk aged by the Board in accordance with the approved investment policy. This policy defines maximum exposures and credit ratings limits. The Group does not account for fixed rate financial assets and liabilities at fair value through profit or loss. During the financial year the Group has managed its cash assets by entering into a fixed interest term deposits to maximise its cash balance. The group does not have any material exposure to interest rate risk as at 30 June 2021. Foreign currency risk The Group has no material transactional foreign currency exposure. Credit risk Credit risk arises in the event that counterparty will not meet its obligations under a financial instrument leading to financial losses. The Group is exposed to credit risk from its operating activities, financing activities including deposits with banks and receivables. The credit risk control procedures adopted by the Group is to assess the credit quality of the institution with whom funds are deposited or invested, taking into account its financial position and past experiences. Investment limits are set in accordance with limits set by the Board based on the counterparty credit rating. The limits are assigned to minimise concentration of risks and mitigate financial loss through potential counterparty failure. The compliance with credit limits is regularly monitored as part of day-to-day operations. Any credit concerns are highlighted to senior management. As the Group is yet to commence mining operations it has no significant exposure to customer credit risk. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets in the Statement of Financial Position. Credit Quality of Financial Assets Consolidated as at 30 June 2021 Cash and cash equivalents Other Financial Assets AAA $ - - Trade and Other Receivables 40,666 Consolidated as at 30 June 2020 Cash and cash equivalents Other Financial Assets AAA $ - - Trade and Other Receivables 49,389 S&P Credit rating A1+ $ 6,124,217 - - A1 $ - - - S&P Credit rating A1+ $ 578,179 - - A1 $ - - - A2 $ - - - A2 $ - - - Unrated $ - - - Unrated $ - - - Liquidity risk The responsibility for liquidity risk management rests with the Board of Directors. The Group manages liquidity risk by maintaining sufficient cash to meet the operating requirements of the business and investing excess funds in highly liquid short term i including: cash generated from interest accrued on cash balances, short and long term borrowings and issue of equity instruments. Alternatives for sourcing our future capital needs include our current cash position, future operating cash flow, project debt financings and equity raisings. These alternatives are evaluated to determine the optimal mix of capital resources for our capital needs. The maturity analysis for contractual undiscounted cash flows of liabilities: Less than one year $246,666 One to five years Total undiscounted cash flow $50,695 $297,361 Page 38 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 FINANCIAL RISK MANAGEMENT continued 19. Capital risk management (2020: $16,030,932 amounting to $24,749,957 at 30 June 2021 To safeguard the business as a going concern; To maximise potential returns for shareholders through minimising dilution; and To retain an optimal debt to equity balance in order to minimise the cost of capital. The Group may issue new shares or sell assets to reduce debts in order to maintain the optimal capital structure. 20. GROUPS INFORMATION The consolidated financial statements include the financial statements of King River Resources Limited and its subsidiaries: Country of Incorporation Australia Australia Australia Australia Australia % Equity Interest 2021 100 100 100 100 1001 2020 100 100 100 100 - Speewah Mining Pty Ltd Treasure Creek Pty Ltd Kimberley Gold Pty Ltd Whitewater Minerals Pty Ltd ARC Specialty Metals Pty Ltd 1This is a wholly-owned subsidiary incorporated on 21 May 2021. 21. EVENTS AFTER THE BALANCE SHEET DATE 22. The auditors of King River are Ernst & Young. Au Fees to Ernst & Young (Australia) Fees for auditing the statutory financial report of the parent covering the group and auditing the statutory financial reports of any controlled entities Fees for other assurance and agreed-upon-procedures services under other legislation or contractual arrangements where there is discretion as to whether the service is provided by the auditor or another firm - Audit of Form 5 expenditure report Total fees to Ernst & Young (Australia) remuneration Consolidated 2021 $ 42,674 - 42,674 42,674 2020 $ 37,804 3,120 40,924 40,924 23. DIRECTORS AND KEY MANAGEMENT PERSONNEL DISCLOSURES There were no changes to Directors and Key Management Personnel between the reporting date and the date the financial report was authorised for issue. Consolidated (a) Compensation of Directors and Key Management Personnel Director and Key Management Personnel Short-term Post-employment superannuation Share based payments 2021 $ 388,879 9,084 13,995 411,958 2020 $ 326,048 9,669 174,532 510,249 Page 39 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2021 24. RELATED PARTY TRANSACTIONS Director and the Company Secretary, have entered into an occupancy and administration agreement with King River Resources in respect of providing occupancy, administration and bookkeeping services commencing March 2009. The total value of the occupancy and administration services provided by AHG during the year was $4,909 (2020: $4,909). As at 30th June 2021, there is $520 amount (2020: $450) outstanding to pay AHG. All services provided by companies associated with directors were provided on commercial terms. Harvey Springs Estate Pty Ltd , a company controlled by Mr Anthony Barton, had entered into a loan facility agreement in the amount of $500,000 with King River to fund ongoing development and working capital. The loan facility is non-interest bearing and unsecured with the maturity date being 30 June 2021. The loan facility was drawn down in full before 30 June 2020 to fund prefeasibility expenditure and working capital. The loan was repaid in full on 18 August 2020. Mr Anthony Barton and his associate entities acquired 4,545,455 ordinary shares and 2,272,730 attaching options at $0.033 per share and nil per option pursuant to the Share Purchase Plan acceptance. Mr Leonid Charuckyj and his associate entities acquired 1,800,000 ordinary shares and 900,000 attaching options at $0.033 per share and nil per option pursuant to the Share Purchase Plan acceptance. Mr Greg MacMillan and his associate entities acquired 1,818,181 ordinary shares and 909,092 attaching options at $0.033 per share and nil per option pursuant to the Share Purchase Plan acceptance. Mr Kenneth Rogers acquired 606,062 ordinary shares and 303,032 attaching options at $0.033 per share and nil per option pursuant to the Share Purchase Plan acceptance. Page 40 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation ASX Additional Information Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in this report is as follows. The information is current as at 23 September 2021. (a) Distribution of Equity Securities The number of shareholders, by size of holding, in each class of share are: 1 1,001 5,001 10,001 100,001 1,000 5,000 10,000 100,000 and over Listed Ordinary Shares Listed Options Number of Holders 157 Number of Shares 42,452 293 485 2,300 1,512 4,747 1,035,529 3,997,800 97,219,753 1,451,229,413 1,553,524,947 Number of Holders Number of Options 9 - 1 245 267 523 996 - 7,442 9,702,483 142,732,421 152,443,342 (b) Twenty Largest Shareholders The names of the twenty largest holders of quoted shares are: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD GDM SERVICES PTY LTD BNP PARIBAS NOMINEES PTY LTD CITICORP NOMINEES PTY LIMITED UNIVERSAL OIL (AUSTRALIA) PTY LTD A P BARTON PERSON S/F A/C BARTON SUPER FUND A/C L & E FISHER NOMINEES PTY LTD BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD S F MARAVENTANO PTY LTD SESNA PTY LTD MR KENNETH JON CARTER & MRS MANDY EMMA CARTER LASTING LEGACY PTY LTD HOOKS ENTERPRISES PTY LTD BARTON & BARTON PTY LTD 16. MRS CORINNE HEATHER BARTON 17. MARK LA STARZA SUPERANNUATION FUND PTY LTD 18. 19. J & R SUPERANNUATION PTY LTD TEMTOR PTY LTD 20. MR KENNETH ARNOLD ROGERS (c) Voting Rights Listed Ordinary Shares Number of Shares Percentage of Shares % 43,224,274 41,050,083 35,401,684 30,541,718 28,725,371 28,064,033 20,965,700 19,812,358 18,000,000 16,604,216 15,713,098 15,000,000 15,000,000 14,909,091 14,200,000 13,917,018 11,132,422 11,070,137 11,000,000 10,391,667 10,303,031 2.78% 2.64% 2.28% 1.97% 1.85% 1.81% 1.35% 1.28% 1.16% 1.07% 1.01% 0.97% 0.97% 0.96% 0.91% 0.90% 0.72% 0.71% 0.71% 0.67% 0.66% All ordinary shares (whether fully paid or not) carry one vote per share without restriction. Page 46 ASX Additional Information (d) Substantial Shareholders The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are: Mr Anthony Barton and Associates (e) Twenty Largest Quoted Option Holders Number of Shares 104,660,157 Percentage of Ordinary Shares % 6.737% These options all have an exercise price of 6 cents and expire on the 31 July 2022. Listed Options Number of Options Percentage of Options % 1 2 3 4 5 6 7 8 9 9 10 10 10 11 12 13 14 15 16 17 18 19 20 THE KING'S RANSOM (VIC) PTY LTD M & K KORKIDAS PTY LTD BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD J & R SUPERANNUATION PTY LTD MR MATTHEW WAYNE SOLMAN OCEAN REEF HOLDINGS PTY LTD CALM NOMINEES PTY LTD L & E FISHER NOMINEES PTY LTD IQ GLOBAL ASSET PARTNERS PTY LTD DENILIQUIN PHARMACY (NSW) PTY LTD MARRIOTT PRINTERY PTY LIMITED INVICTUS CAPITAL PTY LTD KHE SANH PTY LTD MULLOWAY PTY LTD MR ERIC JOHN ANDERSON MR CRAIG LESLIE DIXON SIRROM SUPER PTY LTD MR PAUL JONATHAN WRIGHT MR EDWARD JAMES HARWOOD & MRS BEVERLEY MARIE HARWOOD CITICORP NOMINEES PTY LIMITED LHG SUPERANNUATION PTY LTD BNP PARIBAS NOMINEES PTY LTD 7,000,000 6,299,837 5,530,306 4,200,000 3,105,164 2,500,000 2,121,213 2,037,880 2,037,880 2,000,010 2,000,000 2,000,000 2,000,000 1,750,000 1,666,667 1,582,148 1,500,000 1,460,096 1,446,965 1,250,000 1,121,214 1,100,000 1,077,270 4.59% 4.13% 3.63% 2.76% 2.04% 1.64% 1.39% 1.34% 1.34% 1.31% 1.31% 1.31% 1.31% 1.15% 1.09% 1.04% 0.98% 0.96% 0.95% 0.82% 0.74% 0.72% 0.71% (f) Distribution of unquoted option holder numbers Category (Size of Holding) No of Option Holders No of Options 100,001 and over Page 47 2 2 7,000,000 7,000,000 ASX Additional Information (g) Holders of more than 20% of unquoted options There are no holders, holding more than 20% of the unquoted options on issue. (h) On-Market Buyback There is no on-market buy- (i) Schedule of Mining Tenements Area of Interest Australia Western Australia Tenements Comments All of the Tenements are registered in the name of Speewah Mining Pty Ltd, Treasure Creek Pty Ltd and Whitewater Minerals Pty Ltd the wholly owned subsidiaries of King River Resources Limited. Note: M = Mining Lease E/EL = Exploration Licence L = Miscellaneous Licence East Kimberley East Kimberley East Kimberley East Kimberley East Kimberley East Kimberley East Kimberley East Kimberley East Kimberley East Kimberley East Kimberley East Kimberley East Kimberley East Kimberley East Kimberley East Kimberley East Kimberley East Kimberley Tennant Creek Tennant Creek Tennant Creek Tennant Creek Tennant Creek Tennant Creek Tennant Creek Tennant Creek Tennant Creek Tennant Creek Tennant Creek Tennant Creek Tennant Creek Tennant Creek Tennant Creek Tennant Creek M80/267 M80/268 M80/269 E80/2863 E80/3657 E80/4468 E80/5007 E80/5133 E80/5176 E80/5177 E80/5178 E80/5192 E80/5193 E80/5194 E80/5195 E80/5196 L80/43 L80/47 EL31617 EL31618 EL31619 EL31623 EL31624 EL31625 EL31626 EL31627 EL31628 EL31629 EL31633 EL31634 EL32199 EL32200 EL32344 EL32345 Page 48 

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