King River Resources Limited
Annual Report 2023

Plain-text annual report

(ACN 100 714 181) Annual Report For the year ended 30 June 2023 Contents Corporate Directory Directors’ Report Auditor’s Independence Report 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 3 4 15 16 17 18 19 20 21 43 48 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 77 St George’s Terrace 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 Limited (“King River” or “the Company”) and its controlled entities for the year ended 30 June 2023. DIRECTORS The names and details of the Company’s directors in office during the financial year and until the date of this report are as 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 in excess of 35 years. Mr MacMillan 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. He 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) and Graduate Diploma of Financial Planning. Ms Gerstmayr, is a Certified Practicing Accountant and a Chartered Company Secretary. CORPORATE STRUCTURE King River is a company limited by shares that is incorporated and domiciled in Australia. King River has fully owned Treasure Creek Pty Ltd subsidiaries: - - Kimberley Gold Pty Ltd - Whitewater Minerals Pty Ltd - High Purity Metals Pty Ltd The Group has prepared a consolidated financial report incorporating the entities that it controlled during the financial year. Page 4 Directors Report NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES King River has a portfolio of 100% owned tenements covering approximately 6,641 square kilometres in the Tennant Creek region of the Northern Territory, and a portfolio of 100% owned tenements covering approximately 351 square kilometres, in the East Kimberley region in Western Australia. The principal activities of the entities within the Group during the year was exploration and geophysical survey works of the tenements in Tennant Creek. The Speewah Vanadium-Titanium-Iron Project was sold during the year. OPERATIONS REPORT Sale of Speewah Project King River Resources Ltd signed a binding term sheet ("Binding Term Sheet") on 17 February 2023 with ASX listed resources company Tivan Limited (ASX: TVN) ("Tivan") by which Tivan will acquire 100% of the issued capital of Speewah Mining Pty Ltd ("SMPL"), the owner of the Speewah Vanadium-Titanium-Iron Project (“Speewah Project”) in the East Kimberley region of North Western Australia. Binding Term Sheet King River and Tivan executed a Binding Term Sheet for the sale of the Speewah Project, with key terms summarised as follows: • Tivan will acquire, and KRR will sell, of all of the unencumbered legal and beneficial interest in the issued capital of • • Speewah Mining Pty Ltd (SMPL) (the "Transaction"). SPML is the legal and beneficial owner of the Speewah Project tenements in Western Australia (E80/2863-I, E80/3657- I, L80/43, L80/47, M80/267, M80/268, M80/269) and associated project assets including mining information (previous studies and testwork completed) and all related intellectual property. A$2.5 million to be held in escrow as a refundable deposit pending Transaction completion; Tivan will acquire SPML for total consideration of A$20 million paid on the following terms: - - - A$2.5 million on Tivan completing a raising of no less than A$2.5 million; A$5 million to be paid 12 months after execution of the Agreement, or, if the payment of A$2.5m above has not been made at that time, A$7.5 million must be paid 12 months after execution of the Agreement; and - A$10 million through the issue of 100 million ordinary fully paid shares in Tivan to KRR at a deemed issue price of 10 cents per share; these shares will be subject to a voluntary escrow for a two-year period from the date of the agreement. The sale transaction was completed on 11 April 2023 based on the following conditions precedent being satisfied: • • completion of an independent geological assessment to validate the reported resources of Speewah; and shareholders of KRR approving the transaction under Listing Rule 11.2. As at the date of this report, King River received the following instalments in respect of the total sale proceeds: • • • A$2.5million cash received 11 April 2023; 100 million ordinary fully paid shares in Tivan received 11 April 2023. These shares are subject to voluntary escrow for a two-year period; and A$2.5million cash received 27 July 2023 from Tivan undertaking a raising of no less than A$2.5 million. The deferred consideration of A$5million for the sale of Speewah Project remains owing to King River and is to be paid 12 months after execution of the Agreement (due date being 16 February 2024). This deferred consideration is secured by a general security deed over the issued capital of Speewah Mining Pty Ltd, the owner of the Speewah Vanadium-Titanium-Iron Project. Gold Project King River continued exploration at its Tennant Creek and Mount Remarkable Gold Projects. Tennant Creek The Tennant Creek Project is located to the East, Southeast and South of the very rich historic goldfields of Tennant Creek comprising gold and copper exploration leases. The Tennant Creek tenements are held by King River’s 100% subsidiary Treasure Creek Pty Ltd and there are 17 tenements covering 6,641 square kms and is very prospective for gold and copper. Mt Remarkable The Mt Remarkable Project is located 200km south west of Kununurra in the East Kimberley, Western Australia. The Mt Remarkable tenements are held by King River’s 100% subsidiary Whitewater Minerals Pty Ltd and cover the prospective Whitewater Volcanic rocks that extend 200km along a NE-SW strike south of the Speewah Dome. Mt Remarkable covers 4 tenements totalling 351 square kms and is prospective for gold and copper. Page 5 Directors Report Tennant Creek Geophysical Programme The primary focus of King River during the 2023 financial year was the ongoing geophysical works at Tennant Creek, with the IP work focused at Tennant East and Kurundi locations, together with additional airborne magnetics at the new Pioneer Project (south east of the Bluebird deposit) and the Barkly areas. Multiple targets have already been identified with the gravity work and given the effectiveness, additional gravity surveys are being planned. Geophysical processing and modelling of all data is ongoing. The work is targeting prospective IOCG areas at Rover East, Tennant East, Barkly and Kurundi, including targets along strike of geophysical and geological trends associated with other known significant deposits of high-grade Copper and Gold including Rover, Bluebird and Mauretania. The program commenced in April 2023 and consists of a proposed: 55 line km of DDIP, 10km2 of GAIP, 30km2 of Gravity and 370km2 of detailed magnetics (drone and airborne) to identify multiple targets. Initial results received to date are excellent with new targets generated at several locations. The KRR 2023 Geophysical program and initial results are summarized below: Figure 1: 2023 Geophysical Exploration Programme Proposal for Tennant Creek Projects. High Purity Alumina (HPA) Project The laboratory testwork on the ARC HPA processes continued early in the 2023 financial year and was reviewed by the Board to determine the next step in the potential development of the HPA project. Based on the laboratory developments the Definitive Feasibility Study in its current form was not the commercial solution required by King River. In September 2022 King River ceased work on the HPA project. ENVIRONMENTAL REGULATION AND PERFORMANCE The consolidated entity’s environmental obligations are regulated under both State and Federal law. All environmental performance obligations are monitored by the Board and subjected from time to time to Government agency audits and site inspections. The consolidated entity has a policy of at least complying with, but in most cases exceeding, it’s statutory environmental performance obligations. No environmental breaches have occurred or have been notified by any Government agencies during the year ended 30 June 2023. Page 6 Directors Report MATERIAL RISK OVERVIEW King River’s exploration activities has associated inherent risks and the Board is unable to provide assurance of the expected results. Due to the speculative nature of the undertaking, the material business risks and how these risks are managed by the Company are outlined below. Exploration and operational risk The Company is in the early stages of exploration and there can be no assurance that the exploration programme will result in the discovery of an economic mineable reserve or resource. The exploration activities on existing tenements may prove to be unsuccessful and this may result in the reduction in the project value, a diminution in cash reserves and possible relinquishment of the respective tenements or exploration licences. The Company’s future exploration activities may be affected by a range of factors including, but not limited to, maintaining the title of tenements, and obtaining all consent and approvals necessary, geological conditions, adverse weather, changes in government policies or legislation that affect mining and exploration activities, and unforeseen operational difficulties outside the control of the Company. The Company manages this risk by conducting exploration activities during times of expected favourable seasonal weather patterns, extensive planning and engaging qualified professionals and contractors to complete the work. Future capital raising The development of the Company’s projects may require additional funding in the future. While previous capital raises have been well-supported, there can be no assurance of the availability of future capital or favourable financing options if and when required. Any additional capital raising may be dilutive to shareholders. If the Company is unable to obtain additional funding as needed, it may be required to reduce the scope of its exploration activities. Global economic and financial conditions The Company and resources industry are impacted by global economic and financial conditions. There are a number of factors that can impact the devaluations and volatility in global and domestic equity, commodity, foreign exchange and precious metal markets, including the COVID-19 pandemic, global geopolitical tensions and inflationary economic environments. A slowdown in the financial markets or other economic conditions may adversely affect the Company’s share price, exploration plans and ability to fund activities. Climate risk There are a number of climate-related factors that may significantly change the industry in which the Company operates, including market changes related to climate change mitigation and new or expanding regulations associated with the transition to a lower-carbon economy. Climate change may cause certain environment and physical risks that cannot be anticipated by the Company, including events such as increased severity of weather patterns, extreme weather events and longer term physical risks such as shifting climate patterns. While the Company endeavours to manage these risks and limit any consequential impacts, there can be no guarantee that the Group will not be impacted by these occurrences. LIKELY DEVELOPMENTS AND EXPECTED RESULTS The consolidated entity’s primary focus is the ongoing geophysical survey programme at Tennant Creek and exploration of the Company’s Gold project at Treasure Creek and Mt Remarkable. The Gold projects and geophysical survey results are being reviewed and an update will be announced in due course. CAPITAL STRUCTURE As at the date of this report the Company had 1,553,524,947 (2022: 1,553,524,947) fully paid ordinary shares. There was nil (2022: nil) listed options over ordinary shares on issue and nil (2022: nil) unlisted options over ordinary shares on issue. Details of the terms of the options are outlined in Note 19 of the consolidated financial statements. REVIEW OF CONSOLIDATED FINANCIAL CONDITION The consolidated entity recorded an operating profit after income tax of $3,686,732 (2022: $3,062,768 loss). There was no dividend declared or paid during the year. As at 30 June 2023 the Group had a net current asset surplus of $10,364,809 (2022: $2,648,520 surplus). Page 7 Directors Report CASH FROM OPERATIONS The net cash outflow used for operating activities was $329,981 (2022: $2,107,392). The cash balance at year end was $3,145,977 (2022: $2,945,395). EARNINGS/(LOSS) PER SHARE Basic and diluted earnings/(loss) per share (cents) Share price 2023 0.24 0.007 2022 (0.20) 0.020 2021 (0.06) 0.026 2020 (0.09) 0.033 2019 (0.06) 0.032 SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS King River Resources Ltd signed a binding term sheet on 17 February 2023 with ASX listed resources company Tivan Limited (ASX: TVN) ("Tivan") by which Tivan acquired 100% of the issued capital of Speewah Mining Pty Ltd, the owner of the Speewah Vanadium-Titanium-Iron Project (“Speewah Project”) in the East Kimberley region of North Western Australia. The sale transaction was completed on 11 April 2023, refer to Operations Report – Sale of Speewah Project page 5. There were no other significant changes made to the Company’s state of affairs during the financial year. SIGNIFICANT EVENTS AFTER THE BALANCE DATE On 10 July 2023 the Company announced it has lodged the respective notification to enable an on-market share buy-back of up to 10% of its ordinary shares over the next 12 months. The Company has set the maximum number of shares proposed to be bought back of approximately 155,352,495 ordinary shares, being 10% of the lowest number of ordinary shares issued during the previous 12 months. Pursuant to the Corporations Act 2001 (Cth), companies are permitted to buy-back up to 10% of the lowest number of voting shares on issue during the previous 12 months, without requiring shareholder approval. The number of shares purchased, the purchase price, and timing of the Buy-back will be subject to the Company’s prevailing market conditions, share price and other considerations including unforeseen circumstances. The Company reserves the right to vary the terms, suspend or terminate the buy-back at any time, subject to and in accordance with applicable legal requirements. On 27 July 2023 the Company announced it has received the second cash payment of A$2.5million for the acquisition of the Speewah Project by Tivan Limited ("Tivan"). The balance of deferred consideration of A$5million for the sale of Speewah Project remains owing to KRR and to be paid 12 months after execution of the Agreement (due date being 16 February 2024). This deferred consideration is secured by a general security deed over the issued capital of Speewah Mining Pty Ltd, the owner of the Speewah Vanadium-Titanium-Iron Project. The Company’s cash position on 27 July 2023 was $5,257,553. There were no other significant events following the balance date that affected the Company’s equity or state of affairs. 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 Chairman Leonid Charuckyj Greg MacMillan Director Director Total Ordinary Shares 104,660,1571 18,162,1212 35,468,1093 158,290,387 Options Over Ordinary Shares - - - - 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, and 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 are held in Mr L Charuckyj’s personal name, 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 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. Page 8 Directors Report LOAN PLAN SHARES As at the date of this report, there are 10,000,000 loan plan shares issued to Chief Geologist. Date Shares Granted Loan Term End Date Shares at Grant Number of Shares Escrowed Limited Recourse Fair Value per 14-August- 2019 14-Aug-2026 $0.0254 10,000,000 10,000,000 - - 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 shares have been released from voluntary escrow and therefore no longer subject to trading restrictions. The shares have been funded by a limited recourse loan from the Company with a varied loan repayment date of 14 August 2026 and zero interest rate, the loan is repayable at the end of the term or from the proceeds of any shares sold. 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 were provided at no cost to the recipient. 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 19 Share Based Payments of the financial statements. SHARES UNDER OPTION As at the date of this report, there were no unissued ordinary shares under granted options. The following options expired on their respective expiry date during the financial year ended 30 June 2023. 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. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company has entered into Director and Officer Protection Deeds (“D&O Deed”) with each Director and the Company Secretary (“Officers”). Under the D&O Deed, the Company indemnifies the Officers to the maximum extent permitted by law 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 in respect of liability for any current and future directors, Company secretary, executives and employees of the Company. This amount is payable in total and no specific amount is included in the directors’ remuneration. The Directors have not included details of the premium paid in respect of the Directors’ and Officers’ liability and legal expenses’ insurance contracts, as such disclosure is prohibited under the terms of the contract. ROUNDING The amounts contained in this report and in the financial report have been rounded to the nearest dollar. Page 9 Directors Report 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. For the purposes of this report, the term “executive” encompasses the chief executive and senior executives of the Company. Details of key management personnel (i) Directors A Barton L Charuckyj G MacMillan Executive Chairman Non-Executive Director Executive Director / Company Secretary Other than as detailed above there are no other Key Management Personnel of the Company. From 1 July 2022, Ken Rogers, Andrew Chapman and Douglas Flanagan were no longer considered Key Management Personnel of the Group pursuant to the definition of Key Management Personnel. 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 2023 no external remuneration consultants were engaged to assist the Group in any capacity. 3. Remuneration Policy The Company's remuneration policies are reflected in the Charter of the Remuneration Committee. It is the Company’s objective 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. The Company’s remuneration policy is to establish competitive remuneration (including performance incentives) consistent with 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. It is the Company’s objective that the 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 Company’s long 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. Page 10 Directors Report The table below sets out summary information about the Group’s results and movements in shareholders wealth for the five years to 30 June 2023: Description 30-Jun-23 30-Jun-22 30-Jun-21 30-Jun-20* 30-Jun-19* Revenue and other income $9,148,156 $2,324 $6,094 $1,764 $4,466 Net profit/(loss) before tax $7,459,879 ($3,062,768) ($968,842) ($1,115,536) ($806,862) Net profit/(loss) after tax $3,686,732 ($3,062,768) ($968,842) ($1,115,536) ($806,862) Share price at end of year $0.007 $0.020 $0.026 $0.032 $0.028 Market capitalisation $10.87m $31.07m $40.39m $39.96m $34.68m Basic earnings/(loss) cents per share Diluted earnings/(loss) cents per share 0.24 0.24 (0.20) (0.06) (0.09) (0.20) (0.06) (0.09) (0.06) (0.06) *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. The Group realised a net profit during the year ended 30 June 2023 as a result of the sale of the Speewah Project. The disposal of the Speewah Project derived a net profit on sale of asset of $8,614,950. 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 $40,000 per annum plus statutory superannuation guarantee where superannuation is paid. Remuneration of non executive directors for the year ended 30 June 2023 is disclosed in Table 1 under the remuneration section of this report. 4.2 Variable Remuneration – Short Term Incentives Non executive directors do not receive performance based bonuses or additional remuneration for their membership of subsidiary boards or committees. 4.3 Variable Remuneration – Long Term Incentives During the financial year, the Company had no contractual obligations to provide long term incentives to non executive directors. 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 11 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 superannuation at the executive’s discretion. Executives are offered a competitive base pay. Reference is made to industry benchmarks to ensure that the base pay is set to reflect the market for a comparable role. Base pay is reviewed annually, or upon promotion, to ensure the executive’s pay is competitive with comparable positions of responsibility. There is no guaranteed base pay increases for any executive contract. Each of the executive directors during the financial year received a salary of $40,000 per annum plus statutory superannuation guarantee where superannuation is paid. Remuneration of executive directors for the year ended 30 June 2023 is disclosed in Table 1 under the remuneration section of this report. 5.2 Variable Remuneration – Short Term Incentives During the financial year the Company had no contractual obligations to provide short term incentives to the Key Management Personnel of the Company. 5.3 Variable Remuneration – Long Term Incentives During the financial year the Company had no contractual obligations to provide long term incentives to the Key Management Personnel of the Company. 6. Remuneration of Key Management Personnel and Executives of the Company Details of the remuneration of each director of King River and the consolidated entity for the year ended 30 June 2023 are set out in the following tables. Table 1: Remuneration for the year ended 30 June 2023 30 June 2023 Directors A Barton L Charuckyj G MacMillan Total1 Short Term Post-Employment Payments Salary & Fees Superannuation Options Share Based $ 40,000 40,000 40,000 120,000 $ 4,200 4,200 4,200 12,600 $ - - - - Performance Based Remuneration as % of Total $ - - - - Total $ 44,200 44,200 44,200 132,600 1Premium for Director’s liability insurance is not included in remuneration table. From 1 July 2022, Ken Rogers, Andrew Chapman and Douglas Flanagan were no longer considered Key Management Personnel of the Group pursuant to the definition of Key Management Personnel. Table 2: Remuneration for the year ended 30 June 2022 Short Term Post-Employment Share Based Payments Performance Based Cash Accrued Superannuation Options Loan Plan Total Remuneration Bonus Annual Leave Shares as % of Total $ - - - - - - 13,227 13,227 13,227 $ 4,000 4,000 4,000 12,000 12,223 - 25,524 37,747 49,747 $ - - - - - - - - - $ - - - - 43,6012 - - 43,601 43,601 $ 44,000 44,000 44,000 132,000 178,055 158,843 293,995 630,893 762,893 % - - - - 58% - 8% 20% 17% Salary & Fees $ 40,000 40,000 40,000 120,000 $ - - - - 61,776 60,455 3 158,843 232,517 453,136 573,136 - 22,7273 83,182 83,182 30 June 2022 Directors A Barton L Charuckyj G MacMillan Sub Total1 Executives K Rogers A Chapman D Flanagan Sub Total Total Page 12 Directors Report Remuneration for the year ended 30 June 2022 continued 1Premium for Director’s liability insurance is not included in remuneration table. 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 have been funded by a limited recourse loan from the Company with an extended term date 14 August 2026 and zero interest rate. The fair value per share at grant date is $0.0254 and has been expensed over the vesting period. The expense for the period relating to the loan plan shares (in-substance options) is $43,601, the remaining future expense is $21,872. Note 19 Share-Based Payment of the financial statements. 3Mr Rogers and Mr Flanagan received a discretionary cash bonus in light of his contribution to the Company and technical input with the ARC HPA process and Speewah project metallurgical testwork. 6.1 Equity Based Compensation – Options 2023 During the year, no unlisted options were issued to key management personnel or executives as an alternate remuneration to cash. 6.2. Equity Based Compensation – Shares 2023 Table 1: Shareholdings of Key Management Personnel during the year ended 30 June 2023 30 June 2023 Directors A Barton 1 L Charuckyj 2 G MacMillan 3 Balance Granted as On Exercise Net Change Balance 1 July 2022 Remuneration of Options Ord Ord Ord Other Ord 30 June 2023 Ord 104,660,157 18,162,121 35,468,109 158,290,387 - - - - Total - - - - - - - - 104,660,157 18,162,121 35,468,109 158,290,387 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 are held in Mr L Charuckyj’s personal name. 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. 6.3 Related Party Transactions Australian Heritage Group Pty Ltd (“AHG”), a company in which Mr Anthony Barton is a Director and Shareholder, and Mr Greg MacMillan is a Director, Shareholder 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 (2022: $4,909). AHG was also engaged to provide management and corporate services in relation to the sale of Speewah Project for a management fee of 1% on the proceeds value, resulting in management fee invoiced of $176,000 plus GST. All services provided by companies associated with directors were provided on commercial terms. 6.4 Voting and comments made at the company's 2022 Annual General Meeting ('AGM') At the 2022 AGM, 89.17% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2022. The company did not receive any specific feedback at the AGM regarding its remuneration practices. End of Remuneration Report Page 13 Directors 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: Number of Meetings Held Number of Meetings Attended Anthony Barton Leonid Charuckyj Greg MacMillan Directors Meetings 4 4 4 4 1. During the year the Directors approved 12 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. CORPORATE GOVERNANCE In recognising the need for the highest standards of corporate behaviour and accountability, the directors of King River support and have adhered to the principles of corporate governance. The Company’s corporate governance statement is 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 15 of this report and forms part of this directors’ report for the year ended 30 June 2023. NON AUDIT SERVICES The Company’s auditors, Ernst & Young, provided no non audit services during the year ended 30 June 2023. Signed in accordance with a resolution of the directors. Mr Greg MacMillan Director 15 September 2023 Page 14 Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Auditor’s Independence Declaration to the Directors of King River Resources Limited As lead auditor for the audit of the financial report of King River Resources Limited for the financial year ended 30 June 2023, I declare to the best of my knowledge and belief, there have been: a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; b) No contraventions of any applicable code of professional conduct in relation to the audit; and c) No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of King River Resources Limited and the entities it controlled during the financial year. Ernst & Young Timothy G Dachs Partner 15 September 2023 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Directors’ Declaration 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) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2023 and of its performance for the year ended on that date; and (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; (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 2023. On behalf of the Board Mr Greg MacMillan Director 15 September 2023 Page 16 Statement of Comprehensive Income FOR THE YEAR ENDED 30 JUNE 2023 Consolidated 2023 2022 Notes $ $ Revenue Other income HPA project development HPA project marketing Directors’ and employee benefits expenses Compliance costs Depreciation expense Finance costs Insurance expense Net fair value loss on financial assets Other administration expenses Share-based payments Write-off of capitalised exploration expense Profit/(Loss) before income tax 6(a) 6(b) 6(c) 6(c) 12 6(c) 19 6(d) Income tax – non-cash derecognition of deferred tax asset 7 Net profit/(loss) for the year after tax 249 9,147,907 2,324 - (130,915) (1,458,600) - (155,392) (229,136) (41,396) (3,074) (54,140) (200,000) (277,702) (21,872) (574,650) 7,459,879 (3,773,147) 3,686,732 (54,111) (147,343) (196,895) (52,476) (5,575) (51,668) - (298,469) (43,601) (756,354) (3,062,768) - (3,062,768) Other Comprehensive Income Total Comprehensive Profit/(Loss) for the Year - - 3,686,732 (3,062,768) Total Comprehensive Profit/(Loss) for the Year is attributable to: Owners of King River Resources Limited 3,686,732 3,686,732 (3,062,768) (3,062,768) Loss per share Basic earnings/(loss) per share (cents per share) Diluted earnings/(loss) per share (cents per share) 9 9 0.24 0.24 (0.20) (0.20) The above statement of other comprehensive income should be read in conjunction with the accompanying notes Page 17 Statement of Financial Position AS AT 30 JUNE 2023 Assets Current Assets Cash and cash equivalents Other receivables Other current assets Total Current Assets Non-Current Assets Capitalised exploration expenditure Financial Assets at fair value through profit or loss Plant and Equipment Right of use asset Total Non-Current Assets Total Assets Liabilities Current Liabilities Trade and other payables 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 2023 2022 Notes $ $ 10(a) 10(b) 10(c) 11 12 13 14 15 16 16 17(a) 17(b) 3,145,977 7,580,509 51,355 10,777,841 7,638,295 7,400,000 14,756 80,575 15,133,626 25,911,467 390,849 22,183 413,032 59,041 59,041 472,073 2,945,395 98,204 47,184 3,090,783 19,023,605 - 14,584 118,232 19,156,421 22,247,204 394,160 48,103 442,263 74,151 74,151 516,414 25,439,394 21,730,790 49,408,241 1,963,588 49,408,241 1,941,716 (25,932,435) (29,619,167) 25,439,394 21,730,790 The above statement of financial position should be read in conjunction with the accompanying notes. Page 18 Statement of Cash Flows FOR THE YEAR ENDED 30 JUNE 2023 Cash Flows from Operating Activities Interest received Research & Development tax incentive received (HPA project) Payments for HPA project development Payments to suppliers and employees Interest and other finance costs paid Payment for security deposit Consolidated 2023 2022 Notes $ $ 249 532,957 2,324 - (166,230) (1,330,659) (693,883) (3,074) - (761,327) (5,575) (12,155) Net cash used in operating activities 10(a) (329,981) (2,107,392) Cash Flows from Investing Activities Proceeds from sale of Speewah Project 6(b) Payments for transaction costs associated to sale of Speewah Project 6(b) Government grants received Research & Development tax incentive received (Speewah project) Payment for exploration and evaluation Payment for property, plant & equipment Net cash used in investing activities Cash Flows from Financing Activities 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) 2,500,000 (112,142) 100,000 248,740 - - 32,831 835,296 (2,150,754) (1,890,758) (4,500) 581,344 - (1,022,631) (50,781) (50,781) 200,582 2,945,395 3,145,977 (48,799) (48,799) (3,178,822) 6,124,217 2,945,395 The above statement of cash flows should be read in conjunction with the accompanying notes. Page 19 Statement of Changes in Equity FOR THE YEAR ENDED 30 JUNE 2023 Issued Capital Note 16(a) Equity Benefits Reserve Note 16(b) Accumulated Losses Total Equity Notes Consolidated $ $ $ $ At 1 July 2022 Profit/(Loss) for the year Total comprehensive income/(loss) for the year Transaction with owners in their capacity as owners: Loan Plan Shares – issued 14 August 2019 19(a) 49,408,241 1,941,716 (29,619,167) 21,730,790 - - - - - 3,686,732 3,686,732 3,686,732 3,686,732 21,872 - 21,872 Balance at 30 June 2023 49,408,241 1,963,588 (25,932,435) 25,439,394 At 1 July 2021 Profit/(Loss) for the year Total comprehensive income/(loss) for the year Transaction with owners in their capacity as owners: Loan Plan Shares – issued 14 August 2019 19(a) 49,408,241 1,898,115 (26,556,399) 24,749,957 - - - - - (3,062,768) (3,062,768) (3,062,768) (3,062,768) 43,601 - 43,601 Balance at 30 June 2022 49,408,241 1,941,716 (29,619,167) 21,730,790 The above statement of changes in equity should be read in conjunction with the accompanying notes. Page 20 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 1. CORPORATE INFORMATION King River Resources (“King River” or “the Company”) is a Company domiciled in Australia and publicly listed on the Australian Stock Exchange (ASX). The Company was incorporated on 28 May 2002. The address of the Company’s registered office is 254 Adelaide Tce, Perth WA 6000. The consolidated financial statements as at and for the year ended 30 June 2023 comprise the Company and its subsidiaries (the “Group”). The nature of the operations and principal activities of the Group are described in the Directors’ Report. The consolidated financial report was authorised for issue by the directors on the 15 September 2023 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 Standards (AAS’s) and other authoritative pronouncements issued by the Australian Accounting Standards Board, and the Corporations Act 2001. The consolidated financial report also complies with International Financial Reporting Standards (IFRS’s) and interpretations adopted by the International Accounting Standards Board (IASB). (b) Basis of measurement The financial report has been prepared under the historical cost convention, except for, where applicable, the revaluation of financial assets and liabilities at fair value through profit or loss. (c) Functional and presentation currency These consolidated financial statements are presented in Australian dollars, which is the Company’s functional 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 profit after income tax of $3,686,732 for the year ended 30 June 2023 (2022: $3,062,768 loss) and had a net cash inflow from operating and investing activities of $251,363 (2022: $3,130,023 outflow). As at 30 June 2023 the Group had cash and cash equivalents of $3,145,977 (2022: $2,945,395) and a net current asset surplus of $ 10,364,809 (2022: $2,648,520 surplus). 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) Changes in accounting policies From 1 July 2022 the Group has adopted all new and amended Accounting Standards and Interpretations, mandatory for annual periods beginning 1 July 2022. 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 2023. Management are of the view that these standards and amendments will not have a significant impact of the financial statements. 3. SIGNIFICANT ACCOUNTING POLICIES (a) Principles of Consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of King River Resources Limited ('company' or 'parent entity') as at 30 June 2023 and the results of all subsidiaries for the year then ended. King River Resources Limited and its subsidiaries together are referred to in these financial statements as the ‘Group’ or 'consolidated entity'. Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases. Page 21 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 3. SIGNIFICANT ACCOUNTING POLICIES continued (a) Principles of Consolidation continued Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit balance. Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non- controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. (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 paid to the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the 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. 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 Company and its’ subsidiary have formed a tax consolidated group. Page 22 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 3. SIGNIFICANT ACCOUNTING POLICIES continued (b) Income Tax and Other Taxes continued 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) – debt investment; c. FVOCI – equity investment; or 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 amortised cost, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. 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’s financial assets consist of cash and cash equivalents and other receivables. Financial assets at fair value through profit or loss Financial assets not measured at amortised cost are classified as financial assets at fair value through profit or loss. This category of financial asset includes equity investments. Fair value movements are recognised in profit or loss. 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. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. 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 attributable transaction costs. The Group’s financial liabilities include trade and other payables and loans and borrowings. Page 23 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 3. SIGNIFICANT ACCOUNTING POLICIES continued (c) Financial Instruments continued 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. 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 on exploration and evaluation is accounted for in accordance with the ‘area of interest' method. 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. Page 24 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 3. SIGNIFICANT ACCOUNTING POLICIES continued (f) Exploration and Evaluation Expenditure continued 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 impairment exists when the carrying amount of an asset or cash-generating unit exceeds 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 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) Research and development costs Research costs are expensed as incurred. Development expenditure on an individual project are recognised as an intangible asset when the Group can demonstrate: The technical feasibility of completing the intangible asset so that the asset will be available for use or sale Its intention to complete and its ability and intention to use or sell the asset • • • How the asset will generate future economic benefits • The availability of resources to complete the asset • The ability to measure reliably the expenditure during the development Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete, and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation is recorded in cost of sales. During the period of development, the asset is teste for impairment annually. (h) Leases – Group as Lessee The Company entered into agreements to occupy warehouse storage facilities. 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 cannot be readily determined, Company’s incremental borrowing rate. 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 Page 25 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 3. SIGNIFICANT ACCOUNTING POLICIES continued (h) Leases – Group as Lessee continued 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. (i) Trade and other payables These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. (j) 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. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present 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. (k) Goods and Services Tax (“GST”) 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. (l) 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 19. 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 the Group’s best estimate of the number of equity instruments that will ultimately vest. 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 Page 26 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 3. SIGNIFICANT ACCOUNTING POLICIES continued (l) Share Based Payment Transactions continued 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. (m) 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 the reporting date are recognised in other payables in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Other long-term employee benefits The liability for annual and 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. (n) 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. (o) 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; 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. (p) 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 In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the consolidated financial statements: (i) Lease term The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors considered may include the importance of the asset to the consolidated entity's operations; comparison of terms and conditions to prevailing market rates; Page 27 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS continued (a) Significant accounting judgements continued incurrence of significant penalties; existence of significant leasehold improvements; and the costs and disruption to replace the asset. The consolidated entity reassesses whether it is reasonably certain to exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in circumstances. ii) Incremental borrowing rate Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is based on what the consolidated entity estimates it would have to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment. (iii) Research and development tax incentives As the research and development tax incentive only relates to specific types of expenditure incurred and is directly settled in cash, the Group has determined that this incentive should be accounted for as a government grant. As such the research and development tax incentive is recognised when there is reasonable assurance that the incentive rebate will be received. Management judgement is required to assess that the incentive meets the recognition criteria and in determining the measurement of the incentive 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 The Group’s policy for estimating its mineral resources and ore reserves requires that the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2004 (the ‘JORC code’) be used as a minimum standard. 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. Changes in the probability of vesting 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. Page 28 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 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 Profit/(Loss) for the year Total Comprehensive Profit/(loss) for the year 2023 $ 10,358,967 7,486,331 17,845,298 168,394 59,041 227,435 49,408,241 (33,753,966) 1,963,588 17,617,863 15,267,178 15,267,178 2022 $ 2,605,422 120,741 2,726,163 323,199 74,151 397,350 49,408,241 (49,021,144) 1,941,716 2,328,813 (7,253,645) (7,253,645) 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 (up to 31 March 2023), Treasure Creek Pty Ltd, Kimberley Gold Pty Ltd, Whitewater Minerals Pty Ltd and High Purity Metals Ltd (The “Closed Group”) have 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. Pursuant to the sale of the Speewah Project, Speewah Mining Pty Ltd exited the Closed Group effect from 1 April 2023. 6. REVENUES AND EXPENSES (a) Interest Revenue Interest revenue calculated using the effective interest rate method (b) Other Income Net profit on sale of asset – Speewah Project Research & Development Tax Incentive HPA Project Consolidated 2023 $ 2022 $ 249 2,324 8,614,9501 532,957 9,147,907 - - - 1King River Resources Ltd signed a binding term sheet on 17 February 2023 with ASX listed resources company Tivan Limited (ASX: TVN) ("Tivan") by which Tivan acquired 100% of the issued capital of Speewah Mining Pty Ltd, the owner of the Speewah Vanadium-Titanium-Iron Project (“Speewah Project”) in the East Kimberley region of North Western Australia. The sale transaction was completed on 11 April 2023, refer to Operations Report – Sale of Speewah Project page 5. Reconciliation of net profit on sale of asset – Speewah Project Sale consideration pursuant to Binding Term Sheet Fair Value of cash consideration receivable Share consideration: 100m ordinary shares in Tivan Ltd at 7.6cents Less cost base Carrying value of Speewah tenements Deferred tax accounting adjustment relating to Speewah tenements Cash at bank Speewah Mining Pty Ltd Other transaction costs Net profit on sale of asset – Speewah Project Page 29 10,000,0002 7,600,0003 17,600,000 (12,577,157) 3,773,147 - (181,040) 8,614,950 - - - - - Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 6. REVENUES AND EXPENSES continued (b) Other Income continued 2 King River received A$2.5m cash and 100m ordinary fully paid shares in Tivan Ltd on 11 April 2023. The deferred cash consideration of $7.5m is recognised as receivable at 30 June 2023 (see note 10). Refer to Operations Report: Sale of Speewah Project page 5. 3The closing share price of 7.6cents on 31 March 2023 when the King River General Meeting was held approving the sale, satisfying the final condition precedent. The shares are subject to a voluntary escrow for a two-year period from 16 February 2023. (c) Expenses Depreciation expenses: depreciation – right of use asset depreciation – plant and equipment Directors’ and employee benefits expenses (excluding sharebased payments): director fees wages other superannuation contribution Other administration expenses: Administration and bookkeeping fees Media and investor relations Office expenses Short term lease expenses Other expenses (d) Write-off Capitalised Exploration Costs Speewah E80/4468 Speewah E80/4972 Whitewater E80/5192 Whitewater E80/5193 Whitewater E80/5177 Whitewater E80/5194 Whitewater E80/5195 Whitewater E80/5196 Whitewater E80/5329 Consolidated 2023 $ 2022 $ (37,068) (4,328) (41,396) (120,000) (20,626) (14,766) (155,392) (110,368) (13,937) (59,596) (55,623) (38,178) (277,702) (27,655) - - - (220,343) (125,538) (83,999) (110,949) (6,166) (574,650) (44,772) (7,704) (52,476) (120,000) (13,395) (13,948) (147,343) (95,252) (70,205) (64,298) (45,051) (23,663) (298,469) (647,285) (38,842) (27,292) (42,935) - - - - - (756,354) During the financial year, the listed tenement licences were allowed to expire or were surrendered. The total capitalised tenement costs in the amount of $574,650 (2022: $756,354) incurred were written off. Page 30 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 Consolidated 2023 $ 2022 $ 7. INCOME TAX (a) The components of tax comprise: Current income tax Current income tax expense / (benefit) Deferred income tax Relating to the origination and reversal of temporary differences Deferred tax asset derecognised Total income tax as reported in the profit or loss - 3,773,1471 3,773,147 1 Non-cash derecognition of deferred tax asset following disposal of Speewah Mining Pty Ltd (see note 6(b)). - - - (b) The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax as follows: Profit / (Loss) Before Income Tax Prima facie tax payable on profit from ordinary activities before income tax at 30% (2022: 30%) Add: Tax Effect of: Non-assessable/deductible items Movement in deferred tax assets not brought to account Adjustment relating to prior period not brought to account Deferred tax asset derecognised Deferred Tax Assets and Liabilities Deferred Tax Assets (DTA) Capital raising costs Tax losses Other Financial Assets Provisions Accrued expenses Deferred Tax Liabilities (DTL) Exploration Fixed Assets Other Net Deferred assets/ liabilities not recognised 7,459,879 (3,062,768) 2,237,964 (918,830) 2,471,311 (1,245,614) 309,486 3,773,147 (118,110) 852,273 184,668 - 30 June 2022 Movement 30 June 2023 54,801 27,776 82,577 9,811,155 (4,741,829) 5,069,326 36,676 (12,309) - 3,968 14,382 60,000 (3,968) 1,458 24,367 60,000 - 15,840 9,920,982 (4,668,872) 5,252,110 (5,707,082) 3,415,593 (2,291,489) 420 (35,470) (1,042) 8,707 (622) (26,763) (5,742,132) 3,423,258 (2,318,874) 4,178,850 (1,245,614) 2,933,236 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 due to the absence of forecasted future taxable profits. Page 31 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 8. SEGMENT REPORTING Segment information is presented in respect of the Group’s Directors and internal reporting. The Chief Operating Decision Makers are the Board of Directors of the Group. The accounting policies applied for internal reporting purposes are consistent with those applied in the preparation of the financial statements. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets and head office expenses, and income tax assets and liabilities. The corporate and administrative functions based in Australia are considered incidental to Consolidated Entity’s exploration activities. The Group’s interest income is all earned in Australia. For the year ended 30 June 2023 and 30 June 2022, the group had two segments being: • ARC High Purity Alumina (‘HPA’) Project to develop the ARC HPA process and precursor compound for the production of HPA. This was undertaken by High Purity Metals Pty Ltd; and • Exploration and evaluation activities of its gold projects in Australia (Western Australia and Norther Territory). These activities were undertaken by Treasure Creek Pty Ltd, Whitewater Minerals Pty Ltd and Speewah Mining Pty Ltd. 2023 ARC HPA Project $ Exploration and Evaluation $ Total Segments $ Adjustment or Unallocated items $ Consolidated $ - - 3 3 3 3 532,9571 - 532,957 - - (130,915) - - (1,324) (132,239) - 8,614,9502 8,614,950 (3,075) - - (574,650) - (1,438) (579,163) 532,957 8,614,950 9,147,907 (3,075) - (130,915) (574,650) - (2,762) (711,402) 246 246 - - - (38,321) (3,074) - - 249 249 532,957 8,614,950 9,147,907 (41,396) (3,074) (130,915) (574,650) (200,000) (735,480) (976,875) (200,000) (738,242) (1,688,277) 400,718 8,035,787 8,436,505 (976,629) 7,459,630 644 8,065,525 8,066,169 644 8,065,525 8,066,169 - - (244,638) (244,638) (244,638) (244,638) - 2,816,132 7,400,000 7,522,047 107,119 17,845,298 - (146,211) (81,224) (227,435) 8,066,169 2,816,132 7,400,000 7,522,047 107,119 25,911,467 (244,638) (146,211) (81,224) (472,073) Revenue Interest revenue Total revenue Other income R&D Tax Incentive Net profit on disposal of asset Total other income Expenses Depreciation and amortisation Finance costs HPA development costs Write-off of capitalised exploration expense Net fair value loss on investment Other costs Total Expenses Reportable segment result before tax Reportable segment assets Cash and cash equivalent Ordinary shares Other receivables Other assets Total assets Reportable segment liabilities Trade and other payables Lease liability Total liabilities 12022 Research & Development incentive of $532,957 received during the year ended 30 June 2023 and is attributable to the eligible expenditure incurred in the year ended 30 June 2022. The ARC HPA project has been placed on hold April 2022. 2 Net profit on the disposal of Speewah Project refer to Note 6(b) Other Income. Page 32 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 8. SEGMENT REPORTING continued Revenue Interest revenue Total revenue Expenses Depreciation and amortisation Finance costs HPA development costs Write-off of capitalised exploration expense Other costs Total Expenses Reportable segment result before tax Reportable segment assets Cash and cash equivalent Other receivables Other assets Total assets Reportable segment liabilities Trade and other payables Lease liability 2022 ARC HPA Project $ Exploration and Evaluation $ Total Segments $ Adjustment or Unallocated items $ Consolidated $ - - 29 29 29 29 2,295 2,295 2,324 2,324 - - (1,512,711) - (9,690) (1,522,401) (6,902) - - (756,354) (1,891) (765,147) (6,902) - (1,512,711) (756,354) (45,574) (5,575) - (52,476) (5,575) (1,512,711) - (756,354) (11,581) (726,395) (737,976) (2,287,548) (777,544) (3,065,092) (1,522,401) (765,118) (2,287,519) (775,249) (3,062,768) 137,133 19,383,908 19,521,041 137,133 19,383,908 19,521,041 (62,709) (272,620) (335,329) - 2,558,224 30,581 137,358 2,726,163 - (58,831) (122,254) (181,085) 19,521,041 2,558,224 30,581 137,358 22,247,204 (335,329) (58,831) (122,254) (516,414) Consolidated 2023 $ 2022 $ Total liabilities (62,709) (272,620) (335,329) 9. EARNINGS/(LOSS) PER SHARE Earnings/(Loss) used in calculation of basic and diluted earnings per share 3,686,732 (3,062,768) 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 1,553,524,947 - 1,553,524,947 1,553,524,947 - 1,553,524,947 As at 30 June 2023 the Company has 10,000,000 Loan Plan Shares accounted for as in-substance options (2022: 10,000,000), nil unlisted options (2022: 7,000,000), and nil (2022: 152,443,342) listed options on issue. The listed and unlisted options were not included in the calculation of diluted earnings per share prior to expiry because they are antidilutive for the periods presented and conversion of the options to ordinary shares will decrease the loss per share at the time. 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. Page 33 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 10. CURRENT ASSETS (a) Cash and cash equivalents balance Cash at bank and on hand Cash at bank earns interest at floating rates based on daily bank deposit rates. Reconciliation of net loss after tax to net cash flows from operations Profit/(Loss) for the year Share-based payments Depreciation Capitalised exploration expenditure written off Net fair value loss through Profit & Loss Net gain on sale of asset Consolidated 2023 $ 2022 $ 3,145,977 3,145,977 2,945,395 2,945,395 7,459,879 (3,062,768) 21,872 41,396 574,650 200,000 (8,614,950) 43,601 52,476 756,354 - - Plant & equipment brought to account as HPA development expense - 92,626 (Increase)/decrease in assets: - Receivables and other current assets Increase/(decrease) in liabilities: - Trade and other current payables Net Cash flow used in Operating Activities (b) Other Receivables GST recoverable Other receivables 173,529 (2,916) (186,357) (329,981) 13,235 (2,107,392) 80,509 7,500,0001 7,580,509 94,907 3,297 98,204 1 The $7,500,000 is the deferred consideration for the sale of the Speewah Project to Tivan Limited and is measured at amortised cost with nil loss allowance based on lifetime ECLs at the reporting date. On 27 July 2023 King River received A$2.5million cash and the balance of the deferred consideration of $5million remains owing to King River and is due to be paid 12 months after execution of the Agreement (due date being 16 February 2024). This deferred consideration is secured by a general security deed over the issued capital of Speewah Mining Pty Ltd, the owner of the Speewah Vanadium-Titanium-Iron Project. (c) Other current assets Prepayments Security deposit Security deposit – bank1 8,633 30,567 12,155 51,355 4,462 30,567 12,155 47,184 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. Allowance for impairment loss Other receivables which are non-interest bearing and are neither past due nor materially impaired at 30 June 2023 and 30 June 2022. Fair value Due to the short-term nature of the other receivables, their carrying value approximates their fair value. Page 34 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 11. CAPITALISED EXPLORATION EXPENDITURE At Cost Balance at beginning of the year Expenditure incurred Capitalised Tenement costs written off1 Research & Development Incentive Received Government Grants Disposal of asset – Speewah Project2 Total Capitalised Exploration Expenditure Consolidated 2023 $ 2022 $ 19,023,605 2,106,146 (574,650) (248,740) (90,909) (12,577,157) 7,638,295 18,173,969 2,088,668 (756,354) (452,832) (29,846) - 19,023,605 1 Please refer to Note 6. Revenue and Expenses (d). 2 Please refer to Note 6. Revenue and Expenses (b) 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. 12. FINANCIAL ASSET AT FAIR VALUE THROUGH PROFIT & LOSS Listed ordinary shares - designated at fair value through profit or loss Reconciliation Opening fair value Additions Loss on fair value remeasurement Closing fair value Consolidated 2023 $ 7,400,000 7,400,000 - 7,600,0001 (200,000)2 7,400,000 2022 $ - - - - - - 1100 million fully paid ordinary shares in Tivan Ltd at $0.076, being the quoted share price on 31 March 2023 when shareholder approval for the sale of Speewah Project was received. The shares were issued pursuant to the Binding Term sheet and are subject to a voluntary escrow for a two-year period from 16 February 2023. 2The fair value measurement is based on Level 1: Quoted prices (unadjusted) in an active markets for identical assets or liabilities that the entity can access at the measurement date being 30 June 2023. 13. PLANT AND EQUIPMENT Gross carrying amount – at cost Accumulated depreciation Net carrying amount At beginning of year, net carrying amount Acquired Disposals Depreciation charge for the year At end of year, net carrying amount The useful life of the assets was estimated between 2 and 20 years for 2023 and 2022. 14. RIGHT OF USE ASSET Leased warehouse storage Page 35 Consolidated 2023 $ 105,489 (90,733) 14,756 14,584 4,500 - (4,328) 14,756 2022 $ 121,011 (106,427) 14,584 207,540 - (185,252) (7,704) 14,584 80,575 80,575 118,232 118,232 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 TRADE AND OTHER PAYABLES 15. Trade payables Accruals Other payables Consolidated 2023 $ 333,502 52,800 4,547 390,849 2022 $ 322,345 47,940 23,875 394,160 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. 16. LEASE LIABILITIES Leased warehouse storage – current Leased warehouse storage - non-current Consolidated 2023 $ 22,183 59,041 81,224 2022 $ 48,103 74,151 122,254 17. CONTRIBUTED EQUITY AND RESERVES (a) Contributed Equity – Consolidated Issued capital at beginning of year as at 1 July 2022 Fully paid ordinary shares carry one vote per share and carry the right to dividends Movements in ordinary shares on issue Issued capital at end of year as at 30 June 2023 2023 Number $ 1,553,524,9471 49,408,241 - - 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 19(b) Loan Plan Shares. Movement in options on issue Listed Options on Issue as at 1 July 2022 Issued Expired Listed Options on Issue as at 30 June 2023 Each option has an exercise price of $0.06 and expiry date of 31 July 2022. Movement in options on issue Unlisted Options on Issue as at 1 July 2022 Issued Expired Options on Issue as at 30 June 2023 Refer note 19 (b) Summaries of Options Granted. Issued capital at beginning of year as at 1 July 2021 Fully paid ordinary shares carry one vote per share and carry the right to dividends Movements in ordinary shares on issue Issued capital at end of year as at 30 June 2022 Number Exercise Price 152,443,342 - (152,443,342) - 6 cents - - - Number 7,000,000 - (7,000,000) - Exercise Price 6 cents - - - 2022 Number $ 1,553,524,9471 49,408,241 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 19(b) Loan Plan Shares. Page 36 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 17. CONTRIBUTED EQUITY AND RESERVES continued (a) Contributed Equity – Consolidated continued 2022 Listed Options on Issue as at 1 July 2021 Issued Expired Listed Options on Issue as at 30 June 2022 Each option has an exercise price of $0.06 and expiry date of 31 July 2022. Unlisted Options on Issue as at 1 July 2021 Issued Expired Options on Issue as at 30 June 2022 Refer note 19 (b) Summaries of Options Granted. Terms and conditions of contributed equity Ordinary shares Number Exercise Price 152,443,342 - - 152,443,342 6 cents - - 6 cents Number 7,000,000 Exercise Price 6 cents - - - - 7,000,000 6 cents 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. 17(b) Reserves Reserves At 30 June 2021 Share – based payments At 30 June 2022 Share – based payments At 30 June 2023 Equity Benefits Reserve $ 1,898,115 43,601 1,941,716 21,872 1,963,588 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. 18. COMMITMENTS Exploration Expenditure Commitment Within 1 year Consolidated 2023 $ 2022 $ 873,800 1,684,800 In order to maintain the Company’s interest in mining tenements, the Company is committed to meet the minimum expenditure 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. Page 37 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 19. 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 shares have been funded by a limited recourse loan from the Company with zero interest rate, the loan is repayable at the end of the term (14 August 2026) 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 Loan Plan Shares have been released from voluntary escrow and there are no remaining vesting conditions.. 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 19(g). The value brought to account as a share-based payment expense in the year ended 30 June 2023 was $21,872. (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. 2023 2022 Number WAEP Number WAEP Options outstanding at the beginning of the year Granted during the year Expired during the year Outstanding at the end of the year Exercisable at the end of the year 7,000,000 0.06 7,000,000 - (7,000,000) - - - - - - - - 7,000,000 2,000,000 0.06 - - 0.06 0.06 There were nil options on issue as at 30 June 2023 (2022: 7,000,000). Loan Plan Shares 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 2023 2022 Number WAEP Number WAEP 10,000,000 0.032 10,000,000 0.032 - - - - - - - - - 10,000,000 - 0.032 - 10,000,000 5,000,000 - - - 0.032 0.032 There were 10,000,000 Loan Plan Shares which have been accounted for as an in-substance options award (2022: 10,000,000) at 30 June 2023. Refer to section Note 19 (g) Share pricing model, and Loan Plan Shares of the Directors Report 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 unlisted options outstanding as at 30 June 2023 is 0 year (2022: 0.12 years). The Loan Plan Shares have been funded by a limited recourse loan from the Company with a varied loan repayment date of 14 August 2026 and zero interest rate, the loan is repayable at the end of the term or from the proceeds of any shares sold. The weighted average remaining contractual life for the Loan Plan Share loan term outstanding as at 30 June 2023 is 3.13 years. (d) Range of exercise price and weighted average share price at the date of exercise The exercise price for unlisted options outstanding at the end of the year was: Options Class O (7,000,000) 2023 - 2022 0.06 There were no unlisted options exercised during the 2023 financial year. Class O 7,000,000 unlisted options expired on 14 August 2022. Page 38 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 19. SHARE BASED PAYMENTS continued (e) Weighted average fair value There were no options granted during the year ended 30 June 2023 (2022: nil). There were 7,000,000 unlisted options expired during the year ended 30 June 2023 (2022: nil). (f) Option pricing model There were no unlisted options on issue as at 30 June 2023 (2022: 7,000,000). There were 10,000,000 Loan Plan Shares which have been accounted for as an in-substance options award (2022: 10,000,000) at 30 June 2023. Refer to Note 19 (g) Share pricing model. (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. Grant Date Options Issued Volatility (%) Risk free interest rate (%) Discount rate (%) Share price at 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. FINANCIAL RISK MANAGEMENT 20. The Group’s principal financial instruments comprise of cash and short term deposits. The Group has various other financial 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 15 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. Interest rate risk The Group’s current exposure to the risk of changes in market interest rates relate primarily to cash assets rates and is managed 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. The group does not have any material exposure to interest rate risk as at 30 June 2023. Foreign currency risk The Group has no material transactional foreign currency exposure. Page 39 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 FINANCIAL RISK MANAGEMENT continued 20. 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 2023 Cash and cash equivalents Other Financial Assets Other Receivables S&P Credit rating AAA $ - - 80,509 A1+ $ 3,145,977 - - A1 $ - - - A2 $ - - - Unrated $ - - 7,500,0001 1 On 27 July 2023 the Company received the cash payment of A$2.5million for the sale of the Speewah Project. The balance of the deferred consideration of A$5million remains owing to KRR and is due to be paid by 16 February 2024. This deferred consideration is secured by a general security deed over the issued capital of Speewah Mining Pty Ltd, the owner of the Speewah Vanadium-Titanium-Iron Project . S&P Credit rating AAA $ - - 98,204 A1+ $ 2,945,395 - - A1 $ - - - A2 $ - - - Unrated $ - - - Consolidated as at 30 June 2022 Cash and cash equivalents Other Financial Assets Other Receivables 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 investments. The Group’s liquidity needs can be met through a variety of sources, 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 One to five years Total undiscounted cash flow Capital risk management $413,032 $68,973 $482,005 The Group’s capital comprises share capital, reserves less accumulated losses amounting to $25,439,394 at 30 June 2023 To safeguard the business as a going concern; (2022: $21,730,790). The Group’s capital management objectives are: • • • The Group may issue new shares or sell assets to reduce debts in order to maintain the optimal capital structure. To retain an optimal debt to equity balance in order to minimise the cost of capital. To maximise potential returns for shareholders through minimising dilution; and Page 40 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 FINANCIAL RISK MANAGEMENT continued 20. Equity price risk The Group’s listed equity investments are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Group manages the equity price risk by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Group’s Board of Directors on a regular basis. The Group’s Board of Directors reviews and approves all equity investment decisions. At the reporting date, the listed equity investments are subject to escrow until 17 February 2024 and exposure to equity investments at fair value listed on the ASX was $7,4000,000. Given that the changes in fair values of the equity investments held are strongly positively correlated with changes of the ASX market index, the Group has determined that an increase/(decrease) of 10% on the fair value could have an impact of approximately $740,000 increase/(decrease) on the income and equity attributable to the Group. 21. GROUPS INFORMATION The consolidated financial statements include the financial statements of King River Resources Limited and its subsidiaries: Speewah Mining Pty Ltd (sale completed 11 April 2023) Treasure Creek Pty Ltd Kimberley Gold Pty Ltd Whitewater Minerals Pty Ltd High Purity Metals Pty Ltd Country of % Equity Interest Incorporation Australia Australia Australia Australia Australia 2023 2022 - 100 100 100 100 100 100 100 100 100 22. EVENTS AFTER THE BALANCE SHEET DATE On 10 July 2023 the Company announced it has lodged the respective notification to enable an on-market share buy-back of up to 10% of its ordinary shares over the next 12 months. The Company has set the maximum number of shares proposed to be bought back of approximately 155,352,495 ordinary shares, being 10% of the lowest number of ordinary shares issued during the previous 12 months. Pursuant to the Corporations Act 2001 (Cth), companies are permitted to buy-back up to 10% of the lowest number of voting shares on issue during the previous 12 months, without requiring shareholder approval. The number of shares purchased, the purchase price, and timing of the Buy-back will be subject to the Company’s prevailing market conditions, share price and other considerations including unforeseen circumstances. The Company reserves the right to vary the terms, suspend or terminate the buy-back at any time, subject to and in accordance with applicable legal requirements. On 27 July 2023 the Company announced it has received the second cash payment of A$2.5million for the acquisition of the Speewah Project by Tivan Limited ("Tivan"). The balance of deferred consideration of A$5million for the sale of Speewah Project remains owing to KRR and to be paid 12 months after execution of the Agreement (due date being 16 February 2024). This deferred consideration is secured by a general security deed over the issued capital of Speewah Mining Pty Ltd, the owner of the Speewah Vanadium-Titanium-Iron Project. The Company’s cash position on 27 July 2023 was $5,257,553. There were no other significant events following the balance date that affected the Company’s equity or state of affairs. 23. AUDITORS’ REMUNERATION The auditors of King River are Ernst & Young. Auditor’s Remuneration 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 Total fees to Ernst & Young (Australia) Total auditor’s remuneration Consolidated 2023 $ 64,512 - 64,512 64,512 2022 $ 45,604 - 45,604 45,604 Page 41 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 JUNE 2023 24. 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 2023 $ 120,000 12,600 - 132,600 2022 $ 669,545 49,747 43,601 762,893 From 1 July 2022, Ken Rogers, Andrew Chapman and Douglas Flanagan were no longer considered Key Management Personnel of the Group pursuant to the definition of Key Management Personnel. 25. RELATED PARTY TRANSACTIONS Australian Heritage Group Pty Ltd (“AHG”), a company in which Mr Anthony Barton is a Director and shareholder, and Mr Greg MacMillan, a Director, Shareholder 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 (2022: $4,909). AHG was engaged to provide management and corporate services in relation to the sale of Speewah Project for a management fee of 1% on the proceeds value, resulting in management fee invoiced of $176,000 plus GST. As at 30th June 2023, there is $82,950 (2022: $450) outstanding to pay AHG. All services provided by companies associated with directors were provided on commercial terms. Page 42 Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Independent auditor’s report to the members of King River Resources Limited Report on the audit of the financial report Opinion We have audited the financial report of King River Resources Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2023, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023 and of its consolidated financial performance for the year ended on that date; and b. Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For the matter below, our description of how our audit addressed the matter is provided in that context. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 2 We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of our report, including in relation to this matter. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report. Carrying amount of capitalised exploration and evaluation assets Why significant How our audit addressed the key audit matter At 30 June 2023, the Group held exploration and evaluation assets of $7,638,295 as disclosed in Note 11 to the financial report. We evaluated the Group’s assessment of the carrying amount of exploration and evaluation assets. Our audit procedures included the following: The carrying amount of exploration and evaluation assets is assessed for impairment by the Group when facts and circumstances indicate that the carrying amount of exploration and evaluation assets may exceed its recoverable amount. The determination as to whether there are any indicators to require the exploration and evaluation assets to be assessed for impairment involves a number of judgments, including whether the Group has tenure, whether substantive expenditure on further exploration and evaluation is neither planned or budgeted and whether there is sufficient information for a decision to be made that the area of interest is not commercially viable. For the year ended 30 June 2023 the Group identified a number of tenements which were allowed to expire or were surrendered, which resulted in a write off of their full carrying values of $574,650 as set out in note 6 (d) to the financial report. The Group did not identify any further indicators of impairment. Given the size of the balance and the judgmental nature of impairment indicator assessments associated with exploration and evaluation assets, we consider this a key audit matter. ► Considered the Group’s right to explore in the relevant exploration area which included obtaining and assessing supporting documentation such as license agreements. ► Considered the Group’s intention to carry out significant exploration and evaluation activity in the relevant exploration area which included assessment of the Group’s cash-flow forecast models and enquiries with senior management and the Directors as to the intentions and strategy of the Group. ► Assessed whether exploration and evaluation data exists to indicate that the carrying amount of capitalised exploration and evaluation assets is unlikely to be recovered through development or sale. ► Assessed the appropriateness of exploration and evaluation asset balances written off where impairment triggers were identified. ► Assessed the adequacy of the disclosures in the financial report. Information other than the financial report and auditor’s report thereon The directors are responsible for the other information. The other information comprises the information included in the Company’s 2023 annual report, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 3 In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: ► Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. ► Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. ► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 4 ► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. ► Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. ► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 5 Report on the audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2023. In our opinion, the Remuneration Report of King River Resources Limited for the year ended 30 June 2023, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Ernst & Young Timothy G Dachs Partner Perth 15 September 2023 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 14 September 2023. (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 Number of Shares Number of Holders Number of Options 166 262 429 2,080 1,389 4,326 41,721 917,559 3,549,656 90,630,108 1,458,385,903 1,553,524,947 - - - - - - - - - - - - (b) Twenty Largest Shareholders The names of the twenty largest holders of quoted shares are: Listed Ordinary Shares Number of Shares Percentage of Shares % 68,360,742 47,240,315 40,778,058 35,401,684 34,883,676 28,064,033 26,000,000 25,174,193 24,351,703 24,000,000 17,000,000 15,713,098 15,000,000 15,000,000 14,406,182 14,000,000 13,917,018 13,000,000 10,391,667 10,196,135 9,247,532 4.40% 3.04% 2.62% 2.28% 2.25% 1.81% 1.67% 1.62% 1.57% 1.54% 1.09% 1.01% 0.97% 0.97% 0.93% 0.90% 0.90% 0.84% 0.67% 0.66% 0.60% 502,126,036 32.32% BNP PARIBAS NOMINEES PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED A P BARTON PERSON S/F A/C GDM SERVICES PTY LTD CITICORP NOMINEES PTY LIMITED UNIVERSAL OIL (AUSTRALIA) PTY LTD L & E FISHER NOMINEES PTY LTD BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD BNP PARIBAS NOMS PTY LTD C W SPENCER SUPERFUND A/C HOOKS ENTERPRISES PTY LTD S F MARAVENTANO PTY LTD SESNA PTY LTD MR K CARTER & MRS M CARTER MR K ROGERS LASTING LEGACY PTY LTD BARTON & BARTON PTY LTD MR M JONES & MS M TAI TEMTOR PTY LTD BARTON & BARTON PTY LTD WHALE WATCH HOLDINGS LIMITED TOTAL 1 2 3 4 5 6 7 8 9 10 11 12 13 13 14 15 16 17 18 19 20 Page 48 ASX Additional Information (c) Voting Rights All ordinary shares (whether fully paid or not) carry one vote per share without restriction. (d) Substantial Shareholders The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are: Number of Shares 104,660,157 Percentage of Ordinary Shares % 6.737% Mr Anthony Barton and Associates (e) Twenty Largest Quoted Option Holders The are no quoted options on issue. (f) Distribution of unquoted option holder numbers There are no unquoted options on issue. (g) Holders of more than 20% of unquoted options There were no holders, holding more than 20% of the unquoted options on issue. (h) On-Market Buyback On 10 July 2023 the Company announced it has lodged the respective notification to enable an on-market share buy-back of up to 10% of its ordinary shares over the next 12 months. The Company has set the maximum number of shares proposed to be bought back of approximately 155,352,495 ordinary shares, being 10% of the lowest number of ordinary shares issued during the previous 12 months. Pursuant to the Corporations Act 2001 (Cth), companies are permitted to buy-back up to 10% of the lowest number of voting shares on issue during the previous 12 months, without requiring shareholder approval. The number of shares purchased, the purchase price, and timing of the Buy-back will be subject to the Company’s prevailing market conditions, share price and other considerations including unforeseen circumstances. The Company reserves the right to vary the terms, suspend or terminate the buy-back at any time, subject to and in accordance with applicable legal requirements. Pursuant to the announcement on 10 July 2023, no shares have been bought back during the period up to 14 September 2023. (i) Schedule of Mining Tenements Area of Interest Tenements Comments Australia – Western Australia All of the Tenements are registered in the name of 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 E80/5007 E80/5133 E80/5176 E80/5178 EL30205 EL31617 EL31618 EL31619 EL31623 EL31624 EL31625 EL31626 EL31627 EL31628 EL31629 EL31633 EL31634 EL32199 EL32200 EL32344 EL32345 ML32745 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 Tennant Creek Tennant Creek Page 49 

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