Kingston Resources Limited
Annual Report 2023

Plain-text annual report

KINGSTON RESOURCES LIMITED & its Controlled Entities KINGSTON RESOURCES LIMITED ABN 44 009 148 529 Annual Financial Report For the year ended 30 June 2023 CONTENTS Contents KINGSTON RESOURCES LIMITED & its Controlled Entities Page No. Corporate Directory ...................................................................................................................................... 2 Chairman’s Letter ......................................................................................................................................... 3 Directors’ Report .......................................................................................................................................... 4 Lead Auditor’s Independence Declaration ................................................................................................. 29 Consolidated Statement of Financial Position ............................................................................................ 30 Consolidated Statement of Profit or Loss and Other Comprehensive Income ........................................... 31 Consolidated Statement of Changes in Equity ........................................................................................... 32 Consolidated Statement of Cash Flows ...................................................................................................... 33 Notes to the Financial Statements .............................................................................................................. 34 Directors’ Declaration ................................................................................................................................ 60 Independent Auditor’s Report .................................................................................................................... 61 Corporate Governance Statement .............................................................................................................. 66 Additional Information ............................................................................................................................... 67 CORPORATE DIRECTORY KINGSTON RESOURCES LIMITED & its Controlled Entities Corporate Directory DIRECTORS Mick Wilkes (B Eng (Hons), MBA, GAICD) Non-Executive Chairman Andrew Corbett (B Eng (Mining, Hons), MBA) Managing Director Anthony Wehby (MAICD) Non-Executive Director Stuart Rechner (BSc, LLB, MAIG, MAusIMM, GAICD) Non-Executive Director COMPANY SECRETARY Robyn Slaughter REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS Suite 202 – 201 Miller Street North Sydney NSW 2060 AUSTRALIA Telephone Email Website (02) 8021 7492 info@kingstonresources.com.au www.kingstonresources.com.au AUDITORS Hall Chadwick Chartered Accountants SHARE REGISTRY Automic Group BANKERS SOLICITORS Australia & New Zealand Banking Group Limited Macquarie Group Limited Bank of South Pacific Cowell Clarke Commercial Lawyers Ashurst Australia STOCK EXCHANGE Australian Securities Exchange (ASX) Secondary Listing - Frankfurt Stock Exchange ASX CODE KSN - 2 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities Chairman’s Letter To our valued shareholders and other stakeholders Welcome to the Annual Report for 2023. It has been a successful year for Kingston marked by the first full year of gold production and cash flow. The Mineral Hill operation sold over 16koz of gold at an All in Sustaining Cost of under $1700/oz producing strong operating cash flows of over $15m, underpinning a full year after tax profit for the Company of just under $10m. This is an outstanding result which exceeded our expectations. As evidenced by these results, the strength and quality of the people within the business continues to grow and full credit goes to Andrew Corbet and his team at Mineral Hill. In addition to the successful delivery of operating targets, the Company completed a feasibility study for the reopening of open pit and underground mine at Mineral Hill, including the refurbishment of the crusher, grinding mill and flotation circuits. The study has produced a 5-year mine plan with strong economics, and the Board approved the project in June this year. Work has already progressed significantly, with much of it being done in house, building on our philosophy to self-perform activities as far as is practical to minimise risk and maintain control of the cost outcomes. The projects and maintenance teams at Mineral Hill have moved quickly to finalise contracts for refurbishment of the plant, place orders for long leads items, and complete site preparations. Open pit mining plans for the Pearse deposits have progressed with a short-term mining contract tendered. Plans for reopening the underground at the Southern Ore Zone (SOZ) have also progressed with commencement of dewatering, recruitment of mining personnel and purchase of underground mining equipment. At Misima having completed a high quality DFS and environmental and social assessments, which highlighted its economic viability, we are exploring our strategic options to progress the project to development. Discussions are continuing with interested parties and we will continue to seek value creation for our shareholders from this fantastic gold project. I wish to thank all of you for your support and look forward to continuing to grow the Company for all our stakeholders. Your sincerely Mick Wilkes Non-Executive Chair 14 September 2023 - 3 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities Directors’ Report The Directors present their report together with the financial statements of the Consolidated Entity (or ‘Group’), being Kingston Resources Limited (‘Kingston” or the “Company’) and its subsidiaries, for the financial year ended 30 June 2023 and the independent auditor’s report thereon. PRINCIPAL ACTIVITIES The Company is an Australian-based Company listed on the ASX. The principal activity of the Group during the period was mineral production and exploration. OPERATING RESULTS AND REVIEW OF OPERATIONS FOR THE YEAR Operating Results Kingston reported a statutory after tax profit of $9,787,333 (2022: loss $2,046,430). The increase in the FY23 profit relative to FY22 loss is due to successful operations at Mineral Hill. Review of Operations Kingston had its first full year of production from the Mineral Hill operations and was successful in increasing gold production and cash flow over the term. Other major achievements included:  Gold production of 16,520oz from the Tailings Project at Mineral Hill.  Multiple phases of exploration and geotechnical drilling at deposits within the current mine plan and near mine targets within the mining lease.  Updates on the Mineral Resource Estimates for the Southern Ore Zone and Jack’s Hut.  Mineral Resource and Ore Reserve Updates for the Pearse open pits.  Completion of IP geophysics to the south of Mineral Hill mining leases and subsequent identification of 15 high priority targets.  Successful in receiving NSW Government’s Critical Minerals and High-Tech Metals Activation Fund – Stream 1: Project Activation Studies towards the development of Mineral Hill feasibility study work totaling $500,000 of which $250,000 was received as at reporting date.  Delivery of the LOM update, incorporating open pit and underground mining out to 2027. The growth outlook for the Company is now well underpinned through existing gold production at Mineral Hill, and the work currently underway to establish a plus five-year mine plan beyond the existing tailings processing operation. This complements the longer-term opportunities offered by the Misima Gold Project. - 4 - DIRECTORS’ REPORT Mineral Hill Mine KINGSTON RESOURCES LIMITED & its Controlled Entities Kingston had a successful year at Mineral Hill in terms of gold production and cash flow performance. Gold sales from the Tailings Project were 16,068oz at an average sales price of A$2,750/oz. Cost management was also a highlight with all-in-sustaining cost (AISC) falling by 39% in FY23 to A$1,686/oz. In comparison to FY22 gold production and sales increased 256% and 245% respectively. Table 1: FY23 production results and performance relative to FY22. FY22 actuals1 FY23 Actuals Y on Y Δ Tonnes Processed (t) 310,906 627,994 Average Feed Grade (g/t) Gold Production (oz) Gold Sales (oz) Silver Sales (oz) AISC (A$/oz) Sales (A$m) Operating Cashflow (A$m) 0.95 4,639 4,656 7,514 2,753 $12.3 -$0.7 1.36 16,520 16,068 16,898 $1,686 $44.7 $16.9 102% 43% 256% 245% 125% -39% 263% 2,514% 1 Kingston completed the Mineral Hill transaction on 16 January 2022, FY22 actuals are from 16 June 2022 to 30 June 2022 Gold Sold (oz) AISC (A$/oz) Gold Price A$/oz ) z o / $ A ( C S I A d n a ) z o ( s e l a S d l o G 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 - 2,534 2,079 2,629 1,770 2,770 2,968 1,543 1,494 SepQ FY23 DecQ FY23 MarQ FY23 Jun Q FY23 Figure 1: Quarterly gold sales, AISC and average realised gold price - 5 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities Kingston has been completing capital works on Tailings Storage Facility 2 (TSF2) during the year, including an embankment raise (Lift 4) to build storage capacity for open pit and underground ore processing. Mineral Hill is well placed in terms of TSF storage capacity for the LOM. An updated life of mine was released in June 2023, comprising a continuation of the Tailings Project, open pit mining from the Pearse deposits and then recommencing underground mining at the Southern Ore Zone. The current life of mine (LOM) for the project is four years, with high potential for extending the underground resource laterally and at depth. Open Pit and Underground Forecast Table 2 shows the open pit mining forecast and Figure 2 shows the designs for the two pits. Open pit mining at Pearse consists of two pits; Pearse North and Pearse South. Pearse North is a new development while Pearse South is a deepening and cut-back of the existing pit. Figure 2: Pit designs for Pearse North and South. The underground production target utilises the existing development at the Southern Ore Zone and Jack’s Hut to enable the production of separate copper, lead and zinc concentrates. There is already substantial underground development in place at the proposed mining areas, and this reduces the required capital expenditure over the life of mine. The Scoping Study on the LOM was announced on the ASX platform on 29 June 2023. - 6 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities Table 2: Mining & processing physicals for open pit mining. Mining Physicals Oxide Tonnes Sulphide Tonnes Total Ore Tonnes Gold Grade Silver Grade Metal Gold Silver Material Movement Waste Tonnes Total Material Movement Strip Ratio Processing Metallurgical Recovery Recovered Gold Recovered Silver Table 3: Underground mining physicals. Mining Physicals Mining Development Ore Tonnes Stope Ore Tonnes Grades (Dev & Stope) Gold Silver Copper Lead Zinc Metal Gold Silver Copper Lead Zinc Material Movement Waste Tonnes Ore Tonnes Total Material Movement Lateral Development Capital Development Operating Development Total Lateral Development - 7 - Unit kt kt kt g/t g/t koz koz kt kt W:O % koz koz Open Pit 7.8 250 258 3.7 58 31 470 2,674 2,933 10 65% 20 322 Unit Underground kt kt g/t g/t % % % koz koz kt kt kt kt kt kt m m m 112 773 1.7 18 0.9% 1.6% 1.3% 47 503 8 14 11 309 885 1,194 1,509 6,845 8,354 DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities Figure 3: Long section at Mineral Hill showing the proposed stopes (blue). Plant Refurbishment and Underground Re-Entry Transitioning to open pit and underground ore feed will require refurbishment of the crushing, grinding and flotation circuits. Refurbishment of these components of the processing plant is already well advanced. Additionally, the company has been pumping water from the underground decline and reinstating the safety and services of the development. Underground diamond drilling will commence in the fourth quarter of this year to infill and extend the underground Mineral Resources and deliver an initial Ore Reserve by June 2024. Exploration and Development Kingston’s main focus on exploration drilling during the financial year was on the Pearse gold-silver deposits, SOZ polymetallic deposits and the Jack’s Hut trend. The primary aim of the drilling was to infill the existing drilling and provide data for updating the Mineral Resources, Ore Reserves and LOM plan. The Pearse North drilling confirmed the high-grade tenor of the mineralisation and the results demonstrated high grade gold and silver starting from surface. Significant results include:        39m @ 4.2g/t Au and 37g/t Ag from 37m from DDH hole 001, including: o 3m @ 26.7g/t Au, 27g/t Ag from 38m 10m @ 6.0g/t Au and 33g/t Ag from 72m from DDH hole 003 3m @ 5.5g/t Au and 55g/t Ag from 55m from DDH hole 004 4.3m @ 2.4g/t Au and 16g/t Ag from 142m from DDH hole 005 12m @ 3.68g/t Au, 9g/t Ag from 14m from DDH002 including: o 7m @ 5.69g/t Au, 13g/t Ag from 15m 17m @ 2.7g/t Au, 11g/t Ag from 15m from RC hole 013 including: o 11m @ 4.0g/t Au, 15g/t Ag from 20m 8m @ 5.6g/t Au, 66g/t Ag from 120m from RC hole 008 including: o 3m @ 14.2g/t Au, 177g/t Ag from 125m - 8 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities Figure 4: Significant gold – silver intercepts at Pearse North relative to USD$1800 Au Ore Reserve pit design. Surface drilling was completed into the upper sections of the SOZ during the year. High grade polymetallic mineralisation was intersected, with extensions being made up-dip from the current mine workings and to the north. Significant intersections include:  19m @ 1.15% Cu, 5.5% Pb, 5.5% Zn, 0.4g/t Au, 44g/t Ag from 150m in DDH006 including: o 10m @ 2.12% Cu, 10.3% Pb, 10.4% Zn, 0.5g/t Au, 81g/t Ag from 150m  39m @ 1.1% Cu, 0.7% Pb, 0.8% Zn, 0.93g/t Au, 12g/t Ag from 161m, in DDH011  9.8m @ 4.22g/t Au, 0.7% Cu, 3.2% Pb, 3.2% Zn, 30g/t Ag from 165.5m in DDH012  8.5m @ 0.4% Cu, 4.2% Pb, 4.2% Zn, 1.23g/t Au, 28g/t Ag from 232m in DDH009  7.0m @ 0.7% Cu, 2.9% Pb, 2.6% Zn, 1.31g/t Au, 26g/t Ag from 154m in DDH008  8.1m @ 0.9% Cu, 8.3% Pb, 3.3% Zn, 0.97g/t Au, 60g/t Ag from 157.9m in DDH007 - 9 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities m 0 2 1 m 5 7 Figure 5: Plan and section view of Southern Ore zone (MH Mine Grid). Figure 6: Section view of Southern Ore zone on Section 2 - 10 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities High grade copper-gold assay results were also returned from the maiden Jack’s Hut drilling program at Mineral Hill. Five drill holes were designed to test the exploration potential within a dilation zone along the Jack’s Hut trend. The program has delivered near surface, high grade copper intercepts, within a 2.2km mineralised trend, and in close proximity to our operating mill. Key results included:  77m @ 0.93% Cu, 0.16g/t Au from 7m in KSNDDH014, including: o o 7.4m @ 5.7% Cu, 0.40g/t Au from 16.4m 9.3m @ 1.3% Cu, 0.39g/t Au from 43.7m  27m @ 1.02% Cu, 0.18g/t Au from 14m in KSNDDH015, including: o 4.2m @ 4.5% Cu, 0.41g/t Au from 21.8m  54.5m @ 0.65% Cu, 0.06g/t Au, from 45m in KSNDDH015, including: o 9.3m @ 2.2% Cu,0.18g/t Au from 63m  10.0m @ 1.56% Cu, 0.76g/t Au, from 37m in KSNRC018, including: o 6m @ 2.20% Cu, 1.22g/t Au from 37m Additional drilling at Pearse North and SOZ commenced in April 2023. The primary purpose of the Pearse North drilling was to collect geotechnical data for open pit wall slope designs. The assay results again confirmed the high-grade nature of the deposit and also added confidence to the existing geological interpretation. The intersections concurred with the 3D wireframes shapes of the mineralisation and were consistent with the grades of previous drill holes. The earlier drilling results from Pearse, SOZ and Jack’s Hut were then incorporated into updated Mineral Resource Estimates (MRE) for all three projects. Additionally, an Ore Reserve Estimate was delivered for the Pearse North and Pearse South deposits. Significantly, the SOZ MRE resulted in a 114% increase in total tonnage and increases of 54% and 64% in contained gold and copper respectively. The MREs for SOZ and Jack’s Hut are shown in Table 4 and Table 5. Table 4: Southern Ore Zone (SOZ) Mineral Resource Estimation for November 2022. Tonnage (Kt) Resource Category Measured Indicated Inferred Total * Due to rounding to appropriate significant figures, minor discrepancies may occur, tonnages are dry metric tonnes. Zn % Au (koz) Ag (koz) 80 15.5 0.3% 1,038 66.8 1.5% 1,256 75.4 1.5% 2,349 157.6 1.4% Au (g/t) Ag (g/t) 10.9 19.9 20.0 19.2 Pb (kt) 1,200 28,500 30,500 60,200 Pb % 0.5% 1.8% 1.6% 1.6% 228 1,622 1,954 3,804 2.11 1.28 1.20 1.29 Zn (kt) 700 24,200 28,900 53,800 Metal Cu (kt) 3,000 16,200 14,500 33,600 Grade Cu % 1.3% 1.0% 0.7% 0.9% Table 5: Jack’s Hut Mineral Resource Estimate for March 2023. Grade Au g/t Ag g/t Cu % Pb % Zn % Metal Cu kt Pb kt Zn kt Class Indicated Inferred Total Mass (kt) 608 1,032 1,640 3.0 10.8 13.8 * Due to rounding to appropriate significant figures, minor discrepancies may occur, tonnages are dry metric tonnes. 7.8 7.2 15.0 1.3% 0.7% 0.9% 0.5% 1.0% 0.8% 0.4% 0.8% 0.6% 1.53 1.09 1.25 7 28 20 2.3 7.8 10.1 Au koz 30 36 66 Ag koz 134 917 1,051 - 11 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities Kingston undertook a new Induced Polarisation (IP) survey during the year to expand coverage to the south- eastern edge of EL1999. This data has enhanced the evidence already provided by gravity geophysics in this region. The existing mineral deposits at Mineral Hill lie at the intersection of IP chargeability highs and gravity gradients (i.e. zones of transition from gravity highs to gravity lows). Extending this knowledge to the south of Mineral Hill has helped to identify 15 additional priority targets (see Figure 7) and drilling of these has already commenced, with results pending. Figure 7: Recently generated geophysical targets in the vicinity of the mining licences. Misima Gold Project Kingston undertook a strategic review of Misima with a view of to maximising value from the project. The company has been actively engaged in discussions with numerous groups to find ways to bring the project into production. Work on site consisted of background environmental monitoring as part of the Environmental and Social Impact Assessment (ESIA) as well as work to progress the Mining Licence application. - 12 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities MINERAL RESOURCES TABLE Mineral Hill (NSW, Australia) Table 6: Mineral Hill Mineral Resource summary, prepared by Mr S. Hayward of Kingston Resources Ltd. Rounding errors may occur. Resource Category Measured Indicated Inferred Total Tonnes Au Ag Cu kt g/t g/t % 228 5,582 3,091 8,901 2.11 1.06 1.17 1.13 11 28 23 26 1.3% 1.2% 0.7% 1.0% Pb % 0.5% 1.7% 1.4% 1.6% Zn % 0.3% 1.1% 1.2% 1.1% Au Ag Cu koz koz kt 3 15 80 47 191 4,244 116 2,242 22 323 6,566 72 Pb kt 1.2 70 42 113 Zn kt 0.7 42 38 81 Table 7: Mineral Hill Mineral Reserve summary, prepared by Mr J. Wyche of Australian Mine Design and Development Pty Ltd. Rounding errors may occur. Tonnes Au Reserve kt Proved Probable Total - 1,431 1,431 g/t - 1.55 1.55 Ag g/t - 57 57 Cu % Pb % Zn % Cu kt Pb kt Zn kt Au koz - 71 71 Ag koz - 470 470 Misima Gold Project (PNG) Table 8: Misima Gold Project Mineral Resource summary, prepared by Mr S. Hayward of Kingston Resources Ltd. Rounding errors may occur. Deposit Umuna Total Resource Umuna TOTAL Cooktown Stockpile Cooktown Stockpile Ewatinona Total Resource Ewatinona TOTAL Misima Misima TOTAL Classificati on Indicated Inferred Inferred Indicated Inferred Indicated Inferred Cutoff Tonnes g/t Au 0.3 0.3 Mt 93.5 64.1 157.6 3.8 3.8 4.2 3.4 7.6 97.7 71.3 169 Gold g/t Au 0.78 0.58 0.70 0.65 0.65 0.88 0.74 0.81 0.79 0.59 0.71 Silver g/t Ag 4.3 3.8 4.1 7.0 7.0 2.6 3.2 2.8 4.3 3.8 4.1 Au Moz Ag Moz 2.4 1.2 3.6 0.1 0.1 0.12 0.08 0.2 2.5 1.4 3.8 13.1 7.5 20.5 0.9 0.9 0.3 0.3 0.7 13.4 8.7 22.1 0.5 0.3 0.3 Table 9: Misima Gold Project Ore Reserve summary, prepared by Mr J. Wyche of Australian Mine Design and Development Pty Ltd. Rounding errors may occur. Ewatinona Probable Ewatinona Total Umuna Probable Umuna Total Probable Misima Total Reserve Tonnes Mt Gold Au g/t Silver Ag g/t Au koz Ag koz 0.8 0.8 0.8 0.8 0.8 0.8 2.4 2.4 4.6 4.6 4.5 4.5 100 100 1,800 1,800 1,900 1,900 300 300 10,600 10,600 10,900 10,900 3.9 3.9 71.7 71.7 75.6 75.6 - 13 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities COMPETENT PERSON’S STATEMENT The information in this report that relates to Exploration Results and Mineral Resources is based on information compiled by Mr. Stuart Hayward BAppSc (Geology) MAIG, a Competent Person who is a member of the Australian Institute of Geoscientists. Mr. Hayward is an employee of the Company. Mr. Hayward has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. Hayward consents to the inclusion in this report of the matters based upon the information in the form and context in which it appears. The Competent Person signing off on the overall Ore Reserves Estimate is Mr John Wyche BE (Min Hon), of Australian Mine Design and Development Pty Ltd, who is a Fellow of the Australasian Institute of Mining and Metallurgy and who has sufficient relevant experience in operations and consulting for open pit metalliferous mines. Mr Wyche consents to the inclusion in this report of the matters based upon the information in the form and context in which it appears. Kingston publicly reports Exploration Results and Mineral Resource estimates in accordance with the ASX Listing Rules and the requirements and guidelines of the 2012 edition of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves – the JORC Code. Kingston’s governance for public reporting of Exploration Results and Mineral Resource estimates includes important assurance measures. All reports are signed-off by appropriate JORC Competent Persons with JORC Code Table 1 Checklists as required. Exploration Results and Mineral Resource estimates are also peer reviewed (either by Kingston technical staff or suitably qualified external consultants) before Board approval and ASX release. FINANCIAL POSITION At the end of the financial year, the Consolidated Entity had net assets of $76,454,900 (2022: $61,130,177) and held $18,206,767 in cash (2022: $5,589,673). On 7 July 2022, the Company secured a two tranche $10m debt facility with PURE asset management. Tranche 1 of $5 million was drawn immediately as a 4-year secured loan facility at an interest rate of 9.90% per annum with 25,000,000 detached warrant shares at an exercise price of $0.20. An establishment fee of $150,000 was recognised as a reduction in proceeds. On 29 June 2023, Tranche 2 of $5million was drawn as a 4-year secured loan facility at an interest rate of 9.90% per annum with 35,714,286 detached warrant shares at an exercise price of $0.14. An establishment fee of $150,000 was recognised as a reduction in proceeds. On 27 June 2023, the Company announced its intention to undertake a two Tranche Share Placement offer raising a total of $5,500,000. On 30 June 2023, advanced placement monies totalling $4,500,000 were received as Tranche 1 of the Placement offer. On 3 July 2023, 52,941,176 Tranche 1 Placement shares were issued at $0.085.On 17 August 2023, Tranche 1 of the Placement offer was completed upon issuing 26,245,576 unlisted attaching options expiring on 31 July 2025 with an exercise price of $0.14 on the basis of one option for every two Placement Share. - 14 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS Other than reported above in the Review of Results and Operations, there were no significant changes in the state of affairs of the Company during the reporting period. MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR On 31 July 2023, the 4,561,810 LTI performance Options were converted to shares raising $45,618.10 and 2,707,994 unvested LTI performance options expired. On 14 August 2023 Shareholders approved the grant of up to $300,000 MH Project Goal Performance Options to Andrew Corbett. On 17 August 2023, Tranche 1 of the Placement offer was completed upon issuing 26,245,576 unlisted attaching options expiring on 31 July 2025 with an exercise price of $0.14 on the basis of one option for every two Placement Share. Also on 17 August 2023: - - - - - the Company issued 11,764,705 shares at $0.085 to Quintana Holdings LLP under Tranche 2 of the Placement offer. These proceeds reduce the final deferred consideration payable to Quintana Holdings LLP upon producing 30,000ozs since the acquisition of Mineral Hill. In addition 5,882,352 unlisted attaching options expiring on 31 July 2025 with an exercise price of $0.14 were issued on the basis of one option for every two Placement Share. the Company issued 11,764,664 shares at $0.085 under a fully underwritten Share Purchase Plan raising $1,000,000 (before costs). In addition, a total of 5,882,332 unlisted options expiring on 31 July 2025 with an exercise price of $0.14 was issued on the basis of one option for every two SPP Share. 742,826 STI performance rights vested and were converted to shares, and 6,043,019 STI performance rights lapsed. 326,233 service fee options were converted to shares for nil consideration. 206,764 shares were issued for nil consideration to an employee as part of their employment contract. Other than the above, there has been no other matter or circumstance which has arisen since 30 June 2023 that has significantly affected or may significantly affect: a) b) c) Kingston Resources Limited’s operations in future financial years; or the results of those operations in future financial years; or Kingston Resources Limited’s state of affairs in future financial years. DIVIDENDS OR DISTRIBUTIONS No dividends were paid during the financial year and the directors do not recommend the payment of a dividend. - 15 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities FUTURE DEVELOPMENTS AND EXPECTED RESULTS The Group will continue its operating activities and evaluation of its mineral projects and undertake generative work to identify and potentially acquire new resource projects. Due to the nature of the business, the result is not predictable. ENVIRONMENTAL REGULATIONS The mineral tenements granted to the Company pursuant to New South Wales Mining Act 1992 and the Papua New Guinea Mining Act 1992, are granted subject to various conditions which include standard environmental requirements. The Company adheres to these conditions and the directors are not aware of any non-compliance with environmental laws. INFORMATION ON THE DIRECTORS The Directors of the Company at any time during or since the end of the financial year are:     Mick Wilkes – Chair (Independent Non-Executive) Andrew Corbett – Director (Managing) Anthony Wehby – Director (Independent Non-Executive) Stuart Rechner - Director (Independent Non-Executive) Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Mick Wilkes, Non-Executive Chair (B Eng (Hons), MBA, GAICD) Term of Office Appointed Non-Executive Chair of Kingston Resources Limited from 1 December 2020; previously Non-Executive Director of Kingston Resources Limited from 6 July 2018 to 1 December 2020. Skills and Experience: Mr Wilkes is a mining engineer with over 35 years of broad international experience with a strong emphasis on operations management and new mine development, predominantly in precious and base metals across Asia and Australia. He was the President and CEO of OceanaGold Corporation (ASX:OCG) from 2011 to 2020. In previous roles he was the Executive General Manager of Operations at OZ Minerals responsible for the development of the Prominent Hill copper/gold project in South Australia and General Manager of the Sepon gold/copper project for Oxiana based in Laos. His earlier experience included 10 years in various project development roles in Papua New Guinea. Mr Wilkes was appointed as a Non-Executive Director of Genesis Minerals Ltd in September 2022. In April 2022 Mr Wilkes was appointed Non-Executive Chair of Andromeda Metals Ltd (ASX:ADN). Mr Wilkes and was previously Non-Executive Director of Dacian Gold Ltd (ASX:DCN) from September 2021 then Non-Executive Chair from March 2022 to July 2022. He was also a Non-Executive Director of Matador Mining Ltd (ASX:MZZ) from July 2020 to May 2022. - 16 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities Mr Wilkes holds a Bachelor of Engineering from the University of Queensland, a Master of Business Administration from Deakin University, and is a member of both the Australian Institute of Mining and Metallurgy, and the Australian Institute of Company Directors. Andrew Corbett, Managing Director (B Eng (Mining, Hons), MBA) Term of Office: Managing Director of Kingston Resources Limited since 4 July 2016. Skills and Experience: Mr Corbett is Managing Director and CEO of the Company. Mr Corbett is a highly experienced mining engineer, having operated in the mining industry for over 25 years. Mr Corbett has senior corporate, operational and mine management experience combined with an in-depth understanding of global equity markets, business development and corporate strategy within the mining sector. His prior roles include General Manager at Orica Mining Services based in Germany and Co- Portfolio Manager of the Global Resource Fund at Perpetual Investments as well as mine management and operations roles with contractor and owner-mining operations. Anthony Wehby, Non-Executive Director (MAICD) Term of Office: Non-Executive Director of Kingston Resources Limited from 1 December 2020; previously Non-Executive Chairman of Kingston Resources Limited from 4 July 2016 to 1 December 2020. Mr Wehby is Chair of the Audit and Risk Committee. Skills and Experience: Mr Wehby is a highly experienced board member and chairman. He is a Director of Ensurance Ltd (ASX:ENA) and Chairman of Variscan Mines Limited (ASX:VAR). He was previously Chairman of Tellus Resources Limited and Chairman of Aurelia Metals Limited. Since 2001, Mr Wehby has maintained a financial consulting practice, focusing on strategic advice to companies including investments, divestments and capital raisings. Prior to 2001, Mr Wehby was a partner in PricewaterhouseCoopers Australia (Coopers & Lybrand) for 19 years. Mr Wehby is a Member of the Australian Institute of Company Directors. Stuart Rechner, Non-Executive Director (BSc, LLB, MAIG, MAusIMM, GAICD) Term of Office: Non-Executive Director from 4 July 2016; previously Executive Director of Kingston Resources Limited from 23 February 2015. Mr Rechner is Chair of the Remuneration and Nomination Committee. Skills and Experience: Mr Rechner is an experienced company director and geologist with a proven track record in project generation, acquisition, exploration, funding and development in Australia and overseas. Mr Rechner holds degrees in both geology and law and is a member of the Australian Institute of Geoscientists, the Australasian Institute of Mining and Metallurgy and the Australian Institute of Company Directors. For over ten years Mr Rechner was an Australian diplomat with postings to Beijing and Jakarta. Mr Rechner has been a Director of Strategic Energy Limited (ASX:SER) since 12 September 2014. - 17 - DIRECTORS’ REPORT COMPANY SECRETARY KINGSTON RESOURCES LIMITED & its Controlled Entities Chris Drew was the Company Secretary from 18 December 2019 to 8 November 2022. He holds a Bachelor of Commerce from the University of Auckland, is a CFA Charterholder, and is a Fellow Member of the Governance Institute of Australia. Robyn Slaughter has been Company Secretary since 8 November 2022. Robyn is a Company Secretary who works at Automic Group, which provides market leading, cloud-based share registry technology, compliance and governance solutions, supported by a tailored range of professional services. She works closely with a number of boards of both listed and unlisted public companies. Robyn is a qualified Governance Professional ('CGI') and Affiliate of the Governance Institute of Australia ('GIA'), who holds a Master's degree in Corporate Governance and a Bachelor's degree in Accounting and Finance. DIRECTORS’ INTERESTS As at the date of this report the relevant interests of each of the Directors, held either directly or indirectly through their associates, in the securities of Kingston are as follows: Director Mick Wilkes 1 Andrew Corbett 2,5 Anthony Wehby 3 Stuart Rechner 4 Fully Paid Ordinary Shares (KSN) 3,067,060 7,986,181 2,311,361 854,268 Unlisted Options 176,470 2,495,167 352,941 176,470 1 Mick Wilkes holds a relevant interest in the specified number of Shares and Options as a result of being a director of Eligius Holdings Pty Limited as trustee of Eligius Holdings Pty Limited ATF, which is the registered holder of those Shares and Options. 2 Andrew Corbett holds a relevant interest in the specified number of Shares and Options as a result of being a director of Milamar Group Pty Ltd as trustee of Milamar Family Trust, which is the registered holder of those Shares and Options. 3 Anthony Wehby holds a relevant interest in Options as he is a related party to Mrs Rosemary Wehby, who is the registered holder of the options. 4 Stuart Rechner holds a relevant interest in the specified number of Shares and Options as a result of being a director of Osmium Holdings Pty Limited 5 As approved by Shareholders at the General Meeting on 14 August 2023, Andrew Corbett has a right to acquire MH Project Goal Performance Options 5 As approved by Shareholders at the General Meeting on 14 August 2023, Andrew Corbett has a right to acquire MH Project Goal Performance Options valued at $300,000 subject to satisfaction of various vesting conditions. The earliest date on which the securities may vest is 30 July 2023. The number of securities to be provided in respect of the rights will be calculated on the basis of the 20-day KSN VWAP immediately prior to the vesting condition being met. Any unvested securities will automatically lapse on 31 July 2025. - 18 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities MEETINGS OF DIRECTORS The number of Directors’ meetings and Committee meetings, and the number of meetings attended by each of the Directors who was a member of the Board and the relevant Committee, held during the year ended 30 June 2023 were: Board Meetings Audit and Risk Committee Meetings held while a Director 10 10 10 10 Number attended 10 10 10 10 Meetings held while a Director 2 - 2 2 Number attended 2 - 2 2 Remuneration and Nomination Committee Number Meetings attended held while a Director 1 1 - 1 1 - 1 1 Mick Wilkes Andrew Corbett Anthony Wehby Stuart Rechner REMUNERATION REPORT (AUDITED) This remuneration report outlines the director and executive remuneration arrangements of the Company and the Group for the year ended 30 June 2023 in accordance with the requirements of the Corporations Act 2001 and its Regulations. - 19 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities (a) Key management personnel disclosed in this report For the purposes of this report, key management personnel (KMP) of 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 a director (whether executive or otherwise) of the Company. Details of key management personnel: M Wilkes Non-Executive Chair (appointed Non-Executive Director 6 July 2018, appointed Non- Executive Chair 1 December 2020) A Corbett Managing Director (appointed 4 July 2016) A Wehby Non-Executive Director (appointed Non-Executive Chairman 4 July 2016, Non-Executive Director 1 December 2020) S Rechner Non-Executive Director (transitioned to Non-Executive Director on 4 July 2016) (b) Remuneration Philosophy The objective of the Group’s executive remuneration framework is to attract, motivate and retain high quality personnel then incentivise and reward performance fairly and responsibly. The framework aligns executive reward with the achievement of strategic objectives and the creation of long-term value for shareholders. The Board has established a separate Remuneration and Nomination Committee which meets as required to review remuneration, recruitment, retention, and termination procedures and to evaluate KMP performance. Our values of safety, respect for the environment, respect for each other, social responsibility, honesty and accountability guide the Committee in policy formation and decision making. Executive remuneration is benchmarked against similar organisations in regards to industry and size; and, from time to time, independent external advice is sought from remuneration consultants. The Corporate Governance Statement provides further information on the Company’s remuneration governance. (c) Executive remuneration policy and framework In determining executive remuneration, the Remuneration and Nomination Committee aims to ensure that remuneration practices are:  Competitive and reasonable, enabling the Company to attract and retain key talent;  Aligned to the Company’s strategic and business objectives and the creation of shareholder value;  Transparent and easily understood; and  Acceptable to shareholders. The Remuneration and Nomination Committee reviews executive packages annually by reference to the executive’s performance and comparable information from industry sectors and other listed companies in similar industries. The terms and conditions for the Managing Director are considered appropriate for the current exploration and development phase of the Group’s asset base. Options and performance rights may be issued to directors subject to approval by shareholders. All remuneration paid to directors is valued at the cost to the Group and expensed. Options are valued using the Black-Scholes methodology. (d) Relationship between remuneration and the Group’s performance The Board has structured its remuneration arrangements in such a way it believes is in the best interests of building shareholder wealth in the longer term. Directors’ remuneration is set by reference to other companies of similar size and industry, and by reference to the skills and experience of directors. Fees paid to Non- Executive Directors are not linked to the performance of the Group. - 20 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities The following table shows the net loss, loss per share and share price for the last four financial years. 2023 2022 2021 2020 Net Profit/( Loss) $9,807,227 ($2,088,167) ($1,954,631) ($751,587) Diluted Profit/(Loss) per share (cents/share) Share price at year end (cents) 2.37 7.8 (0.67) (0.76) (0.42) 8.1 21.5 17.0 Long-term (LTI) and short-term (STI) incentives are provided to KMP in the form of Performance Securities over ordinary shares of the Company and are considered to promote continuity of employment and provide additional incentive to recipients to increase shareholder wealth. Performance Securities may only be issued to directors subject to approval by shareholders in general meeting. Outstanding business and individual performance are required to achieve the maximum level of remuneration. This includes financial; health and safety; and environmental, social & governance components. During the Financial Year the following incentive Performance Securities were issued:  Unlisted Options 5,171,621 (FY22 2,737,240)  STI Performance Rights 6,785,845 (FY22 3,395,667). Non-Executive Directors remuneration policy On appointment to the Board, all non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms including remuneration, relevant to the office of director. The Board policy is to remunerate non-executive directors at commercial market rates for comparable companies for their time, commitment and responsibilities. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders is currently set at $500,000 per annum (approved by shareholders at 2021 AGM). Fees may also be paid to non-executive directors for additional consulting services provided to the Company above and beyond normal non-executive duties. Fees for non-executive directors are not linked to the performance of the Group. Non-executive directors’ remuneration may also include an incentive portion consisting of options, subject to approval by shareholders. (e) Voting and comments made at the Company’s 2022 Annual General Meeting Kingston received over 96.38% of “yes” votes (3.62% of “no” votes) on its remuneration report for the 2022 financial year. (f) Remuneration Details for the Year Ended 30 June 2023 The following table of benefits and payments details, in respect to the financial year, the components of remuneration for each member of the KMP of the Group. - 21 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities Short-term Benefits Post-employment Benefits Long-term Benefits Equity-settled Share-based Payments Non- monetary Other Salary, Fees and Leave $ 104,930 96,000 Profit Share and Bonuses $ - - 344,427 330,362 203,354 38,732 69,000 69,000 116,696 275,874 76,245 75,555 - - 36,259 - - 711,298 846,791 203,354 74,991 Director Mick Wilkes 2023 2022 Andrew Corbett 2023 2022 Anthony Wehby 2023 2022 Chris Drew* 2023 2022 Stuart Rechner 2023 2022 Total 2023 2022 $ - - - - - - - - - - Pension and Super- annuation $ - - 34,817 33,036 7,245 6,900 $ - 7,200 - - 40,436 - 12,188 27,587 8,000 - - - 48,436 7,200 54,250 67,523 Other Incentive Plans LSL Performance Rights/Shares Options $ $ - - - - - - - - - - - - - - - - - - - - - - $ - - 6,493 - - - - - - - $ - - 13,098 13,259 - - - 11,140 - - 6,493 - 13,098 24,399 $ - 29,867 27,407 7,970 - 11,165 - 7,743 - 11,165 27,407 67,910 Cash-settled Share-based Payments Termination Benefits Total $ - - - - - - - - - - - - $ $ - - - - - - - - - - - - 104,930 133,067 629,596 423,359 76,245 87,065 169,320 358,603 84,245 86,720 1,064,336 1,088,815 *as at the date of retirement (g) Service Agreements Remuneration and other terms of employment for KMP are formalised in service agreements. The service agreements specify the components of remuneration, benefits and notice periods. Michael Wilkes Mr Wilkes was appointed a Non-Executive Director on 6 July 2018. On 1 December 2020 Mr Wilkes was appointed as Non-Executive Chair. The appointment is contingent upon satisfactory performance and successful re-election by shareholders of the Company as and when required by the constitution of the Company and the Corporations Act. Mr Wilkes is not entitled to any termination benefits unless paid at the discretion of directors. Andrew Corbett Mr Corbett was appointed as Managing Director on 4 July 2016. Mr Corbett is remunerated pursuant to the terms and conditions of an employment agreement entered into on 4 July 2016 with no fixed term. The agreement may be terminated by either party on the giving of six months’ notice. Mr Corbett is not entitled to any termination benefits other than accrued pay, leave entitlements and other statutory payments unless paid at the discretion of directors. Anthony Wehby Mr Wehby was appointed Non-Executive Chair on 4 July 2016 and transitioned to a Non-Executive Director on 1 December 2020. The appointment is contingent upon satisfactory performance and successful re-election by shareholders of the Company as and when required by the constitution of the Company and the Corporations Act. Mr Wehby is not entitled to any termination benefits unless paid at the discretion of directors. Stuart Rechner Mr Rechner was appointed as Executive Director on 23 February 2015 and transitioned to a Non-Executive Director on 4 July 2016. The appointment as Non-Executive Director is contingent upon satisfactory performance and successful re-election by shareholders of the Company as and when required by the constitution of the Company and the Corporations Act. Mr Rechner is not entitled to any termination benefits unless paid at the discretion of directors. - 22 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities (h) Equity Interests of KMP Options holdings of KMP The number of options over ordinary shares held by each KMP of the Group during the 2023 and 2022 reporting periods is as follows: 2023 Balance at Beginning of Year Issue Date No. Value No. Value No. Grant Details Exercised Lapsed Other changes Mick Wilkes Andrew Corbett Anthony Wehby Chris Drew* Stuart Rechner LTI¹ LTI² LTI3 LTI4 LTI5 LTI6 LTI¹ LTI² LTI3 LTI4 LTI5 LTI¹ LTI² 300,000 186,667 27-Nov-20 14-Dec-21 300,000 186,667 $ 15,584.00 29,867.00 3,421,563 6-Nov-19 3,421,563 137,644.00 1,086,301 27-Nov-20 1,086,301 815,952 14-Dec-21 815,952 - 6-Dec-22 1,679,215 300,000 69,783 27-Nov-20 14-Dec-21 300,000 69,783 2,257,031 6-Nov-19 2,257,031 696,926 27-Nov-20 - 5-Nov-21 300,000 69,783 27-Nov-20 14-Dec-21 696,926 685,510 300,000 69,783 56,118.00 40,052.00 27,407.00 15,584.00 11,165.00 90,797.00 36,003.00 33,649.00 15,584.00 11,165.00 *balance at the date of retirement 3,693,523 4,379,033 213,947 - - - - - - - - - - - - - - - - - $ - - - - - - - 300,000 - - - - - 300,000 - 116,154 342,755 300,000 - - - - - - - - - - - - - - Vested and Exercisable at End of Year No. - 186,667 Vested and Unexercisable at End of Year No. - - 3,421,563 - - - - 69,783 2,257,031 - - - 69,783 - 1,086,301 815,952 1,679,215 - - - 580,772 342,755 - - 1,058,909 2,396,597 923,527 ¹ Unlisted LTI Options issued 27 November 2020 exercisable at 50c - expiry on 30 June 2023 2 Unlisted LTI Service Fee Options issued 14 December 2021 exercisable at 0c - expiry on 14 December 2024, fully exercised on 17 August 2023 3 Unlisted LTI Options issued 6 November 2019 exercisable at 1c, expiry 31 July 2023, exercise is subject to operational hurdles, fully exercised on 31 July 2023 4 Unlisted LTI Options issued 5 August 2020 and 27 November 2020 exercisable at 1c, expiry 31 July 2023, exercise is subject to share price hurdles which were not satisfied and lapsed on 31 July 2023 5 Unlisted LTI Options issued 5 November 2021 and 14 December 2021 exercisable at 0c, expiry 31 August 2024, exercise is subject to share price hurdles 6 Unlisted LTI Options issued 6 December 2022 exercisable at 0c, expiry 31 August 2028, exercise is subject to share price hurdles 2022 Balance at Beginning of Year Issue Date No. Value No. Value No. Grant Details Exercised Lapsed Other changes Mick Wilkes Andrew Corbett Anthony Wehby Chris Drew Stuart Rechner LTI¹ LTI² LTI3 4 LTI 5 LTI LTI¹ LTI² LTI3 LTI4 LTI5 LTI¹ LTI² 300,000 - 27-Nov-20 14-Dec-21 300,000 186,667 3,421,563 6-Nov-19 3,421,563 1,086,301 27-Nov-20 1,086,301 - 14-Dec-21 815,952 300,000 - 27-Nov-20 14-Dec-21 300,000 69,783 2,257,031 6-Nov-19 2,257,031 696,926 27-Nov-20 - 5-Nov-21 300,000 - 27-Nov-20 14-Dec-21 696,926 685,510 300,000 69,783 $ - 29,867 137,644 56,118 7,970 15,584 11,165 90,797 36,003 7,743 15,584 11,165 8,361,821 10,189,516 419,641 - - - - - - - - - - $ - - - - - - - - - - - - - - - - - Vested and Exercisable at End of Year No. 300,000 186,667 Vested and Unexercisable at End of Year No. - - 3,421,563 - - 300,000 69,783 2,257,031 - - 300,000 69,783 - 1,086,301 815,952 - - - 696,926 685,510 - - 6,904,827 3,284,689 ¹ Unlisted LTI Options issued 27 November 2020 exercisable at 50c - expiry on 30 June 2023 2 Unlisted LTI Options issued 14 December 2021 exercisable at 0c - expiry on 14 December 2024 3 Unlisted LTI Options issued 6 November 2019 exercisable at 1c, expiry 31 July 2023, exercise is subject to operational hurdles 4 Unlisted LTI Options issued 5 August 2020 and 27 November 2020 exercisable at 1c, expiry 31 July 2023, exercise is subject to share price hurdles 5 Unlisted LTI Options issued 5 November 2021 and 14 December 2021 exercisable at 0c, expiry 31 August 2024, exercise is subject to share price hurdles - 23 - - 2,099,018 - - 1,019,940 - 856,888 DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities Performance Rights Holdings of KMP The number of performance rights in the Company held by each KMP of the Group during the 2023 and 2022 reporting periods is as follows: Grant Details Vested Lapsed Other changes 2023 Balance at Beginning of Year Issue Date No. Andrew Corbett STI222 STI233 1,019,940 14-Dec-21 1,019,940 - 6-Dec-22 2,099,018 Value $ 13,259 13,098 No. 178,489 - Value $ 2,320 - 841,451 - No. No. Balance at End of Year Chris Drew* STI222 856,888 5-Nov-21 856,888 11,140 167,093 2,172 689,795 *balance at the date of retirement 1,876,828 3,975,846 37,497 345,582 4,492 1,531,246 - 2,099,018 Grant Details Vested Lapsed Other changes 2022 Balance at Beginning of Year Issue Date No. Andrew Corbett Chris Drew STI211 STI222 STI211 STI222 1,357,877 27-Nov-20 1,357,877 - 14-Dec-21 1,019,940 871,157 27-Nov-20 - 5-Nov-21 871,157 856,888 Value $ 77,786 13,259 49,904 11,140 No. 923,553 - Value $ 52,906 - 434,324 - 636,081 36,438 235,076 - - - No. No. Balance at End of Year 2,229,034 4,105,862 152,089 1,559,634 89,344 669,400 - 1,876,828 1 STI21 Performance Rights issued on 27 November 2020 will vest as follows: (a) Up to 50% of STI Performance Rights will automatically vest if the Comp any ’s June 2021 VWAP is between 120% to 150% of the Company’s June 2020 VWAP; and (b) Up to 50% of the STI Performance Rights will vest, at the Board’s discretion, upon the achievement of operational performance measures before 30 June 2021. All STI Performance Rights that have not vested by 31 July 2021 will automatically lapse and be forfeited. 2 STI22 Performance Rights issued on 5 November 2021 and 14 December 2021 will vest as follows: (a) Up to 40% of STI Performance Rights will automatically vest if the Company’s June 2022 VWAP is between 120% to 150% of the Company’s June 2021 VWAP; and (b) Up to 60% of the STI Performance Rights will vest, at the Board’s discretion, upon the achievement of op erational performance measures before 30 June 2022. All STI Performance Rights that have not vested by 31 August 2022 will automatically lapse and be forfeited. 3 STI23 Performance Rights issued on 6 December 2022 will vest as follows: (a) Up to 40% of STI Performance Rights will automatically vest if the Company’s June 2023 VWAP is between 120% to 150% of the Comp any ’s June 2022 VWAP; and (b) Up to 60% of the STI Performance Rights will vest, at the Board’s discretion, upon the achievement of op erational performance measures before 30 June 2023. All STI Performance Rights that have not vested by 31 August 2023 will automatically lapse and be forfeited. Share holdings of KMP The number of ordinary shares in the Company held by each KMP of the Group during the 2023 and 2022 reporting periods is as follows: 2023 Mick Wilkes Andrew Corbett Anthony Wehby Stuart Rechner Balance at Beginning of Year Granted as Remuneration during the Year Issued on Exercise of Options/Vesting of Performance Rights during the Year Other Net Changes during the Year Balance at End of Year 2,527,452 4,386,129 1,335,696 431,544 8,680,821 - - - - 178,489 - 200,000 - - - 178,489 2,527,452 4,564,618 1,535,696 - - - 431,544 9,059,310 200,000 - 24 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities 2022 Mick Wilkes Andrew Corbett Anthony Wehby Chris Drew Stuart Rechner Balance at Beginning of Year Granted as Remuneration during the Year Issued on Exercise of Options/Vesting of Performance Rights during the Year Other (Net) Changes during the Year Balance at End of Year 2,527,452 3,462,576 1,335,696 2,114,199 431,544 9,871,467 - - - - - - - 923,553 - 636,081 - 1,559,634 - - - - - - 2,527,452 4,386,129 1,335,696 2,750,280 431,544 11,431,101 (i) Loans to key management personnel There were no loans to individuals or members of KMP during the financial year or the previous financial year. (j) Other KMP transactions Subsequent to 30 June 2023, on 14 August 2023 Shareholders approved the grant of up to $300,000 MH Project Goal Performance Options to Andrew Corbett, subject to the following vesting conditions: a. Completion of process plant upgrade commissioning; b. Announcement of commercial production; and c. Commencement of concentrate sales. The earliest date on which the Options may vest is 30 June 2025. The number of options to be provided in respect of the rights will be calculated on the basis of 20-day KSN VWAP immediately prior to the vesting condition being met. All MH Project Options that have not vested by 31 July 2025 will automatically lapse and be forfeited. There have been no other transactions involving equity instruments other than those described above. For details of other transactions with KMP, refer to Note 22 Related Party Transactions END OF AUDITED REMUNERATION REPORT - 25 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities SHARE OPTIONS, PERFORMANCE RIGHTS AND WARRANTS During the 2023 reporting period, the unissued ordinary shares of the Company under option, warrants and Performance rights were as follows: Security Type Grant Date Date of Expiry Exercise Price Held at Issued Exercised 01-Jul-22 06-Nov-19 31-Jul-23 1 cent 6,818,841 31-Jan-20 31-Jan-23 25 cents 600,000 27-Nov-20 31-Jul-23 1 cent 2,707,994 27-Nov-20 31-Jul-23 50 cents 900,000 5-Nov- 21 31-Aug-24 0 cents 2,685,770 14-Dec-21 14-Dec-24 0 cents 326,233 - - - - - - Options Options Options Options Options Options Options Warrants Lapsed / Cancelled - 600,000 116,154 900,000 342,755 - - - - Held at 30-Jun-23 4,561,8101 - 2,591,8402 - 2,343,015 326,2333 5,171,621 25,000,000 6,785,8454 2,257,031 - - - - - - - - 6 Dec 22 31-Aug-28 0 Cents 7 July 22 7-July-27 20 Cents Performance Rights 6-Dec-22 31-Aug- 23 0 Cents 5,171,621 25,000,000 - - - 1 Subsequent to 30 June 2023, 4,561,810 ordinary shares in the Company were issued pursuant to the exercise of options on 26 July 2023 2 Subsequent to 30 June 2023, 2,591,840 unlisted options lapsed on 31 July 2023 3 Subsequent to 30 June 2023, 326,233 ordinary shares in the Company were issued pursuant to the exercise of options on 17 August 2023 4Subsequent to 30 June 2023, 742,826 Performance Rights vested and were converted to ordinary shares and 6,043,019 Performance Rights lapsed During the year ended 30 June 2023, 2,257,031 ordinary shares in the Company were issued pursuant to the exercise of options. During the year ended 30 June 2022, no ordinary shares in the Company were issued pursuant to the exercise of options. Apart from as described in this report, there have been no conversions to, calls of, or subscriptions for ordinary shares of issued or potential ordinary shares since the reporting date and before the completion of these financial statements. No person entitled to exercise an option had or has any right by virtue of the option to participate in any share issue of any other body corporate. PROCEEDINGS ON BEHALF OF THE GROUP No person has applied to any court pursuant to section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings. The Group was not a party to any such proceedings during the year. - 26 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities INDEMNITIES GIVEN AND INSURANCE PREMIUMS PAID TO AUDITORS AND OFFICERS The Company has entered into Deeds of Access, Indemnity and Insurance with each Director. Under these deeds, the Company has undertaken, subject to the restrictions in the Corporations Act, to: a) b) c) d) e) indemnify each Director from certain liabilities incurred from acting in that position under specified circumstances; maintain directors’ and officers’ insurance cover (if available) in favour of each Director whilst that person maintains such office and for seven years after the Director has ceased to be a director; cease to maintain directors’ and officers’ insurance cover in favour of each Director if the Company reasonably determines that the type of coverage is no longer available. If the Company ceases to maintain directors’ and officers’ insurance cover in favour of a Director, then the Company must notify that Director of that event; and provide access to any Company records which are relevant to the Director’s holding of office with the Company, for a period of seven years after the Director has ceased to be a Director. During the year, the Company paid a premium to insure officers of the Group. The officers of the Group covered by the insurance policy include all directors and the company secretary. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else to cause detriment to the Group. Details of the amount of the premium paid in respect of the insurance policies is not disclosed as such disclosure is prohibited under the terms of the contract. The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify any current or former officer or auditor of the Group against a liability incurred as such by an officer or auditor. AUDIT COMMITTEE The Board has established a separate Audit and Risk Management Committee to assist the Board to discharge its corporate governance duties in relation to implementing and maintaining appropriate policies and procedures relating to risk management, financial reporting, external and internal control and auditing. - 27 - DIRECTORS’ REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities NON-AUDIT SERVICES During the year the Company’s auditor provided taxation services to the Company at a total cost of $22,881. AUDITORS’ INDEPENDENCE DECLARATION A copy of the auditor’s independence declaration as required by section 307C of the Corporations Act 2001 is included in this Annual Report. Hall Chadwick continues in office in accordance with section 327 of the Corporations Act 2001. Pursuant to section 298(2) Corporations Act, this Directors’ Report: a) b) c) is made in accordance with a resolution of the Directors; and is dated 14 September 2023 and is signed by Mr Mick Wilkes. Mick Wilkes Non-Executive Chair Sydney, New South Wales 14 September 2023 - 28 - CONSOLIDATED STATEMENT OF PROFIT OR LOSS as at 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities Consolidated Statement of Financial Position Notes Consolidated Group 2023 $ 2022 $ Current assets Cash and cash equivalents Trade and other receivables Available for sale financial assets Inventory Other current assets Total current assets Non-current assets Property, plant and equipment Capitalised exploration expenditure Mine & Resource development expenditure Right of use assets Other non-current assets Total non-current assets Total assets Current liabilities Trade and other payables Interest bearing loan Lease liabilities Employee Provisions Deferred Payables Total current liabilities Non-current liabilities Borrowings Interest bearing loan Lease liabilities Rehabilitation Provision Employee Provisions Deferred Payables Total non-current liabilities Total liabilities Net assets Equity Issued capital Advanced Placement Fund (net) Accumulated losses Share based payment reserve Foreign currency translation reserve Total equity 9 10 11 13 23 23 5 14 15 5 26 5 16 21 18,206,767 1,315,211 269,150 3,030,080 278,752 23,099,960 17,256,109 46,079,669 16,650,984 935,006 7,399,044 88,320,812 111,420,772 7,907,917 42,796 360,334 539,486 9,579,789 18,430,322 8,822,176 - 400,687 7,274,000 38,687 - 16,535,550 34,965,872 76,454,900 5,589,673 3,414,195 562,900 2,338,674 101,887 12,007,329 16,999,182 41,554,898 13,553,356 833,234 3,641,425 76,582,095 88,589,424 6,267,320 39,481 283,986 469,308 - 7,060,095 - 41,272 466,756 7,274,000 59,242 12,557,882 20,399,152 27,459,247 61,130,177 121,170,385 3,867,452 (50,812,957) 2,043,126 186,894 76,454,900 121,051,877 - (60,738,440) 609,952 206,788 61,130,177 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. - 30 - CONSOLIDATED STATEMENT OF PROFIT OR LOSS as at 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities Consolidated Statement of Profit or Loss and Other Comprehensive Income Continuing Operations Sales Silver sales Other income Cost of sales Gross Profit Administration expenses Employee benefits Consultant and legal fees Depreciation expense Amortisation expense Director fees Share based payments expense Other expenses Mark to market financial assets Foreign Exchange Gain/(Loss) Profit/ (Loss) before income tax expense Income tax expense Profit/(Loss) for the year Other comprehensive income/(loss) Other comprehensive income/(loss) – net of tax Total comprehensive loss for the year Basic Profit/(loss) per share (cents) Diluted Profit/(loss) per share (cents) Notes Consolidated Group 2023 $ 2022 $ 2 3 4 8 8 44,753,992 21,238 (20,985,979) 23,789,251 11,903,750 1,497,460 (10,815,833) 2,585,377 (532,142) (7,041,660) (111,996) (3,375,375) (1,075,696) (285,730) (314,996) (777,088) (293,750) (173,591) 9,807,227 - 9,807,227 (1,055,468) (945,751) (550,423) (1,217,484) (81,258) (239,455) (130,942) (15,791) (437,500) 529 (2,088,167) - (2,088,167) (19,894) 9,787,333 41,737 (2,046,430) 2.37 2.13 (0.67) (0.67) The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. - 31 - CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities Consolidated Statement of Changes in Equity Attributable to the shareholders of Kingston Resources Limited Advanced Placement Fund $ Balance at 1 July 2021 Loss for the full year Other comprehensive income Issue of Shares Cost of share issue Share based payments Transfer from Share Based Payment Reserve on vesting/lapsing of securities Additions to reserves Ordinary Shares $ 98,584,828 - - 98,584,828 23,126,061 (797,505) - 138,493 - Balance at 30 June 2022 121,051,877 Balance at 1 July 2022 Profit for the full year Other comprehensive income Issue of Shares T1 Placement monies Cost of share issue Share based payments Transfer from Share Based Payment Reserve on vesting/lapsing of securities Additions to reserves 121,051,877 - - 121,051,877 22,570 - (2,500) - 98,438 - - - - - - 4,500,000 (302,255) (330,293) - - Balance at 30 June 2023 121,170,385 3,867,452 (50,812,957) Accumul ated Losses $ (58,713,1 89) (2,088,16 7) - (60,801,3 56) - - - 62,916 - (60,738,4 40) Foreign Exchange Reserves $ Share Based Payment Reserve $ Total Equity $ 165,051 690,419 40,727,110 - - - - (2,088,167) - 165,051 690,419 38,638,943 - - - - - - 120,942 23,126,061 (797,505) 120,942 (201,409) -- 41,737 - 41,737 206,788 609,952 61,130,177 - - - - - - - - - - (60,738,440) 206,788 609,952 61,130,177 9,807,227 - - - - - 9,807,227 - (50,931,213) 206,788 609,952 70,937,404 - - - - 118,256 - - - - - - - - - 1,649,868 (216,694) 22,570 4,500,000 (304,755) 1,319,575 - (19,894) 186,894 - (19,894) 2,043,126 76,454,900 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. - 32 - CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities Consolidated Statement of Cash Flows Cash flows from operating activities Continued operations Receipts from customers Interest received Government Grants Payments to suppliers and employees Net cash used in operating activities Notes Consolidated Group 2023 $ 2022 $ 44,774,911 3,238 250,000 (29,533,911) 15,494,238 11,660,228 21,122 - (8,697,090) 2,984,260 20 Cash flows from investing activities Payment for exploration and evaluation/Mine Development Payment for bond deposits Payment for acquisition of Mineral Hill Pty Ltd Proceeds from divestment of WesternX Pty Ltd Payment for PPE Proceeds from sale of investment Proceeds from sale of PPE Payment for other non-current assets Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares and options Advanced placement fund Transaction costs related to issue of shares, convertibles, or options Proceeds from borrowings Repayment of borrowings Net cash provided by financing activities Net change in cash and cash equivalents held Cash and cash equivalents at beginning of financial year Effect of movement in exchange rate on cash held Cash and cash equivalents at end of financial year 9 (8,830,323) (3,746,109) (2,915,629) 1,500,000 (2,792,869) - - - (16,784,930) 22,570 4,226,629 (2,500) 9,700,000 (41,230) 13,905,469 12,614,777 5,589,673 2,317 18,206,767 (19,700,402) (3,591,853) (1,236,210) 2,500,000 - 314,972 1,179 (249,426) (21,961,740) 14,230,000 - (697,506) 49,149 (29,916) 13,551,727 (5,425,753) 11,007,936 7,490 5,589,673 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. - 33 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities Notes to the Financial Statements This financial report includes the consolidated financial statements and notes of Kingston Resources Limited and controlled entities (‘Consolidated Group’ or ‘Group’). For the purpose of preparing the consolidated financial statements, the Company is a for-profit entity. Note 1: Statement of Significant Accounting Policies The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The consolidated financial statements are presented in the currency of Australian dollars. Statement of Compliance Compliance with Australian Accounting Standards ensures that the financial statements and notes of Kingston Resources Limited and its controlled entities comply with International Financial Reporting Standards (IFRS). The financial statements were authorised for issue by the directors on 14 September 2023. Basis of Preparation The financial statements have been prepared on an accrual basis and are based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied. Significant Accounting Policies a) Principles of Consolidation The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June 2023. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 30 June. A list of controlled entities is contained in Note 12 to the financial statements. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests. b) Changes in Accounting Policies The Group has considered the implications of new or amended Accounting Standards which have become applicable for the current financial reporting period. c) New Accounting Standards and Interpretations Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2023. - 34 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities d) Income Tax The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income). Current and deferred income tax expense (income) is charged or credited directly to other comprehensive income instead of the profit or loss when the tax relates to items that are credited or charged directly to other comprehensive income. Current tax Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and its intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. Tax consolidation Kingston Resources Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation legislation. Each entity in the Group recognises its own current and deferred tax liabilities. Such taxes are measured using the ‘stand-alone taxpayer’ approach to allocation. Current tax liability (assets) and deferred tax assets arising from unused tax losses and tax credits in the subsidiaries are immediately transferred to the head entity. The Group notified the Australian Taxation Office that it had formed an income tax consolidated group to apply from 1 July 2003. e) Property, Plant and Equipment Each class of property, plant and equipment is carried at cost or fair value less, where applicable any accumulated depreciation and impairment losses. Plant and equipment Plant and equipment are measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets employment and subsequent disposal. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss on the statement of profit or loss and other comprehensive income. Depreciation The depreciable amount of all fixed assets is depreciated using the straight line method commencing from the time the asset is held ready for use. - 35 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities The depreciation rates used for each class of depreciable asset are: Class of Fixed Assets Motor Vehicles Buildings Plant & Equipment Depreciation Rate 20-25% 10-33% 10-50% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. The gains and losses are included in profit or loss in the statement of profit or loss and other comprehensive income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. f) Leases At inception of a contract the Group assesses if the contract contains or is a lease. If there is a lease present and the Group is the lessee, a right-of-use asset and a corresponding lease liability is recognised. However, all contracts that are classified as short-term leases (ie a lease with a remaining lease term of 12 months or less) and leases of low-value assets are recognised as an operating expense on a straight-line basis over the term of the lease. Initially, the lease liability is measured at the present value of the lease payments still to be paid at commencement date. The lease payments are discounted at the interest rate implicit in the lease. If this rate cannot be readily determined, the Group uses the incremental borrowing rate. Lease payments included in the measurement of the lease liability are as follows:       fixed lease payments less any lease incentives; variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; the amount expected to be payable by the lessee under residual value guarantees; the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; lease payments under extension options, if lessee is reasonably certain to exercise the options; and payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease. The right-of-use assets comprise the initial measurement of the corresponding lease liability as mentioned above, any lease payments made at or before the commencement date, as well as any initial direct costs. The subsequent measurement of the right-of-use assets is at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the lease term or useful life of the underlying asset, whichever is the shortest. Where a lease transfers ownership of the underlying asset, or the cost of the right-of-use asset reflects that the Group anticipates to exercise a purchase option, the specific asset is depreciated over the useful life of the underlying asset. g) Fair Value of Assets and Liabilities The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the applicable Accounting Standard. Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (ie unforced) transaction between independent, knowledgeable and willing market participants at the measurement date. - 36 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. To the extent possible, market information is extracted from either the principal market for the asset or liability (ie the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting period (ie the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs). For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use. The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial instruments, by reference to observable market information where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective note to the financial statements. h) Financial Instruments Initial recognition and measurement Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions to the instrument. For financial assets, this is the date that the Group commits itself to either the purchase or sale of the asset (ie trade date accounting is adopted). Financial instruments (except for trade receivables) are initially measured at fair value plus transaction costs, except where the instrument is classified "at fair value through profit or loss", in which case transaction costs are expensed to profit or loss immediately. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted. Trade receivables are initially measured at the transaction price if the trade receivables do not contain a significant financing component or if the practical expedient was applied as specified in AASB 15.63. Classification and subsequent measurement Financial liabilities Financial instruments are subsequently measured at: - - amortised cost; or fair value through profit or loss. A financial liability is measured at fair value through profit and loss if the financial liability is: - - - a contingent consideration of an acquirer in a business combination to which AASB 3: Business Combinations applies; held for trading; or initially designated as at fair value through profit or loss. All other financial liabilities are subsequently measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest expense in profit or loss over the relevant period. The effective interest rate is the internal rate of return of the financial asset or liability. That is, it is the rate that exactly discounts the estimated future cash flows through the expected life of the instrument to the net carrying amount at initial recognition. A financial liability is held for trading if: - it is incurred for the purpose of repurchasing or repaying in the near term; - 37 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities - - part of a portfolio where there is an actual pattern of short-term profit taking; or a derivative financial instrument (except for a derivative that is in a financial guarantee contract or a derivative that is in a effective hedging relationships). Any gains or losses arising on changes in fair value are recognised in profit or loss to the extent that they are not part of a designated hedging relationship are recognised in profit or loss. The change in fair value of the financial liability attributable to changes in the issuer's credit risk is taken to other comprehensive income and are not subsequently reclassified to profit or loss. Instead, they are transferred to retained earnings upon derecognition of the financial liability. If taking the change in credit risk in other comprehensive income enlarges or creates an accounting mismatch, then these gains or losses should be taken to profit or loss rather than other comprehensive income. A financial liability cannot be reclassified. Financial assets Financial assets are subsequently measured at: - - - amortised cost; fair value through other comprehensive income; or fair value through profit or loss. Measurement is on the basis of two primary criteria: - - the contractual cash flow characteristics of the financial asset; and the business model for managing the financial assets. A financial asset that meets the following conditions is subsequently measured at amortised cost: - - the financial asset is managed solely to collect contractual cash flows; and the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates. A financial asset that meets the following conditions is subsequently measured at fair value through other comprehensive income: - - the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates; the business model for managing the financial assets comprises both contractual cash flows collection and the selling of the financial asset. By default, all other financial assets that do not meet the measurement conditions of amortised cost and fair value through other comprehensive income are subsequently measured at fair value through profit or loss. The Group initially designates a financial instrument as measured at fair value through profit or loss if: - - - it eliminates or significantly reduces a measurement or recognition inconsistency (often referred to as “accounting mismatch”) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases; it is in accordance with the documented risk management or investment strategy, and information about the groupings was documented appropriately, so that the performance of the financial liability that was part of a group of financial liabilities or financial assets can be managed and evaluated consistently on a fair value basis; it is a hybrid contract that contains an embedded derivative that significantly modifies the cash flows otherwise required by the contract. - 38 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities The initial designation of the financial instruments to measure at fair value through profit or loss is a one-time option on initial classification and is irrevocable until the financial asset is derecognised. Equity instruments At initial recognition, as long as the equity instrument is not held for trading and not a contingent consideration recognised by an acquirer in a business combination to which AASB 3: Business Combinations applies, the Group made an irrevocable election to measure any subsequent changes in fair value of the equity instruments in other comprehensive income, while the dividend revenue received on underlying equity instruments investment will still be recognised in profit or loss. Regular way purchases and sales of financial assets are recognised and derecognised at settlement date in accordance with the Group's accounting policy. Derecognition Derecognition refers to the removal of a previously recognised financial asset or financial liability from the statement of financial position. Derecognition of financial liabilities A liability is derecognised when it is extinguished (ie when the obligation in the contract is discharged, cancelled or expires). An exchange of an existing financial liability for a new one with substantially modified terms, or a substantial modification to the terms of a financial liability is treated as an extinguishment of the existing liability and recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. Derecognition of financial assets A financial asset is derecognised when the holder's contractual rights to its cash flows expires, or the asset is transferred in such a way that all the risks and rewards of ownership are substantially transferred. All of the following criteria need to be satisfied for derecognition of financial asset: - - - the right to receive cash flows from the asset has expired or been transferred; all risk and rewards of ownership of the asset have been substantially transferred; and the Group no longer controls the asset (ie the Group has no practical ability to make a unilateral decision to sell the asset to a third party). On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. On derecognition of a debt instrument classified as at fair value through other comprehensive income, the cumulative gain or loss previously accumulated in the investment revaluation reserve is reclassified to profit or loss. On derecognition of an investment in equity which was elected to be classified under fair value through other comprehensive income, the cumulative gain or loss previously accumulated in the investment revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings. Impairment The Group recognises a loss allowance for expected credit losses on: - - - - - financial assets that are measured at amortised cost or fair value through other comprehensive income; lease receivables; contract assets (eg amounts due from customers under construction contracts); loan commitments that are not measured at fair value through profit or loss; and financial guarantee contracts that are not measured at fair value through profit or loss. Loss allowance is not recognised for: - financial assets measured at fair value through profit or loss; or - 39 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities - equity instruments measured at fair value through other comprehensive income. Expected credit losses are the probability-weighted estimate of credit losses over the expected life of a financial instrument. A credit loss is the difference between all contractual cash flows that are due and all cash flows expected to be received, all discounted at the original effective interest rate of the financial instrument. The Group uses the general approach to impairment, as applicable under AASB 9: Financial Instruments: Under the general approach, at each reporting period, the Group assesses whether the financial instruments are credit-impaired, and if: - - the credit risk of the financial instrument has increased significantly since initial recognition, the Group measures the loss allowance of the financial instruments at an amount equal to the lifetime expected credit losses; or there is no significant increase in credit risk since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. Recognition of expected credit losses in financial statements At each reporting date, the Group recognises the movement in the loss allowance as an impairment gain or loss in the statement of profit or loss and other comprehensive income. The carrying amount of financial assets measured at amortised cost includes the loss allowance relating to that asset. Assets measured at fair value through other comprehensive income are recognised at fair value, with changes in fair value recognised in other comprehensive income. Amounts in relation to change in credit risk are transferred from other comprehensive income to profit or loss at every reporting period. For financial assets that are unrecognised (eg loan commitments yet to be drawn, financial guarantees), a provision for loss allowance is created in the statement of financial position to recognise the loss allowance. i) Impairment of Non-Financial Assets At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of profit or loss and other comprehensive income. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. j) Foreign Currency Transactions and Balances Functional and presentation currency The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency. Transaction and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity as a qualifying cash flow or net investment hedge in which case they would be recognised in other comprehensive income. k) Employee Benefits Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to reporting date. Employee benefits that are expected to be settled wholly within one year have been measured at the amounts expected to be paid when the liability is settled plus related on costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. - 40 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities Equity-settled compensation The Group operates a share-based compensation plan which includes a share option arrangement. The bonus element over the exercise price of the employee’s services rendered in exchange for the grant of options is recognised as an expense in the statement of profit or loss and other comprehensive income, with a corresponding increase to an equity account. The total amount to be expensed over the vesting period is determined by reference to the fair value of the shares of the options granted. The fair value of options is ascertained using a Black-Scholes pricing model which incorporates all market vesting conditions, the fair value of Performance Rights is ascertained using the Monte Carlo method. l) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. m) Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. n) Revenue and Other Income Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Research and development credits are treated as Other Income and recognised to the extent that the related expenditure has been expensed in the Statement of Profit and Loss and Other Comprehensive Income. Research and development credits that pertain to expenditure on any capitalised amounts remaining on the Statement of Financial Position are deferred accordingly to be recognised in-line with expensing of those items. All revenue is stated net of the amount of goods and services tax (GST). o) Mine Development Mine development expenditures incurred are capitalised in respect of each identifiable area of interest where there is a reasonable assessment of existence of recoverable reserves. These costs are only capitalised to the extent that they are expected to be realised through production and sale of mineral resources identified. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to capitalise costs in relation to that area of interest. p) Exploration Expenditure Exploration, evaluation and development expenditures incurred are capitalised in respect of each identifiable area of interest. These costs are only capitalised to the extent that they are expected to be recovered through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to capitalise costs in relation to that area of interest. Costs of site restoration are provided over the life of the project from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with local laws and regulations and clauses of the permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis. Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations - 41 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site. q) 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 statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. r) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. s) Going Concern The consolidated entity has earned an operating profit of $9,807,227 (2022:Loss $2,088,167) and positive operating cash flows of $15,494,238 (2022 $2,984,260) for the year ended 30 June 2023. The consolidated entity’s net current asset position as at 30 June 2023 was $4,669,638 (2022: $4,947,234) including $18,206,767 in cash (2022: $5,589,673). During the year the following significant equity and debt raisings were made:  On 7 July 2022, the Company secured a two-tranche $10m debt facility with PURE asset management. $5 million was drawn immediately under Tranche 1 of the facility under a 4-year secured loan facility with an interest rate of 9.90% per annum with 25,000,000 detached warrant shares issued at an exercise price of $0.20. An establishment fee of $150,000 was recognised as a reduction in proceeds.  On 29 June 2023, , $5million was drawn under Tranche 2 of the facility under a 4-year secured loan facility issued with an interest rate of 9.90% per annum with 35,714,286 detached warrant shares issued at an exercise price of $0.14. An establishment fee of $150,000 was recognised as a reduction in proceeds. On 27 June 2023,the Company announced its intention to undertake a two Tranche Share Placement offer raising a total of $5,500,000. On 30 June 2023, advanced placement monies totalling $4,500,000 were received under Tranche 1 of the Placement offer. On 3 July 2023, 52,941,176 Tranche 1 Placement shares were issued at $0.085.On 17 August 2023, Tranche 1 of the Placement offer was completed upon issuing 26,470,588 unlisted attaching options expiring on 31 July 2025 with an exercise price of $0.14.  For details on the remaining shares issued during the year see Note 16. The entity has planned to use these funds largely on Life of Mine exploration and development activities, the expenditure of which can be varied and applied discretionarily. The Group’s cash balance of $18,206,767 as at 30 June 2023 leaves it with sufficient funding to continue to meet operational expenditure requirements, including minimum exploration commitments across its tenement portfolio. Nevertheless, the nature of an exploration and development company is to have negative cash flow from operations and investing activities, and as such the Company may need to raise equity from time to time as successfully demonstrated most recently in November 2021 and February 2022. If the Group is unsuccessful in raising capital, a material uncertainty exists, that may cast significant doubt on the Group’s ability as a going concern and its ability to recover assets, and discharge liabilities in the normal course of business and at the amount shown in the financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern. Taking into account the current cash reserves of the Company, the Directors are confident the Company has adequate resources to continue in its main business activity for the foreseeable future. As a result, the financial statements have been prepared on the basis of going concern which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business and at the amounts stated in the financial report. - 42 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities t) Joint arrangements and associates Associates are those entities over which the Group is able to exert significant influence but which are not subsidiaries. A joint venture is an arrangement that the Group controls jointly with one or more other investors, and over which the Group has rights to a share of the arrangement’s net assets rather than direct rights to underlying assets and obligations for underlying liabilities. A joint arrangement in which the Group has direct rights to underlying assets and obligations for underlying liabilities is classified as a joint operation. Investments in associates and joint ventures are accounted for using the equity method. Interests in joint operations are accounted for by recognising the Group’s assets (including its share of any assets held jointly), its liabilities (including its share of any liabilities incurred jointly), its revenue from the sale of its share of the output arising from the joint operation, its share of the revenue from the sale of the output by the joint operation and its expenses (including its share of any expenses incurred jointly). Any goodwill or fair value adjustment attributable to the Group’s share in the associate or joint venture is not recognised separately and is included in the amount recognised as investment. The carrying amount of the investment in associates and joint ventures is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate and joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group. Unrealised gains and losses on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment. Critical Accounting Estimates and Judgements The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. Key estimates – Impairment The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Share-based payment transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by management review using the Black Scholes, Monte Carlo, or an agreed fair value method. The relevant assumptions are detailed in Note 21. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity. Assessment of mine life of assets The Assessment of mine life of assets has been based on Life of Mine Plan. In addition, condition of the assets is assessed at least once per year and considered against the remaining mine life. Adjustments to mine lives are made when considered necessary. Estimation of useful lives of assets The estimation of the useful lives of assets has been based on historical experience and manufacturers’ warranties (for plant and equipment). In addition, the condition of the assets is assessed at least once per year and considered against the remaining useful life. Adjustments to useful lives are made when considered necessary. Exploration and evaluation of expenditure Costs arising from exploration and evaluation activities are carried forward provided the rights to tenure of the area of the interest are current and such costs are expected to be recouped through successful development, or by sale, or where exploration and evaluation activities have not, at reporting date, reached a stage to allow a reasonable assessment regarding the existence of economically recoverable reserves. Costs carried forward in respect of an area of interest that is abandoned are written off in the year in which the decision to abandon is made. The carrying value of the capitalised exploration and evaluation expenditure is assessed for impairment whenever facts and circumstances suggest that the - 43 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities carrying amount of the asset may exceed its recoverable amount. Such capitalised exploration expenditure is carried at the end of the reporting period at $46,079,669 (see Note 23). The Group has applied AASB 6 Exploration for and Evaluation of Mineral Resources. Consolidated Group 2023 $ 2022 $ 3,238 - - - 18,000 21,238 21,122 82,184 1,392,976 1,178 - 1,497,460 Consolidated Group 2023 $ 2022 $ (225,107) (86,670) (3,063,598) (3,375,375) (78,013) (37,751) (1,101,720) (1,217,484) 2. OTHER INCOME Other income Interest income Profit on sale of financial assets Profit on disposal of mining assets Proceeds from sale of motor vehicle Rental income Total other income 3. DEPRECIATION Depreciation of: - right of use asset - building - plant and equipment Total depreciation and amortisation 4. INCOME TAX (a) Income tax recognised in profit and loss The prima facie tax expense (benefit) on operating result is reconciled to the income tax provided in the statement of profit or loss and other comprehensive income as follows: Consolidated Group 2023 $ 2022 $ Accounting profit/(loss) before income tax 9,807,227 (2,088,146) Income tax benefit calculated at 25% Non-deductible expenses Utilisation of tax losses previously not recognised Tax losses/temporary difference not brought into account Income tax expense (benefit) (2,451,807) 143,455 2,308,352 - (522,037) 350,381 - 171,656 - - The tax rate used in the above reconciliation is the corporate tax rate of 25% (FY22 25%) payable by Australian corporate entities on taxable profits under Australian tax law. - 44 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities (b) Analysis of deferred tax asset No deferred tax assets have been recognised other than to offset deferred tax liabilities, as it is currently not probable that future taxable profit will be available to realise the asset. The potential deferred tax asset on carry forward losses amounts to $6,296,780 (2022: $4,104,549). Tax Consolidation Effective 1 July 2003, for the purposes of income taxation, the Company and its 100% wholly-owned subsidiaries formed a tax consolidated group; the head entity of the tax consolidated group is Kingston Resources Limited. 5. RIGHT OF USE ASSETS The Group’s Right of use Assets include buildings (in the form of an office lease), plant and equipment and motor vehicles. Consolidated Group 30 June 2023 $ 30 June 2022 $ 336,145 (183,312) 152,833 336,145 (95,978) 240,167 361,505 - 262,978 (326,654) 297,829 518,500 - 63,901 (98,057) 484,344 935,006 360,334 400,687 761,021 - 180,044 181,461 (58,445) 303,060 200,786 109,877 207,837 (228,493) 290,007 833,234 283,986 466,756 750,742 a. Right of use assets Leased Buildings Accumulated Amortisation Net Carrying Value Leased Motor Vehicles Opening Balance Addition through business combination Additions Accumulated Amortisation Net Carrying Value Leased Equipment Opening Balance Addition through business combination Additions Accumulated Amortisation Net Carrying Value Total Net Carrying Value b. Lease liabilities Current Non-current - 45 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities 6. INTERESTS OF KEY MANAGEMENT PERSONNEL (a) Key management personnel compensation Key management personnel (KMP) remuneration has been included in the Remuneration Report section of the Directors’ Report. The totals of remuneration paid to KMP of the Group during the 2023 and 2022 reporting periods are as follows. Short-term employee benefits Post-employment benefits Equity-settled share-based payments Total Consolidated Group 2023 $ 2022 $ 1,037,447 61,375 40,505 1,139,327 928,982 67,523 92,309 1,088,814 Consolidated Group 2023 $ 2022 $ 7. AUDITOR REMUNERATION Remuneration of the auditor of the Company for: - auditing or reviewing the financial statements - non-audit services Total 81,456 22,881 104,337 44,572 27,327 71,899 8. PROFIT/(LOSS) PER SHARE (a) Basic profit/(loss) per share (cents per share) (b) Diluted profit/(loss) per share (cents per share) (c) Weighted average number of ordinary shares on issue used in the calculation of basic profit/(loss) per share (d) Weighted average number of ordinary shares on issue used in the calculation of diluted profit/(loss) per share Profit/(Loss) used in calculation (d) Consolidated Group 2023 $ 2022 $ 2.37 2.13 413,256,806 (0.67) (0.67) 313,665,434 460,037,170 313,665,434 $9,807,227 ($2,088,167) Consolidated Group 2023 $ 2022 $ 9. CASH AND CASH EQUIVALENTS Cash at bank and in hand Total 18,206,767 18,206,767 5,589,673 5,589,673 - 46 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities Cash at bank earns interest at floating rates based on daily deposit rates. The carrying amounts of cash and cash equivalents represent fair value. Consolidated Group 2023 $ 2022 $ 10. TRADE AND OTHER RECEIVABLES Current Deferred receivable – Divestment of WesternX Pty Ltd Other receivables Total current trade and other receivables - 1,315,211 1,315,211 1,500,000 1,914,195 3,414,195 The Group has no significant concentration of credit risk with respect to any single counter party or group of counter parties other than those receivables specifically provided for as mentioned within this note. The class of assets described as Other Receivables is considered to be the main source of credit risk related to the Group. During the year, the Group took up a provision equivalent to 66.66% of total GST receivable for Gallipoli Exploration (PNG) Ltd and WCB PNG Exploration Ltd totalling $647,599. The provision increased the capitalised expenditure for Misima gold project by $647,599. The Group applies the AASB 9 general approach to measuring expected credit losses, which permits the use of the lifetime expected loss provision for all other receivables. Under the general approach a nil expected loss rate was applied to all receivables as at 30 June 2023 and 30 June 2022. 11. FINANCIAL ASSETS Financial assets at fair value through profit and loss: At fair value Shares in listed entities Options in listed entities Consolidated Group 2023 $ 2022 $ 262,900 6,250 269,150 500,400 62,500 562,900 Financial assets at fair value through profit and loss consist of investments in ordinary shares and listed options. (i) Listed shares - The fair value of listed shares has been determined directly by reference to published price quotations in an active market. (ii) Listed options - The fair value of listed options has been determined directly by reference to published price quotations in an active market. 12. CONTROLLED ENTITIES Name Country of Incorporation Principal Activity Beneficial Percentage Interest Held By Economic Entity 2022 % 2023 % Slipstream WANT Pty Ltd Universal Rare Earths Pty Ltd Fleurieu Mines Pty Ltd Centex Resources Ltd (formerly U Energy Pty Ltd) WCB Pacific Pty Limited WCB Australia Pty Limited Mineral Hill Pty Ltd WCB PNG Limited Australia Australia Australia Australia Australia Australia Australia Mineral Exploration Mineral exploration Mineral exploration Mineral exploration Mineral exploration Mineral exploration Mineral exploration Papua New Guinea Mineral exploration 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 - 47 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities WCB PNG Exploration Limited Papua New Guinea Mineral exploration Gallipoli Exploration (PNG) Limited Papua New Guinea Mineral exploration 100 100 100 100 Consolidated Group 2023 $ 2022 $ 13. PROPERTY, PLANT AND EQUIPMENT Motor vehicles: Opening balance Exchange rate adjustment Additions Disposals Closing Balance Accumulated depreciation Opening balance Exchange rate adjustment Depreciation for the year Closing balance Net Book Value – Motor Vehicles Buildings: Opening balance Addition through business combination Exchange rate adjustment Additions Disposals Closing Balance Accumulated depreciation Opening balance Addition through business combination Exchange rate adjustment Depreciation for the year Closing balance Net Book Value – Buildings Plant & Equipment: Opening balance Addition through business combination Exchange rate adjustment Additions Disposals Closing Balance Accumulated depreciation Opening balance Addition through business combination Exchange rate adjustment Depreciation for the year Closing balance Net Book Value – Plant & Equipment 226,352 - - - 226,352 135,900 - 40,481 176,381 49,971 895,222 - - 14,465 - 909,687 333,015 - - 86,670 419,685 490,002 20,265,787 - - 3,433,211 - 23,698,998 3,919,264 - - 3,063,598 6,982,862 16,716,136 177,203 - 49,149 - 226,352 97,987 - 37,913 135,900 90,452 - 819,700 - 75,522 - 895,222 - 295,265 - 37,750 333,015 562,207 - 7,854,425 - 12,411,362 - 20,265,787 - 2,817,544 - 1,101,720 3,919,264 16,346,523 Net Book Value – Property, plant and Equipment 17,256,109 16,999,182 - 48 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities 14. OTHER NON CURRENT ASSETS Environmental bonds Other security deposits Total 15. TRADE AND OTHER PAYABLES Trade payables – unsecured Other payables and accruals Total Consolidated Group 2023 $ 2022 $ 7,274,000 125,044 7,399,044 3,477,000 164,425 3,641,425 Consolidated Group 2023 $ 2022 $ 5,234,297 2,673,620 7,907,917 3,956,907 2,310,413 6,267,320 Given the short term nature of these amounts, their carrying value approximates their fair value. - 49 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities ISSUED CAPITAL 16. (a) Movements in contributed equity for the year Balance at the beginning of the year - 5 Aug 2022 - 5 Dec 2022 Shares issued during the previous financial year: - 30 Jul 2021 - 24 Nov 2021 - 25 Nov 2021 - 25 Nov 2021 - 17 Jan 2022 - 4 Feb 2022 Less capital raising costs Total contributed equity Consolidated Group 30 June 2023 30 June 2022 Number of Fully Paid Ordinary Shares $ Number of Fully Paid Ordinary Shares $ 412,769,439 627,186 2,257,031 121,051,877 7,641 113,367 283,736,946 98,584,828 2,417,611 70,000,000 500,000 50,000 54,914,882 1,150,000 138,494 14,000,000 100,000 10,000 8,786,061 230,000 415,653,656 (2,500) 121,170,385 412,769,439 (797,506) 121,051,877 During the period the Company issued share capital amounting to 2,884,217 fully paid ordinary shares of no par value. At shareholders’ meetings each fully paid ordinary share is entitled to one vote when a poll is called. On 17 January 2022, the Company issued 54,914,882 shares at $0.20 to Quintana Resources Holdings LP in part consideration for the acquisition of Mineral Hill Pty Ltd. On 4 February 2022, the Company completed a placement of 1,150,000 shares at $0.20 purchased under a Share Purchase Plan announced 18 November 2021, raising $230,000. On 27 June 2023, the Company announced its intention to undertake a two Tranche Share Placement offer raising a total of $5,500,000. On 30 June 2023, advanced placement monies totalling $4,500,000 was received under Tranche 1 of the Placement offer. On 3 July 2023, 52,941,176 Tranche 1 Placement shares were issued at $0.085.On 17 August 2023, Tranche 1 of the Placement offer was completed upon issuing 26,245,576 unlisted attaching options expiring on 31 July 2025 with an exercise price of $0.14 on the basis of one option for every two Placement Share. During the financial year, 2,257,031 fully paid ordinary shares were issued as a result of the exercise of options, and 627,186 shares were issued as a result of Performance Rights vesting. - 50 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities Since the end of the financial year end, no ordinary shares have been issued as a result of the exercise of options, however 627,186 shares were issued as a result of Performance Rights vesting. For more details on issues subsequent to the end of financial year, refer Subsequent Events note. (b) Options (i) For information relating to the Company’s employee and consultant option scheme, including details of options issued, exercised and lapsed during the financial year and the options outstanding at year end, refer to Note 21 Share-based Payments. (ii) For information relating to share options issued to key management personnel during the financial year, refer to the Directors’ Report. (c) Capital Management Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern. The Group’s debt and equity capital includes ordinary share capital and financial liabilities, supported by financial assets. There are no externally imposed capital requirements. Management effectively manages the Group’s capital by assessing its financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debts levels, distributions to shareholders and share issues. There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year. 17. RESERVES (a) Share-based Payment Reserve The share-based payment reserve records items recognised as expenses on valuation of unlisted employee and consultant incentive scheme options and performance rights. Refer to Note 21 Share-based Payments for further details. 18. COMMITMENTS AND CONTINGENCIES The Group has certain obligations to perform minimum exploration work and to expend minimum amounts of money on such work on mining tenements. These obligations may be varied from time to time subject to approval and are expected to be fulfilled in the normal course of the operations of the Group. These commitments have not been provided for in the financial report. Due to the nature of the Group’s operations in exploring and evaluating areas of interest, it is difficult to accurately forecast the nature and amount of future expenditure beyond the next year. Expenditure may be reduced by seeking exemption from individual commitments, by relinquishing tenure or by new joint venture arrangements. Expenditure may be increased when new tenements are granted or joint venture agreements amended. The minimum expenditure commitment on currently held tenements is: Exploration commitment Consolidated Group 2023 $ 2023 $ Not later than one year Later than one year and less than five years 1,465,151 3,161,458 200,000 - During the prior year, with the acquisition of Mineral Hill Pty, the Group had a commitment to increase the Rehabilitation Security Bond as follows; - 51 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities Rehabilitation Security Bond commitment Consolidated Group 2023 $ 2022 $ Not later than one year Later than one year and less than five years - - 3,770,000 - On 4 July 2022, the Company increased its the Rehabilitation Security Bond by $2,000,000, to a total of $5,477,000, reducing the remaining commitment to $1,770,000. On 28 June 2023, the Company increased and fulfilled its final installment of the Rehabilitation Security Bond by paying $1,770,000, to a total of $7,247,000. The Group has finance leases between two and five years for motor vehicles and equipment purchased for the Mineral Hill mine. The future minimum lease payments are as follows: Finance lease commitment Consolidated Group 2023 $ 2022 $ Not later than one year Later than one year and less than five years 268,317 327,276 270,408 311,151 The Group is a party to rental leases for its office premises. The future minimum lease payments are as follows: Operating lease commitment Consolidated Group 2023 $ 2022 $ Not later than one year Later than one year and less than five years 86,342 79,086 78,891 165,428 19. SEGMENT REPORTING For the year ended 30 June 2023, the Group has two segments, being mining and exploration of minerals in Australia and Papua New Guinea. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period in that geographic region. External revenue Other revenue Interest income Total revenue EBITDA Depreciation and amortisation Total comprehensive income Reportable segment asset Reportable segment liability Net assets Australia 44,753,992 18,000 3,238 44,775,230 15,052,690 (4,451,071) 9,816,707 PNG - - - - (20,543) - (29,374) Total 44,753,992 18,000 3,238 44,775,230 15,032,147 (4,451,071) 9,787,333 69,328,702 (34,743,120) 34,585,582 42,092,070 (222,752) 41,869,318 111,420,772 (34,965,872) 76,454,900 - 52 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities 20. CASH FLOW INFORMATION (a) Reconciliation to Statement of Cash Flows For the purposes of the Statement of Cash Flows, cash and cash equivalents are as reported above. Reconciliation of Loss from Ordinary Activities to Net Cash Flows from Operating Activities Profit/(Loss) for the year Depreciation and amortisation Share-based payments Revaluation of assets at FVTPL Interest Paid Unrealised fx (gain)/losses Changes in assets and liabilities Decrease/(increase) in trade and other receivables Decrease/(increase) in prepayments Decrease/(increase) in inventory Decrease/(increase) in other non-current assets (Decrease) in trade payables (Decrease)/increase in provisions (Decrease)/increase in other payables and accruals Net cash flows from operating activities Consolidated Group 2023 $ 2022 $ 9,807,225 4,451,071 314,996 293,750 647,500 13,980 (47,054) (176,891) (55,306) (1,061,094) 1,124,059 33,319 148,683 ) 15,494,238 (2,088,167) 1,217,484 130,942 437,500 - (529) 19,371 269,718 - (10,553) 1,553,754 176,856 1,277,884 2,984,260 21. SHARE-BASED PAYMENTS (i) Share options and performance rights are granted to employees and directors of the Company, or any Associated Body Corporate of the Company. The following employee share-based payment arrangements existed at 30 June 2023. Share options: Date of grant Share-based payment 6 Nov 2019 LTI Options1 27 Nov 2020 LTI Options1 5 Nov 2021 LTI Options2 14 Dec 2021 LTI Options2 17 Jun 22 LTI Options3 6 Dec 2022 LTI Options3 14 Dec 21 Service Fee Options3 Number Outstanding 4,561,810 Value 183,515 Share Price on Issue 0.170 Exercise Price 0.010 Expiry 31 Jul 2023 2,591,840 133,894 0.295 0.010 31 July 2023 1,377,981 815,952 149,082 5,171,621 326,233 67,640 40,052 7,318 84,407 52,197 0.205 0.165 0.094 0.105 0.165 0.00 0.00 0.00 0.00 0.00 31 August 2024 31 August 2024 31 August 2024 31 August 2028 14 December 2024 1 LTI Performance Options vest upon delivery of operational performance hurdles 2 LTI Performance Options vest based on Total Shareholder Return relative to peer group companies prior to expiry 3 Options vested upon issue - 53 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities Performance Rights: Date of grant 6 Dec 2022 Share-based payment STI Performance Rights1 Number granted 6,785,845 Value 42,344 Expiry 31 August 2023 1 STI Performance Rights issued on 12 December 2022 will vest as follows: (a) Up to 40% of STI Performance Rights will automatically vest if the Company’s June 2023 VWAP is between 120% to 150% of the Company’s June 2022 VWAP; and (b) Up to 60% of the STI Performance Rights will vest, at the Board’s discretion, upon the achievement of operational performance measures before 30 June 2023. Of these STI Performance Rights, those that have not vested by 31 August 2023 will automatically lapse and be forfeited. The principal assumptions used in estimating the value of the STI and LTI options include volatility of 55% determined with reference to the Company’s historic volatility and the volatility of peer group companies, and a risk free interest rate of 1.0%. The number and weighted average exercise prices of share options granted to employees and directors is as follows: Outstanding at beginning of period Expired during the period Issued during the period Outstanding at year-end Exercisable at year-end 2023 2022 Number of Options 13,438,838 (3,615,940) 5,171,621 14,994,519 4,888,043 Weighted Average Exercise Price $ 0.05 0.13 0.00 0.00 0.01 Number of Options 10,487,675 (112,310) 3,063,472 13,438,837 1,226,233 Weighted Average Exercise Price $ 0.01 0.01 0.00 0.05 0.37 (ii) Other share-based payments granted to third parties. Ordinary shares: There was nil share based payments to third parties during the year. Share options: Date of grant Share-based payment 31 Jan 2020 Advisory fees Number granted 600,000 Value $28,051 Share price on issue $0.175 Exercise Price $0.25 Expiry 31 Jan 2023 On 31 January 2023, 600,000 options granted as consideration for advisory fees expired. The Options were valued at $28,051. There were no options exercised during the year ended 30 June 2023 (2022: nil). 22. RELATED PARTY TRANSACTIONS (a) Key Management Personnel Key management personnel compensation has been included in the Remuneration Report section of the Directors’ Report and Note 6 Interests of Key Management Personnel. - 54 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities (b) Directors’ Interests As at 30 June 2023 the relevant interests of each of the Directors, held either directly or indirectly through their a Director Mick Wilkes 1 Andrew Corbett 2 Anthony Wehby3 Stuart Rechner 4 Fully Paid Ordinary Shares (KSN) 2,527,452 4,564,618 1,535,696 431,544 Unlisted LTI Options 186.667 7,003,031 69,783 69,783 1 Mick Wilkes holds a relevant interest in the specified number of securities as a result of being a director of Eligius Holdings Pty Limited as trustee of Eligius Holdings Pty Ltd ATF, who is the registered holder of those securities. 2 Andrew Corbett holds a relevant interest in the specified number of securities as a result of being a director of Milamar Group Pty Ltd as trustee of Milamar Family Trust, who is the registered holder of those securities 3 Anthony Wehby holds a relevant interest in Options as he is a related party to Mrs Rosemary Wehby, who is the registered holder of the options. He has a relevant interest in the shares as the registered holder 4Stuart Rechner holds a relevant interest in the specified number of securities as a result of being a director of Osmium Holdings Pty Limited as trustee of Ferndale Superannuation Fund, who is the registered holder of those securities ssociates, in the securities of Kingston was as follows: 23. MINE/RESOURCE DEVELOPMENT AND EXPLORATION At 1 July 2022 Cost Accumulated amortisation Net Carrying Amount Year ended 30 June 2023 Carrying amount at the beginning of the period Amounts acquired in business combinations Additions Amortisation Foreign exchange differences Carrying amount at the end of the year At 30 June 2023 Cost Accumulated amortisation Net Carrying Amount Mine/Resource development expenditure $ Consolidated Group Capitalised exploration expenditure $ Total $ 13,634,614 (81,258) 13,553,356 41,554,898 - 41,554,898 55,189,512 (81,258) 55,108,254 13,553,356 - 4,173,324 (1,075,696) - 16,650,984 41,554,898 - 4,647,585 - (122,814) 46,079,669 55,108,254 - 8,820,909 (1,075,696) (122,814) 62,730,653 17,807,938 (1,156,954) 16,650,984 46,079,669 - 46,079,669 63,887,607 (1,156,954) 62,730,653 An impairment assessment was undertaken of the Group’s exploration assets held at the end of FY23. Nothing has come to the Company’s attention to indicate that amounts recorded as Capitalised Exploration Expenditure as at 30 June 2023 are not reasonable, require impairment, or do not meet the requirements of AASB 6. Of the total $46,079,669 capitalised exploration expenditure, $42,092,069 is attributable to the Misima Gold Project, 3,987,600 is attributable to Mineral Hill tenements. - 55 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities 24. FINANCIAL INSTRUMENTS The Group’s principal financial instruments comprise receivables, payables, FVTPL financial assets, cash and short-term deposits and a commercial loan. The main risks arising from the Group’s financial instruments are interest rate risk, credit risk and liquidity risk. The Company uses different methods to measure and manage different types of risks to which it is exposed. These included monitoring levels of exposure to interest rate and market forecasts for interest rate. Ageing analyses and monitoring of specific credit allowances are undertaken to manage credit risk. Liquidity risk is monitored through the development of future rolling cash flow forecasts. The Board reviews and agrees policies for managing each of these risks which are summarised below. (a) Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. Credit risk arises from cash and cash equivalents, trade and other receivables and FVTPL financial assets. The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount net of any provisions for these assets as disclosed in the statement of financial position and notes to the financial statements. The Group has adopted a policy of only dealing with creditworthy counter parties as a means of mitigating the risk of financial loss from defaults. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit evaluations including an assessment of their independent credit rating, financial position, past experience and industry reputation. Risk limits are set for each individual customer in accordance with parameters set by the Board. These risk limits are regulatory monitored. The Group does not require collateral in respect of financial assets. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. At the reporting date there were no significant concentrations of credit risk. Refer to Note 10 for further information on impairment of financial assets that are past due. (b) Liquidity risk Ultimate responsibility for liquidity risk management rests with the Board of Directors, who have built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long- term funding and liquidity management. The Group manages the liquidity risk by maintaining adequate cash reserves, and by continuously monitoring forecast and actual cash flows while matching the maturity profiles of financial assets and liabilities. There are no material financial assets or financial liabilities that are subject to liquidity risk as at 30 June 2023 or 30 June 2022. (c) Interest rate risk The Group’s current exposure to the risk of changes in market interest rates relate primarily to cash assets rates. The Group does not account for fixed rate financial assets and liabilities at fair value through profit or loss. The following table illustrates sensitivities to the Group’s exposures to changes in interest rates. The table indicates the impact on how profit / (loss) and equity values reported at reporting date would have been affected by changes in the relevant risk variable that management considers to be reasonably possible. The Group’s main interest rate risk arises from cash and cash equivalents with variable interest rates. - 56 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities Financial assets Cash and cash equivalents Impact on post tax profit / (loss) and equity + 2% in interest rate - 2% in interest rate (d) Foreign currency risk Consolidated Group 2023 $ 2022 $ 18,206,767 18,206,767 364,135 (364,135) 5,589,673 5,589,673 111,793 (111,793) The Group is not exposed to significant financial risks from movements in foreign exchange rates. The Group does not participate in any type of hedging transactions or derivatives. Therefore, no sensitivity analysis is required. (e) Price risk The Group’s exposure to commodity and equity securities price risk is minimal. Equity securities price risk arises from investments in equity securities. The price risk for both listed and unlisted securities is immaterial in terms of a possible impact on profit and loss or total equity and as such a sensitivity analysis has not been completed. (f) Fair value For the financial assets and liabilities disclosed in this note, the fair value approximates their carrying value. The aggregate fair values and carrying amounts of financial assets and financial liabilities are disclosed in the statement of financial position and in the notes to and forming part of the financial statements. 2023 2022 Footnote Net Carrying Value $ Fair Value $ Net Carrying Value $ Fair Value $ Consolidated Group Financial assets Cash and cash equivalents Trade and other receivables Financial assets at fair value Total financial assets Financial liabilities Trade and other payables Lease liabilities Deferred Payables Interest bearing liabilities Total financial liabilities (i) (i) (ii) (i) 18,206,767 1,315,211 269,150 19,791,128 18,206,767 1,315,211 269,150 19,791,128 5,589,673 3,414,195 562,900 9,566,768 5,589,673 3,414,195 562,900 9,566,768 7,907,918 761,021 7,907,918 761,021 9,579,789 9,579,789 8,864,972 27,113,700 8,864,972 27,113,700 6,267,320 750,742 12,557,882 80,753 19,656,697 6,267,320 750,742 12,557,882 80,753 19,656,697 The fair values disclosed in the above table have been determined based on the following methodologies: (i) Cash and cash equivalents, trade and other receivables and trade and other payables are short-term instruments in nature whose carrying value is equivalent to fair value. Trade and other payables exclude amounts provided for annual leave, which is not considered a financial instrument. (ii) For financial assets at fair value through profit and loss, closing quoted bid prices at the end of the reporting period are used. These listed investments are included within level 1 of the hierarchy of financial assets. (iii) Lease liabilities and Interest bearing liabilities are carried at amortised cost. - 57 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities 25. PARENT COMPANY INFORMATION Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Equity Issued capital Accumulated losses Share-based payments reserve Total equity Financial performance Loss for the year Other comprehensive income / (loss) Total comprehensive loss Parent Entity 2023 $ 2022 $ 11,429,755 71,246,534 82,676,289 4,109,147 71,968,847 76,077,994 10,519,933 8,930,808 19,450,741 2,503,444 12,758,530 15,261,974 121,170,385 (63,855,415) 2,043,126 59,358,096 121,051,877 (60,845,809) 609,952 60,816,020 (3,127,861) - (3,127,861) (1,875,059) - (1,875,059) Contractual commitments Refer to note 18 for contractual and exploration commitments for the parent entity during the financial year. 26. BORROWINGS Consolidated Group 30 June 2023 $ 30 June 2022 $ Interest bearing loans 8,822,176 - On 7 July 2022, the Company secured a two tranche $10m debt facility with PURE Asset Management. Under Tranche 1, $5 million was drawn under a 4-year secured loan facility at an interest rate of 9.90% per annum with 25,000,000 detached warrant shares at an exercise price of $0.20. An establishment fee of $150,000 was recognised as a reduction in proceeds. On 29 June 2023, the Company withdrew $5million under Tranche 2 of the facility, under a 4-year secured loan facility at an interest rate of 9.90% per annum with 35,714,286 detached warrant shares at an exercise price of $0.14. An establishment fee of $150,000 was recognised as a reduction in proceeds. Conversion by the lender Tranche 1 Warrants - The lender may elect at any time up to 7 July 2027, to convert any number greater than or equal to 5,000,000 warrant shares per conversion, at a rate of $0.20 share for every warrant share converted (this conversion rate may be adjusted in the event of significant future capital raisings). The noteholder is not entitled to any additional payments on account of this conversion. - 58 - NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2023 KINGSTON RESOURCES LIMITED & its Controlled Entities Tranche 2 Warrants - The lender may elect at any time up to 29 June 2028, to convert any number greater than or equal to 5,000,000 warrant shares per conversion, at a rate of $0.14 share for every warrant share converted (this conversion rate may be adjusted in the event of significant future capital raisings). The noteholder is not entitled to any additional payments on account of this conversion. Failure to Redeem If the noteholder does not convert all their warrant shares during the exercise period, then the balance of the debt facility under Tranche 1 facility will be repaid on 7 July 2026 and the balance of the debt facility under the Tranche 2 facility will be repaid on 29 June 2027. Movement in interest bearing loan Consolidated Group 30 June 2023 $ 30 June 2022 $ Carrying value at the beginning of the period Issue of convertible notes – face value Less: 3% Establishment fee Less: Fair value of equity component – share warrants Add: Unwinding of discount Carrying value as at end of the period - 10,000,000 (300,000) (1,004,579) 126,755 8,822,176 - - - - - - SUBSEQUENT EVENTS On 31 July 2023, the 4,561,810 LTI performance Options were converted to shares raising $45,618.10 and 2,707,994 unvested LTI performance options expired On 14 August 2023 Shareholders approved the grant of up to $300,000 MH Project Goal Performance Options to Andrew Corbett. On 17 August 2023, Tranche 1 of the Placement offer was completed upon issuing 26,245,576 unlisted attaching options expiring on 31 July 2025 with an exercise price of $0.14 on the basis of one option for every two Placement Share. Also on 17 August 2023: - - - - - the Company issued 11,764,705 shares at $0.085 to Quintana Holdings LLP under Tranche 2 of the Placement offer. These proceeds reduce the final deferred consideration payable to Quintana Holdings LLP upon producing 30,000ozs since the acquisition of Mineral Hill. In addition 5,882,352 unlisted attaching options expiring on 31 July 2025 with an exercise price of $0.14 were issued on the basis of one option for every two Placement Share. the Company issued 11,764,664 shares at $0.085 under a fully underwritten Share Purchase Plan raising $1,000,000 (before costs). In addition, a total of 5,882,332 unlisted options expiring on 31 July 2025 with an exercise price of $0.14 was issued on the basis of one option for every two SPP Share. 742,826 STI performance rights vested and were converted to shares, and 6,043,019 STI performance rights lapsed. 326,233 service fee options were converted to shares for nil consideration. 206,764 shares were issued for nil consideration to an employee as part of their employment contract. Other than the above, there has been no other matter or circumstance which has arisen since 30 June 2023 that has significantly affected or may significantly affect: d) e) f) Kingston Resources Limited’s operations in future financial years; or the results of those operations in future financial years; or Kingston Resources Limited’s state of affairs in future financial years. - 59 - 2023 ANNUAL REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities Directors’ Declaration The Directors of the Company declare that: 1. In the opinion of the Directors of the Company: (a) the financial statements and notes set out on page 30 to 59, and the Remuneration disclosures that are contained in page 19 to 25 of the Remuneration Report in the Directors’ Report, are in accordance with the Corporations Act 2001, including: (i) giving true and fair view of the Group’s financial position as at 30 June 2023 and of its performance, for the financial year ended on that date; (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and (iii) complying with International Financial Reporting Standards as disclosed in Note 1. (b) (c) the remuneration disclosures that are contained in page 19 to 25 of the Remuneration Report in the Directors’ Report comply with Australian Accounting Standard AASB 124 Related Party Disclosures. the directors have been given the declaration required by s295A of the Corporations Act 2001 by the persons undertaking the roles of Managing Director and Chief Financial Officer. 2. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Signed in accordance with a resolution of the Board of Directors. MICK WILKES Non-Executive Chairman Sydney, New South Wales 14 September 2023 - 60 - CORPORATE GOVERNANCE STATEMENT 2023 ANNUAL REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities CORPORATE GOVERNANCE STATEMENT The Board is committed to achieving and demonstrating the highest standards of corporate governance. As such Kingston Resources Limited has adopted the fourth edition of the Corporate Governance Principles and Recommendations which was released by the ASX Corporate Governance Council and became effective for financial years beginning on or after 1 January 2020. The Company’s Corporate Governance Statement for the financial year ending 30 June 2023 was approved by the Board on 14 September 2023. The Corporate Governance Statement can be located on the Company’s website www.kingstonresources.com.au 66 ADDITIONAL INFORMATION 2023 ANNUAL REPORT KINGSTON RESOURCES LIMITED & its Controlled Entities Additional Information required by the Australia Stock Exchange Limited Listing Rules and not disclosed elsewhere in this report. This additional information was applicable as at 31 August 2023. SHAREHOLDER INFORMATION Distribution of Ordinary Shares Distribution above 0 up to and including 1,000 above 1,000 up to and including 5,000 above 5,000 up to and including 10,000 No. of Shareholders (ASX code – KSN) Total Units % Issued Share Capital 280 516 488 48,362 1,727,729 3,602,622 0.01% 0.35% 0.72% 9.53% above 10,000 up to and including 100,000 1,239 47,468,804 above 100,000 Total Holding less than a marketable parcel (based on a price of $0.08) Distribution of Unlisted Options 396 445,114,317 89.39% 2,879 497,961,834 100.00% 2,457,959 917 Distribution No. of Holders Total Units % Issued Capital UNLISTED OPTIONS AT $0.14, EXP 31/07/25 above 10,000 up to and including 100,000 above 100,000 Total UNLISTED LTI OPTIONS AT $0.00, EXP 31/08/24 above 10,000 up to and including 100,000 above 100,000 Total UNLISTED OPTIONS AT $0.00, EXP 31/08/28 above 10,000 up to and including 100,000 above 100,000 Total - 67 - 104 46 150 3,163,988 34,846,222 8.32% 91.68% 38,010,210 100.00% 1 6 7 1 9 10 45,553 1.94% 2,297,462 98.06% 2,343,015 100.00% 37,048 5,171,621 0.71% 99.29% 5,208,669 100.00% ADDITIONAL INFORMATION 2023 ANNUAL REPORT Distribution of Unlisted Warrants KINGSTON RESOURCES LIMITED & its Controlled Entities Distribution No. of Holders Total Units % Issued Capital WARRANT @ $0.20, EXP 07/7/27 above 100,000 WARRANT @ $0.14, EXP 29/6/28 above 100,000 Statement of Top 20 Shareholders of the Quoted Equity Securities Contributed Equity (ASX code – KSN) Name 1 CITICORP NOMINEES PTY LIMITED 2 WINCHESTER INVESTMENTS GROUP PTY LIMITED 1 25,000,000 100.00% 1 35,714,286 100.00% Holding % 68,510,816 13.76% 35,205,882 31,951,847 28,086,219 26,955,938 19,365,778 13,667,409 11,764,705 10,263,203 9,782,221 7,800,000 6,688,888 5,704,876 5,250,000 4,312,207 3,800,000 3,000,000 2,880,393 2,771,225 7.07% 6.42% 5.64% 5.41% 3.89% 2.74% 2.36% 2.10% 2.06% 1.96% 1.57% 1.34% 1.15% 1.05% 0.87% 0.76% 0.60% 0.58% 0.56% 308,212,022 61.89% 497,961,834 100.00% 23,650,000 BNP PARIBAS NOMINEES PTY LTD 10,450,415 FARJOY PTY LTD DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM BNP PARIBAS NOMS PTY LTD QUINTANA RESOURCES HOLDINGS LP 3 4 5 6 7 8 9 10 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 11 12 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 2INVEST AG 13 WGS PTY LTD 14 MILAMAR GROUP PTY LTD 15 16 17 T MITCHELL PTY LTD BERNE NO 132 NOMINEES PTY LTD <656165 A/C> PASAGEAN PTY LIMITED 18 YELRIF INVESTMENTS PTY LTD 19 20 ELIGIUS HOLDINGS PTY LTD LIGHTNING JACK PTY LTD Total Total on Issue - 68 - ADDITIONAL INFORMATION 2023 ANNUAL REPORT Substantial Shareholders KINGSTON RESOURCES LIMITED & its Controlled Entities The names of the substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are: Shareholder Shares Held % of Shares Held Date of Last Notice Delphi Unternehmensberatung Aktiegesellshaft and associates Quintana Resources Holdings LP Winchester Investments Group Pty Ltd & Ian Ronald Ingram 55,687,157 13.53% 20 January 2022 54,914,882 34,500,000 13.34% 7.36% 18 January 2022 5 July 2023 Farjoy Pty Ltd 31,951,847 6.82% 4 July 2023 Substantial Holders of Unquoted Equity Securities Holders of more than 20% of Warrants. HOLDERS WARRANT @ $0.20, EXP 07/7/27 PURE ASSET MANAGEMENT PTY LTD WARRANT @ $0.14, EXP 29/6/28 PURE ASSET MANAGEMENT PTY LTD Number of Units % of Total holding 25,000,000 100.00% 35,714,286 100.00% Voting Rights The Company’s share capital is of one class with the following voting rights: Fully Paid Ordinary Shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Other Unquoted Securities There are no voting rights attached to any other securities on issue. Statement of Restricted Securities The Company has no restricted securities on issue. On Market Buy Back The Company is not currently conducting an on market buy back. Other ASX Information Stock Exchange on which the Company’s Securities are Quoted The Company’s listed equity securities are quoted on the Australian Securities Exchange and the secondary listing of the Company’s listed equity securities are quoted on the Frankfurt Stock Exchange. Review of Operations A review of operations is contained in the Directors Report. - 69 - ADDITIONAL INFORMATION 2023 ANNUAL REPORT Annual General Meeting KINGSTON RESOURCES LIMITED & its Controlled Entities The Company advises that the Annual General Meeting ('AGM') of the company is scheduled for 17 November 2023. Further to Listing Rule 3.13.1, Listing Rule 14.3 and clause 7.2(f) of the Company's Constitution, nominations for election of directors at the AGM must be received not less than 35 Business Days before the meeting, being no later than Friday, 29 September 2023. 4. ON MARKET BUY BACK The Company does not currently have an on market buy back in operation. 5. TENEMENT SCHEDULE Tenement Project Name & Location Status Ownership Type Title Area EL1747 EL1999 EL8334 ML5240 ML5267 ML5278 ML332 ML333 ML334 ML335 ML336 ML337 ML338 ML339 ML340 ML1695 ML1712 ML1778 ML5499 ML5621 ML5632 ML6329 ML6365 Misima, PNG Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Mineral Hill, NSW Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% EL EL EL ML ML ML ML ML ML ML ML ML ML ML ML ML ML ML ML ML ML ML ML 180 km2 17 UNITS 100 UNITS 32.37 HA 32.37 HA 32.37 HA 22.36 HA 28.03 HA 21.04 HA 24.79 HA 23.07 HA 32.27 HA 26.3 HA 25.09 HA 25.79 HA 8.779 HA 23.92 HA 29.05 HA 32.37 HA 32.37 HA 27.32 HA 8.094 HA 2.02 HA - 70 - 

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