Magnetic Resources NL
Annual Report 2020

Plain-text annual report

Annual Report FINANCIAL YEAR ENDED 30 JUNE 2020 Magnetic Resources NL 1st Floor, 44A Kings Park Road, West Perth, WA 6005 Tel (08) 9226 1777 ABN 34 121 370 232 Corporate Directory Review of Operations Director’s Report Auditor’s Independence Declaration Corporate Governance Statement Statement of Profit or Loss and Other Comprehensive income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report Other Information Table of Contents 1 2 17 30 32 43 44 45 46 47 68 69 73 Pg. 01 Corporate Directory Corporate Directory DIRECTORS ERIC LIM (B.Comm) Non-Executive Chairman GEORGE SAKALIDIS (B.SC (Hons)) Managing Director JULIEN SANDERSON (FCA) Non-Executive Director COMPANY SECRETARY BEN DONOVAN (B.Com (Hons),ACG(CS)) REGISTERED OFFICE 1st Floor 44A Kings Park Road West Perth WA 6005 Telephone (08) 9226 1777 WEBSITE www.magres.com.au FOR SHAREHOLDER INFORMATION CONTACT SHARE REGISTRY Security Transfer Registrars Pty Ltd 770 Canning Highway, Applecross WA 6153 Telephone (08) 9315 2333 Facsimile (08) 9315 2233 FOR INFORMATION ON THE COMPANY CONTACT PRINCIPAL & REGISTERED OFFICE 1st Floor 44A Kings Park Road West Perth WA 6005 Telephone (08) 9226 1777 BANKERS Bank of Western Australia Ltd Hay Street, West Perth WA 6005 AUDITORS Elderton & Co Audit Pty Ltd Chartered Accountants Level 2, 267 St Georges Tce, Perth WA 6000 STOCK EXCHANGE Australian Securities Exchange (ASX) COMPANY CODE (quoted) MAU (Fully paid shares) MAUCA (Partly paid shares) ISSUED CAPITAL (as at August 2020) 210,927,718 fully paid ordinary shares. 20,418,862 partly paid shares ($0.20 unpaid). 3,000,000 options to acquire fully paid shares exercisable at $0.377 on or by 31 December 2021 2,700,000 options to acquire fully paid shares exercisable at $0.218 on or by 31 December 2021 Pg. 02 Financial Statements Review of Operations Projects Summary: Gold The Leonora–Laverton district is well endowed with large world-class gold deposits having over 34Moz (mined plus resources), second to the Kalgoorlie region in WA. The company has 252km2 in the Laverton region and 206km2 in the Leonora Region (Figure 1). Most gold targets identified are within 10–15km of operating gold mines of Dacian and Goldfields. Priority projects include Hawks Nest 9, Lady Julie and Homeward Bound South. The objective of Magnetic Resources’ gold exploration program is to identify large economic gold deposits of 1Moz or greater – using the knowledge of the regions geology via current producers. Extensive shallow exploration has been carried out with 597 RC holes for 30,320m ‘to only an average depth of 51m, targeting a maiden resource at HN9 in late 2020. Hawks Nest 9 (“HN9”) exploration demonstrates significant and consistent mineralisation over a 3km long area, which is still open and mainly within the top 50m. Further investigation is planned over a further 1.5km distance heading towards HN10. Thickened altered porphyry zone at HN9 shows up to four stacked lodes in the top 100m and will be investigated at depth down to 400m and to the NE to see whether it is similar to the Jupiter and Wallaby Deposits with multiple lodes that continue down to 400m+. The adjacent Lady Julie Project will be further drilled, looking at the potential to enlarge it to 1km in length and to ascertain the size of the resource, which may add to the HN9 inventory and potentially form the HN9–Lady Julie Mining Centre. The thickened Federation shear zone at Homeward Bound South will be followed up with deep drilling to outline the size of this gold rich shear zone down to 150m depth Figure 1. Magnetic Resources gold projects in the Laverton and Leonora areas Pg. 03 Laverton Area Financial Statements Magnetic Resources NL has 252km2 in the Laverton region comprising E38/3127 Hawks Nest, E37/3100 & P38/4201 Mt Jumbo, E38/3205 Hawks Nest East, E38/3209 Mt Ajax, P38/4317–24 Mt Jumbo East, Lady Julie (P38/4346, P38/4379–4384) and Homeward Bound South (P37/9144, P39/5928–29, 5931–34, 5455) (Figure 2). Table 1 shows the exploration. Table 1. Summary of work completed and proposed in the Laverton Region Tenement Hawks Nest E38/3127 M38/1041 Surface sampling completed 5405 soils 119 rock chips Drilling & ground magnetics completed 164 RAB holes for 1814m 607 RC for 30784m 2 AC holes for 66m 507km ground magnetics Proposed exploration 17 RC holes for 1680m at HN9 4m composite assays pending for current RC programme 1m splits pending for previous RC programme Lady Julie P38/4346, P38/4379-84 Homeward Bound South P37/9144, 39/5455, P39/5928- 29, P39/5931-34 Mt Ajax E38/3209 Mt Jumbo E38/3100 Mt Jumbo East P38/4317–24 Kowtah P39/5594– 97, 5617 11 rock chips 122 RC 6648m 291 shallow RAB for 1689m 4m composite assays pending for current RC programme 19 rock chips 303 soils 3 rock chips 67 lags 7 rock chips 19 rock chips 131 lags 1 rock chip 12 RC for 873m 2 RC holes for 336m 2 DDH for 465m 143km ground magnetics 23 RC holes for 1646m 229km ground magnetics 186km ground magnetics 65 RAB holes for 1950m Figure 2. Hawks Nest, Hawks Nest East, Mt Ajax, Mt Jumbo, Mt Jumbo East and Kowtah projects, showing major shear zones, targets and gold deposits and historic workings Pg. 04 Financial Statements Hawks Nest E38/3127 Hawks Nest 9 target At Hawks Nest 9, approximately 15km SW of Laverton, a 3km x 0.4km boomerang-shaped gold soil anomaly with a gold range of 0.2–0.6g/t has been the focus of drilling over the last 2 years (Fig. 3). A total of 1583 soil samples have been assayed over a 4.2km2 area. Recent deeper drilling is mainly testing areas that do not show up in soil sampling and is focused mainly on the thickened NE-trending zone. Further soil geochemical programmes are being carried out to the east investigating the northeast linkup with the Lady Julie Project. Extensive RC drilling (597 holes for 30,320m, 51m average depth only) define a 3km long mineralised central zone with many intersections greater than 2g/t Au in altered mineralised porphyry (Fig. 4). This zone is still open to the WNW, SW, NE and at depth and is currently being further investigated over a 4.5km length. Within the 3km gold zone there are: • 464 intersections (ranging 1 to 10m) greater than 0.5g/t Au, includes: • 212 greater than 1g/t Au, • 73 greater than 2g/t Au, • 34 greater than 3g/t Au and • 27 greater than 4g/t Au. Most of the intersections are very shallow and within the first 50m of the surface. There are now up to four discernible mineralised zones recognized that mostly dip shallowly around 20-30° to the east (Fig. 5). These intersections are associated with quartz veins and stockworks in both sheared porphyry and porphyry–mafic contacts with potential for bulk tonnage. A further 53-hole 4,365m infill drilling and extension programme will follow up some deeper intersections from previous drilling. The thickened zone is made up of least four stacked porphyry lodes with some large intersections: • 104m at 0.8g/t Au from 8m including 20m at 2.2g/t Au from 95m. • 70m at 0.5g/t Au from 13m including 14m at 1g/t Au from 55m. The thickened zone is being drill tested over 700m and is still open to the NE and at depth. This zone has similarities to the Wallaby and Jupiter Deposits and trends to the NE towards the Lady Julie Deposit. Pg. 05 Financial Statements Figure 3. E38/3127 Hawks Nest 9 target showing showing drill and soil programmes completed Pg. 06 Financial Statements Figure 4. HN9 historical drilling (64 RAB/RC) and workings, MAU completed RC drillholes and planned RC drillholes (blue) within the 3km mineralised gold zone Pg. 07 Financial Statements Figure 5. Cross Section showing HN9 schematic thickened stacked lodes Hawks Nest 10 target Planned drilling at Hawks Nest will target the extension of HN9 to the northwest towards the HN10 target. A 1.5km distance between HN10 and HN9 will be tested after recent drilling approvals (Fig. 6). In addition, several holes are testing an ENE-trending workings along a major ENE drainage. An extensive 50m x 200m 379 soil sampling programme is also planned on prospective regional NW structures that are often mineralised. Pg. 08 Financial Statements Figure 6. HN9 and HN10 historical and planned drilling Pg. 09 Financial Statements Lady Julie (P38/4346, P38/4379–4384) Magnetic Resources has expanded its prospective land holding directly east of HN9, following a purchase of 7.1km2 of tenements at the Lady Julie Project (Figs 7 and 8). The prospective land position at HN9 increased from 4.2 to 11.4km2. The area covering the Lady Julie and HN9 Projects is well endowed with gold mineralisation and has potential for a mining centre after more drilling is completed. At Lady Julie an initial drilling programme of 120 RC holes totalling 5,943m has been completed and is being followed up with 13 RC holes for 1,185m. Figure 7. Lady Julie and HN9 map showing drill intersections greater than 1g/t Au with planned drilling Pg. 10 Financial Statements The Lady Julie tenements are strongly mineralised with: • 217 gold intercepts (1-19m) greater than 0.5g/t Au, which includes 94 greater than 1g/t Au, • 34 greater than 2g/t Au, • 20 greater than 3g/t Au • 13 greater than 4g/t Au. Several of these mineralised zones are like HN9 and occur within altered porphyry and altered porphyry and mafic contacts and in some case with sediment zones (Fig. 8). Figure 8. Lady Julie Cross Sections 1 and 2 Pg. 11 Financial Statements Homeward Bound South (P37/9144, P39/5928–29, 5931–34, 5455) The14km2 of tenements comprise eight prospecting licences covering a 5km strike length of the Federation Shear Zone situated 40km east of Leonora (Figs 9 and 10). Figure 9. Homeward Bound South project location Significantly, a line of old gold diggings occurs over a 500m strike length of the Federation Shear corridor. Further follow up drilling of 10 RC holes for 1320m is starting after recent results including: • 19m at 1.1g/t from 32m (ending in mineralisation) • 25m at 1.3g/t from 12m (open to the south) • 5m at 4.6g/t from 13m (open to the south) • 17m at 0.9g/t from 4m (ending in mineralisation) • 24m at 0.7g/t from 24m • 40m at 0.5g/t from 20m • 24m at 0.5g/t from 12m Pg. 12 Financial Statements Figure 10. The large-scale Federation Shear is widely mineralised with positive early results Pg. 13 Leonora Area Financial Statements Magnetic Resources NL has 206km2 of tenure in the Mertondale Region, which includes the following granted tenements: E37/1258 Mertondale, E37/1177 Mertondale East, E37/1303 Nambi, P37/8687–94 Christmas Well, P37/9204–07 Malcolm, E37/1367 Melita, P37/8905–08, P37/8905– 08 Raeside East Raeside East, and P37/8909–12 Braiser as shown in Figure 11. Most of the work to date (Table 2) has been at the Mertondale and Christmas Well areas, which are 20km NW of the Cardinia Gold Project (193,000oz) and only 5km west of the Mertondale Deposit (395,000oz). The numerous targets are at changes in orientation of the Mertondale Shear and parallel shears, which were identified from interpretation of 100m-spaced detailed aeromagnetic surveys. RAB drilling programmes are planned at Kowtah and Kowtah East, Braiser, Raeside East and Nambi. The targets being followed up are porphyry style, circular intrusions, and changes in orientation. Table 2. Summary of work done in the Leonora region Tenement Mertondale E37/1258 Mertondale East E37/1177 Malcolm E37/1331 Devine Well (Malcolm) P37/9204-07 Melita E37/1367 Nambi E37/1303 Drilling & ground magnetics completed 899 RAB holes for 5313m 26 RC holes for 1452m 188km ground magnetics Surface sampling completed 599 soils 493 laterites 22 costeans 72 rock chips 500t (prospectors) 51 rock chips 1 clay 148 laterites 144 soils Proposed exploration 96 Soil samples 517 Soil samples 633 Soil samples 1 rock chip 47km ground magnetics 50 RAB holes for 1500m Christmas Well P37/8687–94 4 rock chips Raeside East P37/8905–08 Braiser P37/8909–12 492 RAB holes for 4000m 12 RC holes for 730m 25km ground magnetics 85 RAB holes for 627m 26km ground magnetics 127km Ground magnetics 236 soil samples Pg. 14 Financial Statements Figure 11. Homeward Bound, Mertondale, Mertondale East, Christmas Well, Malcolm, Raeside East, Braiser Melita and Nambi Projects, showing major shear zones, targets and gold deposits and historic workings Pg. 15 Financial Statements At Christmas Well several RAB and RC drilling programmes have been completed defining a 150m long WNW trending steeply dipping quartz vein with best result of 2m at 15.1g/t Au from 17m. At Mertondale several extremely large nuggets have been found including two large 11.5oz and 21oz gold nuggets. Some drilling is planned along this 150m nugget-bearing ironstone shown in Fig 12. Early stage soil geochemical programmes have been completed at Malcom, Malcom East, Melita, Raeside East and Braiser with results pending. Figure 12. Mertondale Laterite gold anomalies, gold nugget trench samples and RC drilling Pg. 16 Financial Statements Projects Summary: Iron ore and Nickel Magnetic Resources still maintains an interest in potentially economic iron ore deposits (Figure 13). The current focus is on the Kauring, Mount Joy and Ragged Rock Projects. The agreement includes further payments totalling $1,000,000 and a sliding scale royalty with payments starting at $0.25/t for a sale price of $80.00/t or less, and thereafter, for every increase in the sale price of $10.00/t the royalty rate will increase by $0.25/t. Three tenements were recently applied for 90km northeast of the Julimar high-grade palladium- rich Ni-Cu-PGE sulphides at Julimar, 60km NE of Perth (Fig. 13). Figure 13. Magnetic Resources NL’s Iron Ore and Nickel Projects Other Commodities (Magnetic 0%): During the year Magnetic maintained an arrangement with Tungsten Holdings and retains a small royalty over gold rights at Lake Seabrook E70/2935 held entirely by Tungsten. Pg. 17 Financial Statements Directors Report Your directors present their report on the Company for the year ended 30 June 2020. Directors The following persons were directors of Magnetic Resources NL (“Magnetic” or “the Company”) during the whole of the year and up to the date of this report unless otherwise stated: • Eric Lim • George Sakalidis • Julien Sanderson Principal Activities The principal activity of the Company during the year was to explore mineral tenements in Western Australia. Results From Operations During the year the Company recorded an operating loss $4,726,241 (2019: $3,262,891). Dividends No amounts have been paid or declared by way of dividend by the Company since the end of the previous financial year and the Directors do not recommend the payment of any dividend. Review of Operations A review of operations is covered elsewhere in this Annual Report. Earnings Per Share Basic Loss per share for the financial period was 2.32 cents (2019: 1.74 cents). Diluted Loss per share in respect of both years ended 30 June 2020 and 30 June 2019 was the same as the Basic Loss per share. Financial Position The Company’s cash position as at 30 June 2020 was $4,063,232, a decrease from the 30 June 2019 cash balance which was $4,761,395. The Company’ cash position is adequate to fund committed exploration expenditure. Significant Changes in State of Affairs Other than what is reported in the director’s report, there were no significant changes in the state of affairs of the Company during the financial period. Matters Subsequent to the End of the Financial Year Subsequent to the year end, the Company announced a capital raising of approximately $7.1m via the placement of 5,143,659 shares at $1.38 per share. The placement shares were issued on 11 September 2020. Pg. 18 Financial Statements Likely Developments and Expected Results of Operations Likely developments in the operations of the Company and the expected results of those operations in future financial years have not been included in this report as the directors believe, on reasonable grounds, that the inclusion of such information would be likely to result in unreasonable prejudice to the Company. Environmental Issues The Company carries out exploration operations in Australia which are subject to environmental regulations under both Commonwealth and State legislation. The Company’s exploration manager is responsible for ensuring compliance with regulations. During or since the financial period there have been no known significant breaches of these regulations. Information on Directors and Company Secretary Eric JH Lim Mr Lim is currently a senior executive officer with Standard Chartered Bank and holds the position Head of Wholesale Banking Finance, Southeast Asia. Prior to joining Standard Chartered, he has held positions with OCBC Bank, General Electric and a number of executive positions in the US and Asia Pacific region including Finance Director of GE Money Japan and Global Financial Planning and Analyst for GE Commercial Finance (Healthcare Financial Services). He has also had extensive audit experience with GE Corporate Audit leading a variety of engagements ranging from process to financial audits. Eric is qualified with an MBA and a Bachelor of Accounting degree. Mr Lim has a relevant interest in 8,132,794 ordinary fully paid shares and 1,500,000 options to acquire fully paid ordinary shares. Mr Lim has not held any directorships in other listed companies during the last 3 years. George Sakalidis Mr Sakalidis is an exploration geophysicist with over 30 years’ industry experience. His career has included extensive gold, diamond, base metals and mineral sands exploration. He has worked tirelessly building the gold assets of the company, since February 2016. Mr Sakalidis has been involved in a numerous significant mineral discoveries, including the Three Rivers and Rose gold deposits, the Blackmans gold deposit, the Dongara Mineral Sands Deposits, the Boonanarring, Gingin South, Hyperion Mineral Sands Deposits in Western Australia and he was involved in the tenement application over the Silver Swan nickel deposit. He was also involved with the tenement application for the recently discovered Monty Copper mineralisation adjacent to the Degrussa Copper deposit. He is a founding Director and is Managing Director of this company, Magnetic Resources NL (since listing on August 2006, resigned October 2014, reappointed 29 January 2016), Image Resources NL (since listing on July 2002 and resigned 29 May 2020), Meteoric Resources NL (since listing on 16 July 2004). Mr Sakalidis is also a founding director of ASX listed companies Emu NL and Potash West NL. Pg. 19 Financial Statements Mr Sakalidis has a relevant interest in 5,292,808 ordinary fully paid shares, 3,135,714 contributing shares and 3,000,000 options to acquire fully paid ordinary shares. Throughout the past three years he has served as a director of the following listed companies: Image Resources NL – appointed 2002, resigned 29 May 2020.   Meteoric Resources NL – appointed February 2004, resigned 29 November 2017 Julien Sanderson Julien is a Chartered Accountant with more than 40 years’ experience in banking, corporate, accounting, taxation, company secretarial practice and international and local corporate governance. Mr Sanderson’s experience spans a range of private and public companies in a broad range of industries including mining and resources. Previously Mr Sanderson was Financial Controller and subsequently Manager Director and Company Secretary of ASX-listed Biron Corporation Limited and non-executive Chairman of Premier Gold NL and Corporate Finance Manager of Kia Ora Gold NL. Mr Sanderson has a relevant interest in 335,000 ordinary fully paid shares, and 1,200,000 options to acquire fully paid ordinary shares. Mr Sanderson has not held any directorships in other listed companies during the last 3 years. Ben Donovan (Company Secretary) Mr Donovan is a member of Chartered Secretaries Australia and provides corporate advisory, IPO and consultancy services to a number of companies. Mr Donovan is currently a Director and Company Secretary of several ASX listed and public unlisted companies involved in the resources and technology industries, including one company currently developing a large magnetite project in Australia. He has extensive experience in listing rules compliance and corporate governance, having served as a Senior Adviser at the Australian Securities Exchange (ASX) in Perth for nearly 3 years, including as a member of the ASX JORC Committee. In addition, Mr Donovan has experience in the capital markets having raised capital and assisted numerous companies in achieving an initial listing on the ASX, as well as for a period of time, as a private client adviser at a boutique stock broking group. Mr Donovan has a relevant interest in 60,000 contributing shares. Audit Committee The Company adopted a formal Audit charter last year. The following separately constituted Audit Committee meetings were held during the year: George Sakalidis Eric Lim Julien Sanderson Eligible Attend 2 2 2 to Attended 2 2 2 Pg. 20 Financial Statements Remuneration Committee At the date of this report, the Remuneration Committee comprises the current board of directors. No remuneration committee meetings were held during the year as the board decided all matters. Meetings of Directors During the financial year ended 30 June 2020, the following director meetings were held: George Sakalidis Eric Lim Julien Sanderson *Excludes meetings held by circular resolution Remuneration Report (Audited) Eligible to Attend 4 4 4 Attended 4 4 4 Names and positions held of key management personnel (KMP), defined by the Australian Accounting Standards as being (“those people having authority and responsibility for planning, directing, and controlling the activities of an entity, either directly or indirectly. This includes an entity's directors”) in office at any time during the financial year were: Management Key Person Eric Lim George Sakalidis Julien Sanderson Position Non-Executive Chairman Managing Director Non-Executive Director The Company’s policy for determining the nature and amount of emoluments of key management personnel is set out below. Key Management Personnel Remuneration (KMP) and Incentive Policies Given the size of the Company, all board members form the Remuneration Committee (“committee”). The mandate of the Committee is to consider appropriate and competitive remuneration and incentive policies (including basis for paying and the quantum of any bonuses) for key management personnel and others as considered appropriate to be singled out for special attention, which: • motivates them to contribute to the growth and success of the Company within an appropriate control framework; • aligns the interests of key leadership with the interests of the Company’s shareholders; • are paid within any limits imposed by the Constitution and make recommendations to the Board with respect to the need for increases to any such amount at the Company’s annual general meeting; and • in the case of directors, only permits participation in equity-based remuneration schemes after appropriate disclosure to, due consideration by and with the approval of the Company’s shareholders. Pg. 21 Financial Statements Non-Executive Directors • The committee is to ensure that non-executive directors are not provided with retirement benefits other than statutory superannuation entitlements. • To the extent that the Company adopts a remuneration structure for its non-executive directors other than in the form of cash and superannuation, disclosure shall be made to stakeholders and approvals obtained as required by law and the ASX listing rules. Incentive Plans and Benefits Programs The committee is to: • review and make recommendations concerning long-term incentive compensation plans, including the use of equity-based plans. Except as otherwise delegated by the Board, the committee will act on behalf of the Board to administer equity-based and employee benefit plans, and as such will discharge any responsibilities under those plans, including making and authorising grants, in accordance with the terms of those plans; • ensure that, where practicable, incentive plans are designed around appropriate and realistic performance targets that measure relative performance and provide remuneration when they are achieved; and • review and, if necessary, improve any existing benefit programs established for employees. Retirement and Superannuation Payments Prescribed benefits were provided by the Company to all directors by way of superannuation contributions to externally managed complying superannuation funds during the year. These benefits were paid as superannuation contributions to satisfy (at least) the requirements of the Superannuation Contribution Guarantee Act and in satisfaction of any salary sacrifice requests. All contributions were made to accumulation type funds selected by the director and accordingly actuarial assessments were not required. Relationship between Company Performance and Remuneration There is no relationship between the financial performance of the Company for the current or previous financial year and the remuneration of the key management personnel. Remuneration is set having regard to market conditions and encourage the continual services of key management personnel. Use of Remuneration Consultants The Company did not employ the services of any remuneration consultant during the financial year ended 30 June 2020. Pg. 22 Financial Statements Key Management Personnel Remuneration for 30 June 2020 Key Management Personnel Short-term benefits Fees & contractual payments ($) Post-employment benefits Statutory superannuation ($) Cash settled share based payments ($) Equity settled Share Based Payments ($) Eric Lim 46,000 - George Sakalidis Julien Sanderson Total 234,577 22,285 46,000 326,577 4,370 26,655 - - - - - - Total ($) 46,000 256,862 50,370 353,232 Key Management Personnel Remuneration for 30 June 2019 Key Management Personnel Short-term benefits Fees & contractual payments ($) Post-employment benefits Statutory superannuation ($) Cash settled share based payments ($) Equity settled Share Based Payments ($) Total ($) Eric Lim 41,000 - George Sakalidis Julien Sanderson Total 216,620 20,579 41,000 298,620 3,895 24,474 - - - - 52,906 93,906 105,813 343,012 52,906 97,801 211,625 534,719 Securities Received that are Not Performance-Related. No members of KMP are entitled to receive securities that are not performance-based as part of their remuneration package. Pg. 23 Financial Statements Employment Details of Members of Key Management Personnel Key Management Personnel Eric Lim Position held as at 30 June 2020 and any changes during the year Non-Executive Director George Sakalidis Managing Director Julien Sanderson Non-Executive Director Proportion of 2020 / 2019 Remuneration related to performance (other than options issued) Non-cash salary based incentives Shares / units Proportion of 2018/ 2020 Remuneration not related to performance (Fixed salary/fees) - - - - - - 100% 100% 100% Contract details Continuation and Termination No fixed term No fixed term 2 months’ notice required to terminate No fixed term The employment terms and conditions of all KMP are formalised in contracts of employment. Options held by Key Management Personnel All options were issued by Magnetic Resources NL and entitle the holder to one ordinary share in Magnetic Resources NL for each option exercised. There has not been any alteration to the terms or conditions of any grants since grant date. The number of options over fully paid ordinary shares in the Company held at the beginning and end of the year and movements during the financial year by key management personnel and/or their related entities are set out below: 30 June 2020: Name Balance at the beginning of the year Grant Details Exercised during the year Lapsed Issue Date No. Value $ No. Value $ No. Eric Lim 1,500,00 George Sakalidis Julien Sanderson 3,000,000 1,500,000 - - Total 6,000,000 - - - - - - - - - - - - - - 300,000 65,400 - - Other changes during the year Balance at the end of the year - - - - - - - - 1,500,000 3,000,000 1,200,000 5,700,000 Shares held by Key Management Personnel The number of shares and partly-paid contributing shares (on which $0.20 is payable to convert those partly-paid shares to fully paid shares) in the Company held at the beginning and end of the year and net movements during the financial year by key management personnel and/or their related entities are set out below: Pg. 24 30 June 2020: Name Eric Lim Ordinary shares Contributing shares George Sakalidis Ordinary shares Contributing shares Julien Sanderson Ordinary shares Contributing shares Total Ordinary shares Total Contributing shares Financial Statements Balance at the start of the year Granted as Remuneration during the Year Issued on exercise of Options during the Year Other Changes during the Year Balance at the end of the year 8,132,794 - 5,253,537 3,135,714 165,000 - 13,551,331 3,135,714 - - - - - - - - - - - - 300,000 - 300,000 - - 39,271 - (110,000) - (70,729) - 8,132,794 - 5,292,808 3,135,714 355,000 - 13,780,602 3,195,714 Consultant Agreements On 10 August 2016, the Company entered into an employment agreement with Mr Sakalidis for his services as an executive director effective 7 February 2016. The key terms of the agreement are for Mr Sakalidis to work an average of 95 hours per month at an hourly rate of $155 per hour performing the normal duties associated with an executive director of an ASX listed company. Mr Sakalidis is also entitled to participate in any short and long term incentive plans, and normal leave entitlements. Either party may give 2 months notice of their intention to terminate the agreement, or immediately if Mr Sakalidis commits any serious misconduct or if removed by shareholders. On 11 April 2017, the Board agreed to amend the title held by Mr Sakalidis to Managing Director with no change to the terms of his contract. On 27 May 2019, the Company agreed to revise Mr Sakalidis’ hourly rate to $178.25 per hour. Mr Donovan is engaged by the Company as Company Secretary. Mr Donovan is employed on an agreed annual fee with additional hours paid at market rates. Each party can terminate the agreement with 4 months notice. Mr Lim and Mr Sanderson have entered into a director’s contract where they are paid $40,000 per annum. On 27 May 2019, the Company agreed to revise the annual payment to $46,000 per annum. Guaranteed Rate Increases There are no guaranteed rate increases fixed in the contracts of any of the key management personnel. Other Equity –related KMP Transactions There have been no other transactions involving equity instruments apart from those described in the tables above relating to options, rights and shareholdings. Other Transactions with KMP and / or their Related Parties There have been no other transactions conducted between the Company and KMP or their related parties, that were conducted other than in accordance with normal employee, customer or supplier Pg. 25 Financial Statements relationships on terms no more favourable than those reasonably expected under arm’s length dealings with unrelated persons. involving equity instruments apart from those described in the tables in the tables above relating to options, rights and shareholdings. Directors’ Interests The relevant interest of each director in the shares and options over such instruments issued by the Company as notified by the directors to the Australian Securities Exchange in accordance with Section205G(1) of the Corporations Act 2001 at the date of this report is as follows: Fully Paid Ordinary Shares Partly-paid Contributing Shares Options to Acquire Fully Paid Ordinary Shares Eric Lim George Sakalidis Julien Sanderson Total 8,132,794 5,292,808 355,000 13,780,602 - 3,135,714 - 3,135,714 1,500,000 3,000,000 1,200,000 5,700,000 Share Options Granted to Directors And Officers No options have been issued to directors or officers during or since the end of the financial year other than those noted above. END OF AUDITED SECTION Employees At 30 June 2020, aside from directors who are for tax purposes treated as employees, the Company’s only other employees were part-time or casual staff. The same position prevailed at 30 June 2019. Corporate Structure Magnetic is a no liability company incorporated and domiciled in Australia. Pg. 26 Financial Statements Access to Independent Advice Each director has the right, so long as he is acting reasonably in the interests of the Company and in the discharge of his duties as a director, to seek independent professional advice and recover the reasonable costs thereof from the Company. The advice shall only be sought after consultation about the matter with the chairman (where it is reasonable that the chairman be consulted) or, if it is the chairman that wishes to seek the advice or it is unreasonable that he be consulted, another director (if that be reasonable). The advice is to be made immediately available to all Board members other than to a director against whom privilege is claimed. Indemnification And Insurance Of Directors And Officers The Company has entered into agreements indemnifying, to the extent permitted by law, all the directors and officers of the Company against all losses or liabilities incurred by each director and officer in their capacity as directors and officers of the Company. During the year an amount of $18,906 (2019: $16,735) was incurred in insurance premiums for this purpose. Options As at the date of this report there are the following unquoted options over unissued ordinary shares in the Company: • 3,000,000 options to acquire fully paid shares exercisable at $0.377 on or by 31 December 2021; • 2,700,000 options to acquire fully paid shares exercisable at $0.218 on or by 31 December 2021 Option holders do not have any rights to participate in any issues of shares or other interests of the company or any other entity. There have been no options granted over unissued shares or interests of any controlled entity within the Group during or since the end of the reporting period. For details of options issued to directors and executives as remuneration, refer to the remuneration report. During the year ended 30 June 2020, 300,000 shares were issued on the exercise of options granted. No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate. Pg. 27 Non-audit Services Financial Statements During the year Elderton Audit Pty Ltd, the Company’s auditor, did not perform any services other than their audit services. In the event that non-audit services are provided by Elderton Audit Pty Ltd, the Board has established certain procedures to ensure that the provision of non-audit services are compatible with, and do not compromise, the auditor independence requirements of the Corporations Act 2001. These procedures include: ▪ all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the audit; and ▪ the nature of the service provided does not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. Auditor’s Independence Declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out in this annual report. Signed in accordance with a resolution of the directors SIGNED GEORGE SAKALIDIS MANAGINGDIRECTOR Perth 29 September 2020 Pg. 29 Financial Statements Corporate Governance Statement Pg. 30 Financial Statements Magnetic Resources NL ("Company") has made it a priority to adopt systems of control and accountability as the basis for the administration of corporate governance. These policies and procedures are summarised in this statement. Commensurate with the spirit of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations ("Principles & Recommendations") fourth edition, the Company has followed each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its corporate governance practices. Where the Company's corporate governance practices follow a recommendation, the Board has made appropriate statements reporting on the adoption of the recommendation. Where, after due consideration, the Company's corporate governance practices depart from a recommendation, the Board has offered full disclosure and reason for the adoption of its own practice, in compliance with the "if not, why not" regime. Disclosure of Corporate Governance Practices Summary Statement ASX P & R If not, why not ASX P & R If not, why not Recommendation 1.1 Recommendation 1.2 Recommendation 1.3 Recommendation 1.4     Recommendation 4.2 Recommendation 4.3 Recommendation 5.1 Recommendation 5.2 Recommendation 1.5  Recommendation 5.3 Recommendation 1.6  Recommendation 6.1 Recommendation 1.7  Recommendation 6.2 Recommendation 2.1  Recommendation 6.3 Recommendation 2.2  Recommendation 6.4 Recommendation 2.3 Recommendation 2.4 Recommendation 2.5 Recommendation 2.6 Recommendation 3.1 Recommendation 3.2 Recommendation 3.3 Recommendation 3.4         Recommendation 4.1  Recommendation 6.5 Recommendation 7.1 Recommendation 7.2 Recommendation 7.3 Recommendation 7.4 Recommendation 8.1 Recommendation 8.2 Recommendation 8.3                  Pg. 31 Website Disclosures Financial Statements Further information about the Company's charters, policies and procedures may be found at the Company's website at www.magres.com.au, under the section marked Corporate Governance. Disclosure – Principles & Recommendations The Company reports below on how it has followed (or otherwise departed from) each of the Principles & Recommendations during the 2019/2020 financial period ("Reporting Period"). Principle 1 – Lay Solid Foundations for Management and Oversight Recommendation 1.1: A listed entity should disclose: a) the respective roles and responsibilities of its board and management; and b) those matters expressly reserved to the board and those delegated to management. Disclosure: The Company has established the functions reserved to the Board and has set out these functions in its Board Charter. The Board is collectively responsible for promoting the success of the Company through its key functions of overseeing the management of the Company providing overall corporate governance of the Company, monitoring the financial performance of the Company, engaging appropriate management commensurate with the Company's structure and objectives, involvement in the development of corporate strategy and performance objectives and reviewing, ratifying and monitoring systems of risk management and internal control, codes of conduct and legal compliance. The Company has established the functions delegated to senior executives and has set out these functions in its Board Charter. Senior executives are responsible for supporting the Managing Director or Executive Director and assisting the Managing Director or Executive Director in implementing the running of the general operations and financial business of the Company, in accordance with the delegated authority of the Board. Senior executives are responsible for reporting all matters which fall within the Company's materiality thresholds at first instance to the Managing Director or Executive Director or, if the matter concerns the Managing Director or Executive Director, then directly to the Chair or the lead independent Director, as appropriate. Recommendation 1.2: A listed entity should: a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and c) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. Disclosure: The board undertakes a review of the potential candidate and their appropriate skills through a reference of previous positions and industry contacts. Full details of each person are announced in the initial appointment announcement and also in the Annual Report. Where a director is seeking election, shareholders are given full details. Recommendation 1.3: A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. Disclosure: Upon joining the Company, each director and senior executive enters into an agreement with the Company which sets out the key terms of their employment and their responsibilities including adhering to all Company policies. Recommendation 1.4: The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board. Disclosure: The Company Secretary advises the board directly on all matters regarding the function of the board, in consultation with any legal advice if so required. The Secretary is responsible for the co-ordinating of all board matters, committee meetings and advice. Recommendation 1.5: A listed entity should: Pg. 32 Financial Statements a) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them; b) disclose that policy or a summary of it; and c) disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them, and either: 1) 2) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act.16 Disclosure: The Company does not qualify under the Act. The Company has a policy of appointing the most suitably qualified person to each position in the Company. Where there is a vacancy in the Company, the most suitable party will be employed. At present, there is no documented policy of objectives, as positions are selected on the best available candidate. At the date of this report, all senior executive positions, being persons who can influence the direction of the Company, are filled by males. Recommendation 1.6: A listed entity should: a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. Disclosure: The Chair is responsible for evaluating the board and the various committee members. The Chair holds informal discussions with the board on an ongoing basis, as required. Given the size of the Company and only being a 3 person board, the position of Chair is usually filled by one of the directors. Recommendation 1.7 A listed entity should: a) have and disclose a process for periodically evaluating the performance of its senior executives; and b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. Disclosure: The Managing Director is responsible for evaluating the senior executives, and does this by holding informal discussions with the senior executives on an ongoing basis, as required. Principle 2 – Structure the Board to Add Value Recommendation 2.1 The board of a listed entity should: a) have a nomination committee which: 1) has at least three members, a majority of whom are independent directors; and 2) is chaired by an independent director, and disclose: 3) the charter of the committee; 4) the members of the committee; and Pg. 33 Financial Statements 5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. Disclosure: The Nomination Committee consists of 3 members being Mr Lim, Mr Sakalidis and Mr Sanderson given the size of the board. The committee is deemed to be independent given that Mr Lim and Mr Sanderson are independent directors. The Committee has a charter setting out the criteria and responsibilities for the selection of new Directors. The number of times the committee met is outlined in the annual report. Recommendation 2.2 A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership. Disclosure: The skills of each individual director are outlined in the annual report setting out the qualifications and experience of each person. Recommendation 2.3 A listed entity should disclose: a) the names of the directors considered by the board to be independent directors; b) if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and c) the length of service of each director Name Mr Eric Lim Mr George Sakalidis Mr Julien Sanderson Position Non-Executive Chairman Executive Director Non-Executive Director Independent Yes No Yes Appointed 23/8/2011 29/1/2016 29/1/2016 An independent Director is defined as a Non-Executive Director and; • Is not a substantial shareholder of the Company or an officer of or directly or indirectly associated with a substantial shareholder of the Company within the last 3 years, or if they have been, they have been assessed by the Board to now be independent; • Within the last three years has not been employed in an executive capacity by the Company, or been a Director after ceasing to hold any such employment; • Within the past three years has not been a principal of a material professional advisor or a material consultant to the Company or an employee associated with a such a material service provider or advisor; and, • Does not have a material contractual relationship with the Company other than as a Director of the Company. Disclosure: The Board comprises three Directors, with Mr Sakalidis as an executive director, and Mr Lim and Mr Sanderson who are deemed to be independent directors. The Board considers that given the size of the Company, it is better to have directors with the appropriate skill sets as key board members. A profile of each Director containing their skills, experience, expertise and term of office is set out in the Directors' Report. Identification of Independent Directors Mr and Mr Lim are independent directors. Independence is measured having regard to the relationships listed in Box 2.3 of the Principles & Recommendations and the Company's materiality thresholds. The materiality thresholds are set out below. Group's Materiality Thresholds Pg. 34 Financial Statements The Board has agreed on the following guidelines for assessing the materiality of matters, as set out in the Company's Board Charter: • Statement of Financial Position items are material if they have a value of more than 10% of net assets. • Profit and loss items are material if they will have an impact on the current period operating result of 10% or more. • Items are also material if they impact on the reputation of the Company, involve a breach of legislation, are outside the ordinary course of business, they could affect the Company’s rights to its assets, if accumulated they would trigger the quantitative tests, involve a contingent liability that would have a probable effect of 10% or more on statement of financial position or profit and loss items, or they will have an effect on operations which is likely to result in an increase or decrease in net income or dividend distribution of more than 10%. • Contracts will be considered material if they are outside the ordinary course of business, contain exceptionally onerous provisions in the opinion of the Board, impact on income or distribution in excess of the quantitative tests, there is a likelihood that either party will default, and the default may trigger any of the quantitative tests, are essential to the activities of the Company and cannot be replaced, or cannot be replaced without an increase in cost of such a quantum, triggering any of the quantitative tests, contain or trigger change of control provisions, they are between or for the benefit of related parties, or otherwise trigger the quantitative tests. Recommendation 2.4 A majority of the board of a listed entity should be independent directors. Disclosure: Mr Sanderson and Mr Lim are deemed as independent. Recommendation 2.5: The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity. Disclosure: The Chair of the Board is Mr Lim, which allows for the division of the roles with the Executive Director role carried out by Mr Sakalidis. Mr Lim is also considered independent. Recommendation 2.6: A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively. Disclosure: Each director is provided with an induction to the Company’s assets and business including all policies and procedures. Each director can request appropriate development opportunities which will be considered by the board on each occasion. If a Director considers it necessary to obtain independent professional advice to properly discharge the responsibility of their office as a Director then, provided the Director first obtains approval for incurring such expense from the Chair, the Company will pay the reasonable expenses associated with obtaining such advice. Principle 3 – Act ethically and responsibly Recommendation 3.1 A listed entity should articulate and disclose its values Disclosure: The Company expects Directors, Officers and Employees to practice honesty, integrity and observe high standards of business and personal ethics and comply with all applicable laws and regulations in fulfilling their duties and responsibilities. The Company has a Statement of Values. Recommendation 3.2 A listed entity should: (a) have a code of conduct for its directors, senior executives and employees; and (b) ensure that the board or a committee of the board is informed of any material breaches of that code. Disclosure: Pg. 35 Financial Statements The Company has established a Code of Conduct as to the practices necessary to maintain confidence in the Company's integrity, practices necessary to take into account their legal obligations and the expectations of their stakeholders and responsibility and accountability of individuals for reporting and investigating reports of unethical practices. Recommendation 3.3 A listed entity should: (a) have and disclose a whistleblower policy; and (b) ensure that the board or a committee of the board is informed of any material incidents reported under that policy. Disclosure: The Company has a adopted a Whistleblower Policy which aims to encourage reporting of violations (or suspected violations) of the Company’s Code of Conduct, or material legal or regulatory obligations, and to provide effective protection from victimisation and retaliation or dismissal to those reporting by implementing systems for confidentiality, anonymity and report handling. Everyone working for the Company receives training on the Whistleblower Policy and are expected to understand and comply with it. Complaints made under the Whistleblower Policy which are regarded as serious and warrant investigation by the Responsible Officer are investigated as set out in the Policy. The Board is informed of material breaches or incidents reported under the Whistleblower Policy and the Board periodically reviews and makes changes to the Policy. Recommendation 3.4 A listed entity should: (a) have and disclose an anti-bribery and corruption policy; and (b) ensure that the board or a committee of the board is informed of any material breaches of that policy. Disclosure: The Company has an Anti-Bribery & Anti-Corruption Policy that applies to its employees, Directors, contractors, consultants, third parties and other persons associated with the Company’s business operations. All Company policies are aimed at conducting business that is fair, honestly, transparently, with integrity and in compliance with the law in all jurisdictions in which it operates. Acknowledging the potential for reputational damage if the Company is, or is alleged to be, involved in bribery or corruption, the Policy addresses: • what may be deemed as forms of bribery and corruption; • encourages a robust culture of integrity, transparency and compliance, which is critical to long term success and value preservation in the business; • aims to safeguard and make transparent relationships with external parties in the context of receiving and giving hospitality, gifts and other financial benefits for legitimate purposes consistent with normal business practice; and • prohibits bribes and improper payments, and places appropriate controls on gifts and donations. Employees are trained in the policy and are responsible for reporting actual or suspected breaches of the Policy. All safeguards in terms of confidentiality, anonymity, ongoing support and protection in that Policy will apply in these circumstances. Any material breaches of the Anti-Bribery & Anti-Corruption Policy are reported to the Board. The Board periodically reviews and makes changes to the Policy Principle 4 – Safeguard Integrity in Financial Reporting Recommendation 4.1 The board of a listed entity should: a) have an audit committee which: 1) has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and 2) is chaired by an independent director, who is not the chair of the board, and disclose: Pg. 36 Financial Statements 3) the charter of the committee; 4) the relevant qualifications and experience of the members of the committee; and 5) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. Disclosure: The Board has established an Audit committee, however, given the size of the Company and there only being 3 directors, each director acts as a member of the Audit Committee. Mr Lim and Mr Sanderson are considered independent. However, Mr Sakalidis is not considered independent. Details of each of the Director's qualifications are set out in the Directors' Report. The Company has established procedures for the selection, appointment and rotation of its external auditor. The Board is responsible for the initial appointment of the external auditor and the appointment of a new external auditor when any vacancy arises. Candidates for the position of external auditor must demonstrate complete independence from the Group through the engagement period. The Board may otherwise select an external auditor based on criteria relevant to the Company's business and circumstances. The Audit Committee met twice during the Reporting Period. Recommendation 4.2 The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. Disclosure: The Executive Director and the Chief Financial Officer (or equivalent) have provided a declaration to the Board in accordance with section 295A of the Corporations Act and have assured the Board that such declaration is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial risk. Recommendation 4.3 A listed entity should disclose its process to verify the integrity of any periodic corporate report it releases to the market that is not audited or reviewed by an external auditor. Disclosure: The Audit and Risk Committee reviews and makes recommendations to the Board for the approval of all financial reports. Where a report does not require an audit or review by an external auditor, the report is prepared by the accounts department and then reviewed by the Managing Director. Once the Managing Director has reviewed and is happy with the report content, it is circulated internally to any appropriate member before being circulated to the full board for comment and approval prior to lodging with the ASX. Principle 5 – Make Timely and Balanced Disclosure Recommendation 5.1: Recommendation 5.1 A listed entity should have and disclose a written policy for complying with its continuous disclosure obligations under Listing Rule 3.1. Disclosure: The Company has established written policies designed to ensure compliance with ASX Listing Rule disclosure and accountability at a senior executive level for that compliance. The policies also include examples of disclosure requirements and who can communicate with media outlets. Pg. 37 Recommendation 5.2 Financial Statements A listed entity should ensure that its board receives copies of all material market announcements promptly after they have been made. Disclosure: Any announcement is first prepared by the appropriate department of the Company and forwarded to the Managing Director for review. If needed, the Company Secretary will also review the announcement before it is then sent to the full board for comment and approval prior to lodging with the ASX. Recommendation 5.3 A listed entity that gives a new and substantive investor or analyst presentation should release a copy of the presentation materials on the ASX Market Announcements Platform ahead of the presentation. Disclosure: The Company lodges all presentations prior to any meeting with analysts. From time to time the Company will provide a Company Update which is lodged on the ASX platform ahead of the commencement of trading hours where possible. Principle 6 – Respect the Rights of Security Holders Recommendation 6.1: A listed entity should provide information about itself and its governance to investors via its website. Disclosure: The Company has designed a communications policy for promoting effective communication with shareholders and encouraging shareholder participation at general meetings. This includes all relevant information being disclosed on the Company’s website. Recommendation 6.2 A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors. Disclosure: The company welcomes open communication with shareholders including access to the Manging Director, Board members and the ability for shareholders to communicate via email. Recommendation 6.3 A listed entity should disclose how it facilitates and encourages participation at meetings of security holders. Disclosure: The Company encourages all shareholders to attend meetings of members, including allowing time for shareholder questions. The time and place of each general meeting is decided with Shareholder preferences in mind, to encourage maximum attendance by Shareholders Recommendation 6.4 A listed entity should ensure that all substantive resolutions at a meeting of security holders are decided by a poll rather than by a show of hands. Disclosure: Decisions on all substantive resolutions at general meetings of the Company will be decided by a poll to ensure the true will of Shareholders is ascertained (rather than by a show of hands, which is inconsistent with the “one security one vote” principle in the ASX Listing Rules). Recommendation 6.5 A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically. Pg. 38 Disclosure: Financial Statements The Company has an email where shareholders can request to receive all information electronically and offers the same service through its share registry Principle 7 – Recognise and Manage Risk Recommendation 7.1: The board of a listed entity should: a) have a committee or committees to oversee risk, each of which: 1) has at least three members, a majority of whom are independent directors; and 2) is chaired by an independent director, and disclose: 3) the charter of the committee; 4) the members of the committee; and 5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework. Disclosure: The Board has adopted a Risk Management Policy, which sets out the Company's risk profile. Under the policy, the Board is responsible for approving the Company's policies on risk oversight and management and satisfying itself that management has developed and implemented a sound system of risk management and internal control. Under the policy, the Board delegates day-to-day management of risk to the Managing Director who is responsible for identifying, assessing, monitoring and managing risks. The Managing Director is responsible for updating the Company's material business risks to reflect any material changes, with the approval of the Board. In fulfilling the duties of risk management, the Managing Director may have unrestricted access to Company employees, contractors and records and may obtain independent expert advice on any matter they believe appropriate, with the prior approval of the Board. In addition, the following risk management measures have been adopted by the Board to manage the Company’s material business risks: 1) the Board has established authority limits for management which, if exceeded, will require prior Board approval; 2) 3) the Board has adopted a compliance procedure for the purpose of ensuring compliance with the Group's continuous disclosure obligations; and the Board has adopted a corporate governance manual which contains other policies to assist the Company to establish and maintain its governance practices. The Board has also established an audit and risk committee. Given that the board consists of 3 members, all members comprise the audit and risk committee, and Mr Lim and Mr Sanderson are considered to be independent. Mr Sakalidis is not considered indepdent. Recommendation 7.2: The board or a committee of the board should: a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and b) disclose, in relation to each reporting period, whether such a review has taken place. Disclosure: Management report to the Board as to the effectiveness of the Company's management of its material business risks via the Audit Committee meetings. In addition at every board meeting, the Board is provided with an update to ensure all relevant risks and systems are in place and working effectively Pg. 39 Recommendation 7.3 A listed entity should disclose: Financial Statements a) if it has an internal audit function, how the function is structured and what role it performs; or b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes. Disclosure: The Board receives assurances from the Managing Director and the Chief Financial Officer (or equivalent) that the financial accounts are founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. The Company has an internal audit committee as outlined above, which then reviews these financial reports in addition to the external auditors. Recommendation 7.4 A listed entity should disclose whether it has any material exposure to environmental and social risks and, if it does, how it manages or intends to manage those risks. Disclosure: The Company is an exploration company and as such has exposure to the risks of the mining industry environmental risks etc. To mitigate any risks, the Company hires appropriately qualified personnel to undertake its exploration activities. Principle 8 – Remunerate Fairly and Responsibly Recommendation 8.1 The board of a listed entity should: a) have a remuneration committee which: 1) has at least three members, a majority of whom are independent directors; and 2) is chaired by an independent director, and disclose: 3) the charter of the committee; 4) the members of the committee; and 5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive. Disclosure: The Company has established a Remuneration Committee. The Committee has adopted a formal charter setting out the responsibilities and considerations in determining remuneration of Executives and Non-Executives. The Committee consists of the current board members given the size of the Company The Board considers the remuneration committee is sufficient given the size of the Board and Mr Lim and Mr Sanderson are deemed to be independent. The remuneration committee did not meet during the period but meetings were held as formal board items. Recommendation 8.2: A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives. Disclosure: The details of Executive Directors are disclosed to the ASX when necessary. Pg. 40 Financial Statements Non-Executive Directors are remunerated at a fixed monthly fee for their time and their responsibilities to various committees, and are eligible for additional fees on an hourly basis for work outside of their normal responsibilities, with the approval of the Chairman of the Board. The Non-Executive Directors are however eligible to participate in the Company’s incentive plan. The Board considers that this is a necessary motivation to attract the highest calibre candidates to the Board at this stage in the Company’s operations. Recommendation 8.3: A listed entity which has an equity-based remuneration scheme should: a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and b) disclose that policy or a summary of it. Disclosure: Details of remuneration, including the Company’s policy on remuneration, are contained in the “Remuneration Report” which forms of part of the Directors’ Report. The Remuneration Committee meets where appropriate to discuss the employments terms of the Managing Director/Executive Directors and Non-Executive Directors, and provides any equity-based remuneration after consideration of key milestones to be achieved and other remuneration being paid in the industry. There are no termination or retirement benefits for Non-Executive Directors (other than for superannuation). Securities Trading Policy The Company has also established a policy concerning trading in the Company’s securities by Directors, senior executives and employees. The policy includes blackout periods where no trading in Group securities shall take place between: 1) Up to and including two (2) weeks prior to the announcement of the annual results; 2) Up to and including two (2) weeks prior to the announcement of the half year results; and 3) The last two (2) week period of the months of January, April, July and October prior to the release of the quarterly results for the periods ending 31 December, 31 March, 30 June and 30 September; or 4) as directed in writing by the Company’s Board at any time in its sole discretion. If Directors including the Managing Director/Executive Director wish to trade securities outside the blackout period, they must obtain approval from the Chairman. Employees must obtain the approval of the Managing Director/Executive Director, and the Chairman must obtain the approval of the Board. All related party share dealings involving the purchase of new shares or equity is subject to shareholder approval prior to the shares being issued. Pg. 41 Financial Statements Financial Statement Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2020 Revenue: Interest income Tenement sold Tribute gold sales Profit on disposal of fixed asset Other revenue Expenses: Depreciation expense Exploration and tenement expenses Share based payment expenses Other expenses (Loss) before income tax expense Income tax expense (Loss) from continuing operations Other comprehensive (loss)/income for the year, net of tax Total comprehensive loss for the year Total comprehensive loss for year attributable to members of the Company Basic (loss) per share (cents per share) Diluted (loss) per share (cents per share) Notes 11 3 11 3 3 4 7 7 2020 ($) 35,664 - 2,864 690 62,877 2019 ($) 55,999 - 1,792 - 2,705 (48,777) (3,290) (3,619,904) (2,093,221) - (1,066,758) (4,633,344) - (211,625) (915,528) (3,163,168) - (4,633,344) (3,163,168) (92,897) (99,723) (4,726,241) (3,262,891) (4,726,241) (3,262,891) (2.32) (2.32) (1.74) (1.74) Pg. 42 Financial Statements Statement of Financial Position As at 30 June 2020 Notes 2020 ($) 2019 ($) Current Assets Cash and cash equivalents Trade and other receivables Other assets Total Current Assets Non-Current Assets Property, plant and equipment Other financial assets Right-of-use asset Total Non-Current Assets TOTAL ASSETS Current Liabilities Trade and other payables Lease liability Total Current Liabilities TOTAL LIABILITIES NET ASSETS Equity Contributed equity Reserves Accumulated (losses) Other comprehensive income TOTAL EQUITY 8 9 10 11 12 13 14 15 16 16 4,063,232 4,761,395 105,552 57,722 63,760 22,696 4,226,506 4,847,851 92,810 107,700 14,088 117,542 200,597 - 214,598 318,139 4,441,104 5,165,990 319,034 14,709 231,377 - 333,743 231,377 333,743 231,377 4,107,361 4,934,613 30,926,838 26,809,596 604,462 822,715 (27,484,106) (22,850,762) 60,167 4,107,361 153,064 4,934,613 The accompanying notes form part of these financial statements. Pg. 43 Financial Statements Statement of Changes in Equity For the Year ended 30 June 2020 Note Contributed Equity (Net of Costs) ($) Share Based Payments Reserve ($) Other Compre- hensive Income ($) Accumulated Losses ($) Total ($) Balance at 1 July 2018 19,798,557 414,000 252,787 (19,687,594) 777,750 Comprehensive income Operating (loss) for the year Other comprehensive (loss) for the year Total comprehensive loss for the year Transactions with owners, in their capacity as owners, and other transfers Shares issued during the year Capital raising costs Share based payment Total transactions with owners and other transfers - - - 16 16 16 7,781,820 (770,781) - - - - - 197,090 211,625 7,011,039 408,715 - (3,163,168) (3,163,168) (99,723) - (99,723) (99,723) (3,163,168) (3,262,891) - - - - - - - - 7,781,820 (573,691) 211,625 7,419,754 Balance at 30 June 2019 26,809,596 822,715 153,064 (22,850,762) 4,934,613 Balance at 1 July 2019 26,809,596 822,715 153,064 (22,850,762) 4,934,613 Comprehensive income Operating (loss) for the year Other comprehensive (loss) for the year Total comprehensive loss for the year Transactions with owners, in their capacity as owners, and other transfers Shares issued during the year Options converted to shares Capital raising costs Share based payment Total transactions with owners and other transfers 16 16 16 16 - - - 3,015,792 - - - - 695,813 (218,253) (102,863) 508,500 - - 4,117,242 (218,253) - (4,633,344) (4,633,344) (92,897) - (92,897) (92,897) (4,633,344) (4,726,241) - - - - - - - - - - 3,015,792 477,560 (102,863) 508,500 3,898,989 Balance at 30 June 2020 30,926,838 604,462 60,167 (27,484,106) 4,107,361 The accompanying notes form part of these financial statements. Pg. 44 Financial Statements Statement of Cash Flows For the Year ended 30 June 2020 CASH FLOWS FROM OPERATING ACTIVITIES Notes 2020 ($) 2019 ($) Cash payments to suppliers and contractors (1,050,838) (844,392) Interest received Sundry Income Government grants received 35,523 12,436 50,000 46,668 5,786 - Net cash (used in) operating activities 17 (952,879) (791,938) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of plant and equipment Payments for exploration and evaluation Purchase of new tenements Proceeds from disposal of plant and equipment Net cash (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from new issues of shares Capital raising costs Repayment of lease liabilities Net cash provided by financing activities Net (decrease)/increase in cash held Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year The accompanying notes form part of these financial statements. (4,214) (99,490) (2,980,931) (1,928,217) (130,475) 1,992 (105,570) - (3,113,628) (2,133,277) 3,493,352 (102,863) (22,145) 3,368,344 (698,163) 4,761,395 7,706,820 (573,691) - 7,133,129 4,207,914 553,481 16 16 8 4,063,232 4,761,395 Pg. 45 Financial Statements Notes to the Financial Statements For the year ended 30 June 2020 This financial report includes the financial statements and notes of the Company. NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The financial statements were authorised for issue on 29 September 2020. The following is a summary of the material accounting policies adopted by the Company in the preparation of the financial report. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated. Adoption of new and revised accounting standards The Company has adopted all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 January 2019. It has been determined by the Company that, there is no impact, material or otherwise, of the new and revised standards and interpretations on its business and therefore no change is necessary to Company accounting policies, except for the impact of adoption of AASB16 Leases as explained in Note 26. • AASB 16 Leases The standard replaces AASB 117 ‘Leases” and for lessees will eliminate the classifications of operating leases and finance leases, and require, subject to certain exemptions, the recognition of a ‘right-of-use asset’ and a corresponding lease liability, and the subsequent depreciation of the ‘right-of-use’ asset. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. The Company is currently not party to any material operating or finance lease arrangements. Reporting Basis and Conventions The financial report has been prepared on an accruals basis and is 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. Going Concern The spread of novel coronavirus (COVID-19) was declared a public health emergency by the World Health Organisation on 31 January 2020 and upgraded to a global pandemic on 11 March 2020. The rapid rise of the virus has seen an unprecedented global response by Governments, regulators and industry sectors. The Australian Federal Government enacted its emergency plan on 29 February 2020 which has seen the closure of Australian borders from 20 March, an increasing level of restrictions on corporate Australia’s ability to operate, significant volatility and instability in financial markets and the release of a number of government stimulus packages to support individuals and businesses as the Australian and global economies face significant slowdowns and uncertainties. For the year ended 30 June 2020, COVID-19 has impacted the Group, specifically as follows: • Implications on the current period financial performance and cash flows (particularly operating cash flows). • Details of financial support received from the Australian government. The directors have prepared the financial statements of the Company on a going concern basis. In arriving at this position, the directors have considered the following pertinent matters: a) cash on hand at the date of this report is approximately $9.67 million. Pg. 46 Financial Statements b) current cash resources are considered adequate to fund the entity’s immediate operating and exploration activities however given the state of the equity markets, the rate of expenditure on exploration as a whole has been reduced; and c) the need to raise additional funds by the issue of additional shares or the sale of assets if a high level of exploration activity is to be undertaken. Accounting Policies i. Revenue Interest revenue is recognised on a proportional basis taking into account interest rates applicable to the financial asset. All revenue is stated net of the amount of goods and services tax (GST). The Research and Development tax incentive income is recognised as income when it is determined that it is probable that it will be received, and the amount can be estimated reliably. Within the income tax expense reconciliation, the income is non-assessable and R&D expenditure non-deductible ii. Employee Benefits Provision is made for the Company’s liability for employee benefits arising from services rendered by non-casual employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. There is no liability for long service leave entitlements. iii. Exploration and Evaluation Expenditure All exploration and evaluation expenditure is expensed to Statement of Profit or Loss and Other Comprehensive Income as incurred. The effect of this is to increase the loss incurred from continuing operations as disclosed in the Statement of Profit or Loss and Other Comprehensive Income and to decrease the carrying values in the Statement of Financial Position. The carrying value of mineral assets, as a result of the operation of this policy, is zero, but does not necessarily reflect the board’s view as to the market value of that asset. iv. Acquisition of Assets The cost method is used for all acquisitions of assets regardless of whether shares or other assets are acquired. Cost is determined as the fair value of assets given up at the date of acquisition plus costs incidental to the acquisition. Costs relating to the acquisition of new areas of interest are classified as either exploration and evaluation expenditure or mine properties based on the stage of development reached at the date of acquisition. v. Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST except where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable. Receivables and payables in the Statement of Financial Position are shown inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position. 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. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. vi. Income Tax The income tax expense for the year comprises current income tax expense and deferred tax expense. Current income tax expense charged to the Statement of Profit and Loss and Other Comprehensive Income is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities and assets are therefore measured at the amounts expected to be paid to or recovered from the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses, if any in fact are brought to account. 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 Pg. 47 Financial Statements 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 calculated at the tax rates that are expected to apply to the period when the asset is realised, or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. 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. vii. 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. viii. Impairment of Assets At each reporting date, the Company 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. This policy has no application where paragraph (c) (Exploration and Evaluation Expenditure) applies. (i) Earnings per Share (i) Basic Earnings per Share – Basic earnings per share is determined by dividing the loss from continuing operations after related income tax expense by the weighted average number of ordinary shares outstanding during the financial period. (ii) Diluted Earnings per Share – Options that are considered to be dilutive are taken into consideration when calculating the diluted earnings per share. (j) Property, plant and equipment Each class of plant, equipment and motor vehicles is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses. Plant, equipment and motor vehicles are measured on the cost basis. The carrying amounts of plant, equipment and motor vehicles are 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 asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. Depreciation The depreciable amount of all plant, equipment and motor vehicles are depreciated on a straight-line basis over the asset’s useful life to the Company commencing from the time the asset is held ready for use. The depreciation rates used for the class of plant, equipment and motor vehicle depreciable assets range between 20% and 100%. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each Statement of Financial Position 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. These gains and losses are included in the Statement of Profit and 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. Pg. 48 (k) Financial Instruments Financial instruments Financial Statements A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The Company determines the classification of its financial instruments at initial recognition. Financial assets From 1 January 2018, financial assets are classified at initial recognition a (i) subsequently measured at amortised cost, (ii) fair value through other comprehensive income (OCI) or (iii) fair value through profit or loss. The classification depends on the purpose for which the financial assets were acquired. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designed upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the Income Statement within finance costs. Transaction costs arising on initial recognition are expensed in the Income Statement. Financial assets at fair value through other comprehensive income The financial asset is held for both collecting contractual cash flows and selling the financial asset. Movements in the carrying amount are taken through other comprehensive income and accumulated in the fair value reserve, except for the recognition of impairment, interest income and foreign exchange difference which are recognised directly in profit or loss. Interest income is calculated using the effective interest rate method. The Company’s financial assets at fair value through other comprehensive income include it’s investment in listed equities. Financial assets at amortised cost Financial asset at amortised costs are non-derivative financial assets with fixed or determinable payments that re not quoted in an active market. Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gain and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Company’s financial assets at amortised cost include ‘trade and other receivables’ and “cash and equivalents’ in the Balance Sheet. Financial liabilities Financial liabilities are classified at initial recognition as (i) financial liabilities at fair value through profit or, (ii) loans and borrowings, (iii) payables or (iv) derivatives designated as hedging instruments, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net directly attributable transaction costs. The Company’s financial liabilities include trade and other payables, loans and borrowings including bank overdraft. These are subsequently measured at amortised cost using the effective interest method. Gain and losses are recognised in the Income Statement when the liabilities are derecognised. Amortisation is included as finance costs in the Income Statement. Fair Value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. The expression “fair value” – and derivatives thereof – wherever used in this report bears the meaning ascribed to that expression by the Australian Accounting Standards Board. Impairment At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the profit or loss. Pg. 49 Financial Guarantees Financial Statements Where material, financial guarantees issued, which require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due, are recognised as a financial liability at fair value on initial recognition. The guarantee is subsequently measured at the higher of the best estimate of the obligation and the amount initially recognised less, when appropriate, cumulative amortisation in accordance with AASB 15: Revenue. Where the entity gives guarantees in exchange for a fee, revenue is recognised under AASB 15. The fair value of financial guarantee contracts has been assessed using a probability weighted discounted cash flow approach. The probability has been based on: the likelihood of the guaranteed party defaulting in a year period; the proportion of the exposure that is not expected to be recovered due to the guaranteed party defaulting; and the maximum loss exposed if the guaranteed party were to default. De-recognition Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. (l) Provisions Provisions are recognised when the Company 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. (m) Leases Lease payments for operating leases (where substantially all the risks and benefits remain with the lessor) are charged as an expense in the periods in which they are incurred. Lease incentives under operating leases, if any, are recognised as a liability and amortised on a straight-line basis over the life of the lease term. (n) Contributed Equity Ordinary share capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. (o) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial period. (p) Segment Reporting Operating segments are reported in a manner that is consistent with the internal reporting to the chief operating decision maker (“CODM”), which has been identified by the company as the Managing Director and other members of the Board of directors. (q) Critical Accounting Estimates, Assumptions, and Judgements The directors evaluate estimates and judgements incorporated into the financial report 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 from within the Company. Share based payments The value of amounts recognised in respect of share based payments have been estimated based on the fair value of the equity instruments granted. Fair value of the options issued are estimated by using an appropriate option pricing model. If any of these assumptions or estimated were to change, this could have a significant effect on the amount recognised. Pg. 50 Taxation Financial Statements Balances disclosed in the financial statements and the notes thereto related to taxation are based on best estimates by directors. These estimates take into account both the financial performance and position of the Company as they pertain to current income tax legislation and the directors understanding thereof. No adjustment has been made for pending or future taxation legislation. The current tax position represents the directors’ best estimate pending an assessment being received from the Australian Taxation Office. Environmental Issues Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental legislation and the directors understanding thereof. At the current stage of the Company’s development and its current environmental impact, the directors believe such treatment is reasonable and appropriate. Impairment The Company assesses impairment at each reporting date by evaluating conditions specific to the Company that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Coronavirus (COVID-19) pandemic Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the consolidated entity based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the consolidated entity operates. Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the consolidated entity unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic. (r) Government grants Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate. (s) New or amended Accounting Standards and Interpretations adopted The Company has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The following Accounting Standards and Interpretations are most relevant to the consolidated entity: AASB 16 Leases The consolidated entity has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results improve as the operating expense is now replaced by interest expense and depreciation in profit or loss. For classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the lease payments are separately disclosed in financing activities. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. The Company has adopted AASB 16 from 1 July 2019, using the modified retrospective approach, with no restatement of comparative information. The impact on the accounting policies, financial performance and financial position of the Company from the adoption of AASB 16 is detailed in Note 26. Other than the above, there is no material impact of the new and revised Standards and Interpretations on the Group. Pg. 51 (t) Right of use assets Financial Statements A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. (u) Lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. NOTE 2 OPERATING SEGMENTS Segment Information Identification of reportable segments The Company has identified that it operates in only one segment based on the internal reports that are reviewed and used by the board of directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The Company’s principal activity is mineral exploration. Revenue and assets by geographical region The Company’s revenue is received from sources and assets that are located wholly within Australia. Major customers Due to the nature of its operations, the Company does not provide products and services. Pg. 52 Financial Statements NOTE 3 REVENUE AND EXPENDITURE Other Income Sundry Income Government grants Other Expenses Occupancy costs Filing and ASX fees Corporate and management expenses Legal Fees Other expenses from continuing operations Exploration and Tenement Expenses Exploration expenditure incurred Acquisition of tenements NOTE 4 INCOME TAX EXPENSE The components of tax expense comprise: Current tax Deferred tax asset/liability 2020 ($) 377 62,500 62,877 (29,487) (83,190) (452,483) - (501,598) (1,066,758) (2,980,929) (638,975) (3,619,904) 2020 ($) - - - 2019 ($) 2,705 - 2,705 (45,727) (69,030) (407,488) - (393,283) (915,528) (45,727) (69,030) (915,528) 2019 ($) - - - The prima facie tax on loss from ordinary activities before income tax is reconciled to income tax as follows: Total comprehensive loss for the year before income tax Prima facie tax benefit attributable to loss from continuing operations before income tax at 27.5% 4,726,241 3,262,891 1,299,716 897,295 Tax effect of assessable and non-assessable items • Unrealised gain on available for sale financial assets • Government grants • Share-based payments • Other Deferred tax benefit on tax losses not brought to account Income tax attributable to operating loss Unrecognised temporary differences Net deferred tax assets (calculated at 27.5%) have not been recognised in respect of the following items: Accrued expenses Available-for-sale financial assets loss Unrecognised deferred tax assets relating to the above temporary differences Unrecognised deferred tax assets (25,547) 17,188 - 18,439 (1,309,796) - (27,424) - (58,197) (5,070) (806,604) - (39) 25,547 25,508 (2,566) 27,424 24,858 The Company has accumulated tax losses of $25,757,015 (2019: $21,021,737) The potential deferred tax asset of these losses $7,083,179 (2019: $5,780,978) will only be recognised if: (i) the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit from the losses and deductions to be released; (ii) the Company continues to comply with the conditions for deductibility imposed by the law; and (iii) no changes in tax legislation adversely affect the Company in realising the benefit from the deductions for the losses. Pg. 53 Financial Statements NOTE 5 KEY MANAGEMENT PERSONNEL COMPENSATION Short-term employee benefits Post-employment benefits Share based payments 2020 ($) 419,768 26,655 - 446,423 2019 ($) 383,012 24,474 211,625 619,111 Further key management personnel remuneration information has been included in the Remuneration Report section of the Directors Report. Information on related party and entity transactions is disclosed in Note 21. NOTE 6 AUDITORS REMUNERATION Amounts received or due and receivable by the auditors of the Company for: Auditing and reviewing the financial report Other NOTE 7 EARNINGS PER SHARE The following reflects the earnings and share data used in the calculation of basic and diluted earnings per share Loss for the year Earnings used in calculating basic and diluted earnings per share 2020 ($) 24,655 - 24,655 2020 ($) 2019 ($) 28,153 - 28,153 2019 ($) (4,726,241) (4,726,241) (3,262,891) (3,262,891) Weighted average number of ordinary shares used in calculating basic and diluted earnings per share 203,737,994 187,352,940 The Company had 20,418,862 partly-paid contributing shares and 5,700,000 (2019: 8,986,667) options over fully paid ordinary shares on issue at balance date. Options and contributing shares are considered to be potential ordinary shares. However, they are not considered to be dilutive in this year and accordingly have not been included in the determination of diluted earnings per share. NOTE 8 CASH AND CASH EQUIVALENTS Cash at bank Deposits at call NOTE 9 TRADE AND OTHER RECEIVABLES Trade receivables Other receivables GST refundable NOTE 10 OTHER ASSETS Prepayments 2020 ($) 4,041,029 22,203 4,063,232 2020 ($) 135 1,141 104,276 105,552 2020 ($) 57,722 2019 ($) 738,899 4,022,496 4,761,395 2019 ($) - 10,330 53,430 63,760 2019 ($) 22,696 Pg. 54 Financial Statements NOTE 11 PROPERTY, PLANT, EQUIPMENT Plant and equipment Less: Accumulated depreciation Motor vehicles Less: Accumulated depreciation Reconciliation of the carrying amounts of plant, equipment and motor vehicles from the beginning to the end of the financial year. Plant, equipment and motor vehicles Carrying amount at beginning of year Additions Disposals Depreciation expense Total plant, equipment and motor vehicles at end of year NOTE 12 OTHER FINANCIAL ASSETS Non-Current Financial assets at fair value through other comprehensive income – shares in listed corporations Investments in related parties Financial assets at fair value through other comprehensive income includes the following investments held in director-related party entities: Image Resources NL Meteoric Resources NL NOTE 13 RIGHT-OF-USE ASSET Cost Accumulated depreciation Carrying Value Reconciliation Recognised on 1 July 2019 on adoption of AASB16 Depreciation expense Closing balance AASB 16 has been adopted during the period, refer note 26 for details. NOTE 14 TRADE AND OTHER PAYABLES Trade creditors and accruals PAYG Withholding & Superannuation Payable NOTE 15 LEASE LIABILITIES Current liabilities Reconciliation Recognised on 1 July 2019 on adoption of AASB16 Principal repayments Closing balance 2020 ($) 131,868 (108,185) 23,683 161,285 (92,158) 69,127 92,810 117,542 4,214 (1,301) (27,645) 92,810 2020 ($) 2019 ($) 131,246 (105,952) 25,294 161,285 (69,037) 92,248 117,542 21,342 99,490 - (3,290) 117,542 2019 ($) 107,700 200,597 47,339 7,000 54,339 2020 ($) 35,220 (21,132) 14,088 Premises ($) 35,220 (21,132) 14,088 2020 ($) 314,700 4,334 319,034 2020 ($) 14,709 14,709 Premises ($) 35,220 (20,511) 14,709 74,165 5,000 79,165 2019 ($) - - - Total ($) 35,220 (21,132) 14,088 2019 ($) 215,150 16,227 231,377 2019 ($) - - Total ($) 35,220 (20,511) 14,709 Pg. 55 Financial Statements AASB 16 has been adopted during the period, refer note 26 for details. The Company leases its premises. The average lease term is 2 years. Underlying assets serve as security for the related lease liabilities. A maturity analysis of future minimum lease payments is presented below: Lease payments Interest Net present values <1 year $ 15,058 (349) 14,709 1-2 years $ 2-3 years $ 3-4 years $ 4-5 years $ >5 years $ - - - - - - - - - - - - - - - Total $ 15,058 (349) 14,709 NOTE 16 EQUITY 2020 No. $ 2019 No. $ Contributed Equity – Ordinary Shares At the beginning of year Shares issued during the year at $0.15 each Shares issued during the year at $0.12 each Shares issued during the year at $0.28 each Shares issued during the year at $0.62 each Options exercised during the year at $0.218 on or before 31 Dec 2021 Options exercised during the year at $0.138 on or before 11 Oct 2020 Transfer from share based payments reserve for 3,286,667 share options exercised during the year Shares issued during the year at $0.60 each (i) Shares issued during the year at $0.67 each (ii) Shares issued during the year at $0.75 each (iii) Broker / Sundry Share issuance costs Closing balance: 202,026,870 - - - 4,864,181 26,809,596 - - - 3,015,792 300,000 65,400 2,986,667 412,160 - 200,000 300,000 250,000 - 210,927,718 218,253 120,000 201,000 187,500 (102,863) 30,926,838 Contributed Equity – Contributing Shares – Partly-paid 152,036,703 500,000 38,440,167 11,050,000 - 19,798,557 75,000 4,612,820 3,094,000 - - - - - - - - - - 202,026,870 - - - - (770,781) 26,809,596 At the beginning of year Shares issued during the year at $Nil Closing balance: 2020 2019 No. 20,418,862 - 20,418,862 $ - - - No. 20,418,862 - 20,418,862 $ - - - i. ii. iii. 200,000 shares were issued on 6 February 2020 at $0.60 being the price on 6 February 2020 for the acquisition of tenement M38/1041 being the Nicholson Well Project. 300,000 shares were issued on 26 February 2020 at $0.67 each being the closing price on 25 February 2020 for the acquisition of licences P38/4379-4384 and P38/43446 being the Lady Julie Project. 250,000 shares were issued on 5 May 2020 at $0.75 each being the deemed issue price for the acquisition of licences P39/5455, P39/5928-5929, P39/5931-5934, P37/9144 and applications P39/6175-6177 being the Homeward Bound South Project. Reserves Share based benefits reserve (i) 604,462 822,715 The share based payments reserve is used to recognise the fair value of options issued to employees and advisors. There were no options issued during the year. Pg. 56 Options Financial Statements 2020 2019 Options to acquire fully paid shares exercisable at $0.377 on or by 31 December 2021 Options to acquire fully paid shares exercisable at $0.218 on or by 31 December 2021 Options to acquire fully paid shares exercisable at $0.138 on or by 31 December 2021 Total Options 3,000,000 2,700,000 - 5,700,000 3,000,000 3,000,000 2,986,667 8,986,667 A reconciliation of the total options on issue as at 30 June is as follows: At 1 July 2018 Options issued during the year At 30 June 2019 At 1 July 2019 Options converted to shares during the year At 30 June 2020 Terms and condition of contributed equity Ordinary Fully Paid Shares Number of Options 3,000,000 5,986,667 8,986,667 8,986,667 (3,286,667) 5,700,000 $ 414,000 408,715 822,715 822,715 (218,253) 604,462 Ordinary shares have the right to receive dividends as declared and, in the event of winding up of the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of shares held, regardless of the amount paid up thereon. On a show of hands, every holder of fully paid ordinary shares present at a meeting in person or by proxy, is entitled to one vote and upon a poll, each member present in person or by proxy or by attorney or duly authorised representative shall have one vote for each fully paid ordinary share. Contributing Shares Contributing shares require a further payment of $0.20 to become fully paid. On a show of hands, every holder of contributing shares present at a meeting in person or by proxy, is entitled to one vote and upon a poll, each member present in person or by proxy or by attorney or duly authorised representative shall have a fraction of a vote for each partly-paid contributing share held. The fraction must be equivalent to the proportion which any amount paid (not credited) is of the total amounts paid (if any) and payable (excluding amounts credited). Any amounts paid in advance of a call are ignored when calculating these fractional voting rights. Pg. 57 Financial Statements NOTE 17 CASH FLOW INFORMATION Reconciliation of operating loss after income tax with funds used in operating activities Operating (loss) after income tax Depreciation and amortisation Sale of tenement Exploration expenditure Share based payment Appreciation of available-for-sale financial assets Profit on sale of fixed assets Interest accrual Interest expense – right of use asset Changes in operating assets and liabilities: Decrease/(increase) in trade and other receivables relating to operating activities Decrease/(increase) in prepayments Increase/(decrease) in trade and other payables relating to operating activities Cash flow from operations Non-cash financing activities are listed at Note 21. 2020 ($) 2019 ($) (4,726,241) 48,777 - 3,111,404 508,500 92,897 (690) (141) 1,634 (41,650) (35,026) 87,657 (952,879) (3,262,891) 3,290 - 2,033,787 211,625 99,723 (9,330) - 1,288 7,969 122,601 (791,938) NOTE 18 TENEMENT EXPENDITURE COMMITMENTS Pursuant to relevant legislation in Western Australia, mineral tenements are held subject to the condition that rate and rentals are paid and prescribed expenditure conditions are met. Application for exemption from all or some of the prescribed expenditure conditions may be made but no assurance is given that any such application will be granted. If the prescribed expenditure conditions are not met with respect to a tenement, that tenement is liable to forfeiture. The prescribed expenditure condition in respect of the granted tenements for the next twelve months amounts to $656,860 (2019: $575,960). The prescribed expenditure condition in respect of the pending tenements for the next twelve months amounts to $82,560. Not included in the above figures are Magnetic Iron Ore Tenement commitment conditions of $249,000 which are met by Northam Iron Pty Ltd as per agreement dated 13 November 2017. NOTE 19 TENEMENT ACCESS Native Title and Freehold All or some of the tenements in which the Company has an interest are or may be affected by native title. The Company is not in a position to assess the likely effect of any native title impacting the Company. The existence of native title and heritage issues represent, as a general proposition, a serious threat to explorers and miners, not only in terms of delaying the grant of tenements and the progression of exploration development and mining operations, but also in terms of costs arising consequent upon dealing with aboriginal interest groups, claims for native title and the like. As a general proposition, a tenement holder must obtain the consent of the owner of freehold before conducting operations on the freehold land. Unless it already has secured such rights, there can be no assurance that the Company will secure rights to access those portions (if any) of the Tenements encroaching freehold land but, importantly, native title is extinguished by the grant of freehold so if and whenever the Tenements encroach freehold the Company is in the position of not having to abide by the Native Title Act in respect of the area of encroachment albeit aboriginal heritage matters still be of concern. NOTE 20 EVENTS SUBSEQUENT TO REPORTING DATE Subsequent to the year end, the Company announced a capital raising of approximately $7.1m via the placement of 5,143,659 shares at $1.38 per share. The placement shares were issued on 11 September 2020. Pg. 58 Financial Statements NOTE 21 EQUITY-SETTLED SHARE BASED PAYMENTS During the year there were share based payments amounting to $508,500 (2019: $408,715) i. ii. iii. 200,000 shares were issued on 6 February 2020 at $0.60 being the price on 6 February 2020 for the acquisition of tenement M38/1041 being the Nicholson Well Project. 300,000 shares were issued on 26 February 2020 at $0.67 each being the closing price on 25 February 2020 for the acquisition of licences P38/4379-4384 and P38/43446 being the Lady Julie Project. 250,000 shares were issued on 5 May 2020 at $0.75 each being the deemed issue price for the acquisition of licences P39/5455, P39/5928-5929, P39/5931-5934, P37/9144 and applications P39/6175-6177 being the Homeward Bound South Project. NOTE 22 RELATED ENTITY AND RELATED ENTITY TRANSACTIONS Particulars of contractual arrangements and financial benefits provided to the key management personnel are detailed in the directors’ report. There are no amounts owing to directors and/or director-related parties (including GST) at 30 June 2020 or 2019. Transactions with directors, director-related parties and related entities other than those disclosed elsewhere in this financial report are as follows: Leeman Pty Ltd, a George Sakalidis related party, hire of specialised equipment Image Resources NL, vehicle hire Investments in related parties Financial assets at fair value through other comprehensive income includes the following investments held in director-related party entities: Image Resources NL Meteoric Resources NL 2020 ($) - - - 2019 ($) (4,042) (7,068) (11,110) 47,339 7,000 54,339 74,165 5,000 79,165 Save as disclosed above, there were no other related party or related entity transactions, other than those disclosed in Note 5. NOTE 23 CONTINGENT LIABILITIES Native Title The Company’s activities may be subject to the Native Title Act and Aboriginal heritage legislation. The Native Title Act recognises the title rights of indigenous Australians. State and Commonwealth native title legislation regulates the recognition, application and protection of native title. Native title may affect the status, renewal and conversion of existing tenements and the granting of new tenements. Indigenous land use agreements, including terms of compensation, heritage survey and protection agreements or other agreement types may need to be negotiated with affected parties. The Native Title Act prescribes procedures applicable to the grant of tenements which may apply even in the case of, for instance, a granted exploration licence being “converted” to, say, a mining lease. Compensation may become payable in respect of any impact which the grant of any tenements or other activities have on native title. A tenement holder may be liable for the payment of compensation for the affect of mining and exploration activities on any native title rights and interests that exist in the area covered by a tenement. Compensation may be payable in forms other than money, including the transfer of property and the provision of goods and services. It is not currently possible to assess whether compensation will be payable by the Company to native title holders in relation to any of the tenements but such compensation could be significant. Pg. 59 Financial Statements There may be sites and objects of significance to indigenous Australians located on the land relating to the Company’s tenements. State and Commonwealth Aboriginal heritage legislation aims to preserve and protect these sites and objects from use in a manner inconsistent with Aboriginal tradition. The Company proposes carrying out ‘clearance surveys’ if it considers this to be appropriate before conducting any exploration work that would disturb the surface of the land. The Company’s tenements may contain some such sites or objects of significance, which would need to be avoided or cause delays. It is possible that areas containing mineralisation or an economic resource may also contain sacred sites, in which case exploitation thereof may be entirely frustrated. Access agreements will need to be negotiated with affected parties. Native title, Aboriginal heritage or other indigenous matters are matters of substantial risk (giving rise to the threat that certain tenements may not be granted, access to certain tenements may be denied or delayed in addition to potentially significant cost exposure in respect of things such as negotiations, surveys, incentive payments and compensation to name but a few) as the legislative frame works provide torturous and frequently uncertain routes to the endeavour by both stakeholders (that is explorers/miners and indigenous peoples) to attain certainty. It is not possible to quantify the financial or other impact native title and Aboriginal heritage will have upon the Company as, amongst other things, the processes involved with: (a) (b) (c) identifying all and only the indigenous peoples with a relevant interest; registering an indigenous land use agreement; obtaining access to land without infringing the provisions of the Aboriginal Heritage Act; are open ended, can involve substantial delay and cost and there can be no certainty as to the outcome with it being possible for projects to be entirely frustrated. This could be the case, for instance, even in circumstances where: (a) (b) a native title party consents to the grant of an exploration licence and assists the exploration endeavour thereon (and the discovery of an otherwise economic deposit); the Company, in order to exploit that discovery, applies for a mining lease (or other required approval, consent, authority etc.) but such grant, approval, consent or authority is not forthcoming by reason of an objection by the same or another native title party. Freehold Access The interests of holders of freehold land encroached by tenements are given special recognition by the Mining Act (WA). As a general proposition, a tenement holder must obtain the consent of the owner of freehold before conducting operations on the freehold land. There can be no assurance that the Company will secure rights to access those portions of the tenements encroaching freehold land either at all or for all purposes but, importantly, the grant of freehold extinguished native title so wherever the tenements encroach freehold the Company is in the position of not having to abide by the Native Title Act albeit aboriginal heritage matters will still be a consideration Tenements under option The Company has an option to purchase E53/01978, P53/01627 and P53/01628 known as the Birthday Patch project. Under the terms of the option agreement the company paid an option fee of $5,000 for an option till 31 August, during which time it may purchase a 100% interest in the tenements for a consideration of $40,000. Pg. 60 Financial Statements NOTE 24 CONTINGENT ASSETS Tenement Sales Agreement The following relates to a contingent consideration in terms of the sale of tenements agreement for tenements (Jubuk – E70/3536, Ragged Rock E70/4243, Kauring – E70/4508, Kauring – E70/4528, Mt Joy – E70/4692) sold in July 2017: (i) (ii) (iii) (iv) (a) (b) (c) (d) If the Development Conditions are satisfied on or before the third anniversary of the Effective Date (the “Effective Date” being 14 July 2017), the Purchaser must make a payment of $1,000,000 to an account nominated by the Vendor (Milestone Payment). The Milestone Payment is conditional on the following conditions precedent being satisfied or waived before the third anniversary of the Effective Date: a minimum of a 100,000,000 tonne JORC 2012 compliant iron ore inferred resource being certified by a competent person as existing within any of the Tenements or the area of Mutual Interest (AM1), in any number of deposits in any one or more of the Tenements or the AM1 provided that in aggregate the total resources is equal to or greater than 100,000,000 tonnes of iron ore; the Purchaser receiving all approvals, consents and authorities required under the Mining Act to commence mining of at least 2,000,000 tonnes per annum on any one or more of the Tenements or within the AM 1; the Purchaser receiving all approvals, consents and authorities required under all Environmental Laws to commence mining and development on any one or more of the Tenements or the AM1; and the Purchaser receiving all other statutory approvals, consents and authorities required to commence mining and development on any one or more of the Tenements or the AM together, the Development Conditions). The Purchaser will give the Vendor written notice of the satisfaction of the Development Conditions within 14 days of the satisfaction of the last Development Condition (Development Notice) and make the payment into an account nominated by the Vendor within 14 days of the Development Notice. In its absolute discretion, the Purchaser may waive the requirement for the satisfaction of the Development Conditions in writing and make the Milestone Payment at any time on or before the third anniversary of the Effective Date. Development Delay Payments (a) If the Purchaser has not issued a Development Notice: (i) by the third anniversary of the Effective Date and provided that: (A) the condition in clause (b) is satisfied; and (B) the Purchaser has not exercised its rights under clause (c) the Purchaser will pay the Vendor a payment of $500,000 into an account nominated by the Vendor within 30 days of the third anniversary of the Effective Date (14 July 2020); and (ii) by the sixth anniversary of the Effective Date and provided that the purchaser has not exercised its rights under clause 4(d), the Purchaser will pay the Vendor a payment of $500,000 into an account nominated by the Vendor within 30 days of the sixth anniversary of the Effective Date (14 July 2023), (together, the Development Delay Payments). For the avoidance of doubt, if the Purchaser makes the first Development Delay Payment, the Milestone Payment will not be payable by the Purchaser. (b) The obligation to make the First Development Delay Payment is contingent upon a minimum amount being spent on the Tenements by the Purchaser being equal to the total of the: (i) minimum statutory expenditure under the Mining Act; (ii) rates and rents; and (iii) any fees associated with the Option and any access fees payable to landowners; Pg. 61 Financial Statements calculated from the Completion Date to the third anniversary of the Completion Date. (c) At any time before the third anniversary of the Completion Date, the Purchaser, in its sole discretion, may hand back the Tenements by: (i) subject to the receipt of all relevant consents and approvals under the Mining Act, including the consent of the Minister, transferring its interest in the Tenements and the AMI (or any successor tenements) to the Vendors for nil consideration; and (ii) procuring that all security granted over the Tenements by the Purchaser is released. (d) At any time between the third and sixth year anniversary of the Completion Date, the Purchaser, in its sole discretion, may hand back the Tenements by: (i) subject to the receipt of all relevant consents and approvals under the Mining Act, including the consent of the Minister, transferring its interest in the Tenements (or any successor tenements) to the Vendors for nil consideration; and (ii) procuring that all security granted over the Tenements by the Purchaser is released. (e) If the Purchaser exercises its right to hand back the Tenement to the Vendor: (i) under clause (c), the Purchaser will not be required to make the Development Delay Payments. (ii) under clause (d), the Purchaser will not be required to make the Second Development Delay Payment. (f) (g) If the Purchaser exercises its rights under clauses (c) or 4(d) of this Agreement, both parties agree to do all things necessary or convenient to procure that the Tenements (or any successor tenements) are transferred to the Vendor as expeditiously as possible. In the event that the Purchaser does not pay either of the Development Delay Payments when they are due and payable, the Development Delay Payments will be a debt due and payable by the Purchaser under this Agreement. NOTE 25 FINANCIAL INSTRUMENTS DISCLOSURE (a) Financial Risk Management Policies The Company’s financial instruments consist of deposits with banks, receivables, available-for-sale financial assets and payables. Risk management policies are approved and reviewed by the board. The use of hedging derivative instruments is not contemplated at this stage of the Company’s development. Specific Financial Risk Exposure and Management The main risks the Company is exposed to through its financial instruments, are interest rate and liquidity risks. Interest Rate Risk Exposure to interest rate risk arises on financial assets and financial liabilities recognised at reporting date whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. Liquidity Risk The Company manages liquidity risk by monitoring forecast cash flows, cash reserves, liquid investments, receivables and payables. Capital Risk The Company’s objectives when managing capital are to safeguard their ability to continue as a going concern so that they may continue to provide returns for shareholders and benefits for other stakeholders. Due to the nature of the Company’s activities being mineral exploration, the Company does not have ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Company’s capital risk management is the current working capital position against the requirements of the Company to meet exploration programmes and corporate overheads. The Company’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raising as required. The working capital position of the Company at 30 June 2020 and 30 June 2019 was as follows: Pg. 62 Financial Statements Cash and cash equivalents Trade and other receivables Trade and other payables Working capital position Credit Risk 2020 ($) 4,063,232 105,552 (319,034) 3,849,750 2019 ($) 4,761,395 63,760 (231,377) 4,593,778 The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the Statement of Financial Position and notes to the financial statements. There is no material amounts of collateral held as security at balance date. The following table provides information regarding the credit risk relating to cash and cash equivalents based on credit ratings: AAA rated AA rated A rated 2020 ($) - - 4,063,232 The credit risk for counterparties included in trade and other receivables at balance date is detailed below. Trade and other receivables Trade and other receivables GST and tax refundable (b) Financial Instruments 2020 ($) 1,276 104,276 105,552 2019 ($) - - 4,761,395 2019 ($) 10,330 53,430 63,760 The Company holds no derivative instruments, forward exchange contracts or interest rate swaps. Financial Instrument composition and maturity analysis The table below reflects the undiscounted contractual settlement terms for financial instruments. Weighted Average Effective Interest Rate % 0.012% 2020 Financial Assets Cash and cash equivalents Other receivables Available-for sale financial assets Total Financial Assets Financial Liabilities Trade and other payables (excluding GST refund) Net Financial Assets Floating Interest Rate ($) Non-Interest Bearing ($) 4,063,232 - - 4,063,232 - 105,552 107,700 213,252 Total ($) 4,063,232 105,552 107,700 4,276,484 - 4,063,232 (319,034) (105,782) (319,034) 3,957,450 Trade and other payables are expected to be paid as follows: Less than 6 months 2020 ($) (319,034) (319,034) Pg. 63 2019 Financial Assets Cash and cash equivalents Other receivables Available-for sale financial assets Total Financial Assets Financial Liabilities Trade and other payables (excluding GST refund) Net Financial Assets Financial Statements Weighted Average Effective Interest Rate % 1.528% Floating Interest Rate ($) Non-Interest Bearing ($) 4,761,395 - - 4,761,395 - 10,330 200,597 210,927 Total ($) 4,761,395 10,330 200,597 4,972,322 - 4,761,395 (231,377) (20,450) (231,377) 4,740,945 Trade and other payables are expected to be paid as follows: Less than 6 months 2019 ($) (231,377) (231,377) Financial Instruments Measured at Fair Value The financial instruments recognised at fair value in the statement of financial position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following levels: Quoted prices in active markets for identical assets or liabilities (Level 1); Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). 2020 Financial Assets: Financial assets at fair value through profit or loss: Available-for-sale financial assets: Listed investments 2019 Financial Assets: Financial assets at fair value through profit or loss: Available-for-sale financial assets: Listed investments Level 1 $ Level 2 $ Level 3 $ Total $ 107,700 107,700 Level 1 $ Level 2 $ 200,597 200,597 - - - - Level 3 $ - - - - 107,700 107,700 Total $ 200,597 200,597 (c) Sensitivity Analysis – Interest rate risk The Company has performed a sensitivity analysis relating to its exposure to interest rate risk at balance date. The sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in this risk. As at balance date, the effect on loss and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows: Change in loss – increase/(decrease): Increase in interest rate by 0.1% Decrease in interest rate by 0.1% Change in equity – increase/(decrease): Increase in interest rate by 0.1% Decrease in interest rate by 0.1% 2020 ($) (4,063) 4,063 (4,063) 4,063 2019 ($) (4,762) 4,762 (4,762) 4,762 Pg. 64 Financial Statements NOTE 26 NEW STANDARDS ADOPTED AASB 16 Leases Change in accounting policy AASB 16 Leases supersedes AASB 117 Leases. The Company has adopted AASB 16 from 1 July 2019 which has resulted in changes in the classification, measurement and recognition of leases. The changes result in almost all leases where the Company is the lessee being recognised on the Statement of Financial Position and removes the former distinction between ‘operating and ‘finance’ leases. The new standard requires recognition of a right-of-use asset (the leased item) and a financial liability (to pay rentals). The exceptions are short-term leases and leases of low value assets. The Company has adopted AASB 16 using the modified retrospective approach under which the reclassifications and the adjustments arising from the new leasing rules are recognised in the opening Condensed Statement of Financial Position on 1 July 2019. Under this approach, there is no initial Impact on retained earnings under this approach, and comparatives have not been restated. The Company leases premises. Prior to 1 July 2019, leases were classified as operating leases. Payments made under operating leases were charged to profit or loss on a straight-line basis over the period of the lease. From 1 July 2019, where the Company is a lessee, the Company recognises a right-of-use asset and a corresponding liability at the date which the lease asset is available for use by the Company (i.e. commencement date). Each lease payment is allocated between the liability and the finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a consistent period rate of interest on the remaining balance of the liability for each period. The lease liability is initially measured at the present value of the lease payments that are not paid at commencement date, discounted using the rate implied in the lease. If this rate is not readily determinable, the Company uses its incremental borrowing rate. Lease payments included in the initial measurement if the lease liability consist of: • Fixed lease payments less any lease incentives receivable; • Variable lease payments that depend on an index or rate, initially measured using the index or rate at commencement date; • Any amounts expected to be payable by the Company under residual value guarantees; • The exercise price pf purchase options, if the Company is reasonably certain to exercise the options; and • Termination penalties of the lease term reflects the exercise of an option to terminate the lease. Extension options are included in a number of property leases across the Company. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option. Extension options are only included in the lease term if, at commencement date, it is reasonably certain that the options will be exercised. Subsequent to initial recognition, the lease liability is measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The lease liability is remeasured (with a corresponding adjustment to the right-of-use asset) whenever there us a change in the lease term (including assessments relating to extension and termination options), lease payments due to changes in an index or rate, or expected payments under guaranteed residual values Right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before commencement date, less any lease incentives received and any initial direct costs. These right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses. Where the terms of a lease require the Company to restore the underlying asset, or the Company has an obligation to dismantle and remove a leased asset, a provision is recognised and measured in accordance with AASB 137. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset. Right-of-use assets are depreciated on a straight-line basis over the term of the lease (or the useful life of the leased asset if this is shorter). Depreciation starts on commencement date of the lease. Where leases have a term of less than 12 months or relate to low value assets, the Company has applied the optional exemptions to not capitalise these leases and instead account for the lease expense on a straight-line basis over the lease term. Pg. 65 Financial Statements Impact on adoption of AASB 16 On adoption of AASB 16, the Company recognised lease liabilities in relation to leases which had previously been classified as operating leases under the principles of AASB 117. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 July 2019. The weighted average lessee's incremental borrowing rate applied to lease liabilities on 1 July 2019 was 6.47%. On initial application right-of-use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised ln the Statement of Financial Position as at 30 June 2019. In the Condensed Statement of Cash Flows, the Company has recognised cash payments for the principal portion of the lease liability within financing activities, cash payments for the interest portion of the lease liability as interest paid within operating activities and short-term lease payments and payments for lease of low-value assets within operating activities. The adoption of AASB 16 resulted in the recognition of right-of-use assets of $35,220 and lease liabilities of $35,220 in respect of all operating leases, other than short-term leases and leases of low-value assets. The net impact on retained earnings on 1 July 2019 was $nil. Practical expedients applied In applying AASB 16 for the first time, the Company has used the following practical expedients permitted by the standard: • Using hindsight in determining the lease term where the contract contains options to extend or terminate the lease. Pg. 66 Financial Statements Directors’ Declaration The directors of the Company declare that: 1) the accompanying financial statements and notes are in accordance with the Corporations Act 2001 and: a) comply with Australian Accounting Standards and the Corporations Act 2001; b) give a true and fair view of the financial position as at 30 June 2020 and performance for the year ended on that date of the Company; and c) the audited remuneration disclosures set out in the Remuneration Report section of the Directors’ Report for the year ended 30 June 2020 complies with section 300A of the Corporations Act 2001; 2) the Chief Financial Officer has declared pursuant to section 295A(2) of the Corporations Act 2001 that: a) the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; b) the financial statements and the notes for the financial year comply with Australian Accounting Standards; and c) the financial statements and notes for the financial year give a true and fair view; 3) 4) in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; the directors have included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards. This declaration is made in accordance with a resolution of the Board of Directors. SIGNED: GEORGE SAKALIDIS MANAGING DIRECTOR PERTH Dated 29 September 2020 Pg. 71 Financial Statements Other Information Location Tenement Nature of Interest E70/3536 Granted Project JUBUK Equity (%) held at start of Quarter 100% WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA E70/4243 Granted RAGGED ROCK E70/4508 Granted E70/4692 Granted E70/5276 Granted E70/5277 Granted KAURING MT JOY KAURING KAURING E38/3100 Granted MT JUMBO P39/5594 Granted P39/5595 Granted P39/5596 Granted P39/5597 Granted KOWTAH KOWTAH KOWTAH KOWTAH P38/4201 Granted MT JUMBO E37/1258 Granted MERTONDALE P37/8687 Granted CHRISTMAS WELL P37/8688 Granted CHRISTMAS WELL P37/8689 Granted CHRISTMAS WELL P37/8690 Granted CHRISTMAS WELL P37/8691 Granted CHRISTMAS WELL P37/8692 Granted CHRISTMAS WELL P37/8693 Granted CHRISTMAS WELL P37/8694 Granted CHRISTMAS WELL P39/5617 Granted KOWTAH EAST E38/3127 Granted HAWKS NEST P38/4317 Granted MT JUMBO EAST P38/4318 Granted MT JUMBO EAST P38/4319 Granted MT JUMBO EAST - - - - - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Equity (%) held at end of Quarter 100% Royalty Retained Royalty Retained Royalty Retained Royalty Retained Royalty Retained 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Pg. 72 Financial Statements WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA P38/4320 Granted MT JUMBO EAST P38/4321 Granted MT JUMBO EAST P38/4322 Granted MT JUMBO EAST P38/4323 Granted MT JUMBO EAST P38/4324 Granted MT JUMBO EAST E38/3205 Granted HAWKS NEST EAST E38/3209 Granted E37/1303 Granted MT AJAX NAMBI P37/8905 Granted RAESIDE EAST P37/8906 Granted RAESIDE EAST P37/8907 Granted RAESIDE EAST P37/8908 Granted RAESIDE EAST P37/8909 Granted P37/8910 Granted P37/8911 Granted P37/8912 Granted BRAISER BRAISER BRAISER BRAISER E37/1331 Granted MALCOLM E37/1177 Granted MERTONDALE P37/9204 Granted P37/9205 Granted P37/9206 Granted P37/9207 Granted E37/1367 Granted MALCOLM MALCOLM MALCOLM MALCOLM MELITA 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% =\100% 100% 100% 100% 100% 100% E39/2125 Application LITTLE WELL 100% Pending Grant 100% Pending Grant P39/6134 Application LITTLE WELL 100% Pending Grant 100% Pending Grant P39/6135 Application LITTLE WELL 100% Pending Grant 100% Pending Grant P39/6136 Application LITTLE WELL P39/6137 Application LITTLE WELL P39/6138 Application LITTLE WELL 100% 100% 100% 100% 100% 100% Pg. 73 Financial Statements WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA P39/6139 Application LITTLE WELL P39/6140 Application LITTLE WELL P39/6141 Application LITTLE WELL P39/6142 Application LITTLE WELL P39/6143 Application LITTLE WELL P39/6144 Application LITTLE WELL P38/4346 Granted LADY JULIE P38/4379 Granted LADY JULIE P38/4380 Granted LADY JULIE P38/4381 Granted LADY JULIE P38/4382 Granted LADY JULIE P38/4383 Granted LADY JULIE P38/4384 Granted LADY JULIE M38/1041 Granted NICHOLSON WELL JV P39/5465 Granted HOMEWARD BOUND SOUTH P39/5928 Granted HOMEWARD BOUND SOUTH P39/5929 Granted HOMEWARD BOUND SOUTH P39/5931 Granted HOMEWARD BOUND SOUTH P39/5932 Granted HOMEWARD BOUND SOUTH P39/5933 Granted HOMEWARD BOUND SOUTH P39/5934 Granted HOMEWARD BOUND SOUTH P39/9144 Granted HOMEWARD BOUND SOUTH P39/6175 Application HOMEWARD BOUND SOUTH P39/6176 Application HOMEWARD BOUND SOUTH P39/6177 Application HOMEWARD BOUND SOUTH P39/6194 Application P39/6195 Application P39/6196 Acquisition P39/6197 Acquisition MINARA MINARA MINARA MINARA 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% - - - - - - - - - - - - - - - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Pending Grant 100% Pending Grant 100% Pending Grant 100% Pending Grant 100% Pending Grant 100% Pending Grant 100% Pending Grant Pg. 74 Financial Statements WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA P39/6198 Acquisition MINARA P39/5465 Granted HOMEWARD BOUND SOUTH P39/5928 Granted HOMEWARD BOUND SOUTH P39/5929 Granted HOMEWARD BOUND SOUTH P39/5931 Granted HOMEWARD BOUND SOUTH P39/5932 Granted HOMEWARD BOUND SOUTH P39/5933 Granted HOMEWARD BOUND SOUTH P39/5934 Granted HOMEWARD BOUND SOUTH P39/9144 Granted HOMEWARD BOUND SOUTH P39/6175 Application HOMEWARD BOUND SOUTH P39/6197 Application HOMEWARD BOUND SOUTH P39/6198 Application HOMEWARD BOUND SOUTH P39/6194 Application P39/6195 Application P39/6196 Acquisition P39/6197 Acquisition P39/6198 Acquisition MINARA MINARA MINARA MINARA MINARA The following information was applicable as at 1 September 2020 - - - - - - - - - - - - - - - - - 100% Pending Grant 100% 100% 100% 100% 100% 100% 100% 100% 100% Pending Grant 100% Pending Grant 100% Pending Grant 100% Pending Grant 100% Pending Grant 100% Pending Grant 100% Pending Grant 100% Pending Grant Share and Partly Paid Share holdings Category (Size of Holding) 1 to 1,000 Fully Paid Ordinary Shares 664 410 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and over Total 135 242 126 Shares held 232,561 1,034,976 1,102,984 8,312,230 200,244,967 Partly-Paid Contributing Shares 1,065 489 Partly Paid Shares held 448,541 1,058,187 73 67 17 521,614 2,431,233 15,959,287 1,577 210,927,718 1,711 20,418,862 The number of shareholdings with less than marketable parcels is 349 shareholders holding 45,122 fully paid ordinary shares and 539 shareholders holding 105,633 partly paid contributing shares. There are no listed options. Pg. 75 Financial Statements Substantial shareholders as at 1 September 2020: Shareholder Name OAN CHIM SENG CHAN HIAN SIANG DALE ALCOCK / TARGET RANGE LIM CHOON KONG Total Number of Shares % of Issued Share Capital 32,738,096 29,064,538 16,860,818 15,076,083 93,739,535 15.52 13.78 7.99 7.14 44.43 Twenty largest shareholders – Quoted fully paid ordinary shares: Position Holder Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 MR CHIM SENG OAN MR HIAN SIANG CHAN MR CHOON KONG LIM TARGET RANGE PTY LTD CITICORP NOMINEES PTY LIMITED AVA CARTEL SDN BHD GFI INVESTMENTS PTY LTD ALCOCK SUPERANNUATION FUND PTY LTD REKA CEMERLANG SDN BHD BNP PARIBAS NOMS PTY LTD MR LIM JIN HUEI ERIC MR AARON SIM KWANG LIANG BNP PARIBAS NOMINEES PTY LTD MR SAM SCIE WHITE DOT GROUP INCORPORATED MR CHIN HUAT LOO EMNJ PTY LTD COWARA PTY LTD MR CHUNG NENG WOON LEEMAN PTY LTD Total Total issued capital - selected security class(es) Holding 32,738,096 29,064,538 10,374,443 10,363,381 8,870,868 7,590,302 6,778,266 % IC 15.52% 13.78% 4.92% 4.91% 4.21% 3.60% 3.21% 6,497,437 3.08% 5,759,615 5,536,739 4,148,011 3,957,716 3,403,544 3,305,174 2,986,667 2,718,309 2,410,000 2,199,751 2,000,000 1,921,376 152,624,233 210,927,718 2.73% 2.62% 1.97% 1.88% 1.61% 1.57% 1.42% 1.29% 1.14% 1.04% 0.95% 0.91% 72.36% 100.00% Pg. 76 Financial Statements Twenty largest shareholders – Quoted partly-paid contributing shares: Position 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Holder Name GFI INVESTMENTS PTY LTD MR IAN RONALD BARON MR GEORGE SAKALIDIS & MRS JACQUELINE SAKALIDIS MR ROGER MICHAEL THOMSON & MRS ROSMARIE OLIVE THOMSON EMNJ PTY LTD MR GEORGE SAKALIDIS BRISPOT NOMINEES PTY LTD MR BRENTON GRAHAM TIELEMAN MR BARRINGTON DANCE & MS JEAN PATRICIA DANCE MR BARRINGTON DANCE MEGGSIES PTY LTD AUTO MANAGEMENT PTY LTD GILPIN PARK PTY LTD MR PETER WILLIAM TAYLOR & MRS MAUREEN JUNE TAYLOR MR ROBERT FRANCIS KAVANAGH MRS GAYNOR CHRISTENSEN MR ANTHONY JOHN VETTER MR BRUCE WAYNE HARDING & MRS MARGARETHA MARIA COLETA HARDING MR CHOON KONG LIM MR ERIC ROBERT TERACE & MRS JUDITH FAY TERACE Total Total issued capital - selected security class(es) Holding 4,341,208 2,051,999 2,040,333 % IC 21.26% 10.05% 9.99% 2,000,000 9.79% 1,200,000 5.88% 958,114 725,930 500,000 450,000 360,438 242,831 218,654 205,556 194,500 180,000 166,724 123,000 100,000 92,500 91,666 4.69% 3.56% 2.45% 2.20% 1.77% 1.19% 1.07% 1.01% 0.95% 0.88% 0.82% 0.60% 0.49% 0.45% 0.45% 16,243,453 79.55% 20,418,862 100.00% Pg. 77 Financial Statements Twenty largest option holders – All options are unquoted: Option to acquire Fully Paid Ordinary Shares, expiry 31.12.2021 NAME MR GEORGE SAKALIDIS MR ERIC JIN HUEI LIM MR JULIEN SANDERSON MR GEORGE SAKALIDIS MR ERIC JIN HUEI LIM MR JULIEN SANDERSON Expiry price $0.377 $0.377 $0.377 $0.218 $0.218 $0.218 Number 1,500,000 750,000 750,000 1,500,000 750,000 450,000 There are a total of 210,927,718 fully paid ordinary shares, 20,418,862 partly-paid contributing shares and 5,700,000 options on issue. Both the fully paid ordinary shares and partly-paid contributing shares are listed on Australian Securities Exchange Limited. Buy-Back Plans The Company does not have any current on-market buy-back plans. Voting Rights The voting rights attaching to ordinary shares are governed by the Constitution. On a show of hands every person present who is a Member or representative of a member shall have one vote and on a poll, every member present in person or by proxy or by attorney or duly authorised representative shall have one vote for each fully paid ordinary share held and a fraction of a vote for each partly- paid contributing share held. The fraction must be equivalent to the proportion which any amount paid (not credited) is of the total amounts paid (if any) and payable (excluding amounts credited). Any amounts paid in advance of a call are ignored when calculating these fractional voting rights. None of the options have any voting rights. 

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