Magnolia Bostad
Annual Report 2022

Plain-text annual report

Magmatic Resources Limited ABN 32 615 598 322 Annual report for the year ended 30 June 2022 Contents Corporate Information Chairman’s letter to shareholders Review of operations Directors’ report Auditor’s independence declaration Corporate governance statement Consolidated statement of profit or loss and other comprehensive income Consolidated statement of financial position Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the consolidated financial statements Directors’ declaration Independent auditor’s report to the members ASX additional information 3 4 5 16 26 27 28 29 30 31 32 52 53 56 Magmatic Resources Limited ABN 32 615 598 322 Corporate Information Directors David J Richardson – Executive Chairman Adam R McKinnon – Managing Director (appointed 15 March 2022) David W Berrie – Non-Executive Director Andrew J Viner – Non-Executive Director (appointed 17 December 2021) Company Secretary Andrea S Betti David W Berrie Registered Office and Principal Place of Business Suite 7, 55 Hampden Road Nedlands WA 6009 Share Registry Auditors Solicitors ASX Code Telephone: Email: Website: +61 8 9322 6009 info@magmaticresources.com www.magmaticresources.com Computershare Investor Services Pty Ltd Level 11, 172 St George’s Terrace Perth WA 6000 Telephone: Telephone: 1300 850505 +61 8 9415 4000 BDO Audit (WA) Pty Ltd Level 9 Mia Yellagonga Tower 2 5 Spring Street Perth WA 6000 HopgoodGanim Level 8, 1 Eagle Street Brisbane QLD 4000 Magmatic Resources Limited is listed on the Australian Securities Exchange Shares: MAG 3 Magmatic Resources Limited ABN 32 615 598 322 Chairman’s Letter Dear shareholder, I am pleased to present the Company’s sixth annual report since listing on the ASX in May 2017. The East Lachlan is a globally significant gold-copper province, most famous for Newcrest Mining Limited’s world class gold-copper porphyry cluster at the Cadia Valley Mines and the Northparkes copper-gold porphyry mine owned by the China Molybdenum Company Limited and Sumitomo Group. Magmatic recognised the potential of the region, acquiring four exploration projects from Gold Fields Limited in 2014, and we have always described Magmatic as a junior explorer with a “major’s” portfolio. . To further focus our activities on the three 100%-owned advanced gold/copper projects in the East Lachlan, the Company demerged its Moorefield orogenic gold project to its wholly owned subsidiary Australian Gold and Copper Limited (AGC), which was then listed as a separate listed entity on the ASX in January 2021. The Company’s three gold-copper projects represent strategic positions with advanced target portfolios adjacent to major mining operations and recent discoveries in the region. Significant work was carried out by our exploration team located in Orange New South Wales during the year. Multiple aircore and diamond drilling programs were completed at our Wellington North and Myall projects. The Myall Project’s ongoing diamond drilling program has recently identified a significant new porphyry copper-gold target at the Corvette prospect, with mineralisation showing strong similarities to the Northparkes deposit located 60 kilometres south. The Wellington North Project has a dominant tenure position and target portfolio essentially surrounding the Boda gold-copper deposit held by Alkane Resources Limited. Magmatic also holds a strategic position in the Parkes Fault Zone (Parkes Project), immediately south from Alkane’s Tomingley Gold Operations and recent Roswell and San Antonio discoveries. In March 2022 the Company appointed Dr Adam McKinnon as Managing Director. Adam was previously General Manager - Exploration and Business Development at Aurelia Metals Limited, where he had multiple discovery successes including the high-grade Federation Zn-Pb-Au-Cu discovery, which is currently being developed. Magmatic would like to thank Peter Duerden for his service as the Company’s previous Managing Director. During the year the Company received $2,514,561 from option holders who exercised 34,827,710 options. The Company is very well funded, and we look forward to advancing our gold/copper targets in the 2023 Financial Year. I want to take this opportunity to thank our dedicated employees and contractors across the business for their contributions to the successful execution of both exploration and corporate activities in the reporting period and acknowledge our loyal shareholders for their continued support of the Company. Sincerely David Richardson Executive Chairman 4 Magmatic Resources Limited ABN 32 615 598 322 Review of Operations Magmatic Resources Limited (“Magmatic” or the “Company”) (ASX:MAG) is a New South Wales‐focused  copper and gold explorer that listed in May 2017, following the acquisition of an advanced portfolio in the  East Lachlan, New South Wales from Gold Fields Limited in 2014 (Figure 1).   Figure 1. Location of Magmatic’s East Lachlan Projects (Resources from Phillips, 2017; CMOC, 2018; Evolution, 2019;  Newcrest 2019; Alkane 2020, 2022)  Exploration in the East Lachlan Region   The Company has three 100%‐owned projects comprising six licences in the East Lachlan region of New  South Wales – namely Myall, Wellington North and Parkes.    The East Lachlan region is a globally significant gold‐copper province with an endowment of more than 80  million ounces of gold and 13 million tonnes of copper (Phillips, 2017).  It is most famous for Newcrest  Mining’s (ASX:NCM) world class gold‐copper porphyry cluster at the Cadia Valley, where  the Cadia  East  Mine represents Australia’s largest and one of the world’s most profitable gold producers (Newcrest, 2021).   In  addition,  the Northparkes  copper‐gold  porphyry  deposits (China Molybdenum/Sumitomo) and Cowal  gold deposit (Evolution Mining ASX:EVN) represent significant long‐life mining operations.   The  Company’s  projects  represent  strategic  holdings  and  target  portfolios  adjacent  to  major  mining  operations and recent discoveries.   5     Magmatic Resources Limited ABN 32 615 598 322 Ongoing exploration activity, including recent diamond drilling, indicates strong similarities between the  Company’s Myall Project and the Northparkes Mining District, located 60 kilometres to the south (CMOC,  2021).  The  recent  10.1  million  ounce‐equivalent  maiden  resource  for  the  Boda  gold‐copper  discovery  (ASX:ALK 30 May 2022) has highlighted the value of Magmatic’s dominant surrounding tenure position and  target portfolio at its Wellington North Project. The Company also holds a strategic position in the Parkes  Fault  Zone  (Parkes  Project),  immediately  south  from  Alkane’s  Tomingley  Gold  Operations  and  recent  Roswell and San Antonio discoveries.   Myall Project (Copper‐Gold)   Magmatic Resources Limited 100%   The  Myall  Copper‐Gold  Project  covers  the  northern  extension  of  the  Junee  ‐  Narromine  Volcanic  Belt,  located  ~60km  north  and  along  strike  from  the  Northparkes  copper‐gold  Mining  District  (China  Molybdenum/Sumitomo, Figure 2).   Figure 2. Regional gravity and magnetic imagery, highlighting the similarities between the Myall Project and the major  deposits in the Junee‐Narromine Volcanic Belt.  Multiple previously drilled copper‐gold intercepts, including 70 metres at 0.54% Cu & 0.15g/t Au from 141m  and 62 metres at 0.27% Cu & 0.13g/t Au from 260m (MYACD001, ASX:MAG 4 June 2017), highlight near  equivalent grades to  the Northparkes  Mine Resources (CMOC, 2018) and indicate potential for a fertile  porphyry  cluster at Myall. In  the  2020‐2021  financial  year  the Company  defined a  wide  zone  of copper  6       Magmatic Resources Limited ABN 32 615 598 322 mineralisation at the Kingswood Prospect, including 381.9 metres at 0.20% Cu from 150m to end of hole in  21MYDD412 (ASX:MAG 29 March 2021), which further highlighted the potential of the region.  During the year, a review of the extensive copper‐gold potential of the Myall Project area was conducted  and Magmatic’s Board approved a high impact diamond drilling program that was designed to target the  highly prospective Kingswood, Kingswood North and Corvette prospect areas. The proposed program was  initially set to comprise around 3,000 metres of drilling. Drill pad and site access preparations for the Myall  program commenced in June 2022, although extensive rainfall in the region delayed commencement of  drilling until later in the following month.  Subsequent  to  the  end  of  the  financial  year  the  Company  announced  the  first  drilling  at  the  prospect  (ASX:MAG  23  August  2022)  had  returned  a  broad  copper‐gold‐molybdenum  mineralised  zone  from  the  upper portion of the first hole (Figures 3 & 4), including:  22MYDD415  151.5 metres at 0.37% Cu, 0.08g/t Au & 43ppm Mo from 134.5m (base of cover),  including 13.0 metres at 0.81% Cu, 0.19g/t Au & 90ppm Mo from 152m,   and 22.0 metres at 0.50% Cu, 0.08g/t Au & 67ppm Mo from 201m,  and 13 metres at 0.35% Cu, 0.09g/t Au & 126ppm Mo from 225m (high‐Mo zone),  and 6 metres at 0.65% Cu, 0.19g/t Au & 11ppm Mo from 276m   Figure 3. Plan of the Corvette Prospect over airborne magnetics (RTP) showing previous (ASX:MAG 4 June 2017) and recent  diamond drilling with down hole copper mineralisation and visual sulphide intersections in 22MYDD415. Vertical air core holes  <150 metres depth are omitted for clarity. Full details in ASX:MAG 13 September 2022.  7                            Magmatic Resources Limited ABN 32 615 598 322 A subsequent release (ASX:MAG 13 September 2022) reported even higher grades from the middle portion  of the hole (Figures 3 & 4), including:  22MYDD415  111 metres at 0.55% Cu, 0.10g/t Au, 1.8g/t Ag & 5ppm Mo from 499m,  including 61 metres at 0.81% Cu, 0.13g/t Au & 2.9g/t Ag from 542m,   including 10.5 metres at 1.39% Cu, 0.11g/t Au & 7.1g/t Ag from 544.5m,  and 21 metres at 1.00% Cu, 0.21g/t Au & 3.1g/t Ag from 582m,  At the time of this release, assays had been received to a down hole depth of 650 metres, resulting in an  overall mineralised interval of 511.5 metres at 0.29% Cu, 0.06g/t Au & 17ppm Mo from 134.5m, with assays  pending between 650 and 1,014.7 metres down hole.   Hole 22MYDD414, which was stopped at 227 metres down hole due to excessive deviation in the pre‐collar,  also returned a shallow, strongly mineralised zone over most of the drilled interval:  22MYDD414  88.4 metres at 0.35% Cu, 0.04g/t Au & 17ppm Mo from 131.6m (base of cover),  including 15.0 metres at 0.90% Cu, 0.09g/t Au & 48ppm Mo from 137m   Figure 4. Schematic cross section looking north at the Corvette prospect showing intersections from 22MYDD414 & 22MYDD415 in  relation to historic drilling (ASX:MAG 13 September 2022).  8                     Magmatic Resources Limited ABN 32 615 598 322 The  strong  results  in  the  first  drilling  of the  2022  Myall  diamond  program  were  considered exceptionally  encouraging, with the significant follow‐up exploration expected in the coming year.  Figure 5. Magmatic Resources’ Exploration Manager, Steven Oxenburgh, holding core with abundant breccia‐hosted chalcopyrite  (yellow) from 588m down hole in 22MYDD415 (left); and cross section of core from 591.6m down hole displaying semi‐massive,  breccia hosted chalcopyrite from 22MYDD415 (right).  Wellington North Project (Gold‐Copper)   Magmatic Resources Limited 100%   The Wellington North Project covers the northern extension of the Molong Volcanic Belt, located north of  Australia’s largest gold producer at Cadia East (ASX:NCM) and effectively surrounding Alkane’s recent Boda  gold‐copper discovery (ASX:ALK).   The project area is considered highly prospective for epithermal‐porphyry gold‐copper and epithermal lode,  high grade gold mineralisation (Figure 6).   The historic Bodangora Gold Field produced 230,000 ounces @ 26g/t Au between 1869‐1917 (ASX:MAG 17  May 2017). Magmatic’s exploration activity during the year focussed on the Bodangora region, including  diamond drilling, a regional air core geochemistry program and a ground magnetics survey.  During the year the Company completed an eight hole diamond program at the historic Mitchells Creek Mine  at  the  Bodangora  Goldfield  to  test  for  extensions  to  the  high  grade  gold  mineralisation.  Significant  mineralisation from this drilling included:    21BNDD018  0.57 metres at 14.3g/t Au, 22g/t Ag & 1.1% Cu from 265.6m  21BNDD014  0.40 metres at 4.3g/t Au, 2g/t Ag from 139.0m  21BNDD019  0.65 metres at 1.5g/t Au, 6g/t Ag & 0.2% Cu from 278.5m  21BNDD021  0.38 metres at 1.0g/t Au, 8g/t Ag & 0.1% Cu from 175.0m  9         Magmatic Resources Limited ABN 32 615 598 322 Figure 6. Aeromagnetic imagery (RTP) showing the Magmatic’s target portfolio in the Wellington North Project area and  highlighting the proximity to the 10.1Moz AuEq Boda discovery (ASX:ALK 30 May 2022).  Figure 7. Schematic long section looking west showing the historic workings at the Mitchells Creek Mine at the Bodangora Goldfield  along with diamond drilling intercepts returned during the year (ASX:MAG 24 March 2022).  10         Magmatic Resources Limited ABN 32 615 598 322 Gold mineralisation of variable tenor was intercepted in six of the eight holes drilled at Mitchells Creek, with  the central portion of the deposit around hole 21BNDD018 (0.57 metres at 14.3g/t Au & 1.1% Cu) appearing  to be most prospective for direct extensions of the high grade mineralisation (see Figure 7).   The mineralised intercepts were also variably elevated in silver, copper and tellurium, indicating a potential  distal relationship with the nearby Boda Porphyry discovery (Alkane Resources Limited ASX:ALK) and other  porphyry  gold‐copper  prospects  in  the  Wellington  North  project  area  (ASX:MAG).  The  northernmost  diamond hole drilled in the recent program (21BNDD014) also returned an intercept of 4.3g/t, highlighting  the potential for the mineralisation to continue along strike.   The  Company  also  completed  five  diamond  holes  totalling  714  metres  at  the  Dicks  Reward  workings,  targeting extensions along strike to the northwest and southeast of the historic workings (Figure 8), including  the following significant intercepts:  22BNDD023  1.7 metres at 12.9g/t Au & 8g/t Ag from 65.5m  22BNDD024  1.0 metres at 0.5g/t Au from 58.0m  0.35 metres at 10.7g/t Au from 78.8m  22BNDD025  1.0 metres at 1.4g/t Au from 62.0m  0.3 metres at 1.3g/t Au from 66.8m  Figure 8. Schematic long section looking northeast showing the historic workings at the Dicks Reward mine in the Bodangora  Goldfield showing results from recent diamond drilling (ASX:MAG 8 July 2022).  The Company was particularly encouraged by the results in hole  22BNDD023 (1.7 metres at 12.9g/t Au),  which indicates that shallow, high grade mineralisation remains open to the northwest of the Dicks Reward  workings (Figure 8). The results in the holes that were drilled close to the workings (22BNDD024, 025 and  026) were quite variable but do indicate the presence of further high‐grade mineralisation, including 0.35  metres  at  10.7g/t  Au  in  22BNDD024  (Figure  8).  Significant  potential  mineralisation  may  also  be  present  below  the  central  portion  of  the  deposit,  which  was  not  able  to  be  drilled  due  to  the  exceptionally  wet  conditions prevailing in the region.  Drill hole details and significant intercepts for diamond holes drilled on at the Wellington North Project during  the year are summarised in Tables 1 & 2.  11         Magmatic Resources Limited ABN 32 615 598 322 Table 1. Collar summary for DD holes in reporting period.  Target  Hole ID  Mitchells Creek  21BNDD014  Mitchells Creek  21BNDD015  Mitchells Creek  21BNDD016  Mitchells Creek  21BNDD017  Mitchells Creek  21BNDD018  Mitchells Creek  21BNDD019  Mitchells Creek  21BNDD020  Mitchells Creek  21BNDD021  Dicks Reward  22BNDD022  Dicks Reward  22BNDD023  Dicks Reward  22BNDD024  Dicks Reward  22BNDD025  Dicks Reward  22BNDD026  Easting  (MGA55)  687,604  687,607  687,654  687,709  687,991  688,003  688,013  688,035  687,083  686,703  686,698  686,707  686,694  Northing  (MGA55)  6,408,263  6,408,262  6,408,252  6,408,177  6,407,769  6,407,780  6,407,787  6,407,313  6,407,877  6,408,238  6,408,232  6,408,257  6,408,180  RL   (m)  465  465  465  465  464  465  466  431  430  422  422  423  421  Dip  Azimuth  ‐60  ‐75  ‐70  ‐70  ‐69  ‐75  ‐70  ‐60  ‐70  ‐65  ‐60  ‐60  ‐75  297  297  228  220  245  261  280  250  258  282  160  142  162  Depth  (m)  198.8  198.8  225.8  243.7  304.9  309.9  300.7  189.6  174.7  177.6  132.5  129.6  99.6  Table 2. Significant intercepts in returned for the reporting period for the Bodangora Goldfield    Hole_ID  Interval  Au (g/t)  Ag (g/t)  Cu (%)  From (m)  21BNDD014  21BNDD015  21BNDD016  21BNDD017  21BNDD018  21BNDD019  21BNDD020  21BNDD021  22BNDD022  22BNDD023  22BNDD024  22BNDD025  22BNDD026  0.35  0.4  1.0  0.57  0.65  0.05  1.0  1.0  0.38  1.7  1.0  0.35  1.0  0.4  0.3  0.1  4.3  0.6  14.3  1.5  0.3  0.1  0.1  1.0  12.9  0.5  10.7  1.4  1.3  0.8  0.16  1.84  0.26  No sig. intercepts  No sig. intercepts  21.7  5.65  0.49  0.18  0.12  8.42  No sig. intercepts  8  0  12  1  0  3  No sig. intercepts  0.0  0.0  0.0  1.1  0.2  0.0  0.0  0.0  0.1  0.0  0.0  0.0  0.0  0.0  0.0  128.0  139.0  137.0  265.6  278.5  274.3  279.0  2.0  175.0  65.5  58.0  78.8  62.0  66.8  69.5  In  addition  to  the  diamond  drilling,  the  Company  completed  a  279  hole,  2,908  metre  air‐core  drill  geochemical sampling program over the broader Bodangora region during the year, along with a further 160  soil samples collected on the topographic highpoints in each of the east‐west sampling lines. The program  identified  a  coherent  northeast‐southwest  striking  zone  of  anomalous  gold  over  200  metres  wide  and  extending to 1,000 metres in length between and to the south of the historic workings (Figure 9). The gold  trend is also coincident with both copper (Cu) and lead (Pb) anomalism greater than 250ppm. Copper and  12                                               Magmatic Resources Limited ABN 32 615 598 322 lead sulphides are known to be associated with the gold mineralisation in the Bodangora Goldfield and Boda  regions.   The new geochemical data also identified a coherent zone of copper anomalism along strike to the north of  the  Mitchells  Creek  workings,  as  well  as  a  number  of  single‐point  gold  anomalies  on  the  northernmost  sampling line and to the northwest of the Dicks Reward workings (Figure 9). Further drilling to follow‐up the  zones of geochemical anomalism is being considered for later in the current year.   Figure 9. Plan of the Bodangora region showing the location of recently completed air‐core drill holes and infill soil samples in  reference to the historic Mitchells Creek and Dick’s Reward workings. Diamond collar locations are also shown for the recent Dicks  Reward drilling (ASX:MAG 8 July 2022).  13       Magmatic Resources Limited ABN 32 615 598 322 Parkes Project (Gold)   Magmatic Resources Limited 100%   The Parkes Project comprises two exploration licences located within the Parkes Fault Zone, approximately  25 kilometres south from Alkane’s Tomingley Gold Operations and recently defined resources at Roswell of  904,000oz  of  gold  and  406,000oz  of  gold  at  San  Antonio  (ASX:ALK  2  May  2022).  Several  existing  gold  intersections are equivalent to early‐stage exploration results at Alkane’s Tomingley deposits, including:       16m at 1.22 g/t Au from 13m (MM33) McGregors (ASX:MAG 17 May 2017)  18m at 0.72 g/t Au from 33m (MM33) McGregors (ASX:MAG 17 May 2017)  26m at 0.55 g/t Au from 34m (MM32) McGregors (ASX:MAG 17 May 2017)  22m at 0.79g/t Au from 45m (S1) Stockmans (ASX:MAG 17 May 2017)  12m at 1.42g/t Au from 7m (S2) Stockmans (ASX:MAG 17 May 2017)  Approximately  130  line‐kilometres  of  a  planned  high  resolution  ground  magnetics  (GMAG)  program  was  surveyed during the year at the Stockmans target, with completion of the full survey delayed due to heavy  rainfall, contractor availability and cropping activities. The remaining GMAG data collection is scheduled for  later in the current financial year and will assist with target generation and subsequent air core and/or RC  drilling in the project area.   Figure 10. Parkes Project, aeromagnetic imagery, showing position along strike from Tomingley Gold Mine (ASX:ALK) and recent  discoveries within the highly prospective Parkes Fault Zone  14        Magmatic Resources Limited ABN 32 615 598 322 References   CMOC 2021., China Molybdenum Company Limited, http://www.cmocinternational.com/australia/   Evolution., 2018, https://evolutionmining.com.au/reservesresources/   Heithersay P  S and Walshe J L, 1995, Endeavour 26  North: A porphyry Copper‐Gold Deposit in the Late  Ordovician, Shoshonitic Goonumbla Volcanic Complex, New South Wales, Economic Geology v90   House,  M.J.  1994.  Gold  distribution  at  the  E26  porphyry  copper‐gold  deposit,  NSW.  M.Sc  thesis,  Uni  of  Tasmania   Lye 2006, The Discovery History of the Northparkes Deposits, Mines and Wines 2006    Newcrest., 2019, Newcrest Investor and Analyst Presentation, ASX Announcement, 18 November 2019   Newcrest 2020, Cadia Operations NI 43‐101 Technical Report, 30 June 2020,  https://www.newcrest.com/sites/default/files/2020‐10/Technical%20Report%20on%20Cadia%20  Operations %20as%20of%2030%20June%202020_0.pdf   Phillips,  G  N  (Ed),  2017.  Australian  Ore  Deposits,  The  Australasian  Institute  of  Mining  and  Metallurgy:  Melbourne   Competent Persons Statement   The information in this document that relates to Exploration Results, Mineral Resources or Ore Reserves is  based on information compiled by Dr Adam McKinnon who is a Member of the AusIMM. Dr McKinnon is  Managing Director and a full‐time employee of Magmatic Resources Limited and has sufficient experience  which is relevant to the style of mineralisation and type of deposit under consideration and to the activity  which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian  Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Dr McKinnon consents to  the inclusion in this presentation of the matters based on his information in the form and context in which it  appears.  Additionally,  Dr  McKinnon  confirms  that  the  entity  is  not  aware  of  any  new  information  or  data  that  materially affects the information contained in the ASX releases referred to in this report.  15        Magmatic Resources Limited ABN 32 615 598 322 Directors’ Report Your directors present their annual financial report on the consolidated entity (referred to hereafter as the “Group”) consisting of Magmatic Resources Limited (the “Company” or “parent entity”) and its wholly owned subsidiaries Modeling Resources Pty Ltd (“Modeling”) and Landslide Investments Pty Ltd (“Landslide”). In order to comply with the provisions of the Corporations Act, the directors report as follows: Directors The names of the directors of the Company during or since the end of the year are noted below. Directors were in office for the entire year unless otherwise stated: David J Richardson – Executive Chairman Adam R McKinnon – Managing Director (appointed 15 March 2022) David W Berrie – Non-Executive Director Andrew J Viner – Non-Executive Director (appointed 17 December 2021) Peter B Duerden – Managing Director (appointed 3 February 2020, resigned 17 December 2021) Company Secretary Andrea S Betti David W Berrie Principal activities The principal activity of the Group during the financial year was mineral exploration. Dividends No dividend has been paid or declared since the start of the financial year and the directors do not recommend the payment of a dividend in respect of the financial year. Review of operations Information on the operations of the Group is set out in the Review of Operations report on pages 5 to 15 of this Annual Report. Financial review The loss for the Group after providing for income tax for the financial year amounted to $3,019,039 (2021: profit of $1,188,014). As at 30 June 2022, the Group had net assets of $6,731,700 (30 June 2021: $7,519,063), including cash and cash equivalents of $5,018,580 (30 June 2020: $6,122,271). Significant changes in the state of affairs The Group raised $2,514,561 from option holders who exercised 34,827,710 options. The Company’s retained 5.64% shareholding in Australian Gold and Copper Ltd was revalued down by $394,632 at 30 June 2022 (2021: revalued down by $338,256), based on the AGC closing market price of $0.07 from its 30 June 2021 price of $0.14. Matters subsequent to the end of the financial year During the first quarter of the 2023 financial year, the Group received $577,600 from option holders who exercised 8,000,000 options and the Company announced the first drilling at the Corvette Prospect (ASX:MAG 23 August  2022) had returned a broad copper‐gold‐molybdenum mineralised zone from the upper portion of the first hole. Likely developments and expected results Additional comments on expected results of certain operations of the Group are included in the Review of Operations. Environmental legislation The Group is subject to significant environmental legal regulations in respect to its exploration and evaluation activities. The group is compliant with the NGER Act 2007. There have been no known breaches of these regulations and principles. 16 Magmatic Resources Limited ABN 32 615 598 322 During the financial year the Company has paid premiums in respect of insuring directors and officers of the Company against liabilities incurred as directors or officers. The amount paid is confidential under the terms of the terms of the insurance policy. The Company has no insurance policy in place that indemnifies the Company’s auditors. Information on directors David Richardson B. Comm MBA Executive Chairman Experience and expertise Mr David Richardson has extensive international corporate experience including 15 years in Japan in Asia Pacific regional director positions with organisations such as Pacific Dunlop Ltd and Amcor Ltd, expertise includes venture capital and finance. Mr Richardson founded Magmatic Resources in 2014, listing the Company on the ASX in 2017 and is Executive Chairman of the Company. Mr Richardson holds an Masters of Business Administration from the University of Southern California (USC), Los Angeles. Mr Richardson is not considered to be independent due to his executive role as Executive Chairman of the Company and his interest in the securities of the Company. Other current directorships: Australian Gold and Copper Ltd Former directorships in the last 3 years: Nil Special responsibilities: Executive Chairman Interests in shares and options at the date of this report: 47,442,573 ordinary shares (indirectly held) and 8,000,000 options (indirectly held). Adam McKinnon BSc (Hons), PhD, MAusIMM, MRACI (CCHEM) Managing Director (appointed 15 March 2022) Experience and expertise Dr McKinnon is a mining and geoscience professional with 16 years industry and academic experience. Before joining Magmatic Resources he was General Manager – Exploration and Business Development at Aurelia Metals Limited, where he was involved in a number of significant discoveries including the high grade Federation deposit south of Nymagee, NSW. Dr McKinnon also led several highly successful exploration programs whilst with KBL Mining Limited, including the discovery of the high grade Pearse gold-silver deposit near the Mineral Hill Mine. Dr McKinnon holds a PhD in mineralogy and geochemistry from Western Sydney University, is a Chartered Chemist with the Royal Australian Chemical Institute (RACI) and a Member of the Australian Institute of Mining and Metallurgy (AusIMM). Dr McKinnon is not considered to be independent due to his executive role as Managing Director of the Company. Other Current Directorships: Australian Gold and Copper Ltd (appointed 12 August 2022) Former directorships in the last 3 years: Nil Special Responsibilities: Managing Director Interests in shares and options at the date of this report: 420,000 ordinary shares (directly held) and 10,000,000 options (indirectly held) David Berrie LLB Non-Executive Director (appointed 28 October 2016) Company Secretary (appointed 01 June 2019) Experience and expertise Mr. David Berrie has over 30 years’ experience in the mining industry. Mr Berrie worked as a solicitor in the mining team at Clayton Utz before joining the international mining house Western Mining Corporation in 1987 with much of that time spent in the exploration division before transitioning over to BHP Billiton. Mr Berrie has extensive public company experience. Mr Berrie has a Bachelor of Laws and a Bachelor of Juris Prudence from the University of Western Australia. Other current directorships: Nil Former directorships in the last 3 years: Hylea Metals Limited (appointed 6 February 2018, resigned 2 January 2019) Summit Resources Limited (appointed 19 Oct 2006, resigned 15 November 2018) Special responsibilities: Joint Company Secretary Interests in shares and options at the date of this report: 14,029,044 ordinary shares (indirectly held) and 4,000,000 options (indirectly held). 17 Magmatic Resources Limited ABN 32 615 598 322 Andrew Viner BSc (Geology) Non-Executive Director (appointed 17 December 2021) Experience and Expertise Mr Viner is a geologist with more than 37 years’ experience in multi commodity mining and mineral exploration in Australia, southeast and central Asia and South America. He has been an Executive and Managing Director of ASX listed Companies since 2002. Andy has a BSc in Geology undertaken at Curtin University in Western Australia. He is a member of the Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Company Directors. Other Directorships: Nil Former Directorships in the last 3 years: Strickland Metals Limited (appointed 21 June 2011, resigned 1 April 2021) 543,000 ordinary shares (533,000 indirectly held and 10,000 directly held). Meetings of directors During the financial year there were five formal directors’ meetings. All other matters that required formal Board resolutions were dealt with via written circular resolutions. In addition, the directors met on an informal basis at regular intervals during the financial year to discuss the Group’s affairs. The directors have determined that the Company is not of a sufficient size to merit the establishment of Board committees of the Board, and therefore duties ordinarily assigned to committees are carried out by the full Board. The number of meetings of the Company’s board of directors attended by each director were: D Richardson A McKinnon D Berrie A Viner P Duerden Directors’ meetings entitled to attend 5 2 5 3 2 Directors’ meetings attended 5 2 5 3 2 Shares under option Outstanding share options at the date of this report are as follows: Grant date 14 October 2019 22 October 2019 29 November 2019 31 January 2020 31 January 2020 04 December 2019 04 December 2019 18 February 2020 24 September 2020 25 September 2020 28 May 2021 27 October 2021 29 November 2021 29 November 2021 15 March 2022 Date of expiry 14 October 2022 30 November 2022 30 November 2022 31 January 2023 31 January 2023 31 January 2023 31 January 2023 12 February 2023 30 September 2023 30 September 2023 28 May 2024 31 October 2024 31 December 2024 31 December 2024 31 May 2025 Exercise price Number of options $0.0722 $0.0722 $0.2322 $0.3352 $0.5772 $0.3352 $0.5772 $0.5262 $0.2642 $0.2642 $0.2062 $0.1500 $0.1452 $0.1936 $0.1002 3,000,000 8,000,000 8,000,000 9,040,000 4,460,000 660,000 340,000 2,000,000 500,000 250,000 4,000,000 1,250,000 4,050,000 1,950,000 10,000,000 18 Magmatic Resources Limited ABN 32 615 598 322 Shares issued on the exercise of options Options Grant Date 31 August 2018 31 August 2018 31 August 2018 31 August 2018 31 August 2018 31 August 2018 31 August 2018 31 August 2018 22 November 2019 Date of Expiry 30 August 2021 30 August 2021 30 August 2021 30 August 2021 30 August 2021 30 August 2021 30 August 2021 30 August 2021 30 November 2022 Date Exercised 30 July 2021 6 August 2021 13 August 2021 17 August 2021 20 August 2021 27 August 2021 1 September 2021 3 September 2021 3 September 2021 Exercised Price $0.0722 $0.0722 $0.0722 $0.0722 $0.0722 $0.0722 $0.0722 $0.0722 $0.0722 Number of Options 5,000,000 441,500 3,058,410 165,000 2,777,356 5,358,892 5,886,552 140,000 12,000,000 Remuneration Report (Audited) This report outlines the remuneration arrangements in place for the key management personnel of Magmatic Resources Limited (the “Company” or “Parent”) for the financial year ended 30 June 2022. The information provided in this remuneration report has been audited as required by Section 308(3C) of the Corporations Act 2001. The remuneration report details the remuneration arrangements for key management personnel (“KMP”) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes all executives in the Parent and the Group receiving the highest remuneration. Key Management Personnel (i) Directors David Richardson - Executive Chairman Adam McKinnon – Managing Director (appointed 15 March 2022) David Berrie – Non-Executive Director Andy Viner – Non-Executive Director (appointed 17 December 2021) Peter Duerden – Managing Director (appointed 3 February 2020, resigned 17 December 2021) (ii) Executives Michael Franklin - Chief Financial Officer Details of directors’ and executives’ remuneration are set out under the following main headings: A B C D Principles used to determine the nature and amount of remuneration Details of remuneration Employment contracts/Consultancy agreements Share-based compensation Principles used to determine the nature and amount of remuneration A The objective of the Company’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aims to align executive reward with the creation of value for shareholders. The key criteria for good remuneration governance practices adopted by the Board are:      competitiveness and reasonableness acceptability to shareholders performance incentives transparency capital management The framework provides a mix of fixed salary, consultancy, agreement-based remuneration and share based incentives. The broad remuneration policy for determining the nature and amount of emoluments of Board members and senior executives of the Company is governed by the full board. Although there is no separate remuneration committee, the Board’s aim is to ensure the remuneration packages properly reflect directors’ and executives’ duties and responsibilities. The Board assesses the appropriateness of the nature and amount of emoluments of such officers 19 Magmatic Resources Limited ABN 32 615 598 322 on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention and motivation of a high-quality Board and executive team. The current remuneration policy adopted is that no element of any director or executive package is directly related to the Company’s financial performance. Indeed, there are no elements of any director or executive remuneration that are dependent upon the satisfaction of any specific condition however the overall remuneration policy framework is structured to advance and create shareholder wealth. Non-executive directors Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non-executive directors’ fees and payments are reviewed annually by the Board and are intended to be in line with the market. Non-executive directors receive a board fee and fees for chairing or participating on board committees. They do not receive performance-based pay or retirement allowances. For the year ended 30 June 2022, exclusive of superannuation guarantee, the annual cash remuneration for the Non-Executive Directors was $122,862. The non-executive directors fee pool approved by shareholders is $250,000 per annum. Directors’ fees On appointment to the Board, all non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms, including remuneration relevant to the office of director. The Board policy is to remunerate non-executive directors at commercial market rates for comparable companies for their time, commitment and responsibilities. Non-executive directors receive a Board fee but do not receive fees for chairing or participating on Board committees. Board members are allocated superannuation guarantee contributions as required by law, and do not receive any other retirement benefits. From time to time, some individuals may choose to sacrifice their salary or consulting fees to increase payments towards superannuation. Non-executive directors are granted options in the Company from time to time subject to shareholder approval. Fees for non-executive directors are not linked to the performance of the Group. Retirement allowances for directors Apart from superannuation payments paid on salaries there are no retirement allowances for directors. Executive pay The executive pay and rewards framework has the following components:   base pay and benefits such as superannuation where appropriate long-term incentives through participation in employee equity issues Base pay All executives are either full time employees or consultants who are paid on an agreed basis that has been formalised in a consultancy agreement. Benefits Apart from superannuation paid on executive salaries there are no additional benefits paid to executives. Short-term incentives There are no current short-term incentive remuneration arrangements. Performance based remuneration To ensure that the Company has appropriate mechanisms in place to continue to attract and retain the services of suitable directors and employees, the Company has, in the past, issued options and performance rights to some key personnel. Share-based compensation Issue of shares No shares were issued to directors during the year ended 30 June 2022. 20 Magmatic Resources Limited ABN 32 615 598 322 Options The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: Number of Options Granted Grant Date Vesting and exercisable date Option Life (Years) Expiry Date Share price on Grant Date Exercise Price Risk Free Interest Rate on Grant Date Fair value Per option at grant date # David Richardson 2,700,000 29 Nov 2021 1 Dec 2021 3.09 31 Dec 2024 $0.0990 $0.14520 0.929% $0.054596 David Richardson 1,300,000 29 Nov 2021 1 Dec 2021 3.06 31 Dec 2024 $0.0990 $0.19360 0.929% $0.048858 David Berrie 1,350,000 29 Nov 2021 1 Dec 2021 3.09 31 Dec 2024 $0.0990 $0.14520 0.929% $0.054596 David Berrie 650,000 29 Nov 2021 1 Dec 2021 3.09 31 Dec 2024 $0.0990 $0.19360 0.929% $0.048858 Michael Franklin 500,000 27 Oct 2021 1 Dec 2021 3.01 31 Oct 2024 $0.0930 $0.15000 1.032% $0.048889 Adam McKinnon 10,000,000 15 Mar 2022 27 May 2022 3.21 31 May 2025 $0.0950 $0.10020 1.88% $0.059968 # The Black Scholes valuations for each option granted assumed the Expected Volatility parameter was 100% and the Dividend Yield parameter was 0.00%. Options granted carry no dividend or voting rights. All options were granted over unissued fully paid ordinary shares in the Company. Options vest based on the provision of service over the vesting period whereby the executive becomes beneficially entitled to the option on vesting date. Options are exercisable by the holder as from the vesting date. There has not been any alteration to the terms or conditions of the grant since the grant date. There are no amounts paid or payable by the recipient in relation to the granting of such options other than on their potential exercise. The table below shows a reconciliation of options held by each KMP from the beginning to the end of the financial year ending 30 June 2022: Balance at the start of the year Unvested Vested Granted as compensation - 4,000,000 - - - 5,000,000 4,000,000 - - - - 10,000,000 2022 Name & Grant dates D Richardson 21 Nov 2021 23 Jan 2020 30 Aug 2018 A McKinnon 15 Mar 2022 D Berrie 21 Nov 2021 23 Jan 2020 30 Aug 2018 - 2,000,000 - - - 675,000 2,000,000 - - M Franklin 27 Oct 2021 - - 500,000 P Duerden Vested Forfeited Balance at the end of the year Number % Exercised Number % Other changes Vested and exercisable - - - - - - - - - - - - - - - - - - 5,000,000(1) - - - - - - - - - - - - - - - 675,000 - - 100 - - - - - - - - - - - - - - - - - - - - - Unvested 4,000,000 4,000,000 - 10,000,000 2,000,000 2,000,000 - 500,000 - 6,000,000 23 Jan 2020 - (1)The total amount paid on the exercise of these options was $361,000 at the rate of $0.0722 per option. Performance rights No performance rights were issued during the year ended 30 June 2022. - - - - 6,000,000 100 Company performance, shareholder wealth and directors’ and executives’ remuneration No relationship exists between shareholder wealth, director and executive remuneration and Company performance due to the nature of the Company’s operations being a non-producing resources exploration company. 21 Magmatic Resources Limited ABN 32 615 598 322 The table below shows the losses and earnings per share of the Company for the last four financial years: 2022 2021 2020 2019 2018 Net profit / (loss) ($3,019,039) $1,188,014 ($4,318,026) ($1,993,025) ($2,533,870) Share Price at year end (cents) 5.2 Profit / (Loss) per share (cents) (1.16) 12.5 0.58 27.0 (3.02) 1.8 (1.76) 6.1 (2.75) B Details of remuneration Amounts of remuneration Details of the remuneration of the directors and other key management personnel (as defined in AASB 124 Related Party Disclosures) of the Company and the Group for the year ended 30 June 2022 are set out in the following tables. The key management personnel of the Group comprise the directors of the Company and persons who have the authority and responsibility for planning, directing and controlling the activities of the Group. Given the size and nature of the Group, there are no other employees who are required to have their remuneration disclosed in accordance with the Corporations Act 2001. No cash remuneration is linked to performance. Year ended 30 June 2022 Name Director D Richardson A McKinnon (appointed 15 March 2022) D Berrie A Viner (appointed 17 December 2021) P Duerden (resigned 17 December 2021) Key Management Personnel M Franklin Salary / Fees $ 225,725 103,985 90,000 21,692 162,800 100,000 704,202 Post- employment benefits / Superannuation $ Share-based compensation1 $ Other $ Total $ 22,572 10,399 9,000 2,169 16,280 7,500 67,920 201,489 54,703 100,745 - (360,383) 5,437 1,991 - - - - - - - 449,786 169,087 199,745 23,861 (181,303) 112,937 774,113 1 Equity-settled share-based payments as per Corporations Regulation 2M.3.03(1) Item 11. These include negative amounts for options forfeited during the year and the reversal of prior year expenses. Year ended 30 June 2021 Name Director D Richardson P Duerden D Berrie D Flanagan (appointed 28 October 2020 resigned 4 February 2021) Key Management Personnel M Franklin Salary / Fees $ 180,000 262,866 60,000 53,272 100,000 656,138 Post- employment benefits / Superannuation $ Share-based compensation $ Other $ Total $ 24,680 48,685 5,700 5,061 167,644 251,030 83,822 - - - - - 372,324 562,581 149,522 58,333 - 84,126 - 502,496 100,000 - - 1,242,760 22 Magmatic Resources Limited ABN 32 615 598 322 C Employment contracts / Consultancy agreements On appointment to the Board, all Non-Executive Directors enter into a service agreement with the Company in the form of a letter of appointment. Remuneration of the Managing Director and other executives are formalised in letters of appointment and employment agreements and amendments thereof. These agreements and amendments thereof provide details of the salary and employment conditions relating to each employee. Name Term of agreement and notice period Base salary (excl. superannuation) Termination payments David Richardson Executive Chairman Adam McKinnon Managing Director Michael Franklin Chief Financial Officer N/A 3 months N/A 6 months N/A 3 months $240,000 $350,000 $100,000 N/A N/A N/A D Key management personnel equity holdings 2022 Ordinary shares Directors D Richardson A McKinnon (appointed 15 March 2022) D Berrie A Viner (appointed 17 December 2021) P Duerden (appointed 3 February 2020, resigned 17 December 2021) Other Key management personnel M Franklin Balance at beginning of year Net movement during the year Balance at the end of year 42,442,571 - 14,029,044 243,000 4,850,313 5,000,000(1) 240,000 - - (3,172,714) 47,442,571 240,000 14,029,044 243,000 1,677,599 100,000 101,110 201,110 (1) This increase in shares was due to the exercise of options. Options Directors D Richardson A McKinnon (appointed 15 March 2022) D Berrie A Viner (appointed 17 December 2021) P Duerden (appointed 3 February 2020, resigned 17 December 2021) Other Key management personnel M Franklin Balance at beginning of year Net movement during the year Balance at the end of year 9,000,000 - 2,675,000 - (1,000,000) 10,000,000 1,325,000 - 8,000,000 10,000,000 4,000,000 - 6,000,000 (6,000,000) 0 - 500,000 500,000 No remuneration consultants have been used. Other than disclosed above, there are no other transactions with key management personnel. Loans to Key Management Personnel There were no loans to individuals or members of key management personnel during the financial year. 23 Magmatic Resources Limited ABN 32 615 598 322 Transactions with Key Management Personnel Mr Andrew Viner (Non-Executive Director) During the financial year Mr Viner’s consulting company provided geological consultancy services to the Company to the value of $59,280. These services were provided on normal commercial terms and conditions. Other than described above, there were no transactions with key management personnel during the financial year or the previous financial year E Voting and comments made at the Company’s 2021 Annual General Meeting Magmatic Resources Ltd received more than 99.18% of “yes” votes on its remuneration report for the 2021 financial year. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices. End of audited remuneration report. Auditor’s independence and non-audit services Section 307C of the Corporations Act 2001 requires our auditors, BDO Audit (WA) Pty Ltd to provide the directors of the Company with an Independence Declaration in relation to the audit of the annual report. This Independence Declaration is set out on page 24 and forms part of this directors’ report for the year ended 30 June 2022. Non-audit services The Company may decide to employ the auditors on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the consolidated entity are important. The Company has considered the position and is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. Details of remuneration paid to the auditors are: Assurance services BDO Audit (WA) Pty Ltd Audit and review of financial statements Total remuneration for audit services Consultancy services BDO Corporate Finance (WA) Pty Ltd Preparation of Independent Limited Assurance report Total remuneration for audit services Total auditor’s remuneration Proceedings on behalf of Company Consolidated 2022 $ 2021 $ 43,680 43,680 42,151 42,151 - - 10,622 10,622 43,680 57,773 No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. 24 Magmatic Resources Limited ABN 32 615 598 322 Insurance of Directors and Officers The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Company, and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities. This report is made in accordance with a resolution of the directors. D Richardson Executive Chairman PERTH, Western Australia Dated: 28 September 2022 25 Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth WA 6000 PO Box 700 West Perth WA 6872 Australia DECLARATION OF INDEPENDENCE BY DEAN JUST TO THE DIRECTORS OF MAGMATIC RESOURCES LIMITED As lead auditor of Magmatic Resources Limited for the year ended 30 June 2022, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Magmatic Resources Limited and the entities it controlled during the period. Dean Just Director BDO Audit (WA) Pty Ltd Perth, 28 September 2022 BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 1 26 Magmatic Resources Limited ABN 32 615 598 322 Corporate Governance Statement The Company and the Board are committed to achieving and demonstrating the highest standards of corporate governance. The Company has reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (4th edition) published by the ASX Corporate Governance Council. The 2022 Corporate Governance Statement is lodged with the ASX as a separate document to the Annual Report. The 2022 Corporate Governance Statement was approved by the Board on 28 September 2022 and is current as at 30 June 2022. A description of the Group’s current corporate governance practices is set out in the Group’s Corporate Governance Statement which can be viewed at www.magmaticresources.com. 27 Magmatic Resources Limited ABN 32 615 598 322 Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2022 Consolidated Note 2022 $ Continuing Operations Other income Corporate administration expenses Exploration and evaluation expenses Exploration asset impairments Share based payment expense Finance costs Profit / (Loss) before tax Income tax Net profit / (loss) for the year Other comprehensive income, net of tax Items that will not be classified subsequently to profit or loss Changes in the fair value of investments at fair value through other comprehensive income Items that may be reclassified subsequently to profit or loss Total comprehensive profit / (loss) for the year Total comprehensive profit / (loss) for the period attributable to the members of Magmatic Resources Limited: Profit / (Loss) per share attributable to the members of Magmatic Resources Limited Profit / (Loss) per share (dollars) Profit / (Loss) per share fully diluted (dollars) 2 3 3 8 12 4 9 5 5 2021 $ 6,433,474 6,433,474 (1,257,527) (3,135,379) (260,000) (588,039) (4,515) (5,245,460) 77,179 77,179 (896,240) (2,085,934) - (111,747) (2,297) (3,096,218) (3,019,039) 1,188,014 - - (3,019,039) 1,188,014 - - (394,632) - (338,256) - (3,413,671) 849,758 (3,413,671) 849,758 ($0.012) ($0.012) $0.006 $0.004 The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 28 Magmatic Resources Limited ABN 32 615 598 322 Consolidated Statement of Financial Position as at 30 June 2022 Current Assets Cash and cash equivalents Other receivables Total Current Assets Non-Current Assets Plant and Equipment Security Bonds Exploration assets Right-of-use assets Financial assets held at fair value through other comprehensive income Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Lease Liabilities Total Current Liabilities Non-Current Liabilities Lease Liabilities Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total Equity Note Consolidated 2022 $ 2021 $ 7 8 9 5,018,580 116,948 6,122,271 107,628 5,135,528 6,229,899 134,986 74,300 1,368,350 21,529 394,631 63,636 69,300 1,368,350 68,765 789,263 1,993,796 2,359,314 7,129,324 8,589,213 10 375,016 22,608 999,506 41,378 397,624 1,040,884 - - 29,266 29,266 397,624 1,070,150 6,731,700 7,519,063 11 12 17,094,843 4,480,256 (14,843,399) 14,580,282 4,763,141 (11,824,360) 6,731,700 7,519,063 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. 29 Magmatic Resources Limited ABN 32 615 598 322 Consolidated Statement of Changes in Equity for the year ended 30 June 2022 Consolidated Share Based Payments Reserve $ Capital Restructure Reserve $ Fair Value Other Comprehensive Income ("FVOCI") Reserve Issued Capital $ Accumulated Losses $ Total Equity $ Balance at 1 July 2020 15,071,988 3,752,985 250 - (13,012,374) 5,812,849 Profit after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive (loss)/profit for the year - - - - - - Transactions with owners recorded directly in equity Share-based payments Issue of ordinary shares Capital raising expenses In-specie Distribution to Shareholders - 5,415,898 (1,035,123) (4,872,481) 588,039 - 760,123 - Total transactions with owners recorded directly in equity (491,706) 1,348,162 Balance at 30 June 2021 14,580,282 5,101,147 Balance at 1 July 2021 Loss after income tax expense for the year Other comprehensive income for the year, net of tax 14,580,282 - - 5,101,147 - - Total comprehensive loss for the year - - Transactions with owners recorded directly in equity Share-based payments Issue of ordinary shares Capital raising expenses - 2,514,561 - 111,747 - - Total transactions with owners recorded directly in equity 2,514,561 111,747 - - - - - - - - 250 250 - - - - - - - - (338,256) 1,188,014 - 1,188,014 (338,256) (338,256) 1,188,014 849,758 - - - - - - - - 588,039 5,415,898 (275,000) (4,872,481) (338,256) 1,188,014 856,456 (338,256) (11,824,360) 7,519,063 (338,256) - (394,632) (11,824,360) (3,019,039) - 7,519,063 (3,019,039) (394,632) (394,632) (3,019,039) (3,413,671) - - - - - - 111,747 2,514,561 - (394,632) (3,019,039) (787,363) Balance at 30 June 2022 17,094,843 5,212,894 250 (732,888) (14,843,399) 6,731,700 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. 30 Magmatic Resources Limited ABN 32 615 598 322 Consolidated Statement of Cash Flows for the year ended 30 June 2022 Consolidated Note 2022 $ 2021 $ Cash flows from operating activities Receipts from customers and Government Subsidies Payments to suppliers and employees Payments for exploration expenditure Net Interest received / (paid) 53,199 (907,784) (2,718,430) 17,735 171,382 (868,663) (2,517,984) 9,690 Net cash used in operating activities 17(a) (3,555,280) (3,205,575) Cash flows from investing activities Payments for property, plant & equipment Tenement bonds refunded net of bonds (paid) Net cash from / (used in) investing activities Cash flows from financing activities Repayment of lease liabilities Proceeds from the exercise of options Payment of capital raising costs Net cash from financing activities (9,936) (5,000) (14,936) - 22,000 22,000 (48,036) 2,514,561 - (44,873) 5,415,900 (300,000) 2,466,525 5,071,027 Net increase/(decrease) in cash and cash equivalents (1,103,691) 1,887,451 Cash and cash equivalents at the beginning of the year 6,122,271 4,234,820 Cash and cash equivalents at the end of the year 7 5,018,580 6,122,271 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. 31 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 Note 1: Statement of significant accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) Adoption of new and revised accounting standards and interpretations In the year ended 30 June 2022, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Company and effective for the current reporting periods beginning on or after 1 July 2021. As a result of this review the Directors have determined that there is no material impact of the Standards and Interpretations issued by the AASB and, therefore, no change is necessary to Company accounting policies. There is no material impact to profit or loss or net assets on the adoption of this new standard in the current or comparative periods as leases were only short term leases and low value leases. (b) New accounting standards and interpretations that are not yet mandatory The Directors have also reviewed all Standards and Interpretations issued and not yet adopted for the year ended 30 June 2022. As a result of this review the Directors have determined that there is no material impact of the Standards and Interpretations in issue not yet adopted on the Company and, therefore, no change is necessary to Company accounting policies. (c) Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Magmatic Resources Limited is a for-profit entity for the purpose of preparing the financial statements. Historical cost convention The financial statements have been prepared under the historical cost convention. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 1(u). (d) Statement of compliance The financial report was authorised by the Board of directors for issue on 28 September 2022. The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS). (e) (f) 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. Principles of consolidation The consolidated financial statements incorporate all of the assets, liabilities and results of the parent entity (Magmatic Resources Limited) and its controlled subsidiaries; Modeling Resources Pty Ltd and Landslide Investments Pty Ltd. The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains 32 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 or losses on transactions between group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group. (g) (h) (i) (j) (k) Income tax The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is current when it is expected to be realised or intended to be sold or consumed in normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within twelve months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non- current. A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within twelve months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. The Group accounts for long term restricted security deposits as ‘other’ non-current assets. Other receivables Other receivables are recognised at amortised cost, less any provision for impairment. Plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows: Plant and equipment 3-7 years The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter. An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Company. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. 33 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 (l) Leases All leases are accounted for by recognising a right-of-use asset and a lease liability except for: • • leases of low value assets; and leases with a term of 12 months or less. Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the group’s incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate. On initial recognition, the carrying value of the lease liability also includes: • amounts expected to be payable under any residual value guarantee; • the exercise price of any purchase option granted in favour of the group if it is reasonable certain to assess that option; and • any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised. Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for: • • • lease payments made at or before commencement of the lease; initial direct costs incurred; and the amount of any provision recognised where the group is required to dismantle, remove or restore the leased asset. Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term. When the group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate (being the interest rate implicit in the lease for the remainder of the lease term or, if that cannot be readily determined, the Group’s incremental borrowing rate at the re-assessment date). An equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. The carrying value of lease liabilities is also revised when the variable element of future lease payments dependent on a rate or index is revised or there is a revision to the estimate of amounts payable under a residual value guarantee. In both cases an unchanged discount rate is used. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. When the group renegotiates the contractual terms of a lease with the lessor, the accounting depends on the nature of the modification: • • • if the renegotiation results in one or more additional assets being leased for an amount commensurate with the standalone price for the additional rights-of-use obtained, the modification is accounted for as a separate lease in accordance with the above policy in all other cases where the renegotiated increases the scope of the lease (whether that is an extension to the lease term, or one or more additional assets being leased), the lease liability is remeasured using the discount rate applicable on the modification date, with the right-of-use asset being adjusted by the same amount. if the renegotiation results in a decrease in the scope of the lease, both the carrying amount of the lease liability and right-of-use asset are reduced by the same proportion to reflect the partial of full termination of the lease with any difference recognised in profit or loss. The lease liability is then 34 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 further adjusted to ensure its carrying amount reflects the amount of the renegotiated payments over the renegotiated term, with the modified lease payments discounted at the rate applicable on the modification date. The right-of-use asset is adjusted by the same amount. Payments associated with short-term leases and leases of low-value assets are recognised on a straight- line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets are items such as IT-equipment and small items of office furniture. (m) Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial period and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. (n) Fair value measurement When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principle market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interest. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Investments and other financial assets Investments and other financial assets are recognised and derecognised on settlement date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the time-frame established by the market concerned. They are initially measured at fair value, net of transaction costs, except for those financial assets classified as fair value through profit or loss, which are initially measured at fair value. The Group classifies its financial assets in the following measurement categories:  Those to be measured subsequently at fair value (either through other comprehensive income (OCI), or through profit or loss); or  Those to be measured at amortised cost. The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, the classification will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at FVOCI. (i) Measurement At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest. The Group subsequently measures all equity investments at fair value. The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include reference to the fair values of recent arm’s length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and pricing models to reflect the issuer’s specific circumstances. 35 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 Where the Group’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the Group’s right to receive payments is established. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value. (ii) Impairment The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. For trade and other receivables, the Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience. (o) Exploration expenditure Exploration expenditure is expensed to the statement of profit or loss as incurred and acquisition costs are capitalised as noncurrent assets. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Where uncertainty exists as to the future viability of certain areas, the value of the area of interest is written off or provided against. Due to the speculative nature, when exploration assets have been acquired through equity instruments, the fair value of the asset cannot be measure reliably, therefore the fair value of the equity instrument is used to determine the fair value of the asset. Impairment testing of exploration and evaluation expenditure Exploration and evaluation expenditure is assessed for impairment if sufficient data exists to determine technical feasibility and commercial viability or facts and circumstances suggest that the carrying amount exceeds the recoverable amount. Exploration and evaluation expenditure is tested for impairment when any of the following facts and circumstances exist:  The term of exploration licence in the specific area of interest has expired during the reporting period or will expire in the near future, and is not expected to be renewed;  Substantive expenditure on further exploration for and evaluation of mineral resources in the specific area are not budgeted nor planned;  Exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the decision was made to discontinue such activities in the specified area; or  Sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale. Where a potential impairment is indicated, an assessment is performed for each area of interest. The Group performs impairment testing in accordance with accounting policy note 1(n) (ii). (p) Share based payments Equity-settled share-based payment transactions to Directors and seed capitalists for services are measured in reference to the fair value of equity instruments granted. Equity-settled share-based payments in return for goods and services are measured at fair value of the goods and services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments. The fair value of options and performance rights with non-vesting conditions and no service conditions attached issued to Directors, seed capitalists and suppliers, are valued with a Black-Scholes pricing model. 36 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 The fair value is measured at the grant date of the equity instrument and is recognised in equity in the share- based payment reserve. The number of instruments expected to vest is estimated based on the non-market vesting conditions. The total expense is recognised at the date of grant of the options and rights. (q) Issued capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (r) Goods and Services Tax ('GST') and other similar taxes Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. (s) Deferred tax Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. (t) In-specie distribution The share capital of the Company was reduced by the fair value of an investment that was returned to shareholders. (u) Critical accounting estimates and judgements The preparation of these financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. Judgements: Impairment of Exploration and Evaluation Asset Determining the recoverability of exploration and evaluation expenditure capitalised in accordance with the Group’s accounting policy (refer Note 1(o)), requires judgements as to future events and circumstances, in particular, whether successful development and commercial exploitation, or alternatively sale, of the respective areas of interest will be achieved. If, after having capitalised the expenditure under accounting policy 1(o), a judgement is made that recovery of the expenditure is unlikely, an impairment loss is recorded in the income statement in accordance with accounting policy 1(o). The carrying amounts of exploration and evaluation assets are set out in Note 8. 37 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 Share-based payments The Group measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using the Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Refer to note (q). Note 2: Other income Gain on disposal of AGC AGC shared services agreement income NSW Government Co-operative Drilling Programme grant COVID 19 Cash Boost subsidy Office sub-lease Interest income Other Note 3: Expenses Corporate and administration expenses Depreciation Director and Company Secretarial Fees Consulting Fees Investor Relations Legal Fees Travel Employee Expenses Rental Expense Other Exploration and evaluation expenses Exploration expenses incurred Net exploration and evaluation expense Consolidated 2022 $ - 58,398 - - (952) 20,033 (300) 77,179 27,440 216,230 25,000 28,083 39,518 31,486 368,999 30,233 129,251 896,240 2021 $ 6,243,740 32,168 35,250 103,995 1,905 14,205 2,211 6,433,474 25,986 220,487 100,000 40,141 65,272 11,396 292,756 29,983 471,506 1,257,527 2,085,934 2,085,934 3,135,379 3,135,379 38 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 Note 4: Income tax (a) Income tax benefit The prima facie income tax expense on pre-tax accounting result from operations reconciles to the income tax benefit in the financial statements as follows: Accounting profit/(loss) from continuing operations before income tax At the statutory income tax rate of 25% (2021: 26%) Add - Non-assessable income - Share based payments - Deductible equity costs - Capital gain on exit from consolidated group - Capital losses utilised - Non-deductible expenses - Under provision and correction of prior year balances - Tax loss not brought to account Income tax (benefit) Accounting profit/(loss from Other Comprehensive Income before income tax At the statutory income tax rate of 25% (2021: 26%) Add - Temporary differences not brought to account Income tax (benefit) reported in the statement of comprehensive income (b) Unrecognised deferred tax balances The following deferred tax assets have not been brought to account Deferred tax assets comprise: Accruals Operating lease Employee entitlements Share issues & capital costs Investments Losses available for offset against future income – revenue Deferred tax liabilities comprise: Prepayments Exploration Equipment Investments Capitalised expenditure deductible for tax purposes Consolidated 2022 $ 2021 $ (3,019,039) (754,760) 1,188,014 308,884 - 27,936 (39,477) - - - (971,627) 1,737,927 - (1,357,256) 152,890 (68,158) 51,297 (51,297) 50,717 - 912,923 - (394,632) (338,256) 98,658 87,947 (98,658) - (87,947) - 5,450 270 44,392 120,043 183,222 2,612,765 2,966,142 16,085 165 - - 16,250 6,614 489 39,301 186,296 - 3,407,824 3,640,524 10,227 - 205,208 - 215,435 Net unrecognised deferred tax assets 2,949,892 3,425,089 Deferred tax assets have not been recognised in respect of these items because it is not certain that future taxable profit will be available against which the Group can utilise the benefit thereof. Tax Losses As at 30 June 2022, the Consolidated Entity has $10,451,059 (2021: $13,107,014) of taxable losses that are available for offset against future taxable profits of the consolidated entity, subject to the loss recoupment requirements in the Income Tax Assessment Act 1997. No deferred tax assets have been recognised in the Statement of Financial Position in respect of the amount of these losses, as it is not presently probable future taxable profits will be available against which the Company can utilise the benefit. 39 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 Note 5: Profit / (Loss) per share Total basic profit / (loss) per share Total fully diluted profit / (loss) per share The profit / (loss) and weighted average number of ordinary shares used in the calculation of basic profit / (loss) per share is as follows: Net profit / (loss) for the period The weighted average number of ordinary shares Options outstanding at year end Fully diluted total weighted average securities on issue Note 6: Segment information Consolidated 2022 $ (0.0116) (0.0116) 2021 $ 0.0058 0.0042 (3,019,039) 1,188,014 259,750,467 205,768,090 51,500,000 75,908,558 311,250,467 281,676,648 AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Consolidated Entity that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. AASB 8 “Operating Segments’” states that similar operating segments can be aggregated to form one reportable segment. Following incorporation, the Company acquired Modeling Resources Pty Ltd and Landslide Investments Pty Ltd. The Group has one reportable operating segment being gold exploration projects in Australia. Note 7: Cash and cash equivalents Cash at bank and on hand Consolidated 2022 $ 2021 $ 5,018,580 5,018,580 6,122,271 6,122,271 (Refer to Note 13(f) which contains risk exposure analysis for cash and cash equivalents) Note 8: Exploration project acquisition costs Opening balance Project acquisition costs Impairment of acquired exploration projects* Acquisition costs in respect of areas of interest in the exploration phase Consolidated 2022 $ 2021 $ 1,368,350 - - 1,628,350 - (260,000) 1,368,350 1,368,350 *$260,000 was impaired during the 2021 financial year in relation to the Mt Venn area of interest after the relevant exploration licences were surrendered in June 2021. Exploration expenditure is expensed to the statement of profit or loss as incurred and acquisition costs are capitalised as non-current assets. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Where uncertainty exists as to the future viability of certain areas, the value of the area of interest is written off or provided against. 40 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 The carrying value of capitalised exploration expenditure is assessed for impairment at each area of interest whenever facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amounts. An impairment exists when the carrying amount of an asset or area of interest exceeds its estimated recoverable amount. The asset or area of interest is then written down to its recoverable amount. Any impairment losses are recognised in the profit or loss account. Note 9: Financial assets held at fair value through other comprehensive income Investments Opening balance Investment in AGC retained at listing (5,367,594 shares) Revaluation to fair market value Closing balance Note 10: Trade and other payables Current Trade and other payables Trade creditors * Other creditors Goods and services tax payable * Trade payables are non-interest bearing and are normally paid on 30 day terms. Note 11: Issued capital (a) Ordinary shares issued Consolidated 2022 $ 789,263 - (394,632) 394,631 2021 $ - 1,127,519 (338,256) 789,263 Consolidated 2022 $ 154,737 218,407 1,872 375,016 2021 $ 817,690 180,732 1,084 999,506 Consolidated 2022 $ 2021 $ 254,486,798 (2021: 219,659,088) ordinary shares 17,094,843 14,580,282 Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders’ meetings. In the event of winding up of the parent entity, ordinary shareholders rank after all creditors and are fully entitled to any proceeds on liquidation. 41 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 (b) Movements in ordinary share capital: Date Balance as at 30 June 2020 18 November 2020 22 December 2020 23 December 2020 29 December 2020 8 February 2021 12 March 2021 12 March 2021 17 May 2021 11 June 2021 Balance as at 30 June 2021 Details Options exercised at $0.10 AGC in-specie distribution to shareholders Options exercised at $0.10 Options exercised at $0.10 Options exercised at $0.0722 Options exercised at $0.0722 Share Placement at $0.12 per share Options exercised at $0.0722 Options exercised at $0.0722 Capital Raising Expenses Balance as at 30 June 2021 30 July 2021 6 August 2021 13 August 2021 17 August 2021 20 August 2021 27 August 2021 1 September 2021 3 September 2021 Balance as at 30 June 2022 Options exercised at $0.0722 Options exercised at $0.0722 Options exercised at $0.0722 Options exercised at $0.0722 Options exercised at $0.0722 Options exercised at $0.0722 Options exercised at $0.0722 Options exercised at $0.0722 Number of shares 173,115,298 305,000 326,669 1,662,250 10,000 250,000 41,666,670 2,000,000 323,201 219,659,088 219,659,088 5,000,000 441,500 3,058,410 165,000 2,777,356 5,358,892 5,886,552 12,140,000 254,486,798 $ 15,071,988 30,500 (4,872,481) 32,667 166,225 722 18,050 5,000,000 144,400 23,336 (1,035,125) 14,580,282 14,580,282 361,000 31,876 220,817 11,913 200,525 386,912 425,009 876,508 17,094,843 (c) Movements in share options 2022 Weighted average exercise price 2021 Weighted average exercise price Number of Options Number of Options Listed Options to acquire ordinary fully paid shares at $0.0722 on or before 30 August 2021: Beginning of the financial year Issued during the year Converted during the year Expired during the year Balance at end of financial year Unlisted Options to acquire ordinary fully paid shares on or before 14 October 2022: Beginning of the financial year Issued during the year Converted during the year Expired during the year Balance at end of financial year 26,535,708 - (22,827,710) (3,707,998) - 3,000,000 - - - 3,000,000 0.0722 - 0.0722 - - 0.0722 - - - 0.0722 26,535,708 - (2,877,120) - 23,658,588 3,000,000 - - - 3,000,000 0.10 - 0.0944 - 0.0722 0.10 - - - 0.0722 42 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 2022 2021 Number of Options Weighted average exercise price Number of Options Weighted average exercise price Unlisted Options to acquire ordinary fully paid shares on or before 30 November 2022: Beginning of the financial year Issued during the year Converted during the year Expired during the year Balance at end of financial year Unlisted Options to acquire ordinary fully paid shares on or before 31 January 2023: Beginning of the financial year Issued during the year Converted during the year Expired during the year Balance at end of financial year Unlisted Options to acquire ordinary fully paid shares on or before 12 February 2023: Beginning of the financial year Issued during the year Converted during the year Expired during the year Balance at end of financial year (1) Unlisted Options to acquire ordinary fully paid shares on or before 30 September 2023: Beginning of the financial year Issued during the year Converted during the year Expired during the year Balance at end of financial year (2) Unlisted Options to acquire ordinary fully paid shares on or before 28 May 2024: Beginning of the financial year Issued during the year Converted during the year Expired during the year Balance at end of financial year (3) Unlisted Options to acquire ordinary fully paid shares on or before 31 October 2024: Beginning of the financial year Issued during the year Converted during the year Expired during the year Balance at end of financial year 28,000,000 - (12,000,000) - 16,000,000 14,500,000 - - (6,000,000) 8,500,000 2,000,000 - - - 2,000,000 750,000 - - - 750,000 4,000,000 - - - 4,000,000 - 1,250,000 - - 1,250,000 0.1179 - 0.0722 - 0.1522 0.4153 - - 0.3352 0.4149 0.5262 - - - 0.5262 0.2642 - - - 0.2642 0.2062 - - - 0.2062 - 0.1500 - - 0.1500 30,000,000 - (2,000,000) - 28,000,000 14,500,000 - - - 14,500,000 2,000,000 - - - 2,000,000 - 750,000 - - 750,000 - 4,000,000 - - 4,000,000 - - - - - 0.1426 - 0.0722 - 0.1179 0.4631 - - - 0.4153 0.5540 - - - 0.5262 - 0.2920 - - 0.2642 - 0.2062 - - 0.2062 - - - - - 43 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 2022 2021 Number of Options Weighted average exercise price Number of Options Weighted average exercise price (4) Unlisted Options to acquire ordinary fully paid shares on or before 31 December 2024: Beginning of the financial year Issued during the year Converted during the year Expired during the year Balance at end of financial year (5) Unlisted Options to acquire ordinary fully paid shares on or before 31 May 2025: Beginning of the financial year Issued during the year Converted during the year Expired during the year Balance at end of financial year - 6,000,000 - - 6,000,000 - 10,000,000 - - 10,000,000 - 0.1609 - - 0.1609 - 0.1002 - - 0.1002 - - - - - - - - - - - - - - - - - - - - (1) During the prior year, the Group issued 750,000 options with the fair value of $90,338 in accordance with the Company’s employee share ownership plan to certain key management personnel which vest progressively throughout the period during which they can be exercised but lapse if their employment is terminated. The options were valued using a Black-Scholes option pricing model using the following inputs: Grant Date 24 September 2020 25 September 2020 Share Price on Grant Date Exercise Price Expected Volatility Option Life Dividend Yield Interest Rate Fair Value per Option $0.215 $0.292 100% 3.02 years 0.00% 0.178% $0.119 $0.220 $0.292 100% 3.01 years 0.00% 0.182% $0.123 (2) During the prior year, the Group issued 4,000,000 to the broker who managed the $5,000,000 share placement that occurred during the year. The fair value of the service provided was not able to be estimated, therefore a Black-Scholes model was used to fair value these options using the following inputs: Share Price on Grant Date Exercise Price Expected Volatility Option Life Dividend Yield Interest Rate Fair Value per Option $0.150 $0.2062 100% 3.25 years 0.00% 0.128% $0.084 Grant Date 26 February 2021 (3) During the year, the Group issued 1,250,000 options with the fair value of $61,098 in accordance with the Company’s employee share ownership plan to certain key management personnel which vest progressively throughout the period during which they can be exercised but lapse if their employment is terminated. The options were valued using a Black-Scholes option pricing model using the following inputs: Share Price on Grant Date Exercise Price Expected Volatility Option Life Dividend Yield Interest Rate Fair Value per Option $0.093 $0.15 100% 3.01 years 0.00% 1.032% $0.049 Grant Date 27 October 2021 44 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 (4) During the year, the Group issued 6,000,000 options with the fair value of $316,387 in accordance with the Company’s employee share ownership plan to certain key management personnel which vest progressively throughout the period during which they can be exercised but lapse if their employment is terminated. The options were valued using a Black-Scholes option pricing model using the following inputs: Share Price on Grant Date Exercise Price Expected Volatility Option Life Dividend Yield Interest Rate Fair Value per Option $0.099 $0.1452 100% 3.09 years 0.00% 0.929% $0.055 $0.099 $0.1936 100% 3.09 years 0.00% 0.929% $0.049 Grant Date 29 November 2021 29 November 2021 (5) During the year, the Group issued 10,000,000 options with the fair value of $599,684 in accordance with the Company’s employee share ownership plan to the Company’s new managing director which vest progressively throughout the period during which they can be exercised but lapse if his employment is terminated. The options were valued using a Black-Scholes option pricing model using the following inputs: Grant Date Share Price on Grant Date Exercise Price Expected Volatility Option Life Dividend Yield Interest Rate Fair Value per Option 15 March 2022 $0.095 $0.1002 100% 3.21 years 0.00% 1.880% $0.060 Note 12: Reserves Capital Restructure reserve Opening balance Expense for the year Closing balance Share-based payment reserve Opening balance Share based expense for year Share based capital raising costs Closing balance Consolidated 2022 $ 2021 $ 250 - 250 250 - 250 5,101,147 111,747 - 5,212,144 3,752,985 588,039 760,123 5,101,147 Fair Value Other Comprehensive Income ("FVOCI") Reserve Opening balance Fair Value Other Comprehensive Income ("FVOCI") Reserve movement Closing balance (338,256) (394,632) (732,888) - (338,256) (338,256) Nature of reserves: (a) Capital restructure reserve The capital restructure reserve arises from the acquisition of Modeling Resources Pty Ltd (b) Share-based payment reserve This reserve records the value of equity instruments issued to directors, employees and suppliers as recognition for services provided. (c) Fair Value Other Comprehensive Income ("FVOCI") Reserve This reserve records the value change in the Company’s investment in Australian Gold and Copper Ltd [ASX:AGC]. 45 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 Note 13: Financial instruments (a) Capital risk management Prudent capital risk management implies maintaining sufficient cash and marketable securities to ensure continuity of tenure to exploration assets and to be able to conduct the Group’s business in an orderly and professional manner. The Board monitors its future capital requirements on a regular basis and will when appropriate consider the need for raising additional equity capital or to farm-out exploration projects as a means of preserving capital. The Board currently has a policy of not entering into any debt arrangements. (b) Categories of financial instruments The Group’s principal financial instruments comprise of cash and short-term deposits. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as receivables and trade payables, which arise directly from its operations. It is, and has been throughout the year, the Group’s policy that no trading in financial instruments shall be undertaken during the year. (c) Financial risk management objectives The Group is exposed to market risk (including interest rate risk and equity price risk), credit risk and liquidity risk. The main risks arising from the Group’s financial instruments is the price risk of Australian Gold and Copper Ltd’s shares. The Board reviews and agrees policies for managing each of these risks and they are summarised below. (d) Market risk Equity price risk sensitivity analysis There has been no change to the Group’s exposure to market risks or the manner in which it manages and measures the risk from the previous period. (i) Interest rate risk management All cash balances attract a floating rate of interest. Excess funds that are not required in the short term are placed on deposit for a period of no more than 3 months. The Group’s exposure to interest rate risk and the effective interest rate by maturity periods is set out below. Interest rate sensitivity analysis As the Group has no interest-bearing borrowings, its exposure to interest rate movements is limited to the amount of interest income it can potentially earn on surplus cash deposits. At 30 June 2021, if interest rates had changed by + 50 basis points and all other variables were held constant, the Group’s loss would have been $31,832 (2021: $19,285) lower as a result of higher interest income on cash and cash equivalents. If interest rates dropped on average – 50 basis points then the Group’s loss would have increased the by $31,832 (2021: $19,285). (e) Credit risk management Credit risk relates to the risk that counterparties will default on their contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with credit worthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from any defaults. 46 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 (f) Liquidity risk management Prudent liquidity risk management implies maintaining sufficient cash and marketable securities to ensure continuity of tenure to exploration assets and to be able to conduct the Group’s business in an orderly and professional manner. Cash deposits are only held with major financial institutions. 2022 Weighted Average Interest Rate Less than 1 month 1-3 months 3 months – 1 year 5 + years Financial assets Cash and cash equivalents – non - interest bearing Cash and cash equivalents – interest bearing Trade and other receivables n/a 0.32% n/a $ $ 68,533 450,046 4,439 523,018 - 4,500,000 - 4,500,000 $ - - - - Financial liabilities Trade and other payables Lease Liabilities 2021 Financial assets Cash and cash equivalents – non - interest bearing Cash and cash equivalents – interest bearing Trade and other receivables n/a 0.27% n/a n/a 5% 197,446 4,510 201,956 118,056 13,529 131,585 59,514 4,569 64,083 Weighted Average Interest Rate Less than 1 month 1-3 months 3 months – 1 year 5 + years $ $ 122,261 1,000,010 4,945 1,127,216 - 5,000,000 - 5,000,000 $ - - - - $ - - 5,276 5,276 Financial liabilities Trade and other payables Lease Liabilities n/a 5% 931,462 4,166 935,628 34,332 12,497 46,829 33,712 33,725 67,437 - 25,393 25,393 The directors consider that the carrying value of the financial assets and financial liabilities are recognised in the consolidated financial statements approximate their fair values. Note 14: Commitments and contingencies In order to maintain an interest in the exploration tenements in which the Group is involved, the Group is committed to meet the conditions under which the tenements were granted. The timing and amount of exploration expenditure commitments and obligation of the Group are subject to the minimum expenditure commitments over the life of the licenses, required as per the Mining Act 1978, as amended, and may vary significantly from the forecast based upon the results of the work performed which will determine the prospectivity of the relevant area of interest. Currently, the minimum expenditure commitment for the granted tenements is approximately $962,650 (2021: $1,574,325). $ - - 4,229 4,229 - - - 47 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 Note 15: Key management personnel disclosures (a) Directors At the date of this report the directors of the Company are: D Richardson – Executive Chairman A McKinnon – Managing Director (appointed 15 March 2022) D Berrie – Non-Executive Director and Joint Company Secretary A Viner – Non-Executive Director (appointed 17 December 2021) P Duerden – Managing Director (appointed 3 February 2020, resigned 17 December 2021) There were no changes of the key management personnel after the reporting date and the date the financial report was authorised for issue. (b) Key management personnel At the date of this report the other Key management personnel of the Company are: M Franklin – Chief Financial Officer (c) Key management personnel compensation Short-Term Post-employment Share-based payments Termination benefits Consolidated 2022 $ 704,202 67,920 1,991 - 774,113 2021 $ 656,138 84,126 502,496 - 1,242,760 Detailed remuneration disclosures of directors and key management personnel are in pages 18 to 20 of this report. There were no loans to individuals or members of the key management personnel during the financial year or the previous financial year. During the financial year Mr Viner’s consulting company AJV Discoveries Pty Ltd provided geological consultancy services to the Company to the value of $59,280. These services were provided on normal commercial terms and conditions. Note 16: Subsidiaries Name of entity Country of incorporation Class of shares Equity holding Modeling Resources Pty Ltd Landslide Investments Pty Ltd Australia Australia Ordinary Ordinary 2022 % 100 100 2021 % 100 100 48 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 Note 17: Reconciliation of loss after income tax to net cash outflow from operating activities a) Reconciliation of loss from ordinary activities after income tax to net cash outflow from operating activities Net profit / (loss) for the year after income tax (3,019,039) 1,188,014 Consolidated 2022 $ 2021 $ Profit on disposal of AGC Share based payment expense Depreciation ROU Asset Amortisation Exploration asset impairments Movements in working capital (Increase) / Decrease in other receivables (Increase) in prepayments Increase / (Decrease) in trade and other payables Net cash outflows from operating activities b) Non-cash financing and investing activities - 111,747 27,440 47,237 - (6,243,740) 588,039 25,986 46,470 260,000 15,688 (25,008) (713,345) 216,212 (6,423) 719,867 (3,555,280) (3,205,575) There were no non-cash financing and investing activities in the financial year ended 30 June 2022. Note 18: Parent Entity Disclosures Financial position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity Financial performance Profit / (Loss) for the year Other comprehensive income/(loss) Total comprehensive income/(loss) 2022 $ 5,027,454 1,768,493 6,795,947 2021 $ 6,102,862 1,605,472 7,708,334 178,376 178,376 189,271 189,271 6,617,571 7,519,063 17,139,992 4,434,858 (14,957,279) 14,625,431 4,717,743 (11,824,111) 6,617,571 7,519,063 (848,979) (394,632) (1,243,611) 4,377,204 (338,256) 4,038,948 49 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 Note 19: Events after the reporting date During the first quarter of the 2023 financial year, the Company received $577,600 from option holders who exercised 8,000,000 options and the Company announced the first drilling at the Corvette Prospect (ASX:MAG 23 August 2022)  had returned a broad copper‐gold‐molybdenum mineralised zone from the upper portion of the first hole. Note 20: Auditor’s remuneration The auditors of the Group are BDO Audit (WA) Pty Ltd Assurance services BDO Audit (WA) Pty Ltd Audit and review of financial statements Total remuneration for audit services Consultancy services BDO Corporate Finance (WA) Pty Ltd Preparation of independent limited assurance report Total remuneration for audit services Consolidated 2022 $ 2021 $ 43,680 43,680 42,902 42,902 - - 10,622 10,622 Total auditor’s remuneration 43,680 57,773 Note 21: Fair Value Measurement This note provides an update on the judgements and estimates in determining the fair values of the financial instruments since the last annual financial report. Fair Value Hierarchy To provide an indication about the reliability of the inputs used in determining fair value. The Group classifies its financial instruments into the three levels prescribed under accounting standards. An explanation of each level follows underneath the table. The following table presents the Group’s financial assets and financial liabilities measured and recognised at fair value. As at 30 June 2022 Level 1 $ Level 2 $ Level 3 $ Financial assets as FVOCI – Equity Securities 394,631 As at 30 June 2021 Financial assets as FVOCI – Equity Securities 789,263 - - - - Total $ 394,631 789,263 There were no transfers between levels during the year. The Group’s policy is to recognise transfers into and out of the fair value hierarchy levels at reporting date. The fair value of the financial assets and liabilities held by the Group must be estimated for recognition, measurement and /or disclosure purposes. The Group measures fair value by level, per the following fair value measurement hierarchy:  Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities  Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or the liability, either directly (as prices) or indirectly (derived from prices); and  Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). 50 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 Valuation techniques used to determine fair values The Group did not have any financial instruments that are recognised in the financial statements where their carrying value differed from the fair value. The fair value of assets and liabilities are included at an amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The carrying value of amounts of cash and short-term trade and other receivables, trade payables and other current liabilities approximate their fair value largely due to the short-term maturities of these payments. Financial assets at fair value through other comprehensive income – equity securities The fair value of the equity holdings held in ASX companies are based on the quoted market prices from the ASX on the last trading day prior to the period end. 51 Magmatic Resources Limited ABN 32 615 598 322 Notes to the consolidated financial statements for the year ended 30 June 2022 Directors’ declaration 1. In the opinion of the directors of Magmatic Resources Limited (the “Company”): a. the accompanying financial statements and notes are in accordance with the Corporations Act 2001 including: i. giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its performance for the financial year then ended; and ii. complying with Accounting Standards, Corporations Regulations 2001, professional reporting b. c. requirements and other mandatory requirements. 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 financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. 2. This declaration has been made after receiving the declarations required to be made to the directors in accordance with Section 295A of the Corporations Act 2001 for the year ended 30 June 2022. This declaration is signed in accordance with a resolution of the Board of Directors. D Richardson Chairman Perth, Western Australia 28 September 2022 52 Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth WA 6000 PO Box 700 West Perth WA 6872 Australia INDEPENDENT AUDITOR'S REPORT To the members of Magmatic Resources Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Magmatic Resources Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance for the year ended on that date; and (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 1 BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 53 Recoverability of Exploration and Evaluation expenditure Key audit matter How the matter was addressed in our audit As disclosed in Note 8 to the financial report, the Our procedures included, but were not limited to: carrying value of the exploration and evaluation asset represents a significant asset of the Group. The Group’s accounting policies and significant judgements applied to capitalised exploration and evaluation expenditure are detailed in Note 1 of the financial report. In accordance with AASB 6 Exploration for and Evaluation of Mineral Resources (‘AASB 6’), the recoverability of exploration and evaluation expenditure requires significant judgement by management in determining whether there are any facts and circumstances that exist to suggest the carrying amount of this asset may exceed its recoverable amount. As a result, this is considered a key audit matter. • Assessing whether rights to tenure of the Group’s area of interest remained current at balance date; • Considering the status of the ongoing exploration programmes in the respective areas of interest by holding discussions with management, and reviewing the Group’s exploration budgets, ASX announcements and director’s minutes; • Considering whether any such areas of interest had reached a stage where a reasonable assessment of economically recoverable reserves existed; • Considering whether any facts or circumstances existed to suggest impairment testing was required; and • Assessing the adequacy of the related disclosures in Notes 1 and 8 to the financial report. Other information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2022, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. 2 54 In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 19 to 24 of the directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Magmatic Resources Limited, for the year ended 30 June 2022, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit (WA) Pty Ltd Dean Just Director Perth, 28 September 2022 3 55 18.07% 7.31% 5.72% 5.71% 5.34% % 0.00 0.24 0.69 11.69 87.38 100.00 Magmatic Resources Limited ABN 32 615 598 322 Additional Shareholder Information The following additional information is current as at 27 September 2022. Corporate Governance: The Company’s Corporate Governance Statement is available on the Company’s website at www.magmaticresources.com/corporate-governance Substantial Shareholders: Holder Name Bilingual Software Pty Ltd and D & R Richardson Gold Fields Australia Pty Ltd Mr Marc David Harding Mr Ming Yiu Ko Davthea Pty Ltd Holding % IC 47,442,571 19,200,000 15,020,925 15,000,000 14,029,044 Ordinary Shares – Range of Units: Holdings Ranges 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 >100,000 Holders 53 186 211 721 281 1,452 Totals There are 240 shareholders with less than a marketable parcel. Total Units 5,495 617,289 1,805,659 30,682,271 229,376,084 262,486,798 Voting rights Each fully paid ordinary share carries voting rights of one vote per share. The top 20 holders of ordinary shares are: Ranking Holder 1 2 3 4 5 BILINGUAL SOFTWARE PTY LTD GOLD FIELDS AUSTRALIA PTY LTD MR MARC DAVID HARDING MR MING YIU KO DAVTHEA PTY LTD MR DAVID RICHARDSON + MRS RYOKO RICHARDSON MR NEVRES CRLJENKOVIC CITICORP NOMINEES PTY LIMITED WESTGATE CAPITAL PTY LTD AG INVESTMENT SERVICES PTY LTD KAOS INVESTMENTS PTY LIMITED BOND STREET CUSTODIANS LIMITED MR BINH THANH LE CRLJENKOVIC SUPER FUND PTY LTD WOMBAT SUPER INVESTMENTS PTY LTD MR BEVAN JAMES COOTE GOSOJO PTY LTD MRS MARISA MACKOW SERCA SUPERFUND PTY LTD MR ARDAVAN GHORBANI 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Total Total remaining holders Shares Held 36,668,823 19,200,000 15,020,925 15,000,000 14,029,044 10,367,502 9,471,248 3,232,540 3,000,000 2,888,888 2,700,000 2,500,000 1,980,000 1,851,428 1,760,000 1,676,208 1,665,000 1,580,000 1,509,234 1,503,860 % 13.97 7.31 5.72 5.71 5.34 3.95 3.61 1.23 1.14 1.10 1.03 0.95 0.75 0.71 0.67 0.64 0.63 0.60 0.57 0.57 147,604,700 114,882,098 56.23 43.77 56 Magmatic Resources Limited ABN 32 615 598 322 Unquoted equity securities Unquoted equity securities on issue as at 27 September 2022 was as follows: - 1 Optionholder holding 3,000,000 options, exercisable at $0.0722, expiring 14 October 2022 - 1 Optionholder holding 10,000,000 options, exercisable at $0.1002, expiring 31 May 2025 - 2 Optionholders holding 4,050,000 options, exercisable at $0.1452, expiring 31 Dec 2024 - 3 Optionholders holding 1,250,000 options, exercisable at $0.1500, expiring 31 October 2024 - 2 Optionholders holding 1,950,000 options, exercisable at $0.1936, expiring 31 Dec 2024 - 2 Optionholders holding 4,000,000 options, exercisable at $0.2062, expiring 28 May 2024 - 2 Optionholders holding 8,000,000 options, exercisable at $0.2322, expiring 30 November 2022 - 2 Optionholders holding 750,000 options, exercisable at $0.2642, expiring 30 September 2023 - 5 Optionholders holding 5,700,000 options, exercisable at $0.3352, expiring 31 January 2023 - 2 Optionholders holding 2,000,000 options, exercisable at $0.5262, expiring 12 February 2023 - 5 Optionholder holding 2,800,000 options, exercisable at $0.5772, expiring 31 January 2023 Tenement Listing Project Area Wellington North – Duke Myall Parkes – Alectown Wellington North – Bodangora Parkes Wellington North - Combo Tenement Details % Held EL6178 EL6913 EL7424 EL7440 EL7676 EL8357 100 100 100 100 100 100 57 

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