Martin Marietta Materials Annual Report 2022

Plain-text annual report

ANNUAL REP ORT FO R THE YEAR ENDED JUNE 30 2022 METALLICA MINE RALS LTD Metallica Minerals Annual Report | 2022Table of CONTENTS Corporate Directory Key Events Chairman’s Letter Cape Flattery Silica Sand Silica Sand Market & Demand Clermont Copper/Gold 4 7 8 12 21 24 Director & Management Profiles 26 Tenement Table Top 20 Shareholders Full year Financial Statements 29 30 32 3 CORPORATE DIRECTORY As at 16 Sept 2022 DI R EC TORS SHARE REGISTRY Theo Psaros, Executive Chairman Link Market Services Brad Sampson, Non-Executive Director Level 21, 10 Eagle Street Mark Bojanjac, Non-Executive Director Brisbane QLD 4000 MAN AGEMEN T Scott Waddell, Chief Financial Officer and Company Secretary +61 7 3320 2200 AUDITOR Moore Australia Nicholas Villa, General Manager Cape Flattery Silica Level 12, 10 Eagle Street Brisbane QLD 4000 Pat Smith, Geology/Exploration Manager +61 7 3340 3800 PR IN CI PAL RE GI STERED OFFIC E IN AU ST RALI A Level 1, North Tower, 527 Gregory Terrace, Fortitude Valley QLD 4006 + 61 7 3249 3000 admin@metallicaminerals.com.au WEB S IT E www.metallicaminerals.com.au LEGAL Colin Biggers & Paisley Level 35, 1 Eagle Street Brisbane QLD 4000 +61 7 3002 8700 STOCK EXCHANGE LISTING ASX: MLM AUSTRALIAN BUSINESS NUMBER ABN 45 076 696 092 Metallica Minerals Annual Report | 2022 METALLICA MINERALS IS AN AUSTRALIAN DEVELOPMENT COMPANY FOCUSED ON DELIVERING HIGH PURITY SILICA SAND TO A DIVERSIFIED GLOBAL CUSTOMER-BASE. “ “ SUBSIDIARY COMPANIES Lucky Break Operations | ACN: 126 272 580 Phoenix Lime Pty Ltd | ACN: 096 355 761 Cape Flattery Silica Pty Ltd | ACN: 138 608 894 Touchstone Resources Pty Ltd | ACN: 126 306 018 Greenvale Operations Pty Ltd | ACN: 139 136 708 NORNICO Pty Ltd | ACN: 065 384 045 PGE Minerals Pty Ltd | ACN: 642 538 805 PROJECT LOCATION Metallica Minerals Annual Report | 2022 KEY EVENTS August 2022 JukesTodd appointed as Definitive Feasibility Study Manager for the Cape Flattery Silica (CFS) Project 25-hole auger program completed west of the Cape Flattery Silica MLA MoU signed with Mitsui June 2022 MoU signed with Ports North April 2022 Metallica moves towards 51% ownership of the Clermont JV Positive metallurgical testwork results achieved on targeted samples from the CFS Project Significant increase in measured and indicated resources March 2022 Pre-Feasibility Study completed at the CFS Project showing NPV8 of $290 million before tax. Maiden Reserve of 46Mt high purity silica sand resource at Cape Flattery February 2022 CFS Project granted Project of Regional Significance Status by Queensland Government Infill drilling validates resource at CFS Project $3 million capital raising completed December 2021 24 Hole infill drilling program completed at CFS Project November 2021 Sale of Unmarketable shares completed CFS Sand Production Target October 2021 40% increase of CFS Resource to 53.5Mt September 2021 Assay results confirm and extend high purity silica August 2021 98 Hole drill program completed at CFS Project MoU signed with Diatreme Resources for Clermont Copper Gold Project Scoping Study completed for CFS Project 7 EXECUTIVE CHAIRMAN’S LETTER Dear Metallica shareholders It gives me immense pleasure to deliver Metallica’s Annual Report. The 2022 financial year has been a year of significant progress for your company. Our primary focus remains on the delivery of the development of the 100% owned Cape Flattery Silica Sand (CFS) project. Among the many achievements for the CFS project, completion of our Pre-Feasibility Study (PFS) delivered in March 2022 has produced a compelling economic forecast. This has provided a high level of confidence in the project’s potential and accordingly, the Definitive Feasibility Study (DFS) is underway. The PFS has confirmed CFS can be a long-life project, producing high-quality silica sand for the Asian glass manufacturing markets, predominantly supplying the solar panel industry. The robust global market growth dynamics for silica sand and the progress the company has made has also fuelled increasing interest from international shareholders, potential financiers and offtake partners. With the world focused on ESG and achieving net zero emissions targets, Metallica Minerals is well-positioned to help power the global clean energy revolution in the future. CAP E FLATTERY PROJ ECT U PDAT E The PFS has produced positive financial metrics, including low forecast operating costs of A$33.77 per tonne, a pre-tax NPV8 of $290 million, average forecast annual EBITDA of $38.1 million and life of project gross revenue of A$2.13 billion. The capital cost of the project is estimated to be A$79 million with a payback period of 3.9 years. In recent months, significant work and resources have been applied to the many approvals being sought for the CFS project. Post-financial year end, the Company plans to lodge the Environmental Application and Progressive Rehabilitation and Closure Plan with the Queensland Department of Environment and Science. A referral to the new Federal Government’s Department of Climate Change, Environment and Water and an application for a Water Licence are also expected to have been lodged. Metallica has also continued to build and foster positive relationships with the two Native Title holders, Hopevale Congress Aboriginal Corporation RNTBC Trustee, on behalf of the Nguurruumungu Clan, and Walmbaar Aboriginal Corporation, on behalf of the Dingaal Clan. We plan to complete negotiations for cultural and compensation agreements that provide support for the Traditional Owners for the development of the project. The Company has also held negotiation meetings in Hope Vale and Cooktown and these have been conducted in an open and mutually respectful manner. Metallica Minerals Annual Report | 2022Metallica retains ongoing support from the Queensland Government in relation to the CFS project and we thank the respective departments and their officers for their advice and counsel as we advance the project towards our goal of being the next project to deliver high-quality silica sand to the Asian market. A Development Application for a purpose-built jetty is expected to be lodged before the current calendar year end. This jetty will allow barge loading and transhipping operations. It is strategically important this infrastructure is located within the Port Limit of Cape Flattery and not subject to the Sustainable Ports Act (Qld). During the period, Metallica executed a Memorandum of Understanding (MoU) with the Queensland Government-owned corporation, Far North Queensland Ports Corporation Limited (Ports North). This non-binding MoU reflects the parties working closely together to investigate and assess various port related aspects of the project eg; marine infrastructure, marine operations, approvals and commercial agreements for our silica sand project. The CFS project also achieved the designation of a Project of Regional Significance by the Department of Regional Development, Manufacturing and Water in Queensland. This means the project is eligible to apply for a water entitlement from the 25,000 megalitres of unallocated water held in the strategic reserve for the Water Plan. In order to achieve this designation, the CFS project was required to exhibit how it would deliver economic benefits to the region and townships where it is located. S ILICA SAND GLOBAL DEM AND As the world transitions towards decarbonisation and net zero emissions by 2050, the number of countries and households installing rooftop solar is expected to grow exponentially. Solar PV remains the powerhouse of growth in renewable electricity. The International Energy Agency’s July 2022 report noted that reaching net zero by 2050 will be based largely on renewables, and annual additions of solar PV capacity worldwide need to more than quadruple by 2030 to reach the net zero target. As such, global demand for silica sand, particularly premium-quality silica, remains strong given it is an essential ingredient for the fast-growing solar industry in addition to high-tech glass applications. Within Australia, the Federal Government’s 2022 Critical Minerals Strategy, which promotes investment in the nation’s critical minerals sector, added high-purity silica to the critical minerals list. This inclusion recognises the quality of silica sand that Australia can contribute to the goal of net zero emissions. The Queensland Department of Resources also published its Resource Industry Development Plan and silica sand is designated a New Economy Mineral in this plan. C LER MON T PROJECT UPDATE During the period under review, the Company also signed a MoU with Diatreme Resources for a potential Joint Venture on the Clermont Copper Gold Project which comprises EPM 17968. The Company made the decision to move to the second stage of the earn in phase of the agreement and increase Metallica’s share to 51% of the project through a further $700,000 spend on exploration activity at the Clermont Project prior to 27 April 2023. The results from the first drill holes at Clermont are encouraging and warrant further exploration activity. Importantly, this work is being managed by a dedicated team to ensure there are no distractions from our focus on the development of the CFS project. 9 F IN ANCIN G STRATEGY To continue funding the development of the CFS project, Metallica undertook a placement to raise A$3 million in March 2022. The placement was completed with support from a new institutional investor, Sparta AG and with continued support from the Company’s largest pre-placement shareholders, Ilwella Pty Ltd and the Dostal Group. Discussions with potential offtake partners in Europe, Japan and Korea have continued to progress. The first of a planned number of MoUs was executed with Mitsui in August 2022. The Company has also held ongoing discussions with potential debt and equity providers on the CFS development plans, which enables these parties to be well versed in the project’s attributes for when the required capital is pursued. We were pleased to finish the 2022 financial year with $5.3m in cash and no debt. In closing, I would like to thank my fellow Directors, Brad Sampson and Mark Bojanjac for their counsel, strategic thinking and focus to deliver the positive progress of your company. Importantly, the Board has been fortunate to work with a management team whose hard work and professionalism continue to provide the platform for the successful delivery of the CFS project. We have also been fortunate to work with a variety of specialist consultants during the year, whose advice and support has also contributed positively to the Company. On behalf of the Metallica Directors, we thank our many shareholders for their continued support. Your company is very well placed to deliver a positive future as we progress the development of the CFS project at a time when the world is enthusiastically seeking solutions to achieving net zero emissions. Yours faithfully Theo Psaros Executive Chairman Metallica Minerals Annual Report | 2022 11 CAPE FLATTERY S ILICA SANDS MLM interest 100% through subsidiary Cape Flattery Silica Pty Ltd 36Km2 Exploration Tenure | EPM 25734 S ILICA SANDS – BULK EX P ORT The Cape Flattery Silica Sands (CFS) project is located on the eastern coastline of Cape York Peninsula and approximately 220 km north of Cairns in North Queensland. The project is adjacent to the world class Cape Flattery Silica Mine, owned by Mitsubishi. Importantly, the CFS Project is located within the Cape Flattery Port area, which is owned and operated by Ports North, a Queensland Government owned corporation. Ports North owns the jetty which is leased by Mitsubishi and is located immediately south of the CFS’s tenement. The jetty’s ship-loading equipment is owned by Mitsubishi. MIN IN G LEASE AP PLICATION In 2021, Metallica lodged a Mining Lease Application (MLA) with the Queensland Department of Resources. The MLA covers 616.1 ha and had been applied for a term of 25 years. The future Mining Lease (ML 100284) will include the Project’s resource area, the planned processing plant, the accommodation camp, potential water bore sites, and access from a gazetted road. NATI V E TITLE During 2022, four meetings have been held with the representatives of the clans who are the traditional landowners of the Mining Lease Application (MLA) area. The Company have met with the Dingaal and Nguurruumungu representatives and their respective legal advisors and the negotiations for a compensation agreement are ongoing. Negotiations have been delayed due to impacts of a number of COVID cases amongst the both the CFS team and clan members. Importantly, the negotiations have been held in a professional and respectful manner with significant information on the project being shared with the negotiating parties from each clan. In August 2022, Metallica welcomed the seven representatives of Walmbaar (Dingaal clan) to the CFS office to meet with our staff and introduce them to the Definitive Feasibility Study group. Chairman, Kenneth McLean addressed the group and discussed Cultural Heritage matters. PRE-FEASIBILITY STUDY The Pre-Feasibility Study (PFS) was completed in March 2022. The highlights of the PFS are listed below: Cape Flattery Silica Sand Project’s (CFS) Pre-Feasibility Study (PFS) confirms the Project can be a long-life silica sand project producing high quality silica sand for the booming Asia-Pacific glass manufacturing markets supplying the solar panel industry. » The PFS returns Net Present Value (NPV8, pre-tax) of A$290 million (M), Internal Rate of Return (IRR) of 34.9% and life of Project cash revenue of A$2,127M. This compares with the Updated Scoping Study (10 November 2021) which had an NPV8 of A$253M. » The Capital Cost of the CFS Project is estimated to be $79M (including a 15% contingency of $10M) with a payback period from commencement of Metallica Minerals Annual Report | 2022Figure 1: Cape Flattery Port location and Project proximity L-R: John Deeral, Raynard Baru, Shailand Deeral-Rosendale, Stanton Thompson, Nicholas Villa (General Manager), Theo Psaros (Executive Chairman), Tanya Yoren, Fabian O’Burns and Kenneth McLean - Dingaal Clan representatives visit to the Metallica office in August 2022. 13 » CFS will contribute to delivery of the Queensland Government’s commitment to the development of new economy minerals in Far North Queensland. The results of the PFS demonstrated a strong financial case and the Board approved commencement of a Definitive Feasibility Study. DEFINITIVE FEASIBIL ITY STUDY The Definitive Feasibility Study (DFS) commenced following the completion of the PFS and is planned for completion in 2nd Quarter 2023. In August 2022 JukesTodd were appointed as Study Manager and have overall responsibility for the management and delivery of the DFS. The DFS will include the design, engineering and planned delivery of the Cape Flattery Silica operation producing 1.35Mt of high-purity silica sand per annum. production of 3.9 years. All production is based on the Maiden Ore Reserve (refer Table 5 – Ore reserves). » Maiden Ore Reserve of 46 million tonnes (Mt) @ 99.18% SiO₂ contained within a Resource of 53.5Mt @ 99.19% SiO₂, (Table 2 – Mineral Resource) will be exploited over a 25-year Project life producing a saleable product of 1.35Mt per annum. » Sensitivity and scenario analysis demonstrate the Project is financially robust and can maintain a positive Net Present Value (NPV) through stress- testing of the various scenarios. » Both the sand extraction area and the industry standard processing facility will have a small footprint and low environmental impact. » A purpose built jetty is planned to be constructed, subject to Development Approval (DA) to allow barge loading and transhipping operations. This infrastructure, importantly, is located within the Port Limit of Cape Flattery. » Development of the Project will deliver employment, apprenticeship and training opportunities to the indigenous communities at Hope Vale and Cooktown communities, where the Dingaal and Nguurruumungu clans dominantly live. L to R: Boyd Dale and David Bainbrigge (JukesTodd), Tycho Buningh (Royal Haskoning), Shailand Deeral-Rosendale (Walmbaar) and Nicholas Villa onsite at Cape Flattery Metallica Minerals Annual Report | 2022KEY OUTCOMES Table 1: Summary of key outcomes – Pre-feasibility study (A$ — Australian dollars) Key Financial Metrics NPV - pre-tax (8%) IRR - pre-tax NPV – post tax IRR – post tax Payback (start of production) Initial Capital Expenditure (CapEx) Life of Mine (LOM) CapEx Average annual revenue LOM revenue Average annual OpEx LOM OpEx Average annual EBITDA LOM EBITDA C1 OpEx (FOB) Average silica sand price (US$47.50) Key Sand Extraction & Processing Metrics Mineral Resources (see Table 3) Ore Reserve (see Table 2) LOM Sand mined & processed Silica sand production Plant operating capacity Plant yield Silica product sold Notes Unit A$M % A$M % Years A$M A$M A$M A$M A$M A$M A$M A$M A$/t product A$/t (FOB) Unit Tonnes M Tonnes M Years LOM Tonnes M LOM Tonnes M Mtpa % Mtpa Total 290.1 34.9 189.3 27.1 3.9 79.4 113.9 85.1 2,127 46.4 1,159 38.1 952 33.77 63.63 Total 53.5 46 25 45 33.4 1.8 75 1.35 » The PFS Financial Model assumes 100% equity funding with no gearing. Financing the Project will be further explored in the DFS process. » All figures are presented in Australian dollars, unadjusted for inflation. » Assumed exchange rates USD/AUD of approximately $0.75. » » » » The plant is designed to process 1.8Mtpa. The CapEx estimate includes a contingency of $9.6M (15%). Production is assumed to commence approximately 13 months after the first drawdown of capital. The Probable Ore Reserve and Measured and Indicated Mineral Resource underpinning the above production assumption targets has been prepared by a Competent Person in accordance with the requirements of the JORC Code 2012 (refer Table 2 – Mineral Resources). » Refer to ASX Release 21 March 2022 “Cape Flattery Silica PFS Confirms Excellent Economics and Maiden Ore Reserve”. 15 EN VI RON MENTAL During the year, CFS in conjunction with our external environmental consultants, have completed various environmental studies at the CFS project. These studies have included soil sampling, ecological studies (wet season fauna and flora studies) and water monitoring. We plan to lodge a Referral to the Federal Government’s Department of Climate Change, Energy, the Environment and Water (DCCEEW) in late Q3 2022. It is expected that the Environmental Application and Progressive Rehabilitation and Closure Plan (PRCP) will be lodged in Q4 2022 to the Queensland Department of Environment and Science (DES). The PRCP will outline how rehabilitation will be undertaken progressively throughout the life of the project and what work will be undertaken when the project is completed. A communication process and a roadshow to representatives of the Dingaal and Nguurruumungu clans, local councils and other key stakeholders to inform them of the PRCP and seek feedback accordingly will be completed prior to lodgement of the PRCP. R ES O URCE Over the past 24 months, Metallica has completed three drilling programs in the eastern area on EPM 25734. A total of 144 aircore holes (CFS001 to CFS144) have been drilled totalling 2,489 meters. The results from the drilling program have identified an area within EPM 25734 which hosts a significant quantity of high-grade (+99%) silica sand. This area has now been contained within MLA100284 and is referred to as the Project area. Metallica Minerals engaged Ausrocks Pty Ltd (Ausrocks) to complete a Mineral Resource Estimate (MRE) for the Project Area on the completion of each drilling program, with the most recent resource estimate completed by Ausrocks in April 2022. Ausrocks is a Brisbane-based resources consultancy with expertise in industrial minerals and quarrying. Ausrocks determined that the drilling density on the completion of the December 2021 drilling program was sufficient to classify the resources contained in the Project Area as Measured – Indicated and Inferred in accordance with the JORC 2012 guidelines. Ausrocks reviewed the project geology, assay data and the duplicate sample and umpire laboratory assay data that Metallica provided to ensure only valid and relevant data was used for the MRE and that all relevant Quality Assurance Quality Control (QA/QC) checks had been completed. The most recent Mineral Resource estimate that Ausrocks developed for the Project is referenced in the MLM ASX Release dated 7 April 2022 ‘Significant Increase in Measured and Indicated Resources at Cape Flattery Silica Project’ . The block model’s construction was based on data from 144 vacuum drill holes as inputs to the Mineral Resource model, with a total of 2,489 samples used in the resource estimate. The various resource categories for the project area and the hole locations are presented on figure, the April 2022 resource estimate is presented in Table 2. Table 2: Mineral Resource for the Cape Flattery Silica Project Resource Category Silica Sand Mt Measured Indicated Inferred Total 16.7 35.2 0.3 52.2 SIO₂ % 99.26 99.14 99.06 99.18 FE₂O₃ % 0.10 0.13 0.14 0.12 TIO₂ % 0.08 0.13 0.16 0.11 LOI % 0.13 0.14 0.12 0.14 AL₂O₃ % Density t/m3 Silica Sand Mm3 0.17 0.19 0.23 0.18 1.6 1.6 1.6 1.6 10.4 22.0 0.2 32.6 For further details, refer to ASX Release: 7 April 2022: “Significant Increase in Measured and Indicated Resources at Cape Flattery Silica Project”. Metallica Minerals Annual Report | 2022Figure 2: Cape Flattery Resource and drilling In August 2022, a 25 hole hand auger program was completed west of the existing CFS Mineral Resource. The program was completed over 4 days and will provide data to aid in understanding the strategic options and planning for the western area. Assays are being processed at ALS and results are expected by the end of Q3 2022. L to R: Shane Mardon and Traditional Landowner from Nguurruumungu clan Niall Cobus 17 METAL LURGICAL T E STING Over the last 12 months, Metallica Minerals has completed extensive metallurgical testwork on samples collected from the CFS Project Area. Samples for the testwork were selected from individual 1m drill samples and composited to produce the preferred head grade to be tested. Samples were selected from drill holes from various parts of the resource area to ensure that they were representatives of the entire deposit, with special emphasis on the Measured resource area where the first 10 years production will be sourced from. The different phases of metallurgical studies were: » Initial characterisation tests on a 10kg sample from the resource area to determine the process parameters and for process design purposes » Additional test work on samples high in clay content to determine if they can be upgraded to a high grade SiO2 product with simple scrubbing » Test work on a 914 kg Bulk sample using data obtained from the initial 10kg characterisation test, with the sample processed through a test rig plant to determine what quality of product can be produced » Characterisation tests on samples with varying iron content to determine what the optimal feed grade is (both SiO2 and Fe2O3) to produce a high-quality silica sand product Results from the targeted testwork indicate that a high-quality silica sand product, which is very similar to that being exported by Mitsubishi can be achieved from the processing of sand within Metallica’s deposit. Metallurgical testwork is ongoing and results from two sets of characterisation test are still pending as of September 2022. ASX announcements containing results from the metallurgical testwork were released to the market on the 21 March 2022: “Cape Flattery Silica PFS confirms excellent economics and maiden ore reserve” and on the 28th of April 2022 “Positive Metallurgical test work results achieved on targeted samples from the Cape Flattery Silica Sand Project”. All of the metallurgical testwork undertaken by Metallica in the financial year ending 30 June 2022 was completed by Mineral Technologies who are based on the Gold Coast in South East Queensland. They initially carried out a silica sand characterisation study comprising laboratory-scale tests to produce products that represent the purest silica sand that may be achievable using conventional mineral processing methods. The sand characterisation study involved using a suite of laboratory tests to understand how the sand will behave in a full-scale processing plant. The sand sample was run through a series of stages, with the silica content and the iron content recorded at the end of each stage. This work identified which stages, (laboratory methods) are crucial in upgrading the feed sand to a high-end product. Once the results from this work was complete the bulk sample was then run through a larger scale test rig processing plant to assist in the design of the process plant. The next phase of metallurgical studies has commenced and will concentrate on the iron variability and final product specifications. Variability studies on a range of silica sand samples with varying levels of Fe2O3 samples from 300ppm Fe2O3 to 1,200ppm Fe2O3 at 100ppm intervals from within the Measured and Indicated Resource areas will help optimise the mine planning and sand recovery sequencing and is an important part of the early DFS work. Samples have also been requested and dispatched to prospective offtake partners for their evaluation of the silica sand extracted from the drilling programs and from the product produced after processing the bulk sample. The feedback received from these potential offtake partners has been positive and indicates that Metallica can produce a high-quality saleable product from the CFS project area. Metallica Minerals Annual Report | 202219 S ILICA SAND MARKET AN D DEMAN D SILICA SAND USES AND FUTURE DEMAND Silica sand is the key ingredient in construction glass and the glass for vehicle windscreens. Demand from the renewable energy sector continues to rise driven by solar panel manufacturers. Growing Markets: » Ultra Clean Glass » Solar panels » Smartphones » Fibre optics » Tablets » LED lighting » The global silica sand market was valued at US$ 21.6 Billion in 2021 » Global silica sand market to exhibit a CAGR of 6% during 2022-2027 » Solar PV capacity has grown 20 -fold over the past decade and forecast to triple in size over the next 10 years Sand is the world’s most consumed raw material after water and an essential ingredient to our everyday lives. Yet, the world is facing a shortage — and climate scientists say it constitutes one of the greatest sustainability challenges of the 21st century. For construction alone the world consumes roughly 40 – 50 billion tons of sand on an annual basis. That’s enough to build a wall of 27 meters high by 27m wide that wraps around the planet every year. The global rate of sand use which tripled over the past two decades partially because of surging urbanisation – far exceeds the natural rate at which sand is being replenished by the weathering of rocks by wind and water. Sand is the worlds most consumed raw material after water and an essential ingredient to our everyday lives. Source: A sand shortage? The world is running out of a crucial — but under- appreciated — commodity https://www. cnbc.com/2021/03/05/sand-shortage- the-world-is-running-out-of-a-crucial- commodity.html According to industry research firm IMARC Group, high-purity silica sands are becoming more sought after, with the global market growing at a compound annual growth rate (CAGR) of around 6% between 2010 and 2017. In 2017, a total of 188 Mt of silica sand was produced globally. This growth has been driven by silica sand’s applications across a broad range of industries including glassmaking, foundry casting, water filtration, chemicals and metals, hydraulic fracturing and an increasing number of hi-tech products, including solar panels. For example, in the global glass-making industry, one of the major consumers of high-purity silica has experienced significant growth recently from the construction and automotive industries. IMARC also estimated the global silica sand market could grow from US$7 billion to US$20 billion in 2024. Source: www.imarcgroup.com/silica-sand- manufacturing-plant Metallica Minerals Annual Report | 2022Silica Sand Market - Growth rate by region 2022-2027 Silica Sand Market - Growth Rate by Region 2022-2027 High Medium Low Source: Mordor Intelligence Other 4% Abrasives 5% Filtration 10% Hydraulic Fracturing 18% Glass Industry 37% Foundry 26% Asia Pacific silica production by end use Silica Sand Market - Growth Rate by Region, 2022-2027 21 CAP E FLATTERY’S PATHWAY TO NET ZE RO The International Energy Agency (IEA) highlights reaching net zero by 2050 will be based largely on renewables, with solar power as the single biggest supply source. IEA report states the pathway to net zero requires annual additions of solar PV to reach 630 gigawatts and wind power to reach 390 gigawatts by 2030.* Together this is four-times the record level achieved in 2020. For solar PV, this means installing the world’s current largest solar park roughly every day. *IEA, 2021: https://iea.blob.core.windows. net/assets/4719e321-6d3d-41a2- bd6b-461ad2f850a8/NetZeroby2050- ARoadmapfortheGlobalEnergySector.pdf Cape Flattery’s 1.35 Mtpa production of high-quality Silica sand could produce over 133 million 375W solar panels on the basis of 74% of the panel is comprised of SiO2. That’s equivalent to 3.35 billion panels over a 25 year mine life at full production. With an assumed output of 4.0 kWh/day, those panels have the potential to generate over 41,312 TWh of renewable energy over their operating life (25 years). * Detailed analysis of energy production and emissions abatement opportunity carried out by Arche Energy using information derived from third parties, heuristics and assumptions. Metallica Minerals Annual Report | 2022 CAPE FLATTERY’S 1.35 MTPA PRODUCTION OF HIGH- QUALITY SILICA SAND COULD PRODUCE OVER 133 MILLION 375W SOLAR PANELS . “ “ 23 CLERMONT CO P PER GOLD MLM 25% through subsidiary PGE Minerals Pty Ltd | 248Km2 Exploration Tenure | EPM 17968 In August 2021, the Company announced it had signed a Memorandum of Understanding (MoU) with Diatreme Resources for a potential Joint Venture on the Clermont Copper Gold Project which comprises EPM 17968, after identifying the tenement as having the potential to host a Copper-Gold porphyry system. In April 2022, the Company confirmed that it has met the expenditure commitment to earn 25% of the project. In addition, the Company made the decision to move to the second stage of the earn in phase of the agreement, which at completion will increase its share of the project to 51% through a further $700,000 spend on exploration activity to be completed prior to 27 April 2023. After reviewing the historical drill hole, soil and geophysical data for EPM17968, Metallica identified a large magnetic low feature within what Diatreme referred to as the Rosevale Porphyry Corridor. Drilling adjacent to and on the margins off this feature intersected low levels of copper – gold and molybdenum mineralisation. MLM postulated that the magnetic low feature is a buried porphyry intrusive which has been strongly altered and is the source of the mineralisation on the periphery of this feature. In February 2022, MLM initiated a two- hole diamond drilling program to test the magnetic feature which has a modelled depth to top of between 300m to 500m. The first hole (RDD019) was drilled to a depth of 530.40m and was completed in March 2022, the second hole (RDD020) was drilled to a depth of 501.50m and was completed in April 2022. The drill hole parameters for the two holes are included as Table 4 and the drill hole locations are presented in Figure 3. Both holes intersected porphyry style alteration, veins styles and low levels of mineralisation characteristic of porphyry deposits, and this was confirmed by the assay results which recorded anomalous copper – gold and molybdenum intersections in both holes. Assay results from the drilling program were released to the ASX on the 13th of July 2022, “Clermont Project Assay Results indicate the potential for a mineralised porphyry at depth”. The results from the drilling indicate that: » Anomalous copper, gold and molybdenum were intersected in both holes » The drill holes show a distinction geochemical zonation which indicates the main copper rich zone of the porphyry system is potentially below the depth of the current drilling » The intensity of copper, silver and gold geochemistry is increasing with depth, with the highest recorded values occurring at or towards the base of the two holes. Modelling of the trace geochemistry, especially tin and tungsten values indicate that the two holes were drilled into the zone immediately above or adjacent to the more mineralised core Based on the results from the drilling program at Clermont, further exploration has been planned for the September and December Quarters of 2022. This includes; » Petrological studies and a detailed analysis of the geochemical data to assist in vectoring in to where a higher- grade copper rich zone may occur in the porphyry system, and Metallica Minerals Annual Report | 2022 » A close spaced magnetic survey to get a better understanding of the depth and morphology of magnetic low anomaly. Based on the results of the magnetic survey and geochemical analysis it is likely that one of the existing holes will be extended by an additional 500m to 1,000m to determine if the copper grades continue to increase with depth with this drilling planned for Q4 2022. Table 4: Clermont JV | EPM 17968 | Drill Hole Parameters Hole Number Easting Northing RDD019 RDD020 550,967 7,471,548 551,250 7,471, 559 320 RL 321 Dip -90 -60 Azimuth Depth (m) 000 240 530.40 501.50 Figure 3: Clermont Drill holes 25 DIRECTOR AND MANAGEMENT PROFILES T H EO PSAROS BRAD SAMPSON Executive Chairman Non-Executive Director Theo Psaros has over 37 years of diverse global and local commercial experience in a number of business sectors and industries within multi-million dollar publicly listed companies, private companies and government departments. Theo’s resource industry experience included a number of years as Chief Financial Officer and Chief Operating Officer of MetroCoal Limited, Chairman of the Surat Basin Coal Alliance and a member of the industry group that assisted with the Queensland Government Department of Natural Resources & Mines to prepare the 30-year strategic plan for the resources industry in Queensland (ResourcesQ). Theo joined the board of Metallica Minerals as Non-Executive Chairman on 1 February 2019 and was appointed as Executive Chairman on 21 May 2020. Brad Sampson is a Brisbane based internationally experienced business leader, Director and mining professional with more than 30 years resources industry experience. He brings significant mine development and operating experience to the Metallica Board along with listed company governance experience across multiple international jurisdictions. Brad has experienced all aspects of mining operations, having worked in leadership roles through the entire cycle of exploration, development, operations and closure. Brad joined the board of Metallica Minerals as Non-Executive Director on 13 May 2021. Metallica Minerals Annual Report | 2022 MA RK BOJA NJAC SCOTT WADDELL Non-Executive Director Chief Financial Officer and Company Mark Bojanjac is a Perth based company Director with more than 20 years of significant experience in ASX resource companies including those that have taken exploration projects into production. He is currently Executive Chairman of PolarX Limited (ASX: PXX), Non-executive Director of Kula Gold Limited (ASX: KGD). He was previously Non-executive Director and later Managing Director of Adamus Resources leading the transition of the company to a gold producer. Mark joined the board of Metallica Minerals as Non-Executive Director on 13 May 2021. Secretary Scott Waddell’s resources experience was gained from eight (8) years with Metro Mining Limited and Cape Alumina Limited, nine (9) years with Anglo Coal and eight (8) years with Rio Tinto Alcan (RTA). This included direct mine site experience of 8 years. Roles included Interim CEO at Cape Alumina, CFO and Company Secretary for Metro Mining Limited and Cape Alumina Limited, Head of Finance for the Monash Energy project in Victoria’s La Trobe Valley, as well as being a director of the CO2CRC Otway Pilot Project and chairman of the audit committee, Business Development Manager as well as a number of finance and corporate roles. Scott joined the board of Metallica Minerals as Executive Director on 1 February 2019 and resigned from his Executive Director role on 31 August 2021. Scott has continued with the Company as Chief Financial Officer and Company Secretary since this date. 27 NI C HO LAS V ILLA PAT SMITH General Manager Cape Flattery Silica Exploration Manager Patrick Smith has over 30 years experience as an exploration geologist, with the last 15 years being in senior roles either as an Exploration Manager or Country Manager. He has an MSc in Mining Geology from Cambourne School of Mines in the UK and an MBA from QUT in Australia. Patrick has experience exploring for various commodities over his career including Gold - Copper exploration in Australia, the Middle East and the Pacific region, nickel, cobalt and scandium in Australia and tin – tantalum and lithium in Africa. Other commodities he has explored for include, heavy mineral sands, and more recently silica sands. He has designed and implement numerous drilling programs over his career which have led to the delineation of significant resources and is familiar with most aspects of tenement administration and management especially in Queensland and PNG. He has specialised in leading small efficient exploration teams but has also managed large exploration camps. Nicholas has over 20 years’ experience as a Mining Professional, he is well practiced in the delivery of resource projects, taking them from early exploration phase through to production. Nicholas has managed bulk commodity operations both as Principal and as Contractor, fulfilling senior management roles including Mining Manager, Project Manager and Site Senior Executive. Developing his experience in a wide range of commodities and operations across Australia, Nicholas cultivated his knowledge in as many areas as the resource industry afforded him during his career including Engineering, Maintenance, Survey, Geology and Construction. As part of this experience, Nicholas has had comprehensive managerial involvement in large scale mobilisation of mining fleets, preceded by in depth investigation and establishment of facilities and personnel to match operational demand. Thoroughly versed in Queensland resource project approvals processes including Environmental Studies and Native Title negotiations, Nicholas was Project Manager for the team that successfully delivered Metro Mining’s Bauxite Hills mine to full production in Northern Cape York. This was comprised of both mining and marine elements, situated in a remote location with complex logistics. Holding an Honours Degree in Geology, as well as a Diploma in Project Management, Nicholas is a long-term Member of the Australian Institute of Geoscientists. Nicholas joined Metallica Minerals on the 14th of June, 2021 with the purpose of delivering yet another successful operation in Northern Queensland. Nicholas was appointed to the role of General Manager on 14 June 2021. Metallica Minerals Annual Report | 2022IN TE REST I N MINING TENEMENTS This section provides information required under ASX listing rule 5.3.3 for mineral exploration entities. State Tenement Name Tenement ID Status Location Interest Holder QLD Cape Flattery Silica QLD Cape Flattery Silica EPM 25734 Granted Cape Flattery 100% ML 100284 Application Cape 100% Flattery QLD Clermont EPM 17968 Granted Clermont 25% Copper Gold Cape Flattery Silica P/L Cape Flattery Silica P/L PGE Minerals P/L Table 5: Cape Flattery Silica Sand Maiden Ore Reserve Ore Reserve Category Tonnage Mt Probable Reserve 46 SIO₂ % 99.18 FE₂O₃ % 0.12 TIO₂ % 0.14 AL₂O₃ % 0.11 LOI % 0.19 Waste Mt Silica Sand Mm3 2.6 28.76 Refer to ASX Release: 7 April 2022: “Significant Increase in Measured and Indicated Resources at Cape Flattery Silica Project” 29 TOP 20 SHAREHOLDERS AS A T 20 SEP TEMBER 20 22 Rank Name # of Shares %IC HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 515 131 , , 933 23. 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 SPARTA AG 6 4 , 5 1 6 , 1 2 9 DOSTAL NOMINEES PTY LTD 4 0, 4 2 2 , 4 0 9 ROOKHARP CAPITAL PTY LIMITED SIBELCO ASIA PACIFIC PTY LTD PLAN-1 PTY LTD GEFRATO TRADING PTY LTD MR GRAHAM RAYMOND WILLIAM DOW SHADBOLT FUTURE FUND (TOTTENHAM) PTY LTD 1 7, 2 4 7, 4 0 8 51 , 4 3 6 , 5 0 0 11, 0 12, 50 2 1 0,0 0 0,0 0 0 9 , 2 50 3, 50 8 , 1 9 0 , 0 0 0 CALAMA HOLDINGS PTY LTD 5 , 5 0 0 , 0 0 0 ANDREW SCOTT VICTOR WADDELL CAROJON PTY LTD MRS CAROLYN DOW 5 , 0 6 6 , 6 6 7 5 , 0 0 0 , 0 0 0 4 ,9 80 , 0 00 BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM 4 , 9 7 5 , 5 2 7 BONDLINE LIMITED CITICORP NOMINEES PTY LIMITED 4, 9 10 , 96 6 4 , 8 5 8 , 3 6 7 MACFORBES SUPER PTY LTD 4 , 5 0 0 , 0 0 0 NO BULL HEALTH PTY LTD 4 , 2 5 0 , 0 0 0 K H DREDGE NOMINEES PTY LTD 3 , 6 5 0 , 0 0 0 9.62 6.03 2.57 302. 1.64 1.49 351. 1.22 0.82 0.76 0.75 0.74 0.74 0.73 0.72 0.67 0.63 0.54 0.48 20 MINNELEX PTY LTD 3 , 2 0 5 , 2 6 0 Total Balance of register Grand total 3 81,878,97 3 56. 49 882 20,8 , 287 43. 06 670,699,701 100.00 Metallica Miner als Annual R eport | 20 22 CO MP ETENT P ERSON STATEMENT CAP E FLATTERY SILICA SAND RESOURCE The information in this report that relates to the Cape Flattery Silica Project – Eastern Resource Area is based on information and modelling carried out by Chris Ainslie, Project Engineer, who is a full-time employee of Ausrocks Pty Ltd and a Member of the Australasian Institute of Mining & Metallurgy. The work was supervised by Mr Carl Morandy, Mining Engineer who is Managing Director of Ausrocks Pty Ltd and a Member of the Australasian Institute of Mining & Metallurgy and also by Mr Brice Mutton who is a Senior Associate Geologist for Ausrocks Pty Ltd. Mr Mutton is a Fellow of the Australasian Institute of Mining & Metallurgy and a Fellow of the Australian Institute of Geoscientists. Mr Morandy and Mr Ainslie and Mr Mutton are employed by Ausrocks Pty Ltd who have been engaged by Metallica Minerals Ltd to prepare this independent report, there is no conflict of interest between the parties. Mr Morandy, Mr Ainslie and Mutton consent to the disclosure of information in the form and context in which it appears in this report. The overall resource work for the Cape Flattery Silica Project – Eastern Resource Area is based on the direction and supervision of Mr Mutton who has sufficient experience that is relevant to the style of mineralisation and type of deposits under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. CAP E FLATTERY SILICA SAND EX P LO RATION RESULTS The information in this report that relates to the Exploration Sampling and Exploration Results is based on information compiled by Mr Patrick Smith, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Smith is the owner and sole Director of PSGS Pty Ltd and is contracted to Metallica Minerals as their Exploration Manager. Mr Smith confirms there is no potential for a conflict of interest in acting as the Competent Person. Mr Smith has sufficient experience that is relevant to the style of mineralisation and type of deposits under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Smith consents to the inclusion of this information in the form and context in which it appears in this release/report. FO RWA RD LOOKING STATEMENT Forward-looking statements are based on assumptions regarding Metallica, business strategies, plans and objectives of the Company for future operations and development and the environment in which Metallica may operate. Forward-looking statements are based on current views, expectations and beliefs as at the date they are expressed and which are subject to various risks and uncertainties. Actual results, performance or achievements of Metallica could be materially different from those expressed in, or implied by, these forward-looking statements. The forward-looking statements contained in this presentation are not guarantees or assurances of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Metallica, which may cause the actual results, performance or achievements of Metallica to differ materially from those expressed or implied by the forward-looking statements. For example, the factors that are likely to affect the results of Metallica include general economic conditions in Australia and globally; ability for Metallica to funds its activities; exchange rates; production levels or rates; demand for Metallica’s products, competition in the markets in which Metallica does and will operate; and the inherent regulatory risks in the businesses of Metallica. Given these uncertainties, readers are cautioned to not place undue reliance on such forward-looking statements. 31 Metallica Minerals Limited ACN 076 696 092 Annual Financial Report - 30 June 2022 Metallica Minerals Limited Corporate directory 30 June 2022 Directors T Psaros - Executive Chairman M Bojanjac - Non-executive Director B Sampson - Non-executive Director Company secretary S Waddell Annual General Meeting The details of the annual general meeting of Metallica Minerals Limited are: Colin Biggers & Paisley Pty Ltd Level 35, Waterfront Place, 1 Eagle Street Brisbane QLD 4000 9.30am on Thursday, 17 November 2022 Registered office and principal place of business Share register Auditor Solicitors Level 1, North Tower Terrace Office Park 527 Gregory Terrace Bowen Hills QLD 4006 Phone: (07) 3249 3000 Link Market Services Limited Level 21, 10 Eagle Street Brisbane QLD 4001 Phone: 1300 554 474 Moore Australia Audit (QLD/NNSW) Level 12, 10 Eagle Street Brisbane QLD 4000 Colin Biggers & Paisley Pty Ltd Level 35, Waterfront Place 1 Eagle Street Brisbane QLD 4000 Stock exchange listing Metallica Minerals Limited shares are listed on the Australian Securities Exchange (ASX code: MLM) Website www.metallicaminerals.com.au Corporate Governance Statement www.metallicaminerals.com.au/corporate-governance 1 Metallica Minerals Limited Directors' report 30 June 2022 The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Metallica Minerals Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2022. Directors The following persons were directors of Metallica Minerals Limited during the whole of the financial year and up to the date of this report, unless otherwise stated: Theo Psaros Mark Bojanjac Brad Sampson Scott Waddell (resigned 31 August 2021) Andrew Gillies (resigned 31 August 2021) Principal activities During the financial year, the principal activities of the consolidated entity consisted of mineral exploration, evaluation and progressing the development of its Cape Flattery Silica Sands Project. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Review of operations The loss for the consolidated entity after providing for income tax amounted to $2,007,194 (30 June 2021: $3,054,991). The 30 June 2021 consolidated loss includes the net loss of $2,049,754 on disposal of the wholly-owned subsidiary companies, Oresome Australia Pty Ltd, Oresome Bauxite Pty Ltd and their respective 50% interest holdings in the JV. During the year ended 30 June 2022 the company: (a) Continued to advance its Cape Flattery Silica Sands Project which included the following activities: ● Successfully completed a 24-hole infill drilling program in December 2021 within the Eastern Target Area. All drilling was undertaken with permission from the Aboriginal Corporations. Progressing the Pre-Feasibility Study (PFS) which was completed in March of 2022. Held a number of meetings with the Dingaal and Nguurruumungu clan members in Hope Vale and Cooktown where the terms of a Negotiation Protocol document was finalised and progress was made on Mining Agreements with the Traditional Landowner parties. On 7 April 2022, released an upgraded resource in the Eastern Resource Area estimated and summarised in the table below. The infill drilling program completed by the company in December 2021 successfully increased the Measured and Indicated Resources from 47.8Mt @ 99.18% SiO2 to 52.2Mt @ 99.18% SiO2. Notably there has been a 74% increase in the Measured Resource from 9.6Mt to 16.7Mt, which will form part of the early mine life as assessed within the Definitive Feasibility Study. Signed a Memorandum of Understanding (MOU) with the Queensland Government owned corporation, Far North Queensland Ports Corporation Limited (Ports North). Ports North is the Port Authority that manages the Cape Flattery Port. The MOU is the first step towards formalising the commercial terms for the establishment of the company's purpose-built jetty for our silica sand project. Completion of the commercial terms remains subject to granting of regulatory approvals and finalising agreements with the Traditional Landowners. Commenced preliminary work on a Definitive Feasibility Study (DFS) which is planned for completion in Q2 of 2023. The company, along with its external environmental consultants, completed an array of environmental studies at the project. These studies included soil sampling, ecological studies and water monitoring. ● ● ● ● ● ● 2 Metallica Minerals Limited Directors' report 30 June 2022 Figure 1: Cape Flattery Silica Project - Distribution of the various Resource categories On 7 April 2022, the company released an upgraded resource in the Cape Flattery Silica Eastern Resource Area estimated and summarised in Table 1, as is shown below: Table 1 - Project Resources Silica Sand (Mt) Measured Resource 16.7 Indicated Resource 35.2 Inferred Resource 0.3 Total 52.2 Silica Sand (Mm3) 10.4 22.0 0.20 32.60 Density (t/m3) 1.6 1.6 1.6 1.6 SiO2 % 99.26 99.14 99.06 99.18 Table 2 - Project Reserve Silica Sand (Mt) Probable Reserve 46 Silica Sand (Mm3) 28.76 Waste Mt 2.6 SiO2 % 99.18 AI2O3 % 0.08 0.13 0.16 0.11 AI2O3 % 0.11 Fe2O3 % 0.10 0.13 0.14 0.12 Fe2O3 % 0.12 TiO2 % 0.13 0.14 0.12 0.14 TiO2 % 0.14 LOI % 0.17 0.19 0.23 0.18 LOI % 0.19 For further details, see ASX Release on 7 April 2022 titled “Significant Increase in Measured and Indicated Resources at Cape Flattery Silica Project". The Resource has been prepared in accordance with the JORC Code 2012 – A cut-off grade 98.5% has been defined based on the surrounding data. These results show there is good potential to produce a premium grade silica product using standard processing techniques. See the Competent Person statement below. 3 Metallica Minerals Limited Directors' report 30 June 2022 (b) On 5 August 2021, the company announced the signing of a Memorandum of Understanding (“MoU”) with Diatreme Resources (ASX: DRX) for a potential joint venture on the Clermont Gold Copper Project (Clermont project) which comprises EPM 17968. On 29 April 2022, the company announced that it had met the expenditure commitment undertaken in accordance with the MOU to earn 25% of the Clermont project. This transfer of 25% of the EPM to the company is pending, awaiting transfer by the Queensland Department of Resources. In addition, the company has made the decision to move to the second stage of the earn-in phase of the agreement and increase the company's share to 51% of the project through a further $700,000 spend on exploration activity at the Clermont Project prior to 27 April 2023. 1. Competent Person Statement 1.1 Cape Flattery Silica Sand Resource The information in this report that relates to the Cape Flattery Silica Project - Eastern Resource Area is based on information and modelling carried out by Chris Ainslie, Project Engineer, who is a full-time employee of Ausrocks Pty Ltd and a Member of the Australasian Institute of Mining & Metallurgy. The work was supervised by Mr Carl Morandy, Mining Engineer who is Managing Director of Ausrocks Pty Ltd and a Member of the Australasian Institute of Mining & Metallurgy and also by Mr Brice Mutton who is a Senior Associate Geologist for Ausrocks Pty Ltd. Mr Mutton is a Fellow of the Australasian Institute of Mining & Metallurgy and a Fellow of the Australian Institute of Geoscientists. Mr Morandy, Mr Ainslie and Mr Mutton are employed by Ausrocks Pty Ltd who have been engaged by Metallica Minerals Ltd to prepare this independent report, there is no conflict of interest between the parties. Mr Morandy, Mr Ainslie and Mr Mutton consent to the disclosure of information in the form and context in which it appears in this report. The overall resource work for the Cape Flattery Silica Project - Eastern Resource Area is based on the direction and supervision of Mr Mutton who has sufficient experience that is relevant to the style of mineralisation and type of deposits under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". 1.2 Cape Flattery Silica Sand Exploration Results The information in this report that relates to the Exploration Sampling and Exploration Results is based on information compiled by Mr Patrick Smith, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy. Capital expenditure During the 2022 financial year, $3,977,378 was incurred on capitalised exploration and development expenditure (2021: $1,183,081). The majority of the expenditure incurred was on the Cape Flattery Silica Sands Project. Cash flow and Liquidity During the 2022 financial year, the net cash outflows from operating activities increased to $1,075,641 (2021: $933,561). An increase in employee costs and other general costs contributed to the increase in cash outflows from operating activities. For the financial year ended 30 June 2022, the net cash outflow from investing activities amounted to $4,112,735 (2021 - net cash outflow: $832,814). The net cash outflows for 2022 and 2021 were largely attributable to payments for exploration and evaluation assets. Cash outflows for plant and equipment and, exploration and evaluation amounted to $4,087,680 (2021: $1,188,746). COVID-19 Impacts COVID-19 continues to impact the company particularly around our Traditional Landowner Negotiations held in Hope Vale and Cooktown. The company continues to follow recommendations from Queensland Health and the Australian Government to provide a COVID-19 safe workplace. Metallica remains committed to following the guidelines released by the Government. Significant changes in the state of affairs There were no significant changes in the state of affairs of the consolidated entity during the financial year. Matters subsequent to the end of the financial year On 11 July 2022, the company allotted 7,342,742 MLMOB options to participants of the February 2022 placement. No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years. Likely developments and expected results of operations The consolidated entity's goal is to develop and maximise the value of the Cape Flattery Silica Sands Project and to continue to evaluate the Clermont project. 4 Metallica Minerals Limited Directors' report 30 June 2022 Material business risks The consolidated entity is engaged in the exploration and development of mine projects in Australia. The consolidated entity is currently focused on successfully delivering high purity silica sand to a diversified customer base through the development of its Cape Flattery Silica Sands Project. Material business risks that could impact the consolidated entity's performance are described below. Resource and reserve estimates Resource and reserve estimates are inherently prone to variability. They involve expressions of judgement with regard to the presence and quality of mineralisation and the ability to extract and process the mineralisation economically. Estimates which were valid when originally calculated may alter significantly when new information or techniques become available. This may result in alterations to development and mining plans which may, in turn, adversely affect the consolidated entity's operations and reduce the estimated amount of mineral resources and ore reserves available for production and expansion plans. The consolidated entity manages the risk associated with resource and reserve estimates by engaging suitably experienced and qualified contractors and operators and ensuring that the Competent Person meets the requirements of the JORC Code 2012. Commodity prices Commodity prices fluctuate and are affected by numerous factors beyond the control of the consolidated entity. These factors include worldwide and regional supply and demand for commodities, general world economic conditions and the outlook for interest rates, inflation and other economic or political factors on both a regional and global basis. These factors may have a negative effect on the consolidated entity's exploration, project development and production plans and activities, together with its ability to fund those plans and activities. Operating risks The operations of the consolidated entity may be affected by various factors, including operational and technical difficulties encountered in mining; difficulties in commissioning and operating plant and equipment; mechanical failure or plant breakdown; unanticipated metallurgical problems which may affect extraction costs; adverse weather conditions (e.g. significant rainfall); industrial and environmental accidents; industrial disputes; and unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment. Such changes may have an adverse effect on the operations and production ability of the consolidated entity by increasing costs or delaying activities. The consolidated entity manages operating risks through a variety of means including selecting suitably experienced and qualified contractors and operators; regular monitoring of the performance of contractors and operators; the recruitment and retention of appropriately qualified employees and contractors; and the regular review by the Board of the consolidated entity's key risks. Environmental and approval risks The ability of the consolidated entity to operate, develop and explore projects may be delayed and limited by environmental and approval considerations and significant costs may result from complying with the consolidated entity's environmental and approval obligations. The consolidated entity recognises management’s best estimate for assets’ retirement obligations and site rehabilitations in the period in which they are incurred. Actual costs incurred in the future periods could differ materially from the estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates and discount rates could affect the carrying amount of this provision. Environmental regulation The consolidated entity is subject to environmental regulations under laws of Queensland and Australia where it holds mineral exploration and mining tenements. During the financial year the consolidated entity’s activities recorded no non-compliance issues. 5 Metallica Minerals Limited Directors' report 30 June 2022 Information on directors (as at the date of this report) Name: Title: Qualifications: Experience and expertise: Theo Psaros Executive Chairman GAICD, CA, BFinAdmin Theo Psaros has over 37 years of diverse global and local commercial experience in a number of business sectors and industries within multi-million dollar publicly listed companies, private companies and government departments. Theo's resource industry experience included a number of years as Chief Financial Officer and Chief Operating Officer of MetroCoal Limited, Chairman of the Surat Basin Coal Alliance and a member of the industry group that assisted with the Queensland Government Department of Natural Resources & Mines to prepare the 30-year strategic plan for the resources industry in Queensland (ResourcesQ). None Other current directorships: Former directorships (last 3 years): Mobilicom Limited (ASX: MOB) resigned 5 July 2021 Special responsibilities: Interests in shares: Interests in options: Executive Chairman 6,000,000 (3,000,000 shares subject to a limited recourse loan option) 3,000,000 shares subject to a limited recourse loan option 948,477 MLMOB listed options 1,266,667 Interests in rights: Name: Title: Qualifications: Experience and expertise: Mark Bojanjac Non-executive Director BCom, ICAA Mark Bojanjac is a Perth based company Director with more than 20 years of significant experience in ASX resource companies including those that have taken exploration projects into production. He is currently Executive Chairman of PolarX Limited (ASX: PXX), Non-executive Director of Kula Gold Limited (ASX: KGD). He was previously Non-executive Director and later Managing Director of Adamus Resources leading the transition of the company to a gold producer. Executive Chairman of PolarX Limited and Non-executive Director of Kula Gold Limited Other current directorships: Former directorships (last 3 years): Non-executive Director of Geopacific Resources Limited from 2013 to 2019 Special responsibilities: Interests in shares: Interests in options: Interests in rights: None Nil Nil 176,667 Name: Title: Qualifications: Experience and expertise: Stuart Bradley Sampson Non-executive Director B.E. (Hons) Mining, MBA, AMP, MAusIMM Brad Sampson is a Brisbane based internationally experienced business leader, Director and mining professional with more than 30 years resources industry experience. He brings significant mine development and operating experience to the Metallica Board along with listed company governance experience across multiple international jurisdictions. Brad has experienced all aspects of mining operations, having worked in leadership roles through the entire cycle of exploration, development, operations and closure. Director of Kore Potash Plc and Non-executive Director of Agrimin Ltd Other current directorships: Former directorships (last 3 years): None None Special responsibilities: 264,516 Interests in shares: Nil Interests in options: 176,667 Interests in rights: 6 Metallica Minerals Limited Directors' report 30 June 2022 Name: Title: Qualifications: Experience and expertise: Andrew Scott Waddell (resigned as Director on 31 August 2021) Executive Director (to 31 August 2021, then Chief Financial Officer and Company Secretary thereafter) B.Bus, Dip.PMM (Dist), FCPA, AGIA Scott Waddell's resources experience was gained from eight (8) years with Metro Mining Limited and Cape Alumina Limited, nine (9) years with Anglo Coal and eight (8) years with Rio Tinto Alcan (RTA). This included direct mine site experience of 8 years. Roles included Interim CEO at Cape Alumina, CFO and Company Secretary for Metro Mining Limited and Cape Alumina Limited, Head of Finance for the Monash Energy project in Victoria's La Trobe Valley, as well as being a director of the CO2CRC Otway Pilot Project and chairman of the audit committee, Business Development Manager as well as a number of finance and corporate roles. None Other current directorships: Former directorships (last 3 years): None Special responsibilities: Interests in shares: Interests in options: CFO and Company Secretary 6,000,000 (4,000,000 shares subject to a limited recourse loan option)* 4,000,000 shares subject to a limited recourse loan option* 1,000,000 MLMOB listed options* 1,600,000* Interests in rights: Name: Title: Qualifications: Experience and expertise: Andrew Gillies (resigned 31 August 2021) Non-executive Director BSc Bachelor of Science (Geology), MAusIMM Andrew Gillies is a highly experienced geologist with over 30 years' experience as company director of ASX listed junior resource companies with strong resource and mineral exploration, company management, project feasibility, project development, mining, governance and corporate background. Andrew was a founding director of Metallica Minerals in 1997, listing the company on the ASX in 2004. He retired from the managing director position in July 2015 and then retired as a director in June 2017. Andrew has extensive experience across a range of mineral and resource projects, much of this experience gained throughout Queensland. Andrew successfully listed subsidiaries Cape Alumina Limited and MetroCoal Limited on the ASX in 2009 (these companies have since merged to become Metro Mining Limited, a successful bauxite producer). Andrew was a director of ASX junior companies Orion Metals Limited and Planet Metals Limited and he was previously a Director of the Queensland Resources Council (QRC). Other current directorships: None Former directorships (last 3 years): None None Special responsibilities: 5,750,000 (3,000,000 shares subject to a limited recourse loan option)* Interests in shares: 3,000,000 shares subject to a limited recourse loan option* Interests in options: 600,000 MLMOB listed options Nil* Interests in rights: 'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships in all other types of entities, unless otherwise stated. 'Former directorships (in the last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships in all other types of entities, unless otherwise stated. * Interests in the shares, options and rights of the company as at the date of resignation as a director. Company secretary The Company Secretary is Scott Waddell. Scott is a member of the Governance Institute of Australia and has previously worked as the Company Secretary to Cape Alumina Ltd and Metro Mining Ltd over an eight-year period. 7 Metallica Minerals Limited Directors' report 30 June 2022 Meetings of directors The number of meetings of the company's Board of Directors ('the Board') held during the year ended 30 June 2022, and the number of meetings attended by each director were: T Psaros M Bojanjac B Sampson S Waddell (resigned as Director on 31 August 2021) A Gillies (resigned 31 August 2021) Full Board Attended Held 13 13 13 3 3 13 13 13 3 3 Held: represents the number of meetings held during the time the director held office. The Board has previously decided that it was no longer appropriate to have separate committees for Audit & Risk and Remuneration. The Board as part of its role has undertaken the responsibilities of these Board committees and carries out the functions set out in their respective charters to ensure that their objectives are met. Remuneration report (audited) The remuneration report, which has been audited, outlines the director and executive remuneration arrangements for the consolidated entity and the company, in accordance with the requirements of the Corporations Act 2001 and its Regulations. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors. The remuneration report is set out under the following main headings: ● ● ● ● ● ● Principles used to determine the nature and amount of remuneration Details of remuneration Service agreements Share-based compensation Additional information Additional disclosures relating to key management personnel Principles used to determine the nature and amount of remuneration The objective of the consolidated entity's and company's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and conforms to the market best practice for delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices: ● ● ● competitiveness and reasonableness acceptability to shareholders transparency The remuneration structure for key management personnel, excluding non-executive directors, is set by the Board and is based on a number of factors including, market remuneration for comparable companies, particular experience of the individual concerned and overall performance of the consolidated entity. The contracts for service between the consolidated entity and key management personnel are on a continuing basis the terms of which are not expected to materially change in the immediate future. The consolidated entity retains the right to terminate contracts immediately by making payment of an amount based on the employee's years of service. Upon retirement or termination key management personnel, excluding non-executives, are paid employee benefits accrued to date of retirement or termination. No other termination benefits are payable under service contracts except that the Executive Chairman is entitled to an additional 3 months written notice in the case of a change of control event. Unless otherwise stated, service agreements do not provide for pre-determined compensation values or the manner of payment. Compensation is determined in accordance with the general remuneration policy. The manner of payment is determined on a case by case basis and is generally a mix of cash and non-cash benefits as considered appropriate by the Board. The remuneration framework is aligned to shareholders’ interests through: ● ● a focus on sustained growth in share price and key non-financial drivers of value attracting and retaining high calibre executives 8 Metallica Minerals Limited Directors' report 30 June 2022 The remuneration framework is aligned to employees’ interests through: ● ● ● ● rewarding capability and experience reflecting competitive rates of remuneration in respect of skills and responsibility providing a clear structure for earning rewards providing recognition for achievements In accordance with best practice corporate governance, the structure of non-executive directors and executive remuneration is separate. Non-executive director remuneration Remuneration of the non-executive directors is approved by the Board and set in aggregate within the maximum amount approved by the shareholders from time to time. The fees have been determined by the Board having regard to industry practice and the need to obtain appropriately qualified independent persons. The aggregate pool of remuneration paid to non-executive directors was approved by shareholders on 24 November 2010 and is currently $300,000 per annum for Metallica Minerals Limited as parent entity. The amount paid to non-executive directors of the parent entity (Metallica Minerals Limited) during the year to 30 June 2022 was $120,050 excluding any remuneration from options (2021: $60,631). Executive remuneration The consolidated entity and company aims to reward executives with a level and mix of remuneration, both fixed and variable, based on their position and level of achievement. The executive remuneration and reward framework has four components: ● ● ● ● base pay and non-monetary benefits short-term performance incentives share-based payments other remuneration such as superannuation and long service leave The combination of these comprises the executive's total remuneration. (i) Fixed remuneration Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the Board, based on individual and business unit performance, the overall performance of the consolidated entity and comparable market remunerations. Executives can receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle benefits) where it does not create any additional costs to the consolidated entity and adds additional value to the executive. (ii) Short-term incentives STIs paid to senior executives are made on a discretionary basis as determined by the Board. These incentives, while not guaranteed, are directly linked to the achievement of KPIs as well as various performance targets for each area of operational responsibility, including the preparation and delivery of reports on time and meeting industry targets and standards in relation to workplace health and safety. No bonus is awarded where performance falls below the minimum acceptable KPI levels as determined by the Board. (iii) Long-term incentives Long-term performance incentives (LTI) are delivered through the grant of options and share rights to executive directors and selected senior executives from time to time as part of their remuneration. Share rights have a nil exercise price and the performance hurdles applicable to any performance period (including how they will be measured) is set out in the invitation to the eligible executives. 9 Metallica Minerals Limited Directors' report 30 June 2022 At the Annual General Meeting (AGM) held on 17 November 2021, the company's shareholders approved the issue of share options to key employees under the company's incentive plan. At the Extraordinary General Meeting (EGM) held on 7 July 2021, the company's shareholders approved the issue of performance rights to Directors under the company's new Employee Equity Incentive Plan. The purpose of the new incentive plan is to: (a) assist in the reward, retention and motivation of participants; (b) align the interests of participants with the interests of the company's shareholders; (c) promote the long-term success of the company and provide greater incentive for participants to focus on the company's longer term goals; (d) link the reward of participants to the performance of the company and the creation of shareholder value; and (e) provide participants with the opportunity to share in any future growth in value of the company. Consolidated entity performance and link to remuneration Because the consolidated entity is in exploration and development, not production, there is no direct relationship between the consolidated entity’s financial profits and the level of remuneration paid to key management personnel. At 30 June 2022, the market price of the company’s ordinary shares was 2.3 cents per share (30 June 2021: 3.5 cents per share). No dividends were paid during the year ended 30 June 2022. Share prices are subject to the influence of international metal prices and market sentiment towards the sector and increases or decreases may occur independently of executive performance or remuneration. The company may issue options or performance rights to provide an incentive for key management personnel which, it is believed, is in line with industry standards and practice and is also believed to align the interests of key management personnel with those of the company’s shareholders. Unless otherwise stated, service agreements do not provide for pre-determined compensation values or the manner of payment. Compensation is determined in accordance with the general remuneration policy. The manner of payment is determined on a case by case basis and is generally a mix of cash and non-cash benefits as determined by the Board of Directors. Except in so far as Directors and other key management personnel hold options or share rights over shares in the company, there is no relationship between remuneration policy and the company’s performance. Use of remuneration consultants The company did not engage remuneration consultants to prepare a formal remuneration report during the financial year ended 30 June 2022. Voting and comments made at the company's 17 November 2021 Annual General Meeting ('AGM') At the 17 November 2021 AGM, 98.95% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2021. The company did not receive any specific feedback at the AGM regarding its remuneration practices. Details of remuneration Amounts of remuneration Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables. The key management personnel of the consolidated entity consisted of the following directors of Metallica Minerals Limited: ● ● ● ● ● Theo Psaros Mark Bojanjac Brad Sampson Andrew Gillies (resigned 31 August 2021) S Waddell - Mr Waddell was a key management person up to 31 August 2021 when he resigned as Director of the company. Mr Waddell has stayed on as Chief Financial Officer and Company Secretary post this date but is no longer a key management person. 10 Metallica Minerals Limited Directors' report 30 June 2022 And the following persons: 2022 Non-Executive Directors: M Bojanjac B Sampson A Gillies (a) Executive Directors: T Psaros S Waddell (c) Short-term benefits Post- employment Long-term benefits Share-based payments Cash salary and fees $ Annual leave accrual $ Super- annuation $ Long service leave $ Options, rights & shares (b) $ Total $ 53,335 53,958 6,692 215,455 29,700 359,140 - - - - - - - 5,396 669 17,046 - 23,111 - - - - - - 8,005 8,005 46,368 61,340 67,359 53,729 103,766 69,880 236,024 336,267 99,580 618,275 (a) Mr A Gillies resigned on 31 August 2021. (b) The amounts included in the share-based remuneration represent the grant date fair value of performance rights and options, amortised on a straight-line basis over the expected vesting period. Expenses are reversed where rights are forfeited due to a failure to satisfy the service conditions or there is a revision of share rights expected to vest. (c) Mr Waddell was a Key Management Personnel up to 31 August 2021 when he resigned as Director of the company on 31 August 2021. Mr Waddell has stayed on as Chief Financial Officer and Company Secretary post this date but is no longer a Key Management Personnel. Short-term benefits Post- employment Long-term benefits Share-based payments Cash salary and fees $ Annual leave accrual $ Super- annuation $ Long service leave $ Options, rights & shares (b) $ Total $ 40,150 8,334 7,610 149,600 135,245 340,939 - - - - - - 3,814 - 723 - - 4,537 - - - - - - 4,326 - - 48,290 8,334 8,333 4,326 5,768 14,420 153,926 141,013 359,896 2021 Non-Executive Directors: A Gillies M Bojanjac (a) B Sampson (a) Executive Directors: T Psaros S Waddell (a) Mr M Bojanjac and Mr B Sampson were appointed Directors on 13 May 2021. (b) The amounts included in the share-based remuneration represent the grant date fair value of performance rights and options, amortised on a straight-line basis over the expected vesting period. Expenses are reversed where rights are forfeited due to a failure to satisfy the service conditions or there is a revision of share rights expected to vest. 11 Metallica Minerals Limited Directors' report 30 June 2022 The proportion of remuneration linked to performance (i.e. options) and the fixed proportion are as follows: Name Non-Executive Directors: M Bojanjac B Sampson A Gillies Executive Directors: T Psaros S Waddell Fixed remuneration 2021 2022 At risk - STI At risk - LTI 2022 2021 2022 2021 87% 88% 14% 69% 30% 100% 100% 91% 97% 96% 13% 12% - 17% 8% - - - - - - - 86% 14% 62% - - 9% 3% 4% Service agreements Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows: Name: Title: Agreement commenced: Term of agreement: Details: Name: Title: Agreement commenced: Term of agreement: Details: Theo Psaros Executive Chairman 1 February 2021 Ongoing From 1 February 2021 to 30 September 2021, Mr Psaros’ monthly salary was $15,000 per month on a contractor basis. After 30 September 2021, Mr Psaros was engaged as an employee on a salary of $227,275 excluding superannuation. Mr Psaros already participates in an employee incentive plan and no other additional short or long-term incentives have been included in the terms of the engagement. The contract can be terminated by three months' notice from either party plus an additional three months' payment in the case of a change of control event. Andrew Scott Waddell CFO and Company Secretary 21 May 2020 Agreement terminated on 31 August 2021 and was replaced with an employee agreement From 21 May 2020 the remuneration payable to Scott Waddell was $1,100 per full day worked (excluding GST) on a contractor basis. Scott already participates in an employee incentive plan and no other additional short or long-term incentives were included in the terms of the engagement. The contract could be terminated by six weeks' notice from either party plus an additional six weeks' payment in the case of a change of control event. Scott was key management person up to 31 August 2021 when he resigned as a Director of the company. Scott has continued employment as CFO and Company Secretary post this date but is no longer considered to be a key management person. Key management personnel have no entitlement to termination payments in the event of removal for misconduct. Share-based compensation Issue of shares There were no shares granted to directors and other key management personnel as part of compensation during the year ended 30 June 2022. 12 Metallica Minerals Limited Directors' report 30 June 2022 Options On 23 December 2019, the company granted 10,000,000 unlisted options to its Directors pursuant to the employee equity incentive plan as approved at the company's annual general meeting on 29 November 2019. Theo Psaros and Andrew Gillies were each granted 3,000,000 options and Scott Waddell was granted 4,000,000 options, for nil consideration. The options vested if the Metallica Minerals Limited share price traded at more than 2.9 cents for 5 days. On 27 July 2021, the company allotted 10,000,000 shares for the exercise of employee options held by Directors, and entered into limited recourse loan agreements with three Directors as outlined in the Extraordinary General Meeting held on 7 July 2021 and Notice of Meeting dated 7 and 8 June 2021. Under Accounting Standard AASB 2 Share-based payment, the issuance of these shares has been accounted for as an in-substance option award. The in-substance options vested on the grant date. The shares are subject to escrow until 23 December 2022. Summary of the options granted on 23 December 2019 and which were exercised on 27 July 2021: Number of options granted Grant Date Expiry Date Exercise option at Vested Price grant date % Fair value per Number of ordinary shares issued 3,000,000 23/12/2019 3,000,000 23/12/2019 4,000,000 23/12/2019 23/06/2022 23/06/2022 23/06/2022 $0.029 $0.029 $0.029 $0.004 $0.004 $0.004 100% 3,000,000 100% 3,000,000 100% 4,000,000 Name T Psaros A Gillies S Waddell Summary of the in-substance share-based option awards (limited recourse borrowings): Number of in substance options granted 3,000,000 3,000,000 4,000,000 Name T Psaros A Gillies S Waddell Fair value per option Grant date Expiry date Exercise price at grant date 27/07/2021 27/07/2021 27/07/2021 31/12/2022 31/12/2022 31/12/2022 $0.029 $0.029 $0.029 $0.021 $0.021 $0.021 Options granted carried no dividend or voting rights. Share rights On 2 August 2021, the company issued 7,160,000 performance rights to Directors and employees based on the terms detailed at the EGM held on 7 July 2021 and Notice of Meeting dated 7 and 8 June 2021. The performance rights convert in 3 equal tranches into ordinary shares on achievement of the following performance hurdles (Hurdles): Hurdle 1: The VWAP of the Metallica Minerals Limited (MLM) share price for the month of June 2022 (based on trading days during that month) is at least 20% higher than the VWAP of the MLM share price for the month of June 2021. Hurdle 2: The total JORC resource of silica sand held by the  company  in relation to its Cape Flattery Silica Sands Project is at least 50 million tonnes, with at least 25 million tonnes included at the measured and/or Indicated JORC category. Hurdle 3: The company has successfully completed the Pre-Feasibility Study for the Cape Flattery Silica Project and released the results of this study to the ASX. As of 30 June 2022, two of the three hurdles had been met and thus 2,386,665 rights have been forfeited 13 Metallica Minerals Limited Directors' report 30 June 2022 The terms and conditions of each grant of share rights over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: Name Grant date T Psaros T Psaros M Bojanjac M Bojanjac B Sampson B Sampson S Waddell S Waddell 07/07/2021 07/07/2021 07/07/2021 07/07/2021 07/07/2021 07/07/2021 07/07/2021 07/07/2021 Vesting date and exercisable date Expiry date 19/07/2022 19/07/2022 19/07/2022 19/07/2022 19/07/2022 19/07/2022 19/07/2022 19/07/2022 19/08/2022 19/08/2022 19/08/2022 19/08/2022 19/08/2022 19/08/2022 19/08/2022 19/08/2022 Share rights granted carry no dividend or voting rights. Fair value Number of Number of per right at rights grant date granted rights forfeited % forfeited 633,333 $0.036 $0.034 1,266,667 88,333 $0.036 176,667 $0.034 88,333 $0.036 176,667 $0.034 $0.036 533,333 $0.034 1,066,667 633,333 - 88,333 - 88,333 - 533,333 - 100% - 100% - 100% - 100% - Additional information The earnings of the consolidated entity for the five years to 30 June 2022 are summarised below: 2022 $ 2021 $ 2020 $ 2019 $ 2018 $ Profit/(loss) after income tax (2,007,194) (3,054,991) (521,340) (4,391,316) 3,195,557 The factors that are considered to affect Total Shareholders Return ('TSR') are summarised below: 2022 2021 2020 2019 2018 Share price at financial year end (cents) Basic earnings/(loss) per share (cents per share) 2.30 0.33 3.50 1.05 1.60 (0.84) (0.16) (1.36) 3.70 0.99 Additional disclosures relating to key management personnel Shareholding The number of shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Ordinary shares T Psaros B Sampson S Waddell A Gillies Shares funded by limited recourse loans* Balance at the start of the year Additions Disposals/ other** Balance at the end of the year 3,000,000 2,000,000 - - 4,000,000 2,000,000 2,400,000 3,000,000 6,400,000 10,000,000 1,000,000 264,516 - 350,000 1,614,516 - - (6,000,000) (5,750,000) (11,750,000) 6,000,000 264,516 - - 6,264,516 * ** For further information on the share purchases funded by limited recourse loans, refer to the section below Loans to key management personnel and their related entities. Includes the removal from the table of the shareholdings for key management personnel who have resigned during the period or who are no longer considered to be a key management person. None of the shares above are held nominally by the directors or any of the other key management personnel. 14 Metallica Minerals Limited Directors' report 30 June 2022 Option holding The number of options over ordinary shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Options over ordinary shares T Psaros S Waddell A Gillies Balance at the start of Granted as the year remuneration Exercised Expired/ forfeited/ Other Balance at the end of the year 3,500,000 4,500,000 3,600,000 11,600,000 - - - - (3,000,000) (4,000,000) (3,000,000) (10,000,000) 448,477 (500,000) * (600,000) * (651,523) 948,477 - - 948,477 * The number of options removed from the table for Andrew Gillies represents the number of options he held at the date of his resignation. The number of options removed from the table for Scott Waddell represents the options he held at the date he was no longer considered to be a key management person. The balance at the end of the year includes options that attached to shares issued under a renounceable rights offer. Limited recourse loan options* T Psaros S Waddell A Gillies Balance at the start of the year Granted Exercised Expired/ forfeited/ other** Balance at the end of the year - - - 3,000,000 4,000,000 3,000,000 - 10,000,000 - - - - - (4,000,000) (3,000,000) 3,000,000 - - (7,000,000) 3,000,000 * ** For further information on the limited recourse loan options refer to the section below Loans to key management personnel and their related entities. Includes the removal from the table of the option holdings for key management personnel who have resigned during the period or who are no longer considered to be a key management person. No other key management personnel held options. Share rights holding The number of share rights over ordinary shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Share rights over ordinary shares T Psaros M Bojanjac B Sampson S Waddell* Balance at the start of the year Granted Exercised Expired/ forfeited/ other Balance at the end of the year - - - - - 1,900,000 265,000 265,000 1,600,000 4,030,000 - - - - - (633,333) (88,333) (88,333) (1,600,000) (2,409,999) 1,266,667 176,667 176,667 - 1,620,001 * The number of rights removed from the table for Scott Waddell represents the rights he held at the date he was no longer considered to be a key management person. 15 Metallica Minerals Limited Directors' report 30 June 2022 Loans to key management personnel and their related parties On 27 July 2021, the company allotted 10,000,000 shares for the exercise of employee options held by Directors at $0.029 per share in terms of the Employee Equity Incentive Plan (refer to note 33). The shares have been funded by limited recourse loans with three Directors as outlined in the Extraordinary General Meeting held on 7 July 2021 and Notice of Meeting dated 7 and 8 June 2021. Under Accounting Standard AASB 2 Share-based payment, the issuance of these shares has been accounted for as an in-substance option award. The value of these equity instruments was assessed by Directors based on an independent valuation (using an option-pricing model) and are recorded in the Share-based payments reserve (note 19). The shares are subject to escrow until 23 December 2022. Other transactions with key management personnel and their related parties There were no other transactions with key management personnel of the group, including their close family members and entities related to them, during the financial year ended 30 June 2022. This concludes the remuneration report, which has been audited. Shares under option Unissued ordinary shares of Metallica Minerals Limited under option at the date of this report are as follows: Grant date 3 August 2011 27 April 2021 27 July 2021** 18 February 2022 Expiry date No expiry date* 25 March 2024 31 December 2022 25 March 2024 Exercise price Number under option $0.700 1,000,000 $0.060 130,678,964 $0.029 10,000,000 $0.060 41,608,871 183,287,835 * ** These options will expire 3 years after the decision to mine at Lucknow or Kokomo is made. These options represent in-substance options (refer to note 33). No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the company or of any other body corporate. No options were granted to the directors or any of the five highest remunerated officers of the company since the end of the financial year. Shares under share rights Unissued ordinary shares of Metallica Minerals Limited under performance rights at the date of this report are as follows: Grant date 7 July 2021* Expiry date 19 August 2022 Exercise price Number under rights $0.000 4,773,335 * On 7 July 2021, the company's shareholders approved the issue of 4,030,000 Performance Rights to the following Directors: Scott Waddell, Theo Psaros, Mark Bojanjac, and Brad Sampson, and 3,130,000 to employees. No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate in any share issue of the company or of any other body corporate. 16 Moore Australia Audit Level 12, 10 Eagle Street Brisbane QLD 4000 GPO Box 475 Brisbane QLD 4001 T +61 7 3340 3800 F +61 7 3340 3700 www.moore-australia.com.au Auditor's Independence Declaration under Section 307C of the Corporations Act 2001 to the Directors of Metallica Minerals Limited As lead auditor for the audit of Metallica Minerals Limited for the year ended 30 June 2022, I declare that, to the best of my knowledge and belief, there have been: (i) no contraventions of the independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Metallica Minerals Limited and the entities it controlled during the year. Murray McDonald Director - Audit and Assurance Moore Australia Audit (QLD/NNSW) Chartered Accountants Brisbane Moore Australia Audit (QLD/NNSW) – ABN 33 050 150 130. An independent member of Moore Global Network Limited - members in principal cities throughout the world. Liability limited by a scheme approved under Professional Standards Legislation. 18 Metallica Minerals Limited Contents 30 June 2022 Statement of profit or loss and other comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements Directors' declaration Independent auditor's report to the members of Metallica Minerals Limited Shareholder information General information 20 21 22 23 24 53 54 57 The financial statements cover Metallica Minerals Limited as a consolidated entity consisting of Metallica Minerals Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Metallica Minerals Limited's functional and presentation currency. Metallica Minerals Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Level 1, North Tower Terrace Office Park 527 Gregory Terrace Bowen Hills QLD 4006 A description of the nature of the consolidated entity's operations and its principal activities are included in the directors' report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 24 August 2022. The directors have the power to amend and reissue the financial statements. 19 Metallica Minerals Limited Statement of profit or loss and other comprehensive income For the year ended 30 June 2022 Revenue Other income Interest revenue Expenses Airfares and conferences Extraordinary General Meeting costs Employee benefits expense Exploration costs Depreciation and amortisation expense Listing fees and share register expenses Legal fees Professional fees Net loss on disposal of subsidiary and joint operation Rental expenses Other expenses Finance costs Total expenses Loss before income tax expense Income tax expense Loss after income tax expense for the year attributable to the owners of Metallica Minerals Limited Other comprehensive income for the year, net of tax Total comprehensive income for the year attributable to the owners of Metallica Minerals Limited Consolidated Note 2022 $ 2021 $ 4 5 6 6 31 6 7 4,182 49,221 2,500 7,770 220,342 8,034 (37,521) (14,667) (857,204) (306,391) (85,372) (87,732) (35,911) (148,033) - (41,413) (388,886) (18,516) (2,021,646) (41,254) (6,000) (372,460) (279,878) (18,421) (96,599) (50,545) (113,436) (2,049,754) (89,936) (214,305) - (3,332,588) (2,007,194) (3,054,991) - - (2,007,194) (3,054,991) - - (2,007,194) (3,054,991) Cents Cents Basic earnings per share Diluted earnings per share 32 32 (0.33) (0.33) (0.84) (0.84) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 20 Metallica Minerals Limited Statement of financial position As at 30 June 2022 Assets Current assets Cash and cash equivalents Trade and other receivables Total current assets Non-current assets Plant and equipment Right-of-use assets Exploration and evaluation Other non-current assets Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Lease liabilities Employee benefits Total current liabilities Non-current liabilities Lease liabilities Provisions Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity Consolidated Note 2022 $ 2021 $ 8 9 5,259,695 59,525 5,319,220 7,531,567 45,923 7,577,490 11 12 13 10 100,105 476,467 5,160,459 73,498 5,810,529 10,788 - 1,183,081 48,443 1,242,312 11,129,749 8,819,802 14 15 16 15 17 838,600 63,163 39,713 941,476 425,282 3,842 429,124 382,022 - 11,447 393,469 - - - 1,370,600 393,469 9,759,149 8,426,333 18 19 53,865,383 50,896,470 219,747 (42,689,884) 590,844 (44,697,078) 9,759,149 8,426,333 The above statement of financial position should be read in conjunction with the accompanying notes 21 Metallica Minerals Limited Statement of changes in equity For the year ended 30 June 2022 Consolidated Issued capital $ Reserves $ Accumulated losses $ Total equity $ Balance at 1 July 2020 36,436,227 8,158,563 (39,634,893) 4,959,897 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year - - - - - - (3,054,991) - (3,054,991) - (3,054,991) (3,054,991) Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 18) Share-based payments (note 33) Transfer from share-based payments reserve to issued capital 6,310,017 - 8,150,226 - 211,410 (8,150,226) - - - 6,310,017 211,410 - Balance at 30 June 2021 50,896,470 219,747 (42,689,884) 8,426,333 Consolidated Issued capital $ Reserves $ Accumulated losses $ Total equity $ Balance at 1 July 2021 50,896,470 219,747 (42,689,884) 8,426,333 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 18) Share-based payments (note 33) - - - - - - (2,007,194) - (2,007,194) - (2,007,194) (2,007,194) 2,968,913 - - 371,097 - - 2,968,913 371,097 Balance at 30 June 2022 53,865,383 590,844 (44,697,078) 9,759,149 The above statement of changes in equity should be read in conjunction with the accompanying notes 22 Metallica Minerals Limited Statement of cash flows For the year ended 30 June 2022 Consolidated Note 2022 $ 2021 $ Cash flows from operating activities Receipts from customers, government grants and other (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Interest and other finance costs paid 8,976 (1,073,871) 7,770 (18,516) 256,644 (1,198,239) 8,034 - Net cash used in operating activities 34 (1,075,641) (933,561) Cash flows from investing activities Payments for property, plant and equipment Payments for exploration and evaluation assets Payments for security deposits Sale proceeds - HMS plant and tenements Proceeds from disposal of subsidiary and joint operation Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Share issue transaction costs Repayment of lease liabilities Net cash from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year 11 13 31 (110,302) (3,977,378) (25,055) - - (5,665) (1,183,081) (15,805) 330,000 41,737 (4,112,735) (832,814) 18 3,044,000 (75,087) (52,409) 7,000,661 (500,254) - 2,916,504 6,500,407 (2,271,872) 7,531,567 4,734,032 2,797,535 Cash and cash equivalents at the end of the financial year 8 5,259,695 7,531,567 The above statement of cash flows should be read in conjunction with the accompanying notes 23 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 1. Significant accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out either in the respective notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. None of the new standards and amendments to standards affected any of the amounts recognised in the current period or any prior period. Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Going concern For the year ended 30 June 2022, the consolidated entity incurred a loss of $2,007,194 after income tax (2021: $3,054,991) and net cash outflows from operating activities of $1,075,641 (2021: $933,561). The net loss before income tax for the year ended 30 June 2021 includes a net loss of $2,049,754 on disposal of the subsidiary companies Oresome Australia Pty Ltd, Oresome Bauxite Pty Ltd and their respective 50% interest holdings in the Urquhart Bauxite joint venture (JV). The Coronavirus (COVID-19) pandemic is restricting access to some remote communities. However, there does not currently appear to be any significant impact upon solvency or going concern of the consolidated entity as at the reporting date or subsequent to the date of this report as a result of the pandemic. The Directors have concluded that the going concern basis of preparation of the financial statements is appropriate and any uncertainty regarding going concern is mitigated by the following: ● At 30 June 2022 the consolidated entity had net current assets of $4,377,744 (30 June 2021: $7,184,021) and total net assets of $9,759,149 (30 June 2021: $8,426,333). Cash and cash equivalents at 30 June 2022 amounted to $5,259,695 (30 June 2021: $7,531,567). If additional cash is required outside of current cash holdings, the consolidated entity is expected to be in a position to complete capital raising with no foreseeable challenges as they have a proven history of successfully raising funds. During the year ended 30 June 2022, the company raised $2,968,913 from the issue of ordinary shares in the company (net of share issue costs) (note 18). ● Based on the above, the Directors are of the opinion that at the date of signature of the financial report there are reasonable and supportable grounds to believe that the consolidated entity will be able to meet its liabilities from its assets in the ordinary course of business, for a period of not less than 12 months from the date of this financial report and has accordingly prepared the financial report on a going concern basis. 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 ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB'). 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 consolidated entity'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 2. Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 28. 24 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 1. Significant accounting policies (continued) Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Metallica Minerals Limited ('company' or 'parent entity') as at 30 June 2022 and the results of all subsidiaries for the year then ended. Metallica Minerals Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'. Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. 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 classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 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 12 months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. Joint arrangements Under AASB 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. Metallica Minerals Limited has only one joint operation at the reporting date and no joint ventures. Joint operations A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Metallica Minerals Limited has recognised its share of the jointly held assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses of joint operations. These have been incorporated in the financial statements under the appropriate classifications. Details of the joint operation are set out in and note 31. 25 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 1. Significant accounting policies (continued) Joint ventures A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Interests in joint ventures are accounted for using the equity method, after initially being recognised at cost in the consolidated statement of financial position. Under the equity method, the share of the profits or losses of the joint venture is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in joint ventures are carried in the statement of financial position at cost plus post- acquisition changes in the consolidated entity's share of net assets of the joint venture. Goodwill relating to the joint venture is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Income earned from joint venture entities reduces the carrying amount of the investment. Investments and other financial assets Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless an accounting mismatch is being avoided. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off. Financial assets at amortised cost A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of the financial asset represent contractual cash flows that are solely payments of principal and interest. Impairment of financial assets The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are measured at amortised cost. The measurement of the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. Restoration, rehabilitation and environmental expenditure Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structure, waste removal, and rehabilitation of the site in accordance with clauses of mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis. Estimates of future costs are reassessed at least annually. Changes in estimates relating to areas of interest in the exploration and evaluation phase are dealt with retrospectively, with any amounts that would have been written off or provided against under the accounting policy for exploration and evaluation immediately written off. Restoration from exploration drilling is carried out at the time of drilling and accordingly no provision is required. Impairment of non-financial assets Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. 26 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 1. Significant accounting policies (continued) Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit. 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. Comparatives Where required by the Australian Accounting Standards comparative figures have been adjusted to conform to changes in presentation for the current financial year. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2022. The consolidated entity has carried out a preliminary assessment of the impact of these new and amended Accounting Standards and Interpretations, and determined that they are unlikely to have a material impact on the consolidated entity's financial statements in the period of initial application. Note 2. Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. Share-based payment transactions The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or 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 will 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. Impairment of property, plant and equipment The consolidated entity assesses impairment of property, plant and equipment at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions. Significant judgements and assumptions were required in making an estimate of the fair value less costs of disposal of the capital works in progress associated with the Oresome joint operation The estimated fair value less costs of disposal was determined based on enquiries of independent parties. 27 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 2. Critical accounting judgements, estimates and assumptions (continued) Exploration and evaluation costs Exploration and evaluation costs have been capitalised on the basis that the consolidated entity will commence commercial production in the future, from which time the costs will be amortised in proportion to the depletion of the mineral resources. Key judgements are applied in considering costs to be capitalised which includes determining expenditures directly related to these activities and allocating overheads between those that are expensed and capitalised. In addition, costs are only capitalised that are expected to be recovered either through successful development or sale of the relevant mining interest. Factors that could impact the future commercial production at the mine include the level of reserves and resources, future technology changes, which could impact the cost of mining, future legal changes and changes in commodity prices. To the extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the period in which this determination is made. Recovery of deferred tax assets Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Lease term The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors considered may include the importance of the asset to the consolidated entity's operations; comparison of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold improvements; and the costs and disruption to replace the asset. The consolidated entity reassesses whether it is reasonably certain to exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in circumstances. Incremental borrowing rate Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is based on what the consolidated entity estimates it would have to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment. Note 3. Operating segments Identification of reportable operating segments The consolidated entity has identified its operating segments based on the internal reports that are reviewed and used by the parent entity’s Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The consolidated entity is managed primarily on a geographic basis that is the location of the respective areas of interest (tenements) in Australia. Operating segments are determined on the basis of financial information reported to the Board which is at the consolidated entity level. The consolidated entity does not have any products/services it derives revenue from. Management currently identifies the consolidated entity as having only one operating segment, being exploration and development of mine projects in Australia. All significant operating decisions are based upon analysis of the consolidated entity as one segment. The financial results from the segment are equivalent to the financial statements of the consolidated entity as a whole. Accounting policy for operating segments Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance. 28 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 4. Revenue Rent Accounting policy for revenue recognition The consolidated entity recognises revenue as follows: Consolidated 2022 $ 2021 $ 4,182 49,221 Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Note 5. Other income Government grants Other Other income Consolidated 2022 $ 2021 $ - 2,500 142,544 77,798 2,500 220,342 Accounting policy for government grants Grants from the government are recognised at their fair value where there is reasonable assurance that the grant will be received and the consolidated entity will comply with all the attached conditions. Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs they are intended to compensate. Government grants relating to the purchase or development of assets, including exploration and evaluation activities, are deducted from the carrying value of the asset. The Government grants noted above relate to amounts received in respect of JobKeeper and Cash Flow Boost. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. 29 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 6. Expenses Loss before income tax includes the following specific expenses: Aggregate employee benefits expense Defined contribution superannuation expense Equity-settled share-based payments Other employee benefits expenses Less Employee costs capitalised to exploration Employee benefits expense Depreciation Plant and equipment Motor vehicles Buildings right-of-use assets Total depreciation Finance costs Interest and finance charges paid/payable on lease liabilities Leases Short-term lease payments Note 7. Income tax Numerical reconciliation of income tax expense and tax at the statutory rate Loss before income tax expense Tax at the statutory tax rate of 25% (2021: 26%) Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Non-assessable income Other non-deductible items Current year tax losses not recognised Current year temporary differences not recognised Income tax expense 30 Consolidated 2022 $ 2021 $ 68,305 371,097 823,771 19,591 14,420 514,391 1,263,173 548,402 (405,969) (175,942) 857,204 372,460 7,263 13,722 64,387 18,421 - - 85,372 18,421 18,516 - 30,356 80,166 Consolidated 2022 $ 2021 $ (2,007,194) (3,054,991) (501,799) (794,298) - - (13,505) 1,844 (501,799) 410,049 91,750 (805,959) 673,885 132,074 - - Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 7. Income tax (continued) Deferred tax assets not recognised Deductible temporary differences and unused tax losses for which no deferred tax assets have been recognised are attributable to the following: Unused tax losses Other deductible temporary differences Deductible temporary differences offset against taxable temporary differences Total deferred tax assets not recognised Consolidated 2022 $ 2021 $ 8,427,773 211,693 (1,409,232) 6,844,356 179,848 (295,770) 7,230,234 6,728,434 The above potential tax benefit for tax losses and deductible temporary differences has not been recognised in the statement of financial position as the recovery of this benefit is uncertain. The tax losses can only be utilised in the future if the continuity of ownership test is passed, or failing that, the same business test is passed. Accounting policy for 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 the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a ● transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. ● 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 recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. Metallica Minerals Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the group allocation approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group. In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity. 31 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 8. Cash and cash equivalents Current assets Cash on hand Cash at bank Cash on deposit Consolidated 2022 $ 2021 $ - 1,933,300 3,326,395 50 3,508,758 4,022,759 5,259,695 7,531,567 Accounting policy for 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. Note 9. Trade and other receivables Current assets Trade receivables Loans to other parties Less: Allowance for expected credit losses* Other receivables GST receivable Consolidated 2022 $ 2021 $ 740 3,034 - - - 186,017 (186,017) - 33 58,752 404 42,485 59,525 45,923 * The loan was fully written off in the current year. Accounting policy for trade and other receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Note 10. Other non-current assets Non-current assets Security deposits - tenements and rental properties 32 Consolidated 2022 $ 2021 $ 73,498 48,443 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 11. Plant and equipment Non-current assets Plant and equipment - at cost Less: Accumulated depreciation Motor vehicles - at cost Less: Accumulated depreciation Consolidated 2022 $ 2021 $ 75,317 (60,386) 14,931 98,896 (13,722) 85,174 63,911 (53,123) 10,788 - - - 100,105 10,788 Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Consolidated Balance at 1 July 2020 Additions Disposal of subsidiary and joint operation Adjustment Depreciation expense Balance at 30 June 2021 Additions Depreciation expense Balance at 30 June 2022 Plant and equipment $ Motor vehicles $ 23,364 5,665 (2,705) 2,885 (18,421) 10,788 11,406 (7,263) - - - - - - 98,896 (13,722) Total $ 23,364 5,665 (2,705) 2,885 (18,421) 10,788 110,302 (20,985) 14,931 85,174 100,105 Accounting policy for property, 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 plant and equipment over their expected useful lives as follows: Plant and equipment Motor vehicles 33% per annum 33% per annum The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. 33 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 12. Right-of-use assets Non-current assets Land and buildings - right-of-use Less: Accumulated depreciation Consolidated 2022 $ 2021 $ 540,854 (64,387) 476,467 - - - Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Consolidated Balance at 1 July 2020 Balance at 30 June 2021 Additions Depreciation expense Balance at 30 June 2022 Land and buildings $ - - 540,854 (64,387) 476,467 On 23 July 2021, the company entered into a 4-year lease for office premises. Accounting policy for right-of-use assets A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. The company has an option to extend the lease for 3 years, which the Directors believe will be probable. As such, the depreciation has been calculated over a period of 7 years. The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. Note 13. Exploration and evaluation Non-current assets Exploration and evaluation expenditure Consolidated 2022 $ 2021 $ 5,160,459 1,183,081 34 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 13. Exploration and evaluation (continued) Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Consolidated Balance at 1 July 2020 Additions Disposal of subsidiary and joint operation Balance at 30 June 2021 Additions* Balance at 30 June 2022 Exploration & evaluation $ 2,090,729 1,183,081 (2,090,729) 1,183,081 3,977,378 5,160,459 * Includes $273,167 of E&E expenditure on EPM 17968, Clermont project. The Clermont project is 25% owned by the consolidated group. Expenditure at EPM 17968 was recorded as E&E from the point that the farm-in criteria were met (see note 25). The earn-in arrangement entered into in respect of the Clermont Project has been accounted for in accordance with the Exploration and evaluation assets accounting policy below. The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent upon successful development and commercial exploitation or sale of the respective areas of interest. Accounting policy for exploration and evaluation assets Exploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure are current is carried forward as an asset in the statement of financial position where it is expected that the expenditure will be recovered through the successful development and exploitation of an area of interest, or by its sale; or exploration activities are continuing in an area and activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of economically recoverable reserves. Where a project or an area of interest has been abandoned, the expenditure incurred thereon is written off in the year in which the decision is made. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. Note 14. Trade and other payables Current liabilities Trade payables Other payables Consolidated 2022 $ 2021 $ 817,340 21,260 375,401 6,621 838,600 382,022 Refer to note 21 for further information on financial instruments. Accounting policy for trade and other payables These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. 35 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 15. Lease liabilities Current liabilities Lease liability - land and buildings Non-current liabilities Lease liability - land and buildings Consolidated 2022 $ 2021 $ 63,163 425,282 488,445 - - - Refer to note 21 for further information on financial instruments. On 23 July 2021, the company entered into a 4-year lease for office premises. The company has an option to extend the lease for 3 years. Accounting policy for lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. At commencement date and each subsequent reporting date, the company assesses where it is reasonably certain that the extension options will be exercised. Only options where the entity is reasonably certain that the extension options will be exercised are included in the calculation of the lease liability and right of use asset. Note 16. Employee benefits Current liabilities Annual leave Long service leave Consolidated 2022 $ 2021 $ 30,823 8,890 6,144 5,303 39,713 11,447 Accounting policy for employee benefits Short-term employee benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. 36 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 17. Provisions Non-current liabilities Lease make good Consolidated 2022 $ 2021 $ 3,842 - Accounting policy for provisions Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost. Note 18. Issued capital Consolidated 2022 Shares 2021 Shares 2022 $ 2021 $ Ordinary shares - fully paid 665,926,366 557,732,777 53,865,383 50,896,470 Movements in ordinary share capital Details Date Shares Issue price $ Balance Shares for services rendered Rights issue (a) Follow-on placement (a) Transfer from share-based payments reserve (note 19) Share issue costs Balance Share option exercised - funded by limited recourse loans (b) Shares for services rendered Placement (c) Share issue costs 1 July 2020 25 November 2020 27 April 2021 27 April 2021 324,047,408 330,000 162,188,704 71,166,665 36,436,227 6,600 4,865,661 2,135,000 $0.020 $0.030 $0.030 8,150,226 (697,244) 30 June 2021 557,732,777 50,896,470 27 July 2021 22 October 2021 18 February 2022 10,000,000 290,363 97,903,226 $0.031 $0.031 - 9,000 3,035,000 (75,087) Balance 30 June 2022 665,926,366 53,865,383 Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. (a) Rights issue and follow-on placement On 25 March 2021, the company issued a Prospectus (Rights Issue Prospectus) for a renounceable pro rata entitlement issue (Offer) fully underwritten by Mahe Capital Pty Ltd (Mahe) for the issue of up to 162,188,704 Shares and 1 free attaching Option for every 2 Shares taken up under the Offer, to raise up to $4,865,661. 37 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 18. Issued capital (continued) Pursuant to the company's underwriting agreement with Mahe for the Offer, the company also agreed to issue 9,731,322 Options to Mahe, based on the amount of funds sought under the Offer. On 23 April 2021, the company issued a Supplementary Prospectus pursuant to which it advised that, as a result of excess demand under the Shortfall Offer (as defined in the Rights Issue Prospectus), it had agreed to issue an additional 71,166,665 New Shares and 35,583,334 attaching New Options under the Offer to raise an additional $2,135,000 (Follow-on Placement). As a result, the number of Options to which Mahe became entitled as underwriter of the Offer increased to 14,001,322 Options. The total amount raised by the rights issue and follow-on placement was $7,000,661. (b) Options 30 June 2021 The company issued a total of 116,677,686 free attaching options (New Options) in connection with the Rights Issue Prospectus and Follow-on Placement on 27 April 2021 on the basis of 1 New Option for every 2 shares taken up. The options are listed on the Australian Securities Exchange and are exercisable at $0.06 each at any time prior to 5.00pm (AEST) on 25 March 2024. There are no participation rights or entitlements inherent in the options and an option holder will not be entitled to participate in new issues of capital offered to the company's shareholders during the term of the option. A further 14,001,322 options were issued to the underwriter (refer note 33) which have the same terms as all other New Options. 30 June 2022 On 27 July 2021, the company allotted 10,000,000 shares for the exercise of employee options held by Directors, and entered into limited recourse loan agreements with three Directors as outlined in the EGM held on 7 July 2021 and Notice of Meeting dated 7 and 8 June 2021. Under Accounting Standard AASB 2 Share-based payment, the issuance of these shares has been accounted for as an in-substance option award (refer to note 33). The shares are subject to escrow until 23 December 2022. (c) Placement On 18 February 2022, the company issued 97,903,226 ordinary shares pursuant to a private placement with institutional and sophisticated investors at an issue price of $0.031 per share. The company issued a total of 41,608,871 free attaching options in connection with the placement on the basis of 1 option for every 2 shares taken up. The options are listed on the Australian Securities Exchange (ASX) and are exercisable at $0.06 each at any time prior to 5.00pm (AEST) on 25 March 2024. There are no participation rights or entitlements inherent in the options and an option holder will not be entitled to participate in new issues of capital offered to the company's shareholders during the term of the option. The issue of the options exceeded the company's placement limit under the ASX Listing Rules 7.1 and 7.1A. The issue of 7,342,742 options was approved by the company's shareholders at an Extraordinary General Meeting held on 7 April 2022, and the issue of 34,266,129 options and the 97,903,226 shares was ratified at the same meeting. Share buy-back There is no current on-market share buy-back. Capital risk management The consolidated entity's objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. The capital structure of the consolidated entity consists of equity attributable to equity holders of the parent entity comprising of issued capital, reserves and accumulated losses as disclosed in the statement of changes in equity. In common with many other exploration companies, the parent raises finance for the consolidated entity's exploration and appraisal activities in discrete tranches. Management effectively manages the consolidated entity's capital by assessing the consolidated entity's financial risks and adjusting its capital structure in response to changes in these risks and in the market. 38 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 18. Issued capital (continued) There are no externally imposed capital requirements. The capital risk management policy remains unchanged from the 2021 Annual Report. The consolidated entity monitors capital on the basis of its working capital position (i.e. liquidity risk). The net working capital of the consolidated entity at 30 June 2022 was $4,377,744 (2021: $7,184,021). Accounting policy for 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. Note 19. Reserves Share-based payments reserve Consolidated 2022 $ 2021 $ 590,844 219,747 Share-based payments reserve The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services. When the equity benefits are exercised or lapsed the value is transferred to issued capital. Movements in reserves Movements in each class of reserve during the current and previous financial year are set out below: Consolidated Balance at 1 July 2020 Share based payments Transfer to issued capital (note 18) Balance at 30 June 2021 Share based payments Balance at 30 June 2022 Note 20. Dividends Share-based payments reserve $ 8,158,563 211,410 (8,150,226) 219,747 371,097 590,844 There were no dividends paid, recommended or declared during the current or previous financial year. Note 21. Financial instruments Financial risk management objectives Risk management is carried out under policies set by the board of directors. The board provides principles for overall risk management, as well as policies covering specific areas. 39 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 21. Financial instruments (continued) The board monitors and manages the financial risk relating to the operations of the consolidated entity. The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. Market risk Foreign currency risk The consolidated entity does not currently have any significant exposure to foreign currency risk. Price risk The consolidated entity does not currently have any significant exposure to price risk. Interest rate risk The consolidated entity’s main interest rate risk arises from cash and cash equivalents. Consolidated Cash at bank Cash on deposit 2022 2021 Weighted average interest rate % Weighted average interest rate % Balance $ Balance $ - 1.18% 1,933,300 3,326,395 - 0.22% 3,508,758 4,022,759 Net exposure to cash flow interest rate risk 5,259,695 7,531,517 At 30 June 2022, if interest rates had increased by 175 basis points (bps) from the year end rates with all other variables held constant, post-tax loss for the year would have been $92,045 higher (2021 changes of 25 bps: $18,829 lower/higher), mainly as a result of higher/lower interest income from cash and cash equivalents and held to maturity investments. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The consolidated entity obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The consolidated entity does not hold any collateral. Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year. Liquidity risk Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable. The consolidated entity manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. 40 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 21. Financial instruments (continued) Remaining contractual maturities The following tables detail the consolidated entity's remaining contractual maturity for its financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. Consolidated - 2022 Non-derivatives Non-interest bearing Trade payables Other payables Interest-bearing Lease liability Total non-derivatives Consolidated - 2021 Non-derivatives Non-interest bearing Trade payables Other payables Total non-derivatives 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Remaining contractual maturities $ 817,340 21,260 - - - - - - 817,340 21,260 82,848 921,448 174,496 174,496 285,322 285,322 16,493 16,493 559,159 1,397,759 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Remaining contractual maturities $ 375,401 6,621 382,022 - - - - - - - - - 375,401 6,621 382,022 The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. Fair value of financial instruments Due to their short-term nature the carrying amounts of financial instruments reflect their fair value. Note 22. Key management personnel disclosures Compensation The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below: Consolidated 2022 $ 2021 $ 359,140 23,111 236,024 340,939 4,537 14,420 618,275 359,896 Short-term employee benefits Post-employment benefits Share-based payments 41 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 22. Key management personnel disclosures (continued) Loans to Key Management Personnel On 27 July 2021, the company allotted 10,000,000 shares for the exercise of employee options held by Directors at $0.029 per share in terms of the Employee Equity Incentive Plan (refer to note 33). The shares have been funded by limited recourse loans with three Directors as outlined in the Extraordinary General Meeting held on 7 July 2021 and Notice of Meeting dated 7 and 8 June 2021. Under Accounting Standard AASB 2 Share-based payment, the issuance of these shares has been accounted for as an in-substance option award. The fair value of these equity instruments was assessed by Directors based on an independent valuation (using an option-pricing model) and are recorded in the Share-based payments reserve (note 19). The shares are subject to escrow until 23 December 2022. Note 23. Remuneration of auditors During the financial year the following fees were paid or payable for services provided by Moore Australia Audit (QLD/NNSW), the auditor of the company: Audit services - Moore Australia Audit (QLD/NNSW) Audit or review of the financial statements Note 24. Contingent assets Consolidated 2022 $ 2021 $ 42,840 40,000 In respect of the disposal of the SCONI Project in September 2017, additional consideration of $2,500,000 in cash or shares in Australian Mines Limited (the Production Payment), will be payable to the company on commencement of Australian Mines Limited achieving commercial production on the project. This additional consideration has not been recognised in the 30 June 2022 financial statements, as the receipt of the additional consideration is not virtually certain. The commencement of commercial production from the SCONI Project requires favourable commodity prices and markets, availability of significant funding and various government approvals. Note 25. Contingent liabilities During the year the company entered into a farm-out agreement with Diatreme Resources Limited (ASX:DRX) for the Clermont Copper/Gold Project (the Project). Under the terms of the Memorandum of Understanding (MOU), Metallica Minerals Limited has the sole and exclusive right to earn: ● a 25% interest in the Project by sole funding exploration expenditure of $300,000 by 30 April 2022 (Minimum Commitment Date); an additional 26% interest in the Project by sole funding exploration expenditure of an additional $700,000 by no later than 12 months after the Minimum Commitment Date (Further Commitment Date), (the Earn-in Requirement); and an additional 24% interest by sole funding the first $1 million of JV expenditure. ● ● On 29 April 2022, the company announced that it had met the expenditure commitment undertaken in accordance with the MOU to earn 25% of the Project. In addition, the company has made the decision to move to the second stage of the earn- in phase of the agreement and increase the company's share to 51% of the Project through a further $700,000 spend on exploration activity at the Clermont Project prior to 27 April 2023. 42 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 26. Commitments Commitments for minimum expenditure on exploration permits Committed at the reporting date but not recognised as liabilities, payable: Within one year One to five years Commitments for environmental authority annual fee Committed at the reporting date but not recognised as liabilities, payable: Within one year One to five years Tenement rentals Committed at the reporting date but not recognised as liabilities, payable: Within one year One to five years Consolidated 2022 $ 2021 $ 41,770 79,858 331,509 725,332 121,628 1,056,841 1,099 3,070 3,505 8,182 4,169 11,687 11,740 25,357 4,055 12,010 37,097 16,065 Commitments for minimum expenditure on exploration permits The consolidated entity has certain commitments to meet minimum annual expenditure requirements on the mineral exploration assets it has an interest in that were granted or renewed prior to May 2020. Any shortfalls are carried forward to subsequent years. Amendments to the Mineral Resources Act 1989 (MRA) were introduced under the Natural Resources and Other Legislation Amendment Act 2019 (NROLA) and commenced on 25 May 2020. Under NROLA, expenditure commitments are no longer a condition of grant or renewal of an exploration permit and have been replaced by a work program as a condition of grant or renewal. Operating lease commitments The lease of offices as at 30 June 2021 was on a 'month to month' basis with three months' notice required to terminate the lease. Notice to leave was provided on 8 July 2021. Note 27. Related party transactions Parent entity Metallica Minerals Limited is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 29. Key management personnel Disclosures relating to key management personnel are set out in note 22 and the remuneration report included in the directors' report. 43 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 27. Related party transactions (continued) Transactions with related parties The following transactions occurred with related parties: Consolidated 2022 $ 2021 $ Other transactions: Subscription for new ordinary shares by key management personnel as a result of the rights issue - 96,000 Receivable from and payable to related parties There were no trade receivables from or trade payables to related parties at the current and previous reporting date. Loans to/from related parties There were no loans to or from related parties at the current and previous reporting date. Note 28. Parent entity information Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Loss after income tax Other comprehensive income for the year, net of tax Total comprehensive income Parent 2022 $ 2021 $ (3,822,807) (2,100,954) - - (3,822,807) (2,100,954) 44 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 28. Parent entity information (continued) Statement of financial position Total current assets Total non-current assets Total assets Total current liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital Share-based payments reserve Accumulated losses Total equity Parent 2022 $ 2021 $ 5,068,196 7,540,777 5,417,752 1,741,535 10,485,948 9,282,312 6,323,049 5,065,738 429,124 - 6,752,173 5,065,738 3,733,775 4,216,574 53,865,383 50,896,470 219,747 (46,899,643) 590,844 (50,722,452) 3,733,775 4,216,574 Guarantees entered into by the parent entity in relation to the debts of its subsidiaries The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2022 and 30 June 2021. Contingent liabilities The parent entity believes it has no contingent liabilities as at 30 June 2022 and 30 June 2021. Capital commitments - Property, plant and equipment The parent entity had no capital commitments for property, plant and equipment as at 30 June 2022 and 30 June 2021. Significant accounting policies The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except for the following: ● Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. Note 29. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1: Name NORNICO Pty Limited Greenvale Operations Pty Limited* Lucky Break Operations Pty Limited PGE Pty Limited** Cape Flattery Pty Limited Phoenix Lime Pty Limited Touchstone Resources Pty Limited Principal place of business / Country of incorporation Ownership interest 2021 2022 % % Australia Australia Australia Australia Australia Australia Australia 45 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 29. Interests in subsidiaries (continued) * ** Greenvale Operations Pty Limited is a wholly owned subsidiary of NORNICO Pty Limited. PGE Pty Limited is a wholly owned subsidiary of Lucky Break Operations Pty Limited. Unless otherwise stated, the subsidiaries have share capital consisting solely of ordinary shares that are held directly by the consolidated entity, and the proportion of ownership interests is equal to the proportion of voting rights held by the consolidated entity. Significant restrictions There are no significant restrictions on the ability of the consolidated entity to access or use the assets and settle the liabilities of the consolidated entity. Note 30. Events after the reporting period On 11 July 2022, the company allotted 7,342,742 MLMOB options to participants of the February 2022 placement. No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years. Note 31. Disposal of subsidiary and joint operation 30 June 2021 On 3 November 2020, the consolidated entity disposed of its wholly-owned subsidiaries Oresome Australia Pty Ltd, Oresome Bauxite Pty Ltd and their respective 50% interest holdings in the Urquhart Bauxite joint venture (JV). The sale proceeds comprised the following cash payments: $50,000 on the announcement of the sale; $50,000 within 30 days of the signing of the Share Sale Agreement. The second payment of $50,000 has not been made after many attempts by the company and is unlikely to be paid at the present time and is considered doubtful. The doubtful debt was provided for in the 2nd half of the 2021 financial year. Consolidated 2021 $ 50,000 Consolidated 2021 8,263 21,855 2,090,729 2,705 (9,303) (14,495) 2,099,754 Consideration received Cash received Book values of net assets over which control was lost Cash and cash equivalents Security deposits Exploration and evaluation assets Property, plant and equipment Other payables Employee provisions Net assets derecognised 46 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 31. Disposal of subsidiary and joint operation (continued) (Gain)/loss on disposal of subsidiary and joint operation Consideration received/receivable Impairment of consideration receivable Net assets disposed of Net loss on disposal of subsidiary and joint operation Net cash inflow/(outflow) arising on disposal Cash consideration received Cash and cash equivalents disposed of Note 32. Earnings per share Consolidated 2021 $ (100,000) 50,000 2,099,754 2,049,754 Consolidated 2021 50,000 (8,263) 41,737 Consolidated 2022 $ 2021 $ Loss after income tax attributable to the owners of Metallica Minerals Limited (2,007,194) (3,054,991) Weighted average number of ordinary shares used in calculating basic earnings per share 602,895,244 365,800,939 Weighted average number of ordinary shares used in calculating diluted earnings per share 602,895,244 365,800,939 Number Number Basic earnings per share Diluted earnings per share Cents Cents (0.33) (0.33) (0.84) (0.84) Share options are considered to be potential ordinary shares but were anti-dilutive in nature for the 30 June 2022 financial year and were not included in the calculation of diluted earnings per share. These options could potentially dilute basic earnings per share in the future. Accounting policy for earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of Metallica Minerals Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. 47 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 33. Share-based payments (a) Employee Equity Incentive Plan (EEIP) At an Extraordinary General Meeting (EGM) held on 7 July 2021, the company's shareholders approved the following: (1) A new Employee Equity Incentive Plan (EEIP). (2) The issue of a total of 4,030,000 Performance Rights to the following Directors: Scott Waddell, Theo Psaros, Mark Bojanjac, and Brad Sampson. (3) Cashless loans to the following Directors: Scott Waddell, Theo Psaros and Andrew Gillies, for the exercise of employee options held by them. The EEIP is open to certain contractors and employees (including Directors) of the company who are invited by the Board to participate in the EEIP (Participants). The Board may invite Participants to apply for shares (including in these terms and conditions, a right to the issue of a share), performance rights and/or options under the EEIP in its absolute discretion. The vesting of a performance right will be conditional on the satisfaction of any conditions and performance hurdles attaching to the performance right. Performance hurdles will be determined by the Board in its discretion and specified in the Participant's invitation letter. The vesting of an option will be conditional on the satisfaction of any conditions attaching to the option. Conditions will be determined by the Board in its discretion and specified in the Participant's invitation letter. Each performance right will entitle a Participant to one share upon vesting. Each option will entitle a Participant upon vesting to subscribe for one share at the exercise price specified by the Board in the Participant’s invitation letter. On 27 July 2021, the company allotted 10,000,000 shares for the exercise of employee options held by three Directors, and entered into limited recourse loan agreements with the three Directors as outlined in the Extraordinary General Meeting held on 7 July 2021 and Notice of Meeting dated 7 and 8 June 2021. Under Accounting Standard AASB 2 Share-based payment, the issuance of these shares has been accounted for as an in-substance option award. The fair value of these equity instruments was assessed by Directors based on an independent valuation (using an option-pricing model) and are recorded in the Share-based payments reserve (note 19). The fair value of the equity instruments granted was estimated at the date of grant using the Black Scholes model taking into account the terms and conditions upon which the shares were granted. The value brought to account as a share-based payment expense in the year ended 30 June 2022 was $210,000. The in- substance options vested on the grant date. In the company's financial report for the half-year ended 31 December 2021, the issuance of these shares was not accounted for as a share-based payment. At 31 December 2021, the company recognised a loan receivable of $290,000 and a credit to issued capital for the same amount. These amounts have subsequently been reversed and replaced by a share-based payment expense and a credit to the share-based payments reserve. On 2 August 2021, the company issued 7,160,000 performance rights to Directors and employees based on the terms detailed at the EGM held on 7 July 2021 and Notice of Meeting dated 7 and 8 June 2021. The performance rights convert in 3 equal tranches into ordinary shares on achievement of the following performance hurdles (Hurdles): Hurdle 1: The VWAP of the Metallica Minerals Limited (MLM) share price for the month of June 2022 (based on trading days during that month) is at least 20% higher than the VWAP of the MLM share price for the month of June 2021. Hurdle 2: The total JORC resource of silica sand held by the  company  in relation to its Cape Flattery Silica Sands Project is at least 50 million tonnes, with at least 25 million tonnes included at the measured and/or Indicated JORC category. Hurdle 3: The company has successfully completed the Pre-Feasibility Study for the Cape Flattery Silica Project and released the results of this study to the ASX. 48 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 33. Share-based payments (continued) (b) Incentive Plan At the Annual General Meeting held on 29 November 2016, the company's shareholders approved the issue of share rights to key employees under the company's incentive plan approved the Board of Directors on 24 October 2016. The purpose of the incentive plan is to: (a) assist in the reward, retention and motivation of participants; (b) align the interests of participants with the interests of the company's shareholders; (c) promote the long-term success of the company and provide greater incentive for participants to focus on the company's longer term goals; (d) link the reward of participants to the performance of the company and the creation of shareholder value; and (e) provide participants with the opportunity to share in any future growth in value of the company. Under the plan eligible participants may be granted share rights for nil consideration (unless otherwise provided under the relevant offer), which vest if certain vesting conditions are met. Upon vesting, subject to any exercise conditions, each share right entitles the participant to one share in the company. On 23 December 2019, the company granted 10,000,000 unlisted options to its Directors pursuant to the employee equity incentive plan as approved at the company's annual general meeting on 29 November 2019. Theo Psaros and Andrew Gillies were each granted 3,000,000 options and Scott Waddell was granted 4,000,000 options, for nil consideration. The options vested if the Metallica Minerals Limited share price traded at more than 2.9 cents for 5 days. The options were exercisable at 2.9 cents and expired on 23 June 2022. Any shares issued on exercise of the options are escrowed until 23 December 2022. The value of these options at the grant date was $37,000. On 27 July 2021, the company allotted 10,000,000 shares for the exercise of the options and entered into limited recourse loan agreements with the three Directors as outlined in the Extraordinary General Meeting held on 7 July 2021 and Notice of Meeting dated 7 and 8 June 2021. (c) Other option issues On 27 April 2021, the company issued 14,001,322 listed options to Mahe Capital Pty Ltd (Mahe) pursuant to the company's underwriting agreement with Mahe (refer note 18). The options vested on the grant date and are exercisable at 6 cents through to 25 March 2024. The value of the options at the grant date was $196,990. (d) Movements in options and performance rights Set out below are summaries of options granted: 2022 Grant date Expiry date price Exercise Balance at the start of the year Granted* Exercised* Expired/ forfeited/ other Balance at the end of the year 23/12/2019 27/04/2021 27/07/2021 23/06/2022 25/03/2024 31/12/2022 $0.029 10,000,000 $0.060 14,001,322 $0.029 - - - 10,000,000 24,001,322 10,000,000 (10,000,000) - - (10,000,000) - - - 14,001,322 - 10,000,000 - 24,001,322 Weighted average exercise price $0.047 $0.029 $0.029 $0.000 $0.047 * Limited recourse loans were granted for the 10,000,000 options exercised. These loans were treated as in-substance options. 2021 Grant date Expiry date price Exercise Balance at the start of the year Granted Exercised Expired/ forfeited/ other Balance at the end of the year 23/12/2019 27/04/2021 23/06/2022 25/03/2024 $0.029 10,000,000 $0.060 - - 14,001,322 10,000,000 14,001,322 - - - - 10,000,000 - 14,001,322 - 24,001,322 Weighted average exercise price $0.029 $0.060 $0.000 $0.000 $0.047 49 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 33. Share-based payments (continued) Note that the exercise price of the 10m options granted 23/12/2019 decreased from $0.030 to $0.029 due to the discount that arose on the rights issue, where the Prospectus was announced on 25 March 2021. The weighted average remaining contractual life of options outstanding at 30 June 2022 was 1.22 years (30 June 2021: 2.01 years). Set out below are summaries of performance rights granted under the EEIP: 2022 Grant date Expiry date price Exercise Balance at the start of the year Granted Exercised Expired/ forfeited/ other Balance at the end of the year 07/07/2021 19/08/2022 $0.000 - - 7,160,000 7,160,000 - - (2,386,665) (2,386,665) 4,773,335 4,773,335 (e) Measurement of fair values Options granted: The fair value of options granted during the current and prior financial years was measured using the Black-Scholes option pricing model. For the options granted during the current and prior financial year, the valuation model inputs used to determine the fair value at the grant date, are as follows: Grant date Expiry date Share price Exercise at grant date price Expected volatility Dividend Risk-free Fair value yield interest rate at grant date 27/04/2021 27/07/2021 25/03/2024 31/12/2022 $0.029 $0.036 $0.060 $0.029 100.58% 116.44% - - 0.11% 0.06% $0.014 $0.021 The options granted on 27 July 2021, relate to the limited recourse loans which have been accounted for as in-substance options. Performance rights granted: The fair value of performance rights granted was measured using the Monte Carlo simulation pricing model for Hurdle 1 and the Binomial pricing model for Hurdles 2 and 3. The valuation model inputs used to determine the fair value at the grant date, are as follows: Grant date Expiry date Share price Expected volatility at grant date Dividend Risk-free Fair value yield interest rate at grant date 07/07/2021 07/07/2021 19/08/2022 19/08/2022 $0.036 $0.036 113.02% 113.02% - - 0.06% 0.06% $0.024 $0.034 The expected price volatility is based on the historic volatility (based on the remaining life of the options/rights), adjusted for any expected changes to future volatility due to publicly available information. (f) Share-based payments expense Consolidated 2022 $ 2021 $ 371,097 14,420 Expense from share-based payments Accounting policy for share-based payments Equity-settled share-based compensation benefits are provided to employees. 50 Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 33. Share-based payments (continued) Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price. The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Black-Scholes or Binomial or Monte Carlo option pricing models that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. Vesting conditions, other than market conditions, attached to equity instruments granted are not taken into account when estimating the fair value at measurement date. The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification. Note 34. Cash flow information Reconciliation of loss after income tax to net cash used in operating activities Loss after income tax expense for the year (2,007,194) (3,054,991) Consolidated 2022 $ 2021 $ Adjustments for: Depreciation and amortisation Share-based payments Adjustment to plant and equipment - non-cash Net loss on disposal of non-current assets Expenses - non-cash Change in operating assets and liabilities: Increase in trade and other receivables Increase in trade and other payables Increase/(decrease) in employee benefits Increase in other provisions Net cash used in operating activities 51 85,372 371,097 - - - 18,421 14,420 (2,885) 2,049,754 6,600 (13,602) 456,578 28,266 3,842 (12,919) 131,606 (83,567) - (1,075,641) (933,561) Metallica Minerals Limited Notes to the financial statements 30 June 2022 Note 34. Cash flow information (continued) Non-cash investing and financing activities Options issued to underwriter Consolidated 2022 $ 2021 $ - 196,990 52 Moore Australia Audit Level 12, 10 Eagle Street Brisbane QLD 4000 GPO Box 475 Brisbane QLD 4001 T +61 7 3340 3800 F +61 7 3340 3700 www.moore-australia.com.au Independent Audit Report To the members of Metallica Minerals Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Metallica Minerals 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 statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (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 then ended; 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 auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the “Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional 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. Moore Australia Audit (QLD/NNSW) – ABN 33 050 150 130. An independent member of Moore Global Network Limited - members in principal cities throughout the world. Liability limited by a scheme approved under Professional Standards Legislation. 54 Key audit matter Going concern How the matter was addressed in our audit Refer to Note 1 Significant accounting policies, detailing going concern Note 1 of the financial statements outlines the basis of preparation of financial statements which indicates they are being prepared on a going concern basis. As the group generates no revenue and is reliant on funding from other sources such as capital raising, there is significant judgement involved in determining whether a material uncertainty relating to going concern exists and is critical to the understanding of the financial statements as a whole. As a result, this matter was key to our audit. In evaluating management’s assessment of the going concern assumption, we performed the following procedures but not limited to: • Obtaining and evaluating management’s assessment of the group’s ability to continue as a going concern • Reviewing management’s assumptions in the cash flow forecasts to assess whether current cash levels along with expected cash inflows and expenditure can sustain the operations of the Group for a period of at least 12 months from the date of signing of the financial statements • Assessing the cash flow forecasts provided by management and challenging the assumptions therein to determine if there is consistency with management’s intention and stated business and operational objectives • Performing a sensitivity analysis over cash flow forecasts as prepared by management based on a number of alternative scenarios • Assessed the adequacy of the disclosures in relation to going concern included in Note 1 to the financial report. Carrying value of Capitalised Exploration & Evaluation Assets Refer to Note 13 Exploration & Evaluation Assets The carrying value of the Group's exploration and evaluation asset is impacted by the Group's ability, and intention, to continue to explore this asset. The results of exploration work also determine to what extent the mineral reserves and resources may or may not be commercially viable for extraction. This impacts the ability of the Group to recover the carrying value of the exploration and evaluation assets either through the successful development or sale. Due to the quantum of this asset and the subjectivity involved in determining whether it's carrying value will be recovered through successful development or sale, we have determined this is a key audit matter. We have critically evaluated management’s assessment of each impairment trigger per AASB 6 Exploration for and Evaluation of Mineral Resources, including but not limited to: • Reviewing the directors' assessment of the carrying value of the exploration and evaluation costs, ensuring that management have considered the effect of potential impairment indicators, commodity prices and the stage of the Group's project against the standard of AASB 6 • Obtaining from management a schedule of areas of interest held by the Group and assessed as to whether the Group had rights of tenure over the relevant exploration areas by obtaining external confirmation from the relevant government agency and also considered whether the Group maintains tenements in good standing • Making enquiries of management with respect to the status of ongoing exploration programs in the respective areas of interest and assessing the Group's cashflow budget for the level of budgeted spend on exploration projects • Considering whether any other data exists which indicates that the carrying amount of the exploration and evaluation asset that is unlikely to be recovered in full from successful development or by sale • Assessed the appropriateness of the disclosures included in Note 13 to the financial report. 55 Other information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2022 but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. 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. When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and will request that it is corrected. If it is not corrected, we will seek to have the matter appropriately brought to the attention of users for whom our report is prepared. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the 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 as included in pages 8 to 16 of the directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Metallica Minerals 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. Murray McDonald Director – Audit and Assurance Moore Australia Audit (QLD/NNSW) Brisbane Moore Australia Audit (QLD/NNSW) Chartered Accountants 56 Metallica Minerals Limited Shareholder information 30 June 2022 The shareholder information set out below was applicable as at 23 August 2022. Distribution of equitable securities Analysis of number of equitable security holders by size of holding: 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and over Holding less than a marketable parcel Equity security holders Ordinary shares Number of holders % of total shares issued Options over ordinary shares Number of holders % of total shares issued 48 32 43 816 524 1,463 164 3 2 3 56 36 100 0.15 25 37 30 131 137 360 202 7 10 8 36 38 100 2.51 Twenty largest quoted equity security holders The names of the twenty largest security holders of quoted equity securities are listed below: Ordinary shares Number held % of total shares issued 151,868,345 64,516,129 35,422,409 17,247,408 11,012,502 10,500,000 8,300,000 8,190,000 7,264,100 5,500,000 5,000,000 5,000,000 5,000,000 4,910,966 4,869,975 4,741,456 4,500,000 4,250,000 4,200,000 4,000,000 366,293,290 22.81 9.69 5.32 2.59 1.65 1.58 1.25 1.23 1.09 0.83 0.75 0.75 0.75 0.74 0.73 0.71 0.68 0.64 0.63 0.60 55.01 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED SPARTA AG DOSTAL NOMINEES PTY LTD ROOKHARP CAPITAL PTY LIMITED PLAN-1 PTY LTD MR GRAHAM RAYMOND WILLIAM DOW GEFRATO TRADING PTY LTD SHADBOLT FUTURE FUND (TOTTENHAM) PTY LTD SIBELCO ASIA PACIFIC PTY LTD CALAMA HOLDINGS PTY LTD CAROJON PTY LTD LATSOD PTY LTD MRS CAROLYN DOW BONDLINE LIMITED CITICORP NOMINEES PTY LIMITED BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM MACFORBES SUPER PTY LTD NO BULL HEALTH PTY LTD MR PAUL THOMAS MCGREAL ANDREW SCOTT VICTOR WADDELL 57 Metallica Minerals Limited Shareholder information 30 June 2022 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED SPARTA AG TANGO88 PTY LTD DOSTAL NOMINEES PTY LTD MR KEVIN JOHN HENDERSON MR BILAL AHMAD MR PUNIT ARORA & MRS SHWETA ARORA LATSOD PTY LTD CALAMA HOLDINGS PTY LTD GEFRATO TRADING PTY LTD ROOKHARP CAPITAL PTY LIMITED OPEG (ORDU PRIVATE EQUITY GROUP) PTY LTD BUCKINGHAM INVESTMENT FINANCIAL SERVICES PTY LTD MRS MARCIA LURLINE DONALDSON MR DAVID GAZE MS PATRICIA MARIE NOELLE ORRE CHALLENGE AURORA PTY LTD PERALTA AGUILAR MEDICALS PTY LTD MS ANGELA MARGARET DAY MR JIAN LIANG Unquoted equity securities Options over ordinary shares issued Substantial holders Substantial holders in the company are set out below: ILWELLA PTY LTD SPARTA AG DOSTAL NOMINEES PTY LTD Voting rights The voting rights attached to ordinary shares are set out below: Options over ordinary shares % of total options issued Number held 55,360,215 32,258,065 12,964,029 6,669,167 5,470,618 4,384,389 2,640,000 2,000,000 1,750,000 1,675,000 1,666,666 1,662,389 1,500,000 1,471,921 1,445,062 1,300,000 1,100,000 1,050,000 1,000,000 1,000,000 30.82 17.96 7.22 3.71 3.05 2.44 1.47 1.11 0.97 0.93 0.93 0.93 0.84 0.82 0.80 0.72 0.61 0.58 0.56 0.56 138,367,521 77.03 Number on issue Number of holders 8,160,000 8 Ordinary shares % of total Number held 150,725,901 64,516,129 40,422,409 shares issued 22.63 9.69 6.07 Ordinary shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. There are no other classes of equity securities. 58 ANNUAL RE PO RT FO R THE YEAR ENDED 3 0 JUNE 2022 METALLICA MINERALS LTD 202 2 Metallica Minerals Annual Report | 2022

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