Mattel
Annual Report 2022

Plain-text annual report

ANNUAL REPORT 2022 Executive Chairman Director Director Director DIRECTORY Directors Paul Poli Franciscus (Frank) Sibbel Andrew Chapman Pascal Blampain Company Secretary Andrew Chapman Registered Office Suite 11, 139 Newcastle Street PERTH WA 6000 Tel: (08) 9230 3555 Fax: (08) 9227 0370 Email: reception@matsa.com.au Postal Address PO BOX 376 Northbridge W.A. 6865 Website www.matsa.com.au Share Registry Advanced Share Registry Services 110 Stirling Highway Nedlands WA 6009 Tel: (08) 9389 8033 Fax: (08) 9262 3723 Home Stock Exchange Australian Securities Exchange Ltd Level 40, Central Park 152-158 St George’s Terrace Perth WA 6000 ASX Code: MAT Auditors Nexia Perth Audit Services Pty Ltd Level 3 88 William Street PERTH WA 6000 MATSA RESOURCES LIMITED - CONTENTS 2022 ANNUAL REPORT · PAGE 2 CORPORATE DIRECTORY CHAIRMAN’S REPORT OPERATIONS REVIEW DIRECTORS’ REPORT AUDITOR’S INDEPENDENCE DECLARATION FINANCIAL STATEMENTS - - - - - Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to and Forming Part of the Consolidated Financial Statements DIRECTORS’ DECLARATION INDEPENDENT AUDIT REPORT ADDITIONAL ASX INFORMATION SCHEDULE OF MINING TENEMENTS 1 3 4 34 49 50 51 52 53 54 96 97 100 106 MATSA RESOURCES LIMITED - CHAIRMAN’S REPORT 2022 ANNUAL REPORT · PAGE 3 Dear Shareholder, Last year I noted that Matsa had focussed on developing a strategy that would serve the Company’s future and create value for shareholders. This year Matsa has continued to reposition itself by building on the delivery of that strategy. To that end, Matsa now has an 886,000oz gold resource across the Lake Carey Gold Project, a 30% increase on the prior year, providing a pathway towards reaching a gold resource that would support a Matsa owned processing plant. New optimisations undertaken for both the Fortitude and Devon projects illustrated that under a Matsa owned and operated processing plant both projects could generate an estimated $135M positive cash flow based on the given assumptions. In order to progress mining proposals on these projects towards future development flora, fauna and other related studies as well as regulatory approvals were progressed. Further drilling programs and surveys conducted during the year have identified new gold targets at Lake Carey and, with further work, may provide additional resources in the future. A disciplined exploration approach will continue so that the value of the Lake Carey Gold Project can be displayed. This approach encompasses operating in a safe and environmentally friendly manner and with awareness of local communities. In December 2021, Matsa executed a $20M Sale and Purchase Agreement with Linden Gold Alliance Limited whereby Linden would acquire the Red October and Devon projects from Matsa for a mixture of cash and shares. Matsa has thus far received $3M cash in non-refundable deposits from Linden, however settlement has not yet occurred at the date of this report. One of the pleasing things to occur this year was the identification of a number of highly prospective areas in Thailand for lithium and tin. This has resulted in a number of applications being lodged with the Thai authorities and is a credit to our Thai team. Whilst it is early days, I really believe there is a story yet to unfold here and over the next 12 months and beyond it will start to be unveiled. The Company has worked hard this year to instil a “work smart” discipline and identify opportunities that can create value with patience and hard work and deliver results for all stakeholders. I am of the belief that these challenges are being met front on and that in time results will become evident, where in turn I anticipate that this Company will show the results from all the effort being put in. I would like to again thank all the people involved with Matsa for their hard work, preparedness to do what is required and support throughout the year. In particular I would also like to thank my fellow board members, senior management and the whole team both in Perth and Thailand. I remain committed to ensuring that Matsa can achieve the goals it has set for itself and that this in turn results in rewarding shareholders. PAUL POLI EXECUTIVE CHAIRMAN MATSA RESOURCES LIMITED CHAIRMAN’S REPORT -3-Dear Shareholder, In writing this year’s report, I thought I would reflect on what I wrote last year, and what really appealed to me was my comment regarding the “The Team”, in that how reliant our whole company is on each individual person that makes up the Matsa team. I, nor anyone, could foresee how important this team attribute, the group made up of individuals working together to achieve a goal, would matter to us as shareholders this year. I proudly observed how our team, the whole Matsa team, took on the Covid-19 planning offensive. How proudly I watched them put their other team members and the company first. How we adhered to our new protection mechanisms and rules which we instigated together to protect all team members and our ambitious plans going forward. For me, this is our greatest achievement this year, we coped with whatever nature threw at us, we in fact excelled at it, and I am sure that we can continue to grow with whatever challenges are thrust upon us. It is important to recognise the twin boom drillers, the underground truck and plant operators, the chargers, the cleaners/caterers, the geologists, engineers and all the admin people and safety officers. Our surface exploration geologists and of course the team in the Perth office, as well the great job the Thailand team have done in managing all the geological data for our operations in Australia. These are the real people that we need to thank this year, and I am sure all shareholders join me in appreciating their efforts. We look forward this year to growing the Red October operations, and developing Devon and also finding a pathway forwards for our valuable Fortitude gold mine. Whilst we work diligently towards our strategy of becoming a mid-tier gold producer, we will also strongly focus on our exploration activities which will grow and build our company. We have an exceptional tenement package. We can and we will achieve all in a safe, environmentally friendly and community minded manner. The board looks forward to the next year and what it will bring. PAUL POLI EXECUTIVE CHAIRMAN MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 4 SUMMARY – DELIVERING STRATEGY AND GROWTH This year, Matsa Resources Limited (‘Matsa’ or ‘the Company’ or ‘the Group’) continued to reposition itself by leveraging off a significant resource potential at the Lake Carey Gold Project (Lake Carey, refer Figure 1) and has set about building a clear pathway to establishing a sustainable long term gold inventory, mining and processing business, centred at Lake Carey. The focus of all exploration efforts during 2022 has been on the Fortitude Fault trend at Lake Carey, where Matsa has demonstrated an economic mining opportunity at the Fortitude and Devon Gold Mines. Additionally, situated only 6km north of the Fortitude Gold Mine, the Fortitude North prospect continues to demonstrate real potential to deliver a significant resource through future drilling, and is expected to complement the 489koz resource modelled at the Fortitude Gold Mine. Significant growth opportunities also exist elsewhere, outside of gold, and to that end with recent significant and positive changes in exploration and mining outlook in Thailand, Matsa has expanded its exploration portfolio through new applications in the highly prospective western granite belt for tin and lithium. The growing Electric Vehicle (EV) market with a large share of manufacturing output centred in southeast Asia, has Thailand well positioned as a potential major supplier of the natural resources that will be required to support the growth forecasts of the EV market. In that respect, Matsa is well placed to leverage off that demand and economic outlook with its established operational team and project pipeline. As a result, a number of important and positive outcomes have been achieved over the past 12 months whose highlights include: • Mineral Resource at Lake Carey increased to 886,000oz @ 2.4 g/t Au following drilling at Hill East and resource updates for both Hill East and Fortitude • The resource upgrade at Fortitude resulted in new optimisations and a scoping study into a Matsa owned and operated processing plant at Lake Carey returned a favourable outcome improving the estimated bottom line at the Fortitude mine by A$40M (to $95M) • A combined estimated Positive cash flow of A$135M for the Fortitude and Devon Gold Mines, utilising a proposed Matsa owned processing plant, has been modelled following revision of optimisations and CPC scoping study input parameters • Completion of flora, fauna and other regulatory approvals and related studies to progress Mining Proposals for the Fortitude and Devon gold mines • Matsa entered into a $20M Sale and Purchase Agreement (“SPA”) with Linden Gold Alliance Limited (“LGA”) for the sale of Red October and Devon gold mines and associated tenements, which has delivered Matsa $3M in non-refundable deposits (note: subsequent to June 30, LGA has been granted an extension to complete the transaction by 30 September 2022) • Exploration applications lodged and accepted by Thailand’s Department of Mineral Resources for 942km² of tenure in Thailand’s western granite belt known to be highly prospective for lithium and tin • IGO Limited purchasing a 70% stake in the Fraser Range project for $600,000 under a JV agreement whereby Matsa retains a 30% free carried interest to decision to mine MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 5 Matsa’s key asset is its 100%-owned Lake Carey Gold Project, located approximately 40km south of Laverton and approximately 250km north-northeast of Kalgoorlie in Western Australia (Figure 1). The project is situated in the heart of an active gold mining district that hosts several multi-million- ounce gold mines including Wallaby and Sunrise Dam with Northern Star’s Carouse Dam located a little further south. Lake Carey comprises of almost 500km² of highly prospective tenements within the Laverton Tectonic Zone (LTZ) of the Kurnalpi Terrane in Western Australia’s eastern goldfields region. The district is well serviced by infrastructure including a network of high-quality roads, gas pipelines, communication infrastructure, airstrips with regular services to Perth and close proximity to an established mining workforce and supply network. Matsa also holds a number of rapidly developing lithium and copper assets in Thailand with 942km² under Special Prospecting Licence Applications (SPLA) for lithium and tin in Thailand’s western granite belt, and a further 584km² under SPLA for copper, silver, gold and base metals in central Thailand’s Loei Fold Belt. FIGURE 1: Matsa’s projects with a gold focus at Lake Carey in Western Australia and lithium – copper – tin focus in Thailand Exploration has progressed at both Lake Carey and Thailand during the July 2021 to June 2022 reporting period. Matsa has additional gold and copper exploration projects in Western Australia’s Pilbara, and nickel exploration projects in Western Australia’s Fraser Range under JV with IGO Limited (refer company website https://www.matsa.com.au/projects/ for further information). MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 6 REVIEW OF OPERATIONS AUSTRALIAN OPERATIONS LAKE CAREY The Lake Carey Gold Project (Figure 2), located in the Laverton Tectonic Zone in the heart of the Eastern Goldfields of Western Australia’s Yilgarn province (Figure 3), is bookended to the north by world class mines such as Granny Smith, Sunrise Dam and Wallaby, to the west Butchers Well and to the south Deep South. The eastern margin of the tenement package is bounded by the regional Barnicoat East Fault structure that separates the Kurnalpi and Burtville terranes. Importantly, the bulk of the key resource projects are located within granted mining licences and accessible by a network of established haul roads. As such, all of the key projects have a shorter lead time to obtaining final mining approvals than would normally be encountered at the exploration and assessment phase. Project status for key resource and mining options are outlined in the following table: PROJECT Fortitude Stage 2 Gallant Bindah Red October* Devon Pit* Hill East* Olympic* MINING LEASE HAUL ROADS MINE PROPOSAL Granted Granted Granted Granted Granted No Granted Existing Existing Existing Existing Existing Partial Existing Current Required Required Current Required Required Required * These projects are subject to the Sale and Purchase Agreement with Linden Gold Alliance Ltd TABLE 1: Key resources and mining lease status OVERVIEW The bulk of Matsa’s exploration work during this financial year has been focussed on Fortitude and Fortitude Fault trend with the remaining part at Devon and the Lake Carey region in general. Exploration activities this year included soil and geochem surveys to test for new gold anomalism, ground magnetic surveys to assist drill targeting, air core (AC) drilling to test gold/geochemical anomalism, diamond drilling (DD) and evaluation studies. Key results from this work include: • Reverse circulation (RC) drilling at the Devon area resulting in an updated resource model for Hill East adding 15koz to the 2021 resource model • Regional soil surveys and air core drilling identifying 2 new gold in basement anomalies • Ground magnetic surveys at Fortitude North, FF1 and Mirage/Stealth which assisted structural interpretations and geological setting to direct future drilling • An updated model for the Fortitude Gold Mine resulting in an increase of approximately $40M to the estimated bottom line following revised optimisation and mining studies • Diamond drilling at Fortitude North returning approximately 36% more gold in the latest drill intercept compared to the next closest drill hole MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 7 FIGURE 2: Regional Geological Setting and location of the Lake Carey project (red circle) • Ground magnetic surveys have identified a large bullseye magnetic anomaly just north of FF1 which remains unexplained and is a target for future drilling, and a northerly trending magnetic feature just west of Fortitude North, which also remains undrilled MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 8 • A new tenement hosting Compensation and Carmen prospects was added to Lake Carey where rock chip sampling returned up to 13.7g/t Au at the Carmen prospect in the south of the tenement and gold in soil anomalism up to 215ppb recorded in the northern part of the tenement Sunset at Red October Spring flowers at Laverton MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 9 FIGURE 3: Lake Carey Gold Project (projects outlined in red are subject to a Sale and Purchase Agreement with Linden Gold Pty Ltd) MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 10 RESOURCES The gold resource at Lake Carey grew from 684koz (30 June 2021) to 886koz (30 June 2022) (Table 2) representing a 30% increase through the following additions and mining adjustments (Figure 4): • 147koz added to the Fortitude Resource following modelling of grade control drilling and changes to the geological model arising from in pit mapping and completion of trial pit mining • An upgrade of 13koz at Hill East following new RC drilling • Increase of 33koz at Red October following modelling of new drilling at Lionfish • Depletion of 7koz from mining of the resource at Red October Cutoff Measured Indicated Inferred Total Resources g/t Au (‘000t) g/t AU (‘000t) g/t AU (‘000t) g/t AU (‘000t) g/t AU (‘000) oz) Red October Red October UG Red October Subtotal Devon Devon Pit (OP) Olympic (OP) Hill East (OP) Devon Subtotal Fortitude Fortitude Gallant (OP) Bindah (OP) 2.0 1.0 1.0 1.0 1.0 1.0 1.0 411 411 102 171 748 105 105 8 8.4 483 483 5.7 5.7 - - - - - - - - 341 4.8 - - - - 341 4.8 1,021 127 2.2 2,979 - - - - - 43 1.9 - 3.3 2.0 4,943 341 483 5,767 Fortitude Subtotal 127 2.2 3021 Stockpiles - - - - 191 TOTAL 232 5.0 3,845 2.7 7,199 6.3 6.3 3.6 2.8 2.0 2.3 1.9 2.1 2.3 1.9 1.0 2.2 999 999 443 171 748 1,362 8,048 341 526 8,915 191 11,467 6.2 6.2 4.6 2.8 2.0 2.9 1.9 2.1 2.4 1.9 1.0 2.4 199 199 65 15 48 128 489 23 40 553 6 886 TABLE 2: Lake Carey Gold Resource Table (resources include reserves, refer Resources and Reserves table for formal 30 June statement). Note rounding adjustments may not total. FIGURE 4: Lake Carey Mineral Resource growth since 2020 Annual Report +80,000ozApr 2021Gallant (23koz)Hill East (35koz)Apr 2021+58,000ozOlympic (15koz)Devon (65koz)Dec 2020+77,000ozRed October 96koz173kozSept 2020439,000ozRed October (96koz)Fortitude(343koz)Jun 2022886,000ozTotal Mineral Resources(886koz @ 2.4g/t Au)Bindah (40koz)+40,000ozJun 2021Lionfish (33koz)+33,000ozJul 2021+147,000ozSept 2021Fortitude343koz489kozMining Depletion-7,000ozJul 2021Hill East (13koz)+13,000ozOct 2021+6,000ozJan 2022Bindah SP(6koz)MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 11 EXPLORATION AND GROWTH Exploration highlights at Lake Carey for the year include: • Exploration drilling at Hill East and Devon prior to Matsa and LGA signing a SPA for the Red October and Devon projects • Approximately 466 line kilometres of high resolution ground magnetic survey being completed, focussed on the Fortitude Shear Zone • 838 soil samples collected across the Lake Carey tenements • Completion of 7,876m of aircore, reverse circulation and diamond drilling across six prospects at Lake Carey • An updated resource model for Fortitude Gold Mine and revised optimisation studies resulting in more than doubling the original results of the optimisation work from 55koz mined to 132koz mined • Carmen and Compensation prospects added to the Lake Carey Gold Project where rock chip sampling has returned gold grades up to 13.7g/t Drone view looking from Fortitude Gold Mine south towards Bindah Gold Mine FORTITUDE AND FORTITUDE FAULT GROUND MAGNETIC SURVEYS Four high resolution ground magnetic surveys (Figure 5) comprising 466 line kilometres, were completed along the regionally significant Fortitude Shear Zone which host’s Matsa’s Fortitude Gold Mine. The surveys were conducted east, north and south of the Fortitude Gold Mine and were designed to provide information that would assist in detailed structural interpretation and help focus future drilling designs. The results of the surveys broadly support the existing regional aeromagnetic interpretation of a major NNW trending regional structure (shear zone) and provided additional detail at the prospect MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 12 scale, that have been interpreted as either dilational jog structures and/or NE trending cross cutting structures that elsewhere, are known to host mineralisation. FIGURE 5: High resolution ground magnetic surveys over regional aeromagnetic data MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 13 The Fortitude Shear zone, along with the Bindah Shear located to the west, forms a narrow corridor of S-SE trending greenstone belt which is bounded to the east and the west by granitoid terrane (Figure 6). As the Fortitude-Bindah system extends north the greenstone pile thickens, and is host to numerous large mineralised systems (Sunrise Dam, Wallaby, Granny Smith and Mt Morgan). FIGURE 6: High resolution ground magnetic surveys over regional aeromagnetic data MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 14 Matsa’s exploration focus along the Fortitude Shear is aimed at resource drilling at Fortitude North to develop a maiden resource, which will support the Fortitude Gold Mine and proposed processing facility. A number of strong geophysical anomalies (circled in pink in Figure 7) where limited drilling has previously been completed provide priority drilling targets. It is pleasing to note that new targets continue to be generated using this exploration technique. FIGURE 7: High resolution ground magnetic surveys over regional aeromagnetic data DRILLING Aircore drilling (Figure 8) comprising 45 holes were completed for 3,627m with results indicating elevated gold values defining new saprolite gold targets at Wilga West and Phantom Well and confirming elevated gold values in transported sand and gravel overlying the FF1 basement gold occurrence previously discovered in 2020. Four key target areas namely, Wilga West, Haul Road, FF1 and Phantom Well on the Fortitude Fault were selected based on strong responses in the magnetic survey data which suggests the presence of favourable structures and geological setting that could host gold mineralisation. MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 15 FIGURE 8: Plan of four aircore drilling programs completed during the year with background aeromagnetic data MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 16 Collecting ground magnetic data at Lake Carey In July 2021, Matsa reported results of RC drilling at Devon and Hill East which has led to an increase of reportable resource at Hill East from 35koz to 48koz. The Hill East prospect has since been subject to a SPA with LGA announced in December 2021. Diamond drilling at Fortitude North was undertaken following an inhouse review of the prospect’s ability to host significant exploitable mineralisation where Matsa identified it is conceivable to define between 380koz and 600koz with further drilling. Geological modelling indicates Fortitude North is likely to be characterised by a shear hosted mineralised envelope encapsulating north easterly plunging higher grade shoots. This has been modelled through interpretation of drilling and geophysical (ground magnetic) results along a 1.5km anomaly. Logging of diamond drill core has indicated the presence of hydraulic fracture quartz veining, suggesting a long lived gold mineralising system. The new drilling was designed to test this geological model with a focus on confirming the potential of higher grade shoots within this extensive system. Results were positive in that the drilling (hole 22FNDD009, Figure 9) returned assay results of 9.6m @ 3.27 g/t Au from 120.8m including a higher grade zone of 2.1m @ 7.76 g/t Au from 121.65m (using 1 g/t cutoff). This drilling reflects down-dip continuity of the mineralised intersection in the next nearest diamond drill hole (19FNDD001), which intersected 8m @ 2.94 g/t Au from 106.25m including a higher-grade zone of 2.75m @ 5.24 g/t Au from 107.25m. Conclusions from the drilling results and recent logging, suggest a high-grade shoot resides in the hanging wall position within the broader lode and mineralised system. Importantly, the data also suggests that grades appear to increase with depth as demonstrated by 2.75m @ 5.24 g/t at 107.25m (19FNDD001) and 2.1m @ 7.76 g/t at 121.65m (22FNDD009). This trend is not an uncommon feature of structurally complex narrow vein gold settings. MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 17 FIGURE 9: Fortitude North Drilling Summary and Location of 22FNDD009 At FF1 an initial diamond drill hole was completed which returned 1m @ 6.57g/t from 148m. The diamond drilling results do not explain the relatively thick 10m gravels and basement gold anomaly recorded in the aircore programs and further drilling is being contemplated to help resolve this apparent disparity. MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 18 STUDIES All permits required to recommence mining at the Fortitude Gold Mine remain in place and an outline of the proposed site setup is shown below in Figure 10. Key changes to the Fortitude layout is the inclusion of a proposed Matsa processing plant and associated tailings facility. Studies for approvals continue. FIGURE 10: Proposed mine layout for Fortitude Gold Mine including potential mill and tailings facilities MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 19 LAKE CAREY REGIONAL EXPLORATION SOIL SAMPLING A number of soil sampling campaigns were completed across Lake Carey (Figure 11) aimed at identifying new drill targets. Results are typically reviewed in context of additional information such as magnetics to assist refining drill designs. FIGURE 11: Plan of soil sampling coverage in Matsa tenements (note Red October and Devon tenements subject to the SPA not shown) MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 20 Sunrise at the Red October village NEXT STEPS Exploration activities at Lake Carey for the coming year will include: • Drilling at Fortitude North with the aim of delivering a maiden resource to complement the nearby Fortitude Gold Mine • Drilling at advanced exploration projects including FF1, Carmen, Stealth and Mirage • Drill testing of newly discovered gold in basement anomalies at Wilga West and Phantom Well • Additional regional geophysical coverage to assist exploration drilling • Ongoing regional soil coverage MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 21 FRASER RANGE The entire Fraser Range project (Figure 12) is now under a 70:30 Joint Venture between IGO Limited (70%) and Matsa (30%) whereby Matsa has a free carried interest to decision to mine. FIGURE 12: Plan of Fraser Range tenements MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 22 THAILAND OPERATIONS Matsa has held a presence in Thailand since 2009 and sees enormous opportunities in exploration for lithium, gold and base metals, not only because of the highly prospective geological setting, but also the economic ramifications of Thailand’s central geographic location within southeast Asia and a growing resource need for the EV market. The Company discovered and explored a number of significant copper targets (Siam 1, Siam 2 and Chang 1 projects) prior to scaling back activities in 2016 due to low political support for mining and exploration activities. These projects have all been retained under SPLAs/EPLAs (Special Prospecting Licence Applications and Exclusive Prospecting Licence Applications) and have demonstrated strong potential for the discovery of extensive mineralisation. Recently, Matsa has seen a change in geopolitical support for exploration and mining evidenced by positive recent developments including: • Kingsgate Consolidated Limited announcing expected recommencement of operations at the world class Chatree gold mine • The recent drilling activities by Pan Asia Metals Limited (ASX: PMA) indicating government support for drilling culminating in a maiden lithium resource in southern Thailand • Positive sentiment for exploration building in recent government policy and dialogue In addition to the changing political landscape, Thailand has an upgraded rail network system linking it to mainland China, which will have positive economic benefits to any mine development within the region. Matsa will build upon past exploration in the country and seek to establish a strategic landholding targeting lithium, copper, lead, zinc, silver and gold in Thailand’s rich metalliferous and geological setting. Matsa has a fully functional office, staff and skills in the country and is well positioned to actively grow its portfolio. The Company believes the positive recent developments strongly encourage mineral exploration and, as a result, is ramping up its activities in Thailand. OVERVIEW Prior to 2022, Matsa held 52 EPLAs and SPLAs for a total of 511km² comprising its Chang and Siam Copper discoveries in the Loei Fold Belt (LFB) of Central Thailand. The LFB contains important mineral deposits including the 3.42Moz Chatree gold mine owned by Kingsgate and the Phu Kham porphyry skarn (copper-gold) mine in Laos operated by PanAust Limited. During the year new lithium and tin exploration projects as well as additional silver and base metals projects, including the former Venture Minerals Ltd’s (ASX:VMS) Thali silver and base metals project in the Loei province, have been added to the Company’s existing portfolio of copper projects. Matsa’s Thailand exploration licence and applications position is summarised in Table 3 below. PROJECTS Base & precious metals Lithium, tin, tungsten & tantalum Total SPLA AREA EPLA AREA TOTAL AREA 48 65 113 556 942 1,497 9 0 9 29 0 29 584 942 1,526 TABLE 3: Thailand SPLA and EPLA summary MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 23 EXPLORATION AND GROWTH LITHIUM EXPLORATION The regionally extensive granite/pegmatite belt of western Thailand (Figure 13) has been a significant tin producer on the world stage and extends for some 800km. Mapping by the likes of the British Geological Survey in the 1970’s recorded lepidolite (lithium mica) boulders and lithium bearing pegmatite however lithium was of little exploration interest at that time. The pegmatites of the western granite belt have in more recent times been classified as “LCT” type (lithium-caesium-tantalum) demonstrating their potential for the discovery of lithium and other rare elements, and initial pegging of applications by Matsa has been guided by the historical records of lithium and associated rare element occurrences in reports lodged with Thailand’s Department of Mineral Resources. Matsa believes these licences contain all the right ingredients to make a discovery. Mapping a pegmatite swarm in western Thailand During the year, Matsa applied for 65 SPLAs covering some 942km² . The SPLAs (Figure 14) encompass ground that is expected to yield lithium mineralisation. The applications include projects in the Phang Nga province where PAM has recently delineated a maiden lithium resource of 10mt @ 0.44% lithium at Reung Kiet. Exploration activities during the year have been aimed at discovering and mapping pegmatites, stream sediment sampling, regional muscovite geochemical sampling for potassium/rubidium ratios and administrative works associated with lodgement of applications and provincial approvals and agreements to conduct field activities. The work programs have initially focussed on the Phang Nga province adjacent to Reung Kiet where existing information and an understanding of geological setting is strongest, gradually moving north into less well understood regional settings. Exploration at Phang Nga has taken a traditional grass roots approach with Matsa conducting initial stream sediment sampling to ascertain the geochemical dispersion of lithium and other pathfinder elements, in a field containing known occurrences of lithium bearing pegmatites. MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 24 Matsa is progressing an initial program of approximately 200 stream sediment samples in the Phang Nga (Figure 15) province in campaigns as licencing (Mineral Exploration Licence) for each subdistrict becomes available. The results of multi element assays for these samples are expected to provide Matsa with initial focus points where lithium anomalism in stream sediment sample results are strongest. FIGURE 13: Western Thailand’s granite and major regional fault setting MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 25 FIGURE 14: Fortitude Stage 2 operation cash flow MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 26 FIGURE 15: Plan of stream sediment sampling at Phang Nga On a more regional level, exploration has initially focussed on muscovite K/Rb (potassium v rubidium) ratios to assist defining the more prospective parts of the granite belt where the rocks have undergone fractionation. Increasing fractionation of the granite/pegmatite rock mass is considered to equate to a more fertile environment and therefore more prospective for the discovery of lithium bearing pegmatites. This work is ongoing and typically immediately followed up with stream sediment sampling. MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 27 Muscovite sampling of granite and pegmatite outcrop in western Thailand Stream sediment sampling at Phang Nga MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 28 COPPER (GOLD AND SILVER) EXPLORATION Matsa holds a number of advanced and early stage base metals projects centred on the regionally extensive Loei Fold Belt (LFB) of central Thailand (Figure 16). Matsa’s Bangkok based team explored for base metals between 2010 and 2016. Matsa recognised that despite the highly prospective geology (at the time Chatree was amongst the lowest cost gold mines in the world), very high quality of available geological data, excellent infrastructure and a skilled workforce, the country remained largely under-explored. Between 2016 and 2022, Matsa paused field activities due to low political support for mining and exploration activities. Changes to legislation and an improved positive sentiment towards the minerals sector has provided Matsa positive indicators to ramp up exploration efforts in Thailand. THALI HIGH GRADE SILVER-LEAD PROJECT Matsa has pegged five new SPLAs for 73km² in the Loei province to explore for base and precious metals. The project includes the Thali prospect where high grade silver-lead veins were identified in 2015 by Venture Minerals Ltd (‘VMS’). No drilling has ever been undertaken at this prospect. Exploration by VMS at Thali, discovered a number of strong silver in soil anomalies defined by values exceeding 0.3 g/t Ag with individual anomalies >2km long and with surface rock grab samples up to 1,860g/t Ag and 27% Pb. Mineralisation, which is poorly exposed, appears to be related to stockwork veins in strongly altered granite and limestone. Induced Polarisation (IP) surveys carried out by VMS at Thali during early 2018, returned a number of targets associated with key soil anomalies. CHANG COPPER PROJECT At Chang 1, the Company has previously identified a copper mineralised diorite intrusion, under shallow transported cover with minimal outcrop. The surface expression of mineralisation is a soil copper geochemical anomaly 1.8km x 1.2km in extent. Geophysical (IP) surveys confirm the size and distribution of the soil anomaly and highlight additional targets yet to be explored. In 2016, Matsa halted work at Chang 1 pending legislation changes to allow access to the most prospective parts of the prospect, that to this day, remains unexplored. There has been significant progress in addressing access issues since 2016 and Matsa is confident that impediments to drilling these high priority targets at Chang 1 will be removed during FY2023. SIAM COPPER Siam 1 comprises a ~20km² stream sediment anomaly in an area of mostly soil cover containing scattered boulders of altered basalt with disseminated native copper mineralisation. Initial follow up led to discovery of a discordant NW trending sulphide vein dominated by chalcocite which returned an assay of 54.7% Cu and 148 g/t Ag. Soil sampling and a ground IP survey were carried out to define targets for drilling. A total of 11 diamond drill holes were completed by Matsa which returned a number of broad intersections of anomalous copper (eg 22m @ 0.55% Cu) and demonstrates the potential size of the mineralised zone. Further exploration drilling is planned to better define the context of the high grade copper within this large 20km² copper anomaly. MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 29 FIGURE 16: Plan of Matsa’s Thailand copper/gold/silver projects MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 30 TIN EXPLORATION The granite belt in western Thailand has been a prolific source of tin, largely from alluvial mining. Matsa has obtained very encouraging assay results for tin at both Phang Nga (sample PNGRK008 returning an assay of 0.9% - Figure 17) and Kanchanaburi (sample KCB014RK returning an assay of 0.2% - Figure 18). Both these assay results reflect strong tin anomalism with 0.9% comparing very favourably to industry reported resource grades. PNGRK008 Mica Granite Qtz Vein TIN FIGURE 17: Phang Nga sample PNGRK008 from a water course cutting showing tin mineralisation KCB014RK TIN FIGURE 18: Kanchanaburi sample KCB014RK from outcropping pegmatite showing tin mineralisation. This pegmatite has been mapped over 2km strike, 600m wide and striking NW Further exploration work is planned including gridded hand auger work and ongoing field mapping and sampling. MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 31 Lithium bearing (lepidolite- maroon colours) pegmatite outcrop in western Thailand MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 32 NEXT STEPS Work at Matsa’s Thailand projects for the coming year will include: • Continued regional stream sediment and muscovite sampling to focus priority areas based on lithium fertility assessment • Detailed mapping of priority areas based on lithium anomalism • Progress selected SPLA to grant to enable drilling activities • Follow up exploration in areas of identified tin anomalism • Continue work and field activities in areas where rare earth anomalism is demonstrated from multi element assay data • Obtain approvals to conduct drilling at Matsa’s copper/base metals/silver/gold Loei prospects in Loei Fold Belt • Where possible attain additional tenure to enhance the Matsa portfolio Inspecting pegmatite outcrop in western Thailand MATSA RESOURCES LIMITED - OPERATIONS REVIEW 2022 ANNUAL REPORT · PAGE 33 CORPORATE ACTIVITIES SALE OF RED OCTOBER AND DEVON On 20 December 2021, Matsa entered in to a SPA with LGA to sell the Red October and Devon gold projects to Linden for a total consideration of $20M. Matsa has so far received a total of $3M non- refundable deposit. While LGA planned an Initial Public Offering (IPO), LGA has not yet received conditional approval for admission to the ASX as required under the SPA and subsequent amendments to that SPA by 30 June 2022. Accordingly, LGA did not settle the purchase of the Devon and Red October projects by year end. LGA has provided Matsa with a formal notice advising that as a result of events beyond the control of Linden, it has not received conditional approval for admission to the ASX and consequently, pursuant to the SPA, LGA claimed to be entitled to an automatic extension for a further period of up to 90 days. LGA may elect by 5 October 2022 to complete the sale by paying the balance of the payments owing in cash, ie. $12M to Matsa. Matsa has the right to terminate the SPA should LGA not successfully complete the acquisition by no later than 12 October 2022 (through either successful listing on the ASX or cash settlement). Matsa can retain the $3M deposit it has received, at which point ownership of the Red October and Devon gold projects is retained by Matsa. Matsa will retain 385km² of the Lake Carey Gold Project including the 553,000oz gold resource at Fortitude gold Mine, the nearby Bindah and Gallant satellite resources if the sale of the Red October and Devon gold projects proceeds. SALE OF 70% INTEREST IN FRASER RANGE PROJECTS TO IGO On 1 July 2022, Matsa entered in to an agreement with IGO Newsearch Pty Ltd (“IGO”, a wholly owned subsidiary of IGO Limited) whereby IGO acquired a 70% interest in the Symons Hill project as well as Matsa’s other Fraser Range tenements. Under the terms of this agreement IGO has paid $600,000 in cash and will free carry Matsa for all exploration to completion of feasibility studies or decision to mine whichever occurs earlier. CAPITAL RAISING In July 2021, Matsa completed a $3.38M placement via the issue of approximately 42.2M shares at $0.08 per share (incl. a free 1 for 2 listed option exercisable at $0.17 each expiring 30 April 2023). UNMARKETABLE PARCEL SHARE SALE FACILITY Matsa conducted an Unmarketable Parcel Share Sale Facility whereby shareholders of fully paid ordinary shares in the Company with a holding valued at less than $500 would be able to dispose of those shares at no cost to them. The final number of shares eligible sold was 1,086,067 from a total of 270 shareholdings which was completed in April 2022. MATSA RESOURCES LIMITED DIRECTORS’ REPORT Your directors present their report for the year ended 30 June 2022. DIRECTORS The names and details of the Company’s directors in office during the year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Names, qualifications, experience and special responsibilities Mr Paul Poli Bachelor of Commerce, FCPA DFP (Executive Chairman) Mr Poli is a fellow of the Australian Society of Certified Practicing Accountants and a former registered Securities Trader. He was the founder and managing partner of a taxation and business advisory firm for 19 years prior to founding and heading Matsa Resources Limited from 2009 to date. He is well versed in all aspects of business, particularly financial management through both his previous consulting roles and through his personal ownership of private companies in Western Australia, the Northern Territory and South East Asia. Mr Poli led the negotiations for several significant transactions for Matsa including the $14M Norseman sale to Panoramic Resources Limited, $6M minority interest sale to Westgold Resources Limited, and $7M Symons Hill IGO joint venture. Mr Poli, in his capacity as Chairman of Bulletin Resources also negotiated the sale of Halls Creek gold project for $12M to Pantoro Limited, and the $5.7M Apollo transaction. He has been chairman of Matsa Resources Limited for over 10 years and a significant investor in the mining industry, Mr Poli is particularly well qualified to drive the creation of a significant mining and exploration company. During the past three years, Mr Poli has also served as a Director of the following publicly listed companies: Bulletin Resources Limited (Appointed 24 June 2014) Mr Pascal Blampain BSc, MAusIMM, MAIG Pascal Blampain is a geologist with over 27 years’ experience across Australia and Papua New Guinea having held senior positions with global miners including Barrick Gold Corporation and Gold Fields Limited. Mr Blampain’s roles have spanned regional and near-mine exploration, operational geology, long- term strategic planning and resource development. He has a strong track record of delivering resource and reserve growth in gold during his time working at world-class deposits such as Plutonic, Wallaby (Granny Smith) and Lawlers (now Lawlers-Agnew). Mr Blampain has also served as Chief Geologist/Geology Manager roles at Plutonic (Superior Gold Inc.), Mount Monger-Mt Belches (Silver Lake Resources Limited), Darlot (Gold Fields Limited) and Lawlers (Barrick Gold Corporation). Mr Andrew Chapman CA F Fin GAICD Mr Chapman is a chartered accountant with over 25 years’ experience in publicly listed companies in the mineral resources, oil and gas and technology sectors. He has held Board positions as well as other senior roles including Director, Company Secretary and Chief Financial Officer. Mr Chapman has vast experience in the areas of corporate acquisitions, - 34 - MATSA RESOURCES LIMITED DIRECTORS’ REPORT divestments and capital raisings. He has developed specialist knowledge of dealing with ASX and other corporate regulatory bodies, financial institutions and other advisory groups. Mr Chapman is an associate member of the Chartered Accountants Australia and New Zealand (CAANZ), a Fellow of the Financial Services Institute of Australasia (Finsia) and a graduate of the Australian Institute of Company Directors (AICD). Mr Chapman has not served as a Director of any other publicly listed companies during the past three years. Mr Franciscus (Frank) Sibbel B.E.(Hons) Mining, F.Aus.IMM Mr Sibbel is a mining engineer who has in excess of 40 years operational and managerial experience, in both small and large scale mining projects from development through to successful production. Since 2008, he has been a mining consult where he has successfully consulted on numerous projects for a diversified range of mining companies throughout Australia and overseas. Mr Sibbel’s vast experience in development of gold projects from the grass roots will ensure the company has the extensive skills to deliver on its strategy. During the past three years, Mr Sibbel has also served as a Director of the following publicly listed companies: Bulletin Resources Limited (Appointed 13 August 2013; resigned 1 September 2021) COMPANY SECRETARY Mr Chapman is also the Company Secretary of Matsa. Refer to the directors’ particulars as noted above. PRINCIPAL ACTIVITIES During the year the principal activities of entities within the consolidated entity were gold and other mineral exploration in Australia and Thailand. There were no significant changes in the nature of these activities during the year. Operating Results for the Year The Group’s net loss for the year after income tax is $6,028,025 (2021: $9,654,713). The Group’s net loss for the year includes the following items: • Revenue from the sale of gold ore of $230,235 (2021: $8,055,013). • Income of $3,000,000 (2021: nil) in non-refundable deposit received in relation to the sale of the Red October and Devon under the terms of the SPA. Impairment losses of $1,028,175 (2021: nil) attributable to the Group's exploration projects. • A loss of $2,353,509 (2021: gain of $1,191,750) on the sale of tenements. • • Share based payments expense of $5,329 (2021: $111,956). • Income of $86,079 (2021: $204,868) relating to a tax refund for eligible research. Review of Financial Position The net assets attributable to the shareholders of the parent have decreased by $2,826,722 from 30 June 2021 to $12,545,260 at 30 June 2022. - 35 - MATSA RESOURCES LIMITED DIRECTORS’ REPORT During the financial year: 1. $3,375,350 (before costs) was raised via the issue of 42,191,875 fully paid ordinary shares at an issue price of $0.08 each with one free attaching listed option for every two shares subscribed for with an exercise price of $0.17 each and expiring 30 April 2023; and Cash reserves at 30 June 2022 were $1.57M compared to $3.03M in the previous financial year. Going Concern The consolidated financial report has been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlements of liabilities in the ordinary course of business. The Group has reported a loss for the year of $6,028,025 (2021: $9,654,713) and a cash outflow from operating activities of $2,791,531 (2021: $4,803,673). At the reporting date, the Group had $1,572,483 in cash and term deposit balances. The Group also had borrowings of approximately $4,000,000 due and payable on 30 November 2022. Refer Note 15 for further details. On 20 December 2021, the Company executed a binding agreement to sell the Red October and Devon gold projects to Linden Gold Pty Ltd (LGL) for a consideration of $20,000,000 with the sale expected to be completed within the next 4 to 9 months. Refer note 21 for further details. The Directors also manage discretionary expenditure in line with the Group’s cash flow and are confident that there are sufficient funds to meet the Group’s working capital and funding requirements for a minimum of 12 months from the date of this report. The Directors consider the going concern basis of preparation to be appropriate based on forecast cash flows and confidence in raising additional funds and extension of borrowings. In the event that the Group is not successful in raising funds from the issue of new equity or extension of borrowings or if the sale of LGL does not realise, there exists material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern and realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. DIVIDENDS No dividend was paid or declared by Matsa in the period since the end of the previous financial year, and up to the date of this report. The Directors do not recommend that any amount be paid by way of dividend. CORPORATE STRUCTURE Matsa is a company limited by shares, which is incorporated and domiciled in Australia. EMPLOYEES The Group had 17 employees of which 13 were full-time as at 30 June 2022 (2021: 21 full-time equivalent employees). Review of Operations A full review of the operations of the Group during the year ended 30 June 2022 is included on pages 4 to 33. - 36 - MATSA RESOURCES LIMITED DIRECTORS’ REPORT IMPACT OF COVID-19 While the onset of the COVID-19 pandemic was rapid and dramatic, the Company took immediate action to protect the integrity of the Company’s business interests and the safety and wellbeing of its employees and stakeholders. Prompt implementation and affirmative compliance with government and health bodies forced quick change to operating processes. Matsa operates a remote mining operation and an overseas office, fortunately with the positive protection measures and support of governments and employees our operation continued to function close to normal levels though travel restrictions, social distancing and isolation practices had some impacts on the Group. The closure of borders required immediate action to manage these impacts on our labour force. Roster changes, changed travel and commuting schedules, changed camp operations including dining and enhanced hygiene practices created potential social and mental health impacts. The Company has taken a considerate approach to the hidden consequences of such changes and continues to work with its employees to lessen the impact. The over-arching objective of the Group has been to keep all its employees and stakeholders safe and free from infection and/or spread, and importantly to keep people employed during these uncertain times. Given the exploration nature of the Company’s operations the net impact of the pandemic was estimated to be minor on the Group’s operations. The over-arching objective of the Group is to keep its employees and stakeholders safe and free from infection and/or spread. SIGNIFICANT CHANGES IN STATE OF AFFAIRS In the opinion of the Directors, there were no significant changes in the state of affairs of the Group that occurred during the financial year other than as disclosed in note 21 of the consolidated financial statements. SIGNIFICANT EVENTS AFTER THE REPORTING DATE On 29 August 2022, the Company successfully completed a placement to institutional and sophisticated investors to raise approximately $1.98M before costs which was heavily oversubscribed. On 29 September 2022, the Company announced that LGA was not able to settle the purchase of the Devon and Red October projects via the issue of shares and cash. Under the terms of the SPA, LGA has 10 business days to complete the sale via a cash settlement of $12M. Discussions with LGA for a resolution to settlement of the sale is currently ongoing. The Directors consider the reclassification of the Devon and Red October projects as assets held for sale to be appropriate. LIKELY DEVELOPMENTS AND EXPECTED RESULTS It is expected that the Group will continue its exploration activities in Australia and Thailand. These are described in more detail in the Review of Operations on page 4 to 33. ENVIRONMENTAL REGULATIONS AND PERFORMANCE The Group’s exploration activities are subject to various environmental laws and regulations under Australian and Thai Legislation. The Group has adequate systems in place for the management of its environmental obligations. The directors are not aware of any breaches of the legislation during the financial year which are material in nature. - 37 - MATSA RESOURCES LIMITED DIRECTORS’ REPORT DIRECTORS’ MEETINGS The number of meetings of directors held during the year and the number of meetings attended by each director were as follows: Paul Poli Frank Sibbel Andrew Chapman Pascal Blampain Directors’ Meetings Number eligible to attend 5 5 5 5 Number attended 5 5 5 5 DIRECTORS’ INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY As at the date of this report, the interests of the directors in the shares and options of Matsa Resources Limited were: Number of Ordinary Shares Number of $0.175 Unlisted Options Number of $0.17 Unlisted Options Number of $0.17 Listed Options Paul Poli Frank Sibbel Andrew Chapman Pascal Blampain 13,900,000 700,000 300,000 300,000 2,750,000 1,500,000 1,500,000 - - - - 1,000,000 640,500 52,575 115,500 - Options granted to directors and officers of the Company During the financial year, the Company granted 1,000,000 options over unissued ordinary shares for no consideration in the Company to directors or officers of the Company as part of their remuneration. SHARE OPTIONS As at the date of this report the unissued ordinary shares of Matsa Resources Limited under option are as follows: Date of Expiry Exercise Price Number under Option 30 November 2022 30 November 2022 30 November 2022 30 November 2022 30 November 2022 30 April 2023 31 October 2023 30 November 2023 $0.175 $0.35 $0.35 $0.25 $0.30 $0.17 $0.21 $0.17 5,750,000 1,000,000 2,000,000 2,000,000 44,079,341 49,220,253 3,250,000 1,000,000 108,299,594 Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate. Shares Issued on Exercise of Options During the financial year, there were no options exercised. - 38 - MATSA RESOURCES LIMITED DIRECTORS’ REPORT REMUNERATION REPORT - Audited Principles of Compensation This remuneration report for the year ended 30 June 2022 outlines the remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 (“the Act”) and its regulations. This information has been audited as required by Section 308(3C) of the Act. The remuneration report details the remuneration arrangements for Key Management Personnel (“KMP”) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes the four executives in the parent and the Group receiving the highest remuneration. For the purposes of this remuneration report, the term ‘executive’ includes the Executive Directors, Senior Executives and Secretary of the Company and the Group. The remuneration report is presented under the following sections: 1. Individual key management personnel disclosures 2. Board oversight of remuneration 3. Non-executive Director remuneration arrangements 4. Executive remuneration arrangements 5. Company performance and the link to remuneration 6. Executive contractual arrangements 7. Equity instruments disclosures. Individual Key Management Personnel Disclosures Details of KMP of the Company and Group are set out below: Key Management Personnel Name Directors P Poli F Sibbel A Chapman P Blampain Executives D Fielding Position Date of Appointment Date of Resignation Executive Chairman Director 23 December 2008 25 October 2010 Director and Company Secretary 17 December 2009* Executive Director 17 February 2021 Group Exploration Manager 12 April 2010 - - - - - *A Chapman was appointed Company Secretary on 6 November 2007. There were no other changes to key management personnel after reporting date and before the date the consolidated financial report was authorised for issue. - 39 - MATSA RESOURCES LIMITED DIRECTORS’ REPORT REMUNERATION REPORT (continued) Board Oversight of Remuneration Remuneration Committee In the opinion of the directors, the Company is not of sufficient size to warrant the formation of a remuneration committee. It is the board of directors’ responsibility for determining and reviewing compensation arrangements for the directors and the senior executives. The Board assesses the appropriateness of the nature and amount of remuneration of Non-Executive Directors and Executives on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high performing Director and executive team. Remuneration Approval Process The Board approves the remuneration arrangements of the Executive Directors and Executives and all awards made under the long-term incentive plan. The Board also sets the aggregate remuneration of non-executive directors which is then subject to shareholder approval. Remuneration Strategy The Company’s remuneration strategy is designed to attract, motivate and retain employees and non- executive directors by identifying and rewarding high performers and recognising the contribution of each employee to the continued growth and success of the Group. To this end, the Company embodies the following principles in its remuneration framework: • retention and motivation of key executives; • attraction of quality management to the Company; and • performance incentives which allow executives to share the rewards of the success of the Company. Remuneration Structure In accordance with best practice corporate governance, the structure of Non-Executive Director and Senior Management remuneration is separate and distinct. Non-Executive Director Remuneration Objective The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders. Remuneration Policy The Constitution and the ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the Directors as agreed. The current aggregate remuneration is $250,000 per year. - 40 - MATSA RESOURCES LIMITED DIRECTORS’ REPORT REMUNERATION REPORT (continued) The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst Directors is reviewed annually. The Board considers advice from external consultants as well as the fees paid to non-executive Directors of comparable companies when undertaking the annual review process. No external advice was received during the year. Each Director receives a fee for being a Director of the Company. Non-Executive Directors are encouraged by the Board to hold shares in the Company (purchased by the Director on market). It is considered good governance for Directors to have a stake in the Company on whose Board he or she sits. Structure The remuneration of Non-Executive Directors consists of directors’ fees. Non-Executives are entitled to receive retirement benefits and to participate in any incentive programs. There are currently no specific incentive programs. The Executive Chairman receives no additional directors’ fee in addition to his executive remuneration. Non-executive directors received a base fee of $42,000 per annum during the financial year for being a director of the Group. There are no additional fees for serving on any board committees. Non-executive directors can receive additional fees for work conducted for the Company outside the scope of their normal duties subject to being authorised by the Board. The remuneration report for the Non-Executive Directors for the year ended 30 June 2022 and 30 June 2021 is detailed in this report. Managing Director and Executive Remuneration Structure Remuneration Policy The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company. The current remuneration policy adopted is that no element of any executive package be directly related to the Company’s financial performance. Indeed there are no elements of any executive remuneration that are dependent upon the satisfaction of any specific condition. Remuneration is not linked to the performance of the Company but rather to the ability to attract and retain executives of the highest calibre. The overall remuneration policy framework however is structured in an endeavour to advance/create shareholder wealth. Structure In determining the level and make-up of executive remuneration, the Board engages external consultants as needed to provide independent advice. Remuneration consists of the following key elements: • Fixed remuneration (base salary and superannuation); and • Variable remuneration (short and long term incentives). The proportion of fixed remuneration and variable remuneration for each executive for the period ended 30 June 2022 and 30 June 2021 is detailed in this report. - 41 - MATSA RESOURCES LIMITED DIRECTORS’ REPORT REMUNERATION REPORT (continued) Managing Director and Executive Remuneration Structure Fixed Remuneration Executive contracts of employment do not include any guaranteed base pay increase. Fixed remuneration is reviewed annually by the Board. The process consists of a review of the Company, business unit and individual performance, relevant comparative remuneration internally and externally and, where appropriate, external advice independent of management. Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and fringe benefits such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Company. The fixed remuneration component for executives for the period ended 30 June 2022 and 30 June 2021 is detailed in this report. Variable Remuneration – Short Term Incentive (STI) The objective of the STI is to link the increase in shareholder value over the year with the remuneration received by the Executives charged with achieving that increase. The total potential STI available is set at a level so as to provide sufficient incentive to the Executives to achieve the performance goals and such that the cost to the Group is reasonable in the circumstances. Annual STI payments granted to each Executive depend on their performance over the preceding year and are based on recommendations from the Executive Chairman following collaboration with the Board. Typically included are measures such as contribution to strategic initiatives, risk management and leadership/team contribution. The aggregate of annual STI payments available for Executives across the Group is subject to the approval of the Board. Payments are usually delivered as a cash bonus. During the year there were no STI payments. Variable Remuneration – Long Term Incentive (LTI) The objective of the LTI plan is to reward Executives in a manner which aligns the element of remuneration with the creation of shareholder wealth. As such LTI’s are made to Executives who are able to influence the generation of shareholder wealth and thus have an impact on the Group’s performance. The level of LTI granted is, in turn, dependent on the Company’s recent share price performance, the seniority of the Executive and the responsibilities the Executive assumes in the Group. LTI grants to Executives are delivered in the form of employee share options. These options are issued at an exercise price determined by the Board at the time of issue. The employee share options are issued in accordance with the Company’s Share Option Plan. Typically, the grant of LTIs occurs at the commencement of employment or in the event that the individual receives a promotion and, as such, is not subsequently affected by the individual’s performance over time. However, under certain circumstances, including breach of employment conditions, the Directors may cause the options to expire prior to their vesting date. - 42 - MATSA RESOURCES LIMITED DIRECTORS’ REPORT REMUNERATION REPORT (continued) The Group does have a policy to prohibit executives or directors from entering into arrangements to protect the value of unvested LTI awards. Other Benefits Key management personnel can receive additional benefits as non-cash benefits as part of the terms and conditions of their appointment. Non-cash benefits typically include car parking and expenses where the Company pays fringe benefits tax on these benefits. Company Performance and the Link to Remuneration Remuneration is not linked to the performance of the Company, but based on the ability to attract and retain executives of the highest calibre. The overall remuneration policy framework however is structured in an endeavour to advance/create shareholder wealth. The Matsa Resources Limited Long Term Incentive Plan has no direct performance requirements but has specified time restrictions on the exercise of options and performance rights. The granting of options and performance rights is in substance a performance incentive which allows executives to share the rewards of the success of the Company. Service Agreements It is the Board’s policy that service contracts are entered into with all key management personnel and that these contracts have no termination date. Mr Paul Poli, Executive Chairman, has a contract of employment with the Company. Mr Poli is entitled to receive a salary of $375,000 plus statutory superannuation. This contract is for an unlimited term and is capable of termination by Mr Poli on one month’s notice. The Group has the right to terminate the employment contract by giving Mr Poli six months’ notice or making payment equal to six months’ pay in lieu of notice. Mr Pascal Blampain, Technical Director, has a contract of employment with the Company. Mr Blampain receives a salary of $275,000 plus statutory superannuation. This contract is for an unlimited term and is capable of termination on one month’s notice. The Group retains the right to terminate the contract immediately, by making payment equal to one month’s pay in lieu of notice. Mr David Fielding, Group Exploration Manager, has a contract of employment with the Company. Mr Fielding receives a salary of $241,000 plus statutory superannuation. This contract is for an unlimited term and is capable of termination on one month’s notice. The Group retains the right to terminate the contract immediately, by making payment equal to one month’s pay in lieu of notice. Mr Frank Sibbel, Non-Executive Director, has a consultancy contract with the Company. Mr Sibbel is paid an hourly rate for the provision of consultancy services outside those provided as a director as required. This contract is capable of termination on one month’s notice. The Group retains the right to terminate the contract immediately, by making payment equal to one month’s pay in lieu of notice. - 43 - MATSA RESOURCES LIMITED DIRECTORS’ REPORT REMUNERATION REPORT (continued) Mr Andrew Chapman, Director and Company Secretary, has a contract of employment with the Company. Mr Chapman receives a salary of $200,000 plus statutory superannuation. This contract is for an unlimited term and is capable of termination on one month’s notice. The Group retains the right to terminate the contract immediately, by making payment equal to one month’s pay in lieu of notice. The table below shows the performance of the Group as measured by share price. As at 30 June Closing share price Net comprehensive (loss) per year ended 2022 $0.043 2021 $0.072 2020 $0.155 2019 $0.145 2018 $0.155 (6,028,025) (9,654,713) (5,235,103) (4,947,360) (3,886,427) 2022 Short Term Benefits Post- employment Benefits Share- based payments Key Management Person Salary & Fees $ Other Superannuation Options Total $ $ $ $ % Performance Related % of Remuneration that consists of securities Directors Paul Poli1 Frank Sibbel2 Pascal Blampain Andrew Chapman Total 1 Mr Poli is a director and shareholder of Strategic Siam Co Ltd which received payments totalling $42,785 during the year. Strategic Siam provides administration services to Thai entities. Mr Poli receives an internet and travel allowance as part of his terms of employment. 356,648 54,320 304,041 220,083 935,092 328,973 54,320 275,000 200,000 858,293 23,712 - 23,712 20,083 67,507 - - 5,329 - 5,329 3,963 - - - 3,963 - - 1.75 - - - - 1.75 - - 2 Mr Sibbel provided consultancy services to the Company totalling $12,320 during the year. Executives David Fielding Total 224,933 224,933 - - 22,219 22,219 - - 247,152 247,152 - - - - - 44 - MATSA RESOURCES LIMITED DIRECTORS’ REPORT REMUNERATION REPORT (continued) 2021 Short Term Benefits Post- employment Benefits Share- based payments Key Management Person Salary & Fees $ Other $ Superannuation $ Options $ Total $ % Performance Related % of Remuneration that consists of securities Directors Paul Poli1 Frank Sibbel2 Pascal Blampain3 Andrew Chapman Total 1 Mr Poli is a director and shareholder of Strategic Siam Co Ltd which received payments totalling $45,025 during the year. Strategic Siam provides administration services to Thai entities. Mr Poli receives an internet and travel allowance as part of his terms of employment. 328,226 58,895 96,429 200,000 683,550 351,036 58,895 129,592 219,083 758,606 960 - 25,000 - 25,960 21,850 - 8,163 19,083 49,096 - - - - - - - - - - - - - - - 2 Mr Sibbel provided consultancy services to the Company totalling $16,895 during the year. 3 Mr Blampain was appointed as Executive Director on 17 February 2021. Mr Blampain is due a retention bonus of $25,000 under the terms of his contract of employment. Executives David Fielding Total 236,000 236,000 - - 21,775 21,775 24,114 24,114 281,889 281,889 8.55 - 8.55 - Compensation Options Granted and Vested during the year The table below sets out options granted during the year to Directors and Executives. There were 1,000,000 options issued to a Director during the year. There were no options that were granted in previous years that vested during the year. The options were issued free of charge and entitle the holder to subscribe for one fully paid ordinary share in the Company. Due to the nature of the Company’s activities it does not believe it is appropriate to set vesting conditions at this time. 2022 Vested Granted Grant Date No. No. P Poli F Sibbel P Blampain A Chapman D Fielding - - - - 1,000,000 1,000,000 - - - - - - 30.11.21 - - Spot price per Security at Grant Date $ - - 0.05 - - Exercise Price First Exercise Date Expiry Date $ - - 0.17 - - - - - - 30.11.21 30.11.23 - - - - For details on the valuation of the options, including models and assumptions used, please refer to Note 27. There were no alterations to the terms and conditions of options granted as remuneration since their grant date. - 45 - MATSA RESOURCES LIMITED DIRECTORS’ REPORT REMUNERATION REPORT (continued) The maximum value of the award is equal to the number of options granted multiplied by the fair value at the grant date. The minimum value of the award in the event of forfeiture is zero. There were no shares issued on exercise of compensation options during the year. Value of Options granted as part of remuneration 2022 Value of options granted during the year Value of options exercised during the year Value of options lapsed during the year Paul Poli Frank Sibbel Pascal Blampain Andrew Chapman David Fielding $ - - 5,329 - - 5,329 $ - - - - - - $ - - - - - - Remuneration consisting of options during the year % - - 1.75 - - - Option holdings of key management personnel 2022 Balance 1 July No. Granted as remune- ration No. P Poli A Chapman F Sibbel P Blampain D Fielding 5,890,500 2,865,500 2,802,575 - 1,492,797 13,051,372 - - - 1,000,000 - 1,000,000 2021 Balance 1 July No. Granted as remune- ration No. P Poli A Chapman F Sibbel P Blampain D Fielding 5,250,000 2,750,000 2,750,000 - 750,000 11,500,000 - - - - 700,000 700,000 Exercised Net change other** Balance on Resignation Balance 30 June Vested & Exercisable Not Exercisable No. No. No. No. No. No. - - - - - - (2,500,000) (1,250,000) (1,250,000) - (750,000) (5,750,000) - - - - - - 3,390,500 1,615,500 1,552,575 1,000,000 742,797 8,301,372 - - - - - - - - - - - - Exercised Net change other* Balance on Resignation Balance 30 June Vested & Exercisable Not Exercisable No. No. No. No. No. No. - - - - - - 640,500 115,500 52,575 - 42,797 851,372 5,890,500 2,865,500 2,802,575 - 1,492,797 5,890,500 - 2,865,500 - 2,802,575 - - - - 1,492,797 - 13,051,372 13,051,372 - - - - - - *Net change other refers to free attaching options acquired from the participation of share placements during the year. **Net change other refers to expiry of options during the year. - 46 - MATSA RESOURCES LIMITED DIRECTORS’ REPORT REMUNERATION REPORT (Continued) Shareholdings of key management personnel 2022 Balance 1 July P Poli A Chapman F Sibbel P Blampain D Fielding No. 13,650,000 300,000 700,000 - 941,522 15,591,522 2021 Balance 1 July P Poli A Chapman F Sibbel P Blampain D Fielding No. 11,955,000 69,000 594,852 - 755,929 13,374,781 Granted as remuneration No. Options exercised No. Net change other** No. Balance on resignation No. Balance 30 June No. - - - - - - Granted as remuneration No. Options exercised No. - - - - - - - - - - - - - - - - - - 250,000 - - 300,000 - 550,000 Net change other** No. Balance on resignation No. 1,695,000 231,000 105,148 - 185,593 2,216,741 - - - - - - - - - - - - 13,900,000 300,000 700,000 300,000 941,522 16,141,522 Balance 30 June No. 13,650,000 300,000 700,000 - 941,522 15,591,522 **Net change other refers to on market purchases and sale and any other corporate action taken by the Company during the year. End of Audited Remuneration Report INDEMNIFYING OFFICERS The Company’s Constitution provides that, subject to and so far as permitted by the Corporations Act 2001, the Company must, to the extent the person is not otherwise indemnified, indemnify every officer of the Company out of the assets of the Company to the relevant extent against any liability incurred by the officer in or arising out of the conduct of the business of the Company or in or arising out of the discharge of the duties of the officer. Since the end of the previous financial year, the Company has paid insurance premiums in respect of Directors’ and Officers’ liability. The policy indemnifies all Directors and Officers of the Company and its controlled entities against certain liabilities. In accordance with common commercial practice, the insurance policy prohibits disclosure of the nature of the liability insured against and the amount of the premium. The Directors have not included details of the nature of the premium paid in respect of Directors’ and Officers’ liability as such disclosure is prohibited under the terms of the contract. - 47 - MATSA RESOURCES LIMITED DIRECTORS’ REPORT PROCEEDINGS ON BEHALF OF COMPANY No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. CORPORATE GOVERNANCE In recognising the needs for the highest standards of corporate behaviour and accountability, the Directors of the Company support and have adhered to the principles of Corporate Governance. The Company’s corporate governance statement is available on the Company’s website at: http://www.matsa.com.au/company/corporate-governance/ NON-AUDIT SERVICES The board of directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor’s independence as the nature of the services provided did not compromise the general principles relating to auditor independence. The following fees for non-audit services were paid/payable to the external auditors, or by related practices of the external auditors, during the year ended 30 June 2022: Taxation services $19,190 AUDITOR’S INDEPENDENCE DECLARATION The auditor’s independence declaration for the year ended 30 June 2022 has been received and can be found on page 49. Signed in accordance with a resolution of the Board of Directors. Paul Poli Executive Chairman Dated this 29th day of September 2022 - 48 -  Auditor’s independence declaration under section 307C of the Corporations Act 2001 To the Directors of Matsa Resources Limited, I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2022 there have been: (i) no contraventions of the auditor’s independence requirements as set out in 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. Nexia Perth Audit Services Pty Ltd PTC Klopper Director Perth 29 September 2022 MATSA RESOURCES LIMITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 30 JUNE 2022 Continuing operations Net gain on sale of investments in associates Net gain on sale of financial assets Net (loss)/gain on sale of tenements Net gain on sale of fixed assets Other income Depreciation expense Salaries and employment benefits expenses Exploration and expenditure written-off/provided for Other administration expenses Share based payments expense Results from operating activities Finance income Finance costs Net finance cost Share of profit/(loss) of investment in associates, net of tax Loss/(profit) before income tax expense Income tax expense Note 2022 $ 2021* $ 5 5 10 5 5 5 - - (2,353,509) 60,000 3,275,060 (103,379) (1,273,501) (1,028,175) (1,670,283) (5,329) (3,099,116) 496 (540,148) (539,652) - (3,638,768) - 1,674,472 20,004 1,191,750 - 297,131 (146,480) (1,433,655) - (1,199,074) (111,956) 292,192 347 (553,182) (552,835) 1,051,922 791,279 - Loss/(profit) from continuing operations Discontinued operations Loss from discontinued operations (3,638,768) 791,279 21 (2,389,257) (10,445,992) Net loss for the year (6,028,025) (9,654,713) *Comparative information has been re-presented due to a discontinued operation. See Note 21. The accompanying notes form part of these financial statements. - 50 - MATSA RESOURCES LIMITED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2022 Note 2022 $ 2021* $ Net loss for the year Other comprehensive income Total comprehensive loss for the year attributable to equity holders of the company Loss for the year is attributable to: Owners of the parent Non-controlling interest Total comprehensive loss for the year is attributable to: Owners of the parent Non-controlling interest Earnings per share: Basic/diluted (loss) per share attributable to ordinary equity holders of the parent (cents per share) Earnings per share – continuing operations: Basic/diluted ((loss)/profit per share attributable to ordinary equity holders of the parent (cents per share) (6,028,025) - (9,654,713) - (6,028,025) (9,654,713) (6,028,111) 86 (6,028,025) (9,655,204) 491 (9,654,713) (6,028,111) 86 (6,028,025) (9,655,204) 491 (9,654,713) 20 (1.70) (3.58) 20 (1.02) 0.29 *Comparative information has been re-presented due to a discontinued operation. See Note 21. The accompanying notes form part of these financial statements. - 51 - MATSA RESOURCES LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2022 Note 2022 $ 2021 $ Current assets Cash and cash equivalents Trade and other receivables Other assets Inventories Assets classified as held for sale Total current assets Non-current assets Other assets Other receivables Exploration and evaluation assets Property, plant and equipment Mine properties and development Right-of-use assets Total non-current assets Total assets Current liabilities Trade and other payables Borrowings Lease liabilities Provisions Liabilities associated with assets held for sale Total current liabilities Non-current liabilities Borrowings Lease liabilities Provisions Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity attributable to equity holders of the Company Non-controlling interests Total equity 24 7 8 9 21 8 7 10 12 11 13 14 15 13 16 21 15 13 16 17 18 19 1,572,483 175,469 172,935 - 9,008,264 10,929,151 287,363 200,000 10,627,811 538,564 - 61,776 11,715,514 22,644,665 2,694,409 4,118,332 66,360 295,290 2,506,240 9,680,631 - 15,850 402,924 418,774 10,099,405 12,545,260 3,029,326 237,596 253,900 79,981 - 3,600,803 287,363 200,000 21,437,966 1,917,968 192,694 195,831 24,231,822 27,832,625 4,807,829 224,732 98,986 376,222 - 5,507,769 3,984,116 87,434 2,881,324 6,952,874 12,460,643 15,371,982 63,892,578 10,028,515 (61,454,137) 12,466,956 78,304 12,545,260 60,696,604 10,023,186 (55,426,026) 15,293,764 78,218 15,371,982 The accompanying notes form part of these financial statements. - 52 - CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2022 MATSA RESOURCES LIMITED Issued Capital Ordinary $ Accumulated Losses $ Equity Settled Benefits Reserve $ Total $ Non- controlling interest $ Total $ - 51,348,741 Balance at 1 July 2020 Comprehensive gain/(loss) for the year Total comprehensive gain/(loss) for the year Transactions with owners recorded directly in equity Issue of share capital 10,197,307 (849,444) Share issue costs Share based payment - - (45,770,822) 9,752,588 15,330,507 77,727 15,408,234 (9,655,204) - (9,655,204) 491 (9,654,713) (9,655,204) - (9,655,204) 491 (9,654,713) - - - - - 10,197,307 (849,444) 270,598 270,598 - - - 10,197,307 (849,444) 270,598 Balance at 30 June 2021 Balance at 1 July 2021 Comprehensive gain/(loss) for the year Total comprehensive gain/(loss) for the year Transactions with owners recorded directly in equity Issue of share capital Share issue costs Share based payment Balance at 30 June 2022 60,696,604 (55,426,026) 10,023,186 15,293,764 78,218 15,371,982 60,696,604 (55,426,026) 10,023,186 15,293,764 78,218 15,371,982 - - (6,028,111) - (6,028,111) 86 (6,028,025) (6,028,111) - (6,028,111) 86 (6,028,025) 3,420,950 (224,976) - - - - - - 3,420,950 (224,976) 5,329 5,329 - - - 3,420,950 (224,976) 5,329 63,892,578 (61,454,137) 10,028,515 12,466,956 78,304 12,545,260 The accompanying notes form part of these financial statements. - 53 - MATSA RESOURCES LIMITED CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2022 Note 2022 $ 2021 $ Cash flows from operating activities Other income Payments to suppliers and employees Interest received Interest paid Net payments to discontinued operations Net cash used in provided by operating activities Cash flows from investing activities Proceeds from sale of financial assets Proceeds from sale of investment in associates Purchase of plant and equipment Exploration and evaluation assets Proceeds on sale of plant and equipment Proceeds on sale of tenements Refund of security deposits Net payments to discontinued operations Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Costs of issue Repayment of lease liabilities Repayment of borrowings Interest paid Net payments to discontinued operations Net cash provided by financing activities 24 17 17 24 24 3,302,846 (3,063,207) 496 - (3,031,666) (2,791,531) - - (4,119) (1,624,031) 35,000 713,636 - (80,473) (959,987) 3,375,350 (224,976) (104,210) (224,868) (526,092) (529) 2,294,675 314,161 (2,522,681) 347 (35,002) (2,560,498) (4,803,673) 1,113,354 2,882,129 (10,900) (2,102,694) - 250,000 32,876 (4,848,420) (2,683,655) 10,022,423 (691,919) (114,972) - (495,976) - 8,719,556 Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year 24 (1,456,843) 1,232,228 3,029,326 1,572,483 1,797,098 3,029,326 *Comparative information has been re-presented due to a discontinued operation. See Statements of Consolidated Profit or Loss and Other Comprehensive Income and Note 21. The accompanying notes form part of these financial statements. - 54 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 CORPORATE INFORMATION 1. The consolidated financial statements of Matsa Resources Limited for the year ended 30 June 2022 were authorised for issue in accordance with a resolution of the Board of Directors on 29 September 2022. Matsa Resources Limited (the “Company”) is a for profit company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange. The nature of the operations and principal activities of the Group are described in the Directors’ Report. The consolidated financial statements of the Company as at and for the year ended 30 June 2022 comprise the Company, its subsidiaries (together referred to as the “Group” or “Consolidated Entity”) and the Group’s interest in associates. 2. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Preparation The consolidated financial report is a general purpose financial report which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The consolidated financial statements have been prepared on the historical cost basis except for the financial assets which have been measured at fair value. The consolidated financial report is presented in Australian dollars. (b) Compliance with IFRS The financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board and also International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. (c) Changes in Accounting Policies and Disclosures Since 1 July 2021 the Group has adopted all the Standards and Interpretations mandatory for annual reporting periods beginning on or after 1 July 2021. The adoption of any new and revised standards and interpretations effective from 1 July 2021 has not resulted in any changes to the Group’s accounting policies and has had no material effect on the amounts reported to the current or prior period. The Group has not elected to early adopt any new standards or interpretations that are not mandatory effective. Standards and Interpretations in issue not yet adopted for the year ended 30 June 2022 The directors have also reviewed all Standards and Interpretations in issue not yet adopted for the year ended 30 June 2022. As a result of this review the Directors have determined that there is no material impact of the Standards and Interpretations in issue not yet adopted on the Group and, therefore, no change is necessary to Group accounting policies. - 55 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) (d) Basis of consolidation The consolidated financial statements comprise the financial statements of the parent entity and its subsidiaries (‘the Group’) as at 30 June each year. Control is achieved where the Company has exposure to variable returns from the entity and the power to affect those returns. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether a consolidated entity controls another entity. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. In preparing consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions, have been eliminated in full. Subsidiaries are fully consolidated from the date on which control is obtained by the Consolidated Entity and cease to be consolidated from the date on which control is transferred out of the Consolidated Entity. Where there is loss of control of a controlled entity, the consolidated financial statements include the results for the part of the reporting period during which the Company has control. Changes in ownership interest of a subsidiary (without a change in control) are accounted for as a transaction with owners in their capacity as owners. (e) Going Concern The consolidated financial report has been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlements of liabilities in the ordinary course of business. The Group has reported a consolidated loss for the year of $6,028,025 (2021: $9,654,713) and a cash outflow from operating activities of $2,791,531 (2021: $4,803,673). At the reporting date, the Group had $1,572,483 in cash and term deposit balances. The Group also had borrowings of approximately $4,000,000 due and payable on 30 November 2022. Refer Note 15 for further details. On 20 December 2021, the Company executed a binding agreement to sell the Red October and Devon gold projects to Linden Gold Pty Ltd (LGL) for a consideration of $20,000,000 with the sale expected to be completed within the next 4 to 9 months. Refer note 21 for further details. The Directors also manage discretionary expenditure in line with the Group’s cash flow and are confident that there are sufficient funds to meet the Group’s working capital and funding requirements for a minimum of 12 months from the date of this report. The Directors consider the going concern basis of preparation to be appropriate based on forecast cash flows and confidence in raising additional funds and extension of borrowings. In the event that the Group is not successful in raising funds from the issue of new equity or extension of borrowings or if the sale of LGL does not realise, there exists material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern and realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. - 56 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) (f) Segment Reporting Determination and presentation of operating segments An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Segment results that are reported to the chief operating decision maker include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Company’s headquarters), head office expenses, and income tax assets and liabilities. Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill. (g) Business combinations Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group elects whether it measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability will be recognised in accordance with AASB 9 Financial Instruments (‘AASB 9’) either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of AASB 9, it is measured in accordance with the appropriate Australian accounting standard. - 57 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) (h) Foreign currency transactions and balances (i) Functional and presentation currency The functional currency of each entity within the Consolidated Entity is the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian Dollars which is the parent entity’s functional and presentation currency. (ii) Transactions and balances Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. Non monetary items are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. All exchange differences in the consolidated financial report are recorded in profit and loss. (iii) Transactions of subsidiary Companies’ functional currency to presentation currency The results of the subsidiaries are translated into Australian Dollars (presentation currency). Income and expenses are translated at the exchange rates at the date of the transactions. Assets and liabilities are translated at the closing exchange rate for each reporting date. Share capital, reserves and accumulated losses are converted at applicable historical rates. Exchange variations resulting from the translation are recognised in the foreign currency translation reserve in equity. On consolidation, exchange differences arising from the translation of the net investment in subsidiaries are taken to the foreign currency translation reserve. If a subsidiary were sold, the proportionate share of exchange differences would be transferred out of equity and recognised in the statement of comprehensive income. (i) Financial instruments Non derivative financial instruments Non derivative financial instruments comprise investments in equity securities, other receivables, cash and cash equivalents and trade and other payables. Trade and other receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date. Trade and other receivables are recognised at amortised cost using the effective interest rate method, less any allowance for expected credit losses. The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. For trade and other receivables, the Group applies the simplified approach permitted by AASB 9 to determine any allowances for expected credit losses, which requires expected lifetime losses to be recognised from initial recognition of the receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience. The amounts held in trade and other receivables do not contain impaired assets and are not past due. Based on the credit history of these trade and other receivables, it is expected that the amounts will be received when due. - 58 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 2. (i) SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial instruments (continued) The Group’s financial risk management objectives and policies are set out in Note 26. Due to the short-term nature of these receivables their carrying value is assumed to approximate their fair value. Financial assets are recognised and derecognised on settlement date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the time- frame established by the market concerned. They are initially measured at fair value, net of transaction costs, except for those financial assets classified as fair value through profit or loss, which are initially measured at fair value. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. The Group classifies its financial assets as either financial assets at fair value though profit or loss (“FVPL”), fair value though other comprehensive income (“FVOCI”) or at amortised cost. The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. For investments in equity instruments, the classification depends on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at FVPL or FVOCI. Financial assets at FVPL For assets measured at FVPL, gains and losses will be recorded in profit or loss. The Group’s derivative financial instruments are recognised at FVPL. Assets in this category are subsequently measured at fair value. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists. Refer to Note 26 for additional details. The Group has elected to measure its listed equities at FVPL. Financial assets at OCI For assets measured at FVOCI, gains and losses will be recorded in other comprehensive income. There is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the Group’s right to receive payments is established. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value. Assets in this category are subsequently measured at fair value. The fair values of quoted investments are based on current bid prices in an active market. Other Other non-derivative financial instruments are measured at amortised cost using the effective interest method. - 59 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) (j) Investments in associates The Consolidated Entity's investment in its associates is accounted for using the equity method of accounting in the consolidated financial statements. The associates are entities over which the Consolidated Entity has significant influence and that are neither subsidiaries nor joint ventures. The Consolidated Entity generally deems it has significant influence if it has over 20% of the voting rights. Under the equity method, investments in the associates are carried in the consolidated statement of financial position at cost plus post-acquisition changes in the Consolidated Entity's share of net assets of the associates. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. After application of the equity method, the Consolidated Entity determines whether it is necessary to recognise any impairment loss with respect to the Consolidated Entity's net investment in associates. Goodwill included in the carrying amount of the investment in associate is not tested separately, rather the entire carrying amount of the investment is tested for impairment as a single asset. If an impairment is recognised, the amount is not allocated to the goodwill of the associate. The Consolidated Entity's share of its associates' post-acquisition profits or losses is recognised in the profit and loss, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from associates reduce the carrying amount of the investment. When the Consolidated Entity's share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivables and loans, the Consolidated Entity does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. The financial statements of the associate are prepared for the same reporting period as the Consolidated Entity. When necessary, adjustments are made to bring the accounting policies in line with those of the Consolidated Entity. (k) Leases At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is considered to contain a lease if it allows the Group the right to control the use of an identified asset over a period of time in return for consideration. Where a contract or arrangement contains a lease, the Group recognises a right-of-use asset and a lease liability at the commencement date of the lease. A right-of-use asset is initially measured at cost, which is the present value of future lease payments adjusted for any lease payments made at or before the commencement date, plus any make-good obligations and initial direct costs incurred. Lease assets are depreciated using the straight-line method over the shorter of their useful life and the lease term. Periodic adjustments are made for any re-measurements of the lease liabilities and for impairment losses. Lease liabilities are initially measured at the present value of future minimum lease payments, discounted using the Group’s incremental borrowing rate if the rate implicit in the lease cannot be readily determined, and are subsequently measured at amortised cost using the effective interest rate. Minimum lease payments include fixed payments, amounts expected to be paid under a residual - 60 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) (k) Leases (continued) value guarantee, the exercise price of purchase options for which the Group is reasonably certain to exercise and incorporate the Group’s expectations of lease extension options. The lease liability is remeasured when there are changes in future lease payments arising from a change in rates, index or lease terms from exercising an extension or termination option. A corresponding adjustment is made to the carrying amount of the lease assets. Short term leases (lease term of 12 months or less) and leases of low value assets ($5,000 or less) are recognised as incurred as an expense in the consolidated income statement. Low value assets comprise computers and items of IT equipment. (l) Impairment of non-financial assets The Group assesses, at each reporting date, whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ”loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and when observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. (m) Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term deposits that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts are included within interest bearing loans and borrowings in the current liabilities on the statement of financial position. (n) Trade and other receivables Trade and other receivables, which generally have 30-60 day terms, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less an allowance for impairment. Collectability of trade and other receivables is reviewed on an ongoing basis. Individual debts that are known to be uncollectible are written off when identified. An impairment allowance is recognised when there is objective evidence that the Consolidated Entity will not be able to collect the receivable. Financial difficulties of the debtor, default payments or debts more than 60 days overdue are considered objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate. - 61 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) (o) Inventories Inventories are valued at the lower of cost and net realisable value. Cost includes expenditure incurred in acquiring and bringing the inventories to their existing condition and location and is determined using the weighted average cost method. (p) Interests in Joint Ventures The Group’s share of the assets, liabilities, revenue and expenses of joint venture operations are included in the appropriate items of the consolidated financial statements. (q) Property, plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Capital work-in-progress is stated at cost and comprises all costs directly attributable to bringing the assets under construction ready to their intended use. Capital work-in-progress is transferred to property, plant and equipment at cost on completion. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset which ranges between 3 and 5 years except for buildings which are depreciated over 20 years. Derecognition An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the statement of comprehensive income in the period the item is derecognised. (r) Exploration, evaluation and development expenditure Expenditure on acquisition, exploration and evaluation relating to an area of interest is capitalised and carried forward at cost where rights to tenure of the area of interest are current and: i) it is expected that expenditure will be recouped through successful development and exploitation of the area of interest or alternatively by its sale; or ii) exploration and evaluation activities are continuing in an area of interest, but at reporting date have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Where uncertainty exists as to the future viability of certain areas, the value of the area of interest is written off to the statement of comprehensive income or provided against. Impairment The carrying value of capitalised exploration and evaluation expenditure is assessed for impairment at the cash generating unit level whenever facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amount. - 62 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 2. (r) SIGNIFICANT ACCOUNTING POLICIES (Continued) Exploration, evaluation and development expenditure (continued) An impairment exists when the carrying amount of an asset or cash generating unit exceeds its recoverable amount. The asset or cash generating unit is then written down to its recoverable amount. Any impairment losses are recognised in the statement of comprehensive income. (s) Mine properties and development Expenditure on the acquisition and development of mine properties within an area of interest are carried forward at cost separately for each area of interest. Accumulated expenditure is amortised over the life of the area of interest to which such costs relate on a production output basis. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Impairment The carrying value of capitalised mine properties and development expenditure is assessed for impairment whenever facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amount. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. (t) Trade and other payables Trade and other payables are carried at amortised cost. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obligated to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition. (u) Rehabilitation costs The Consolidated Entity is required to decommission and rehabilitate mines and processing sites at the end of their producing lives to a condition acceptable to the relevant authorities. The expected cost of any approved decommissioning or rehabilitation programme, discounted to its net present value, is provided when the related environmental disturbance occurs. The cost is capitalised when it gives rise to future benefits, whether the rehabilitation activity is expected to occur over the life of the operation or at the time of closure. The capitalised cost is amortised over the life of the operation and the increase in the net present value of the provision for the expected cost is included in financing expenses. Expected decommissioning and rehabilitation costs are based on the discounted value of the estimated future cost of detailed plans prepared for each site. Where there is a change in the expected decommissioning and restoration costs, the value of the provision and any related asset are adjusted and the effect is recognised in profit or loss on a prospective basis over the remaining life of the operation. The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in legislation, technology or other circumstances. Cost estimates are not reduced by potential proceeds from the sale of assets or from plant clean up at closure. - 63 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) (v) Interest-bearing loans and borrowings All loans and borrowings are initially recognised at the fair value of the consideration received, less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Fees paid on the establishment of loan facilities that are yield related are included as part of the carrying amount of the loans and borrowings. Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the balance date. (w) Borrowing costs Borrowing costs are recognised as an expense when incurred unless they relate to qualifying assets in which case they are capitalised. (x) Employee benefits Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to reporting date. Employee benefits expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. (y) Provisions Provisions are recognised when the Consolidated Entity has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs. (z) Share-based payment transactions The Consolidated Entity provides benefits to employees (including Directors) in the form of share- based payment transactions, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). The Consolidated Entity has one plan in place that provides these benefits. It is the Employee Share Option Plan (“ESOP”) which provides benefits to all employees including Directors. The scheme has no direct performance requirements. The terms of the share options are as determined by the Board. Where a participant ceases employment prior to the vesting of their share options, the share options are forfeited. Where a participant ceases employment after the vesting of their share options, the share options automatically lapse after one month of ceasing employment unless the Board decides otherwise at its discretion. - 64 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) (z) Share-based payment transactions (continued) The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by using a Black Scholes model. Further details of which are given in Note 27. In valuing equity-settled transactions, no account is taken of any vesting conditions, other than conditions linked to the price of the shares of the Company (market conditions) if applicable. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the vesting date). At each subsequent reporting date until vesting, the cumulative charge to the statement of profit or loss and other comprehensive income is the product of (i) the grant date fair value of the award; (ii) the current best estimate of the number of awards that will vest, taking into account such factors as the likelihood of employee turnover during the vesting period and the likelihood of non-market performance conditions being met; and (iii) the expired portion of the vesting period. The charge to the statement of profit or loss and other comprehensive income for the year is the cumulative amount as calculated above less the amounts already charged in previous years. There is a corresponding credit to equity. Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated to do so. Any award subject to a market condition is considered to vest irrespective of whether or not the market condition is fulfilled, provided that all other conditions are satisfied. If a non-vesting condition is within the control of the Consolidated Entity, Company or the employee, the failure to satisfy the condition is treated as a cancellation. If a non-vesting condition within the control of neither the Consolidated Entity, Company nor employee is not satisfied during the vesting period, any expense for the award not previously recognised is recognised over the remaining vesting period, unless the award is forfeited. If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share. (aa) Revenue Revenue is recognised when or as the Group transfers control of goods or services to a customer at the amount to which the Group expected to be entitled. If the consideration promised includes a variable amount, the Group estimates the amount of consideration to which it will be entitled. The following specific recognition criteria must be met before revenue is recognised: - 65 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) (aa) Revenue (continued) Sale of goods The Group recognises revenue when it satisfies a performance obligation by transferring a promised good or service to a customer which occurs when control of goods or services have been transferred to the buyer and the associated costs can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. Revenue from ore sales is brought to account when the control of goods or services is transferred have transferred to the buyer and selling prices are known or can be reasonably estimated. R&D Refund Revenue is recognised on receipt of refunds from the Australian Taxation Office for research and development expenditure incurred during the previous financial year. Dividend Income Revenue is recognised on receipt of dividends from listed investments. Finance income Income 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. COVID-19 Government Grant Cash flow boost incentive from the government is recognised when it is received or when the right to receive payment is established. (ab) Income tax Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences: • when the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and • when the taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised: - 66 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) (ab) Income tax (continued) • when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and • when the deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised income taxes are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of comprehensive income. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. (ac) Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. (ad) Other taxes Revenues, expenses and assets are recognised net of the amount of GST except: • when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and • receivables and payables, which are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. - 67 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 2. SIGNIFICANT ACCOUNTING POLICIES (Continued) (ad) Other taxes (continued) Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of amounts of GST recoverable from, or payable to, the taxation authority. (ae) Earnings per share Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for: • • costs of servicing equity (other than dividends) and preference share dividends; the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and • other non-discretionary changes in revenue or expenses during the period that would result from the dilution of potential ordinary shares. Divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. - 68 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 3. SIGNIFICANT 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 and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements. Significant accounting estimates and assumptions 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 a Black Scholes model, using the assumptions as discussed in Note 27. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities in the next annual reporting period but may impact expenses and equity. Impairment of capitalised exploration and evaluation expenditure The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Consolidated Entity decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, which could impact the cost of mining, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices. To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, profits and net assets will be reduced in the period in which this determination is made. In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. To the extent it is determined in the future that this capitalised expenditure should be written off, profits and net assets will be reduced in the period in which this determination is made. Impairment of property, plant and equipment Property, plant and equipment is reviewed for impairment if there is any indication that the carrying amount may not be recoverable. Where a review for impairment is conducted, the recoverable amount is assessed by reference to the higher of “value in use” (being net present value of expected future cash flows of the relevant cash generating unit) and “fair value less costs to sell.” - 69 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (Continued) In determining the value in use, future cash flows are based on: • estimates of the quantities of ore reserves and mineral resources for which there is a high degree of confidence of economic extraction; future production levels; future commodity prices; and future cash costs of production and capital expenditure. • • • Variations to the expected cash flows, and the timing thereof, could result in significant changes to any impairment losses recognised, if any, which in turn could impact future financial results. Mine rehabilitation provision The Consolidated Entity assesses its mine rehabilitation provision on an annual basis in accordance with the accounting policy stated in Note 2(u). In determining an appropriate level of provision, consideration is given to the expected future costs to be incurred, the timing of those future costs (largely dependent on the life of mine) and the estimated level of inflation. The ultimate rehabilitation costs are uncertain, and cost estimates can vary in response to many factors, including estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases as compared to the inflation rates, and changes in discount rates. The expected timing of expenditure can also change, for example in response to changes in reserves or to production rates. These uncertainties may result in future actual expenditure differing from the amounts currently provided. Therefore, significant estimates and assumptions are made in determining the provision for mine rehabilitation. As a result, there could be significant adjustments to the provisions established which would affect future financial result. The provision at reporting date represents management’s best estimate of the present value of the future rehabilitation costs required. 4. SEGMENT REPORTING Identification of reportable segment The Group identifies its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision maker) in assessing performance and determining the allocation of resources. The Group operates primarily in small scale mining and mineral exploration in Western Australia and Thailand. The Group considers that it operates in two geographical segments but within the same operating segment. The decision to allocate resources to individual projects is predominantly based on available cash reserves, technical data and the expectation of future metal prices. The financial information presented in the statement of profit and loss and other comprehensive income and statement of financial position is the same as that presented to the chief operating decision maker. For financial reporting purposes, the Australian and the Thai segments are presented separately. Basis of accounting for purposes of reporting by operating segments Accounting policies adopted Unless stated otherwise, all amounts reported to the Board of Directors as the chief operating decision maker is in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group. - 70 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 4. SEGMENT REPORTING (Continued) Information about reportable segments Information relating to each reportable segment is shown below. 2022 External revenues from continued operations External revenues from discontinued operations Segment revenue Reportable Segments Australia $ Thailand $ 3,275,060 871,235 4,146,295 Total $ 3,275,060 871,235 4,146,295 - - - Loss from continued operations Loss from discontinued operations Segment loss before tax (3,153,701) (2,389,257) (5,542,958) (485,067) - (485,067) (3,638,768) (2,389,257) (6,028,025) Interest Income Interest expense Depreciation expense Segment assets Capital expenditure Segment liabilities 126 (540,148) (103,379) 370 - - 496 (540,148) (103,379) 22,174,226 470,439 22,644,665 33,504 - 33,504 10,093,491 5,914 10,099,405 2021* External revenues from continued operations External revenues from discontinued operations Segment revenue 297,131 8,090,018 8,387,149 - - - 297,131 8,090,018 8,387,149 Profit/(loss) from continued operations Loss from discontinued operations Segment loss before tax 1,281,214 (10,445,992) (9,164,778) (489,935) - (489,935) 791,279 (10,445,992) (9,654,713) Interest Income Interest expense Depreciation expense Share of profit/(loss) of equity accounted investees Segment assets Capital expenditure Segment liabilities 223 (553,182) (146,480) 124 - - 347 (553,182) (146,480) 1,051,922 - 1,051,922 27,349,402 483,223 27,832,625 777,056 - 777,056 12,458,606 2,037 12,460,643 *Comparative information has been re-presented due to a discontinued operation. See Note 21. - 71 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 5. Income and expenses The loss before income tax includes the following revenues whose disclosure is relevant in explaining the performance of the entity: (a) Other income R&D tax incentive refund Other income (i) 2022 $ 2021 $ 86,079 3,188,981 3,275,060 204,868 92,263 297,131 (i) During the year, the Company received a non-refundable deposit of $3,000,000 in relations to the Red October and Devon Sale and Purchase Agreement (SPA). Refer note 21 for further details. (b) Finance income Interest earned 496 347 (c) Expenses included in the statement of comprehensive income Depreciation and amortisation expenses Mine property depreciation Mine capital development amortisation Property plant and equipment depreciation Right-of-use assets depreciation Disclosure in Statement of Profit and Loss Continuing operations: Depreciation expense Discontinued operations: Amortisation and depreciation (d) Other expenses (i) Employee benefits expense Salaries and wages (including bonus) Superannuation expenses Share based payments Total employee benefits expense (ii) Administration and other expenses Operating lease rentals Administration expenses - 72 - 7,873 184,821 622,182 103,261 918,137 103,379 103,379 814,758 814,758 918,137 1,201,128 72,373 5,329 1,278,830 6,371 1,663,912 1,670,283 369,695 4,554,753 760,105 135,367 5,819,920 146,480 146,480 5,673,440 5,673,440 5,819,920 1,352,460 81,194 111,956 1,545,610 6,371 1,192,703 1,199,074 MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 2022 $ 2021 $ - - - - - - 6. Income taxes Income tax expense/(benefit) comprises: Current tax expense/(income) Deferred tax expense/(income) Income tax recognised in profit or loss The prima facie income tax expense/(income) on the pre-tax accounting profit/(loss) from operations reconciles to the income tax expense/(income) in the financial statements as follows: Loss for the year (6,028,025) (9,654,713) Income tax expense calculated at 25% (2021: 26%) (1,507,007) (2,510,225) Non-deductible expenses Non-assessable income Effect of temporary differences not recognised in current year Effect of change in income tax rate Effect of temporary differences that would be recognised directly in equity Adjustments recognised in the current year in relation to the current tax of previous years Income tax expense 6,574 (21,520) 1,580,278 - 31,145 (53,266) 2,514,240 100,570 (56,244) (221,145) (2,081) - 138,681 - The tax rate used in the above reconciliation is the corporate tax rate of 25% (2021: 26%) payable by Australian corporate entities on taxable profits under Australian tax law. Unrecognised deferred tax assets/(liabilities) The following deferred tax assets have not been brought to account: Tax losses - revenue Investments Temporary differences - exploration Section 40-880 expenses Other temporary differences 2022 $ 2021 $ 11,262,170 (2,028,174) 136,402 345,736 9,716,134 10,166,353 - (2,601,206) 155,232 415,477 8,135,856 The ability of the Group to utilise unrecognised tax losses will depend on whether the Group meets the statutory requirements for utilising tax losses as and when it generates taxable profit. - 73 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 7. Trade and other receivables Current Amounts receivable from Australian Taxation Authorities Other receivables Non-current Other receivables (i) 2022 $ 2021 $ 49,476 125,993 175,469 153,281 84,315 237,596 200,000 200,000 200,000 200,000 (i) On 2 February 2021, the Company and Bulletin Resources Limited (Bulletin) have, through their 80:20 joint venture, sold a 400m wide strip (1.35km2) of the 576km2 Lake Rebecca gold project to Apollo Consolidated Limited (Apollo) for a total consideration of approximately $5.6M. The Company’s share of the consideration amount to $1.2M. The remaining receivable of $200,000 is expected to be settled in 2025. 8. Other assets Current Prepayments Non-current Deposits held (i) 2022 $ 2021 $ 172,935 172,935 287,363 287,363 253,900 253,900 287,363 287,363 (i) The Company has cash deposits held with the Thailand government with respect to a number of tenement applications in Thailand. Prior to changes in the Thailand Mineral Act (2017), should the applications not be successful the deposits will be refunded in full. 2022 $ 2021 $ 9. Inventories Current Ore stocks Stores, spares and fuel at cost Total inventories at lower of cost and net realisable value - - - 2,396 77,585 79,981 - 74 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 10. Exploration and evaluation assets Exploration expenditure capitalised at cost -exploration and evaluation phase Movements in carrying amounts Exploration and evaluation phase Balance at beginning of year Acquisition of tenements Disposal of tenements (i) & (ii) Exploration and evaluation expenditure incurred Expenditure written off/impaired Transfer to assets held for sale (note 21) Transferred from/(to) mine property and development Balance at end of year 2022 $ 2021 $ 10,627,811 10,627,811 21,437,966 21,437,966 21,437,966 45,600 (3,068,729) 1,994,430 (1,028,175) (8,753,281) - 10,627,811 18,537,147 - (15,757) 4,031,294 - - (1,114,718) 21,437,966 (i) On 2 February 2021, the Company and Bulletin Resources Limited (Bulletin) have through their 80:20 joint venture sold a 400m wide strip (1.35km2) of the 576km2 Lake Rebecca gold project to Apollo Consolidated Limited (Apollo). Refer to note 7 for further details. A gain on the sale of $1,191,750 was recognised in the statement of profit or loss and other comprehensive income. (ii) On 30 June 2022, IGO Newsearch Pty Ltd (“IGO) acquired a 70% interest in the Symons Hill project as well as the Company’s other Fraser Range tenements for a cash consideration of $600,000 and then free carry the Company for all exploration to completion of feasibility studies or decision to mine whichever occurs earlier. A loss on the sale of $2,209,192 was recognised in the statement of profit or loss and other comprehensive income. The ultimate recoupment of costs carried forward for exploration and evaluation phase is dependent on the successful development and commercial exploitation or sale of the respective areas. 11. Mine property and development Mine properties Balance at beginning of year Depreciation expense for the period Balance at end of year Mine capital development Balance at beginning of year Transferred from/(to) exploration and evaluation assets Additions Amortisation expense for the period Balance at end of year 2022 $ 2021 $ 7,873 (7,873) - 377,568 (369,695) 7,873 184,821 - - (184,821) - 1,291,435 1,114,718 2,333,421 (4,554,753) 184,821 Total mine properties and development - 192,694 - 75 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 12. Property, plant and equipment Plant and equipment at cost Accumulated depreciation Total property, plant and equipment Movements in carrying amounts Consolidated Balance 30 June 2020 Additions Depreciation expense Balance 30 June 2021 Additions Disposals Transfer to asset held for sale (note 21) Depreciation expense Balance 30 June 2022 2022 $ 2021 $ 1,924,483 (1,385,919) 538,564 538,564 Plant and Equipment $ 1,901,017 777,056 (760,105) 1,917,968 33,504 (535,743) (254,983) (622,182) 538,564 3,740,265 (1,822,297) 1,917,968 1,917,968 Total $ 1,901,017 777,056 (760,105) 1,917,968 33,504 (535,744) (254,983) (622,181) 538,564 13. Right-of-use-assets & lease liabilities The Group has lease contracts for various items of equipment, motor vehicles and office premises used in its operations. Leases generally have lease terms between two and four years. Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period: Right-of-use-assets Carrying Amount Cost Accumulated depreciation As at 30 June 2022 Reconciliation As at 1 July 2021 Additions Disposals Depreciation expense As at 30 June 2022 Motor Vehicles $ 156,070 (149,481) 6,589 Motor Vehicles $ 75,922 - (30,794) (38,539) 6,589 Total $ 423,163 (361,387) 61,776 Total $ 195,831 - (30,794) (103,261) 61,776 Equipment $ 44,823 (18,676) 26,147 Premises $ 222,270 (193,230) 29,040 Premises $ 78,821 - - (49,781) 29,040 Equipment $ 41,088 - - (14,941) 26,147 - 76 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 13. Right-of-use-assets & lease liabilities (continued) Lease liabilities Set out below are the carrying amounts of lease liabilities. Carrying Value 2022 Current liabilities Non-current liabilities As at 30 June 2022 Carrying Value 2021 Current liabilities Non-current liabilities As at 30 June 2021 Equipment $ 15,083 15,850 30,933 Equipment $ 15,941 29,478 45,419 Premises $ 31,246 - 31,246 Premises $ 49,240 31,247 80,487 Motor Vehicles $ 20,031 - 20,031 Motor Vehicles $ 33,805 26,709 60,514 Total $ 66,360 15,850 82,210 Total $ 98,986 87,434 186,420 A maturity analysis of future minimum lease payments is presented in Note 26. Movement for the period As at 1 July 2021 Repayments Interest As at 30 June 2022 Equipment $ 45,419 (15,874) 1,388 30,933 Premises $ 80,487 (53,561) 4,320 31,246 Motor Vehicles $ 60,514 (43,349) 2,866 20,031 Total $ 186,420 (112,784) 8,574 82,210 14. Trade and other payables Unsecured liabilities Trade payables Sundry creditors and accrued expenses 2022 $ 2021 $ 1,651,509 1,042,900 2,694,409 3,151,696 1,656,133 4,807,829 - 77 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 15. Borrowings Current Secured liabilities - Loan (i) Unsecured liabilities - Insurance premium finance Non-current Secured liabilities - Loan (i) (i) Reconciliation of loan Balance at beginning of year Interest capitalised Balance at end of year 2022 $ 2021 $ 3,998,172 120,160 4,118,332 - 224,732 224,732 - - 3,984,116 3,984,116 2022 $ 3,984,116 14,056 3,998,172 2021 $ 3,973,264 10,852 3,984,116 On 8 August 2017, Matsa entered into two loan agreements with two separate parties for a $4M facility with the funds being predominantly used as a working capital facility to ensure smooth operations of the trial mine at the Fortitude Gold Project and to conduct further exploration at Lake Carey. The repayment date was initially 31 July 2018 but was extended by mutual consent on 12 April 2018 to 31 July 2019. On 5 May 2019 a further $1M was borrowed and the repayment date extended to 31 July 2020. On 29 May 2020, the repayment date was extended to 31 July 2022. On 28 September 2022, the repayment date was extended to 30 November 2022. The Company is expecting to reach a new loan agreement with the lending parties before 30 November 2022. On this basis the loans have been classified as current. The key terms of the finance facility are as follows: Principal Amount: $5,000,000 ($4M drawn down) Interest Rate: Term: Security: 12% per annum paid monthly in arrears (penalty rate of 18% if Matsa is in default) Repayable by 30 November 2022 The loan facility is secured by a mortgage over the Fortitude gold project and the mining equipment and motor vehicles of Red October gold project. At the time of the original loan Matsa agreed to issue a total of 1M options in the Company, split equally amongst the parties, with an exercise price of $0.20 each with a two year life from the date of issue. The principal loan balance of $4M has been offset by the value of the options issued. At the end of the year the carrying value of the loan was $3,998,172. In return for the loan extension, Matsa agreed to pay each of the lenders an annual Facility Fee of 150,000 fully paid ordinary shares for every year or part year that the loans remain outstanding. There is one Facility Fee of 150,000 shares that was issued on 4 June 2021. - 78 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 16. Provisions Current Provision for annual leave Non-current Provision for long service leave Provision for mine restoration Movement in long service leave provision Opening balance 1 July (Decrease)/increase in provision Closing balance 30 June 2022 $ 2021 $ 295,290 295,290 201,009 201,915 402,924 244,706 (43,697) 201,009 376,222 376,222 244,706 2,636,618 2,881,324 223,737 20,969 244,706 Movement in provision for mine restoration Opening balance 1 July Transfer to liabilities associated with assets held for sale (note 21) Increase in provision Closing balance 30 June 2,636,618 2,427,082 (2,506,240) 71,537 201,915 - 209,536 2,636,618 17. Issued capital 2022 No. 2021 No. 2022 $ 2021 $ Fully paid ordinary shares 358,954,620 315,962,745 63,892,578 60,696,604 Ordinary shares At the beginning of reporting period Share placements Shares issued as a facility fee Shares issued in lieu of payment Exercise of options Transaction costs At reporting date 315,962,745 42,191,875 - 800,000 - - 358,954,620 227,067,368 86,694,005 150,000 2,050,000 1,372 - 315,962,745 60,696,604 3,375,350 - 45,600 - (224,976) 63,892,578 51,348,741 10,021,074 12,000 164,000 233 (849,444) 60,696,604 Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. - 79 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 17. Issued Capital (continued) Options The movement of the options on issue during the financial year is set out below: Exercise Price $0.17 $0.17 $0.35 $0.175 $0.21 $0.35 $0.25 $0.30 $0.17 $0.17 Expiry Date 30/11/2021 30/11/2021 30/11/2022 30/11/2022 31/10/2023 30/11/2022 30/11/2022 30/11/2022 30/4/2023 30/11/2023 Balance at beginning of year No. 5,000,000 2,300,000 1,000,000 5,750,000 3,250,000 2,000,000 2,000,000 44,079,341 28,124,324 - 93,503,665 18. Reserves Equity settled transaction Equity settled transaction reserve Balance at beginning of financial year Share based payment Balance at end of financial year Issued No. Exercised No. Lapsed No. Balance at end of year No. - - - - - - - - - 1,000,000 1,000,000 - - - - - - - - - - - - (5,000,000) - (2,300,000) 1,000,000 - 5,750,000 - 3,250,000 - 2,000,000 - 2,000,000 - - 44,079,341 - 28,124,324 1,000,000 - (7,300,000) 87,203,665 2022 $ 2021 $ 10,028,515 10,028,515 10,023,186 10,023,186 10,023,186 5,329 10,028,515 9,752,588 270,598 10,023,186 The equity settled transaction reserve records share-based payment transactions. 19. Accumulated losses Accumulated losses at beginning of financial year Loss for the year Accumulated losses at end of financial year 2022 $ 2021 $ 55,426,026 6,028,111 61,454,137 45,770,822 9,655,204 55,426,026 - 80 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 20. (Loss)/earnings per share The (loss)/earnings and weighted average number of ordinary shares used in the calculation of loss per share are as follows: 2022 $ 2021 $ Loss Basic/diluted loss per share (cents per share) (6,028,025) (1.70) (9,655,204) (3.58) (Loss)/profit from continued operations Basic/diluted (loss)/earnings per share (cents per share) (3,638,768) (1.02) 791,279 0.29 Weighted average number of ordinary shares No. 355,009,331 No. 269,926,042 Diluted loss per share Diluted loss per share has not been calculated as the Company’s potential ordinary shares are not considered dilutive and do not increase loss per share. 21. Assets classified as held for sale and discontinued operations On 20 December 2021, the Company executed a binding agreement to sell the Red October and Devon gold projects to Linden Gold Pty Ltd (LGL) for a consideration of $20M. The $20M consideration under the terms of the Sale and Purchase Agreement (SPA) consists of the following: 1. A deposit of $1M payable on the execution of the SPA. The Company has received this amount from LGL. LGL has until 28 February 2022 to obtain a conditional approval from the ASX for admission to the ASX. 2. The Company has further received deposits totalling $2M to have the conditional approval date extended to no later than 30 June 2022. 3. On completion occurring in conjunction with the successful listing of LGL on the ASX, the Company will receive: (a) A cash payment of $5M reduced by any amounts paid under 2 above; and (b) $9M either in cash or LGL shares (the full $9M in shares is expected to equate to an approximately 19.6% interest in LGL at the time of LGL listing on the ASX) at LGL’s election, subject to a maximum of $4.5M able to be paid by way of cash. 4. A deferred payment of $5M consisting of: (a) A deferred cash payment of $2.5M within 24 months of LGL receiving conditional approval from the ASX for admission to the ASX; and (b) A net profit payment of $2.5M payable quarterly from mining operations at the Devon gold project. - 81 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 21. Assets classified as held for sale and discontinued operations (Continued) On 1 July 2022, LGL has provided a formal notice to the Company advising that as a result of events beyond the control of LGL, it has not received conditional approval for admission to the ASX and consequently, pursuant to the SPA, LGL claimed to be entitled to an automatic extension for a further period of up to 90 days. At this point, LGL may elect to complete the sale by paying the balance of the payments described in 3(a) and (b) $12M in cash to the Company. At the balance sheet date, the projects were classified as assets held for sale in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations. The fair value of the Red October and Devon gold projects at 30 June 2022 have been determined based on comparable market transactions. The fair value methodology adopted at 30 June 2022 is categorised as Level 3 in the fair value hierarchy. In accordance with Australian Accounting Standards, immediately before the classification of the Red October and Devon gold projects as assets held for sale, the carrying value of the projects were assessed that they were being carried at the lower of their carrying value and fair value less cost to dispose (FVLCD). Any profit or loss arising from the sale of a discontinued operations or its measurement to fair value less costs to sell is presented as part of a single line item, profit or loss from discontinued operations. As at 30 June 2022, the carrying value of assets held for sale and liabilities associated with assets held for sale in the statement of financial position are detailed below: Assets held for sale: Exploration and evaluation assets Plant and equipment Total $8,753,281 $254,983 $9,008,264 Liabilities associated with assets held for sale: Provision for mine restoration (note 16) Total $2,506,240 $2,506,240 - 82 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 21. Assets classified as held for sale and discontinued operations (Continued) For the period ended 30 June 2022, the results of discontinued operations in the statement of profit or loss are detailed below: Revenue from customers Other income Mining operations Amortisation and depreciation Care and maintenance Other expenses Loss on sale of fixed assets Finance costs Loss from discontinued operations 2022 $ 2021 $ 230,235 641,000 (444,537) (814,758) (1,675,747) (932) (252,452) (72,066) (2,389,257) 8,055,013 35,005 (12,640,909) (5,673,440) - (11,440) - (210,221) (10,445,992) The cash flow from discontinued operations included in the consolidated statement of cash flows are as follow: Net cash used in operating activities Net cash used in investing activities Net cash used in financing activities Net cash flows used in discontinued operations 22. Commitments and contingencies 2022 $ 2021 $ (3,031,666) (80,473) (529) (3,112,668) (2,560,498) (4,848,420) - (7,408,918) Exploration and expenditure commitments In order to maintain the mineral tenements in which the Company and other parties are involved, the consolidated entity is committed to fulfil the minimum annual expenditure conditions under which the tenements are granted. The minimum estimated expenditure commitment requirement for granted tenements for the next year is $2,439,581 (2021: $2,424,824). This amount has not been provided for in the financial report. These obligations are capable of being varied from time to time. Exploration expenditure commitments beyond twelve months cannot be reliably determined. Mine development and operating commitments The mine development and operating costs are determined on a time and cost basis. Contingencies There are no contingent assets or contingent liabilities as at 30 June 2022. - 83 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 23. Subsidiaries Parent Entity Matsa Resources Limited Subsidiary Matsa Gold Pty Ltd Killaloe Minerals Pty Ltd Lennard Shelf Exploration Pty Ltd Red October Gold Pty Ltd Australian Strategic and Precious Metals Investment Pty Ltd Matsa Resources (Aust) Pty Ltd Matsa Iron Pty Ltd Cundeelee Pty Ltd Matsa (Thailand) Co Ltd PVK Mining Loei Co Ltd Khlong Tabaek Co Ltd Paisali Mining Co Ltd Siam Copper Resources Co Ltd Loei Mining Co Ltd Azure Circle Co Ltd 24. Cash flow information Country of Incorporation Percentage Owned (%) 2022 2021 Australia Australia Australia Australia Australia Australia Australia Australia Australia Thailand Thailand Thailand Thailand Thailand Thailand Thailand 100 100 100 100 100 100 100 100 100 100 95 95 100 100 100 100 100 100 100 100 100 100 100 100 100 95 95 100 100 100 Reconciliation of cash and cash equivalents Cash and cash equivalents at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: Cash and cash equivalents 1,572,483 3,029,326 2022 $ 2021 $ - 84 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 24. Cash flow information (Continued) Reconciliation of loss for year to net cash flows from operating activities 2022 $ 2021 $ Loss for year (6,028,025) (9,654,713) Non-cash flows in loss from ordinary activities: Share-based payments Depreciation Exploration expenditure written off/impaired Share of investee (gain)/loss Net (gain)/loss on sale of financial assets Net (gain)/loss on disposal of plant and equipment Net (gain)/loss on sale of investment in associates Net (gain)/loss on sale of tenements Interest expense classified as financing cash flow Amortisation Shares issued as facility fees Changes in assets and liabilities: Increase in receivables Increase in inventories (Decrease)/increase in trade creditors and accruals (Decrease)/increase in provisions Cash used in operating activities Reconciliation of liabilities arising from financing activities 5,329 725,442 1,028,175 - - 192,452 - 2,353,509 526,621 192,695 - 68,828 79,981 (1,883,445) (53,093) (2,791,531) 111,956 895,472 - (1,051,922) (20,004) - (1,674,472) (1,191,750) 506,829 4,924,448 12,000 1,438,810 498,371 99,126 302,176 (4,803,673) 2022 Opening balance Cash flows Non-cash changes Closing balance 2021 Opening balance Cash flows Non-cash changes Closing balance Lease Liabilities $ 186,420 (104,210) - 82,210 Lease Liabilities $ 152,523 (114,972) 148,869 186,420 Borrowings Total $ 4,208,848 (224,868) 134,352 4,118,332 $ 4,395,088 (329,078) 134,352 4,200,542 Borrowings Total $ 3,973,264 - 235,584 4,208,848 $ 4,125,787 (114,972) 384,453 4,395,268 - 85 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 25. Parent entity disclosures As at, and throughout, the financial year ended 30 June 2022, the parent company of the Group was Matsa Resources Limited. Company 2022 $ 2021 $ (5,740,470) - (5,740,470) (13,028,584) - (13,028,584) 1,387,360 9,483,444 5,659,824 5,860,832 2,782,197 12,585,878 2,054,275 6,424,097 63,892,577 10,028,515 (70,298,481) 60,696,604 10,023,186 (64,558,009) 3,622,611 6,161,781 Result of the parent entity Loss for the year Other comprehensive gain/(loss) Total comprehensive loss for the year Financial position of parent entity at year end Current assets Total assets Current liabilities Total liabilities Total equity of the parent entity comprising of: Share capital Reserves Accumulated losses Total equity 26. Financial instruments Financial risk management Overview This note presents information about the Group’s exposure to credit, liquidity and market risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. The Group does not use any form of derivatives as it is not at a level of exposure that requires the use of derivatives to hedge its exposure. Exposure limits are reviewed by management on a continuous basis. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and manages the financial risks relating to the operations of the group through regular reviews of the risks. Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s cash balances at bank, deposits with statutory authorities. - 86 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 26. Financial instruments (Continued) Presently, the Group undertakes exploration and evaluation activities exclusively in Australia and Thailand. At the reporting date there were no significant concentrations of credit risk with the exception of its cash balances at bank. Cash and cash equivalents The Group limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have an acceptable credit rating of no less than AA rating. Trade and other receivables The Group manages its exposure to credit risk by extensive due diligence on the party processing its gold sales. Exposure to credit risk The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at the reporting date was: Trade and other receivables Cash and cash equivalents Deposits held Consolidated Carrying amount 2022 $ 175,469 1,572,483 287,363 2021 $ 84,315 3,029,326 287,363 Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages liquidity risk by maintaining adequate cash reserves from funds raised in the market and by continuously monitoring forecast and actual cash flows. The Group also has investments in listed shares that could be sold to raise cash. The Company has leased assets financed by way of finance leases and has taken out a premium funding facility over their insurance requirements. The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements: 30 June 2022 Weighted average interest rate % Carrying amount Contractual cash flows 6 mths or less 6-12 mths 1-2 years 2-5 years $ $ $ $ $ $ Trade and other payables Lease liabilities Insurance premium finance Loan - 6.78 3.83 12 2,694,409 82,210 120,160 3,998,172 6,894,951 2,694,409 2,694,409 - 47,414 18,946 15,850 - 82,210 120,160 - 120,160 3,998,172 3,998,172 - 6,894,951 6,860,155 18,946 15,850 - - - 87 - - - - - - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 26. Financial instruments (Continued) 30 June 2021 Weighted average interest rate % Carrying amount Contractual cash flows 6 mths or less 6-12 mths 1-2 years 2-5 years $ $ $ $ $ $ Trade and other payables Lease liabilities Insurance premium finance Loan - 6.78 4,807,829 186,420 4,807,829 4,807,829 48,286 186,420 - 50,700 - 74,547 - 12,887 4.31 12 224,732 3,984,116 9,203,097 - 157,312 224,732 3,984,116 - 3,984,116 - 9,203,097 5,013,427 118,120 4,058,663 67,420 - - 12,887 Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Currency risk The Group is exposed to currency risk on investments and purchases that are denominated in a currency (Thai baht) other than the respective functional currencies of Group entities, which is primarily the Australian dollar. As at the statement of financial position date the Group holds the following financial assets or liabilities which are exposed to foreign currency risk. Other current assets Cash and cash equivalents Sensitivity analysis Carrying amount 2022 $ 103,941 80,376 2021 $ 95,767 101,652 The Group is exposed to fluctuations in foreign currencies arising from the acquisition of services from time to time in currencies other than the Group’s functional currency. A change of 10% in the foreign currency exchange rate at 30 June 2022 would have increased equity by $16,756 (2021: $17,947), an equal change in the opposite direction would have decreased equity by an equal but opposite amount. Interest rate risk The Group is exposed to interest rate risk (primarily on its cash and cash equivalents), which is the risk that a financial instrument’s value will fluctuate as a result of changes in the market interest rates on interest-bearing financial instruments. The Group does not use derivatives to mitigate these exposures. The Group is not exposed to cash flow volatility from interest rate changes on borrowings as the finance leases carry fixed rates of interest. The Group adopts a policy of ensuring that as far as possible it maintains excess cash and cash equivalents in short terms deposit at interest rates maturing over 90 day rolling periods or less. - 88 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 26. Financial instruments (Continued) Profile At the reporting date the interest rate profile of the Group’s and the Company’s interest-bearing financial instruments was: Fixed rate instruments Cash and cash equivalents Lease liabilities Loan Variable rate instruments Cash and cash equivalents Cash backed performance bonds Carrying amount 2022 $ 2021 $ 50,000 82,210 4,118,332 4,250,542 1,522,483 - 1,522,483 50,000 186,420 3,984,116 4,220,536 2,979,326 - 2,979,326 Fair value sensitivity analysis for fixed rate instruments The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, therefore a change in interest rates at the reporting date would not affect profit or loss. Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis as 2021. Profit or loss Equity 100bp increase $ 100bp decrease $ 100bp increase $ 100bp decrease $ 15,225 (15,225) 15,225 (15,225) 29,793 (29,793) 29,793 (29,793) 30 June 2022 Variable rate instruments 30 June 2021 Variable rate instruments Fair values Fair values versus carrying amounts The carrying amounts of financial assets and liabilities approximate fair value. The basis for determining fair values versus carrying value of financial instruments not carried at fair value is described below. (i) Other receivables, trade and other payables: Other receivables, trade and other payables are short term in nature. As a result, the carrying amount of these instruments is considered to approximate its fair value. Deposits held on tenement applications: The deposits held with Thai authorities are fully recoverable should the applications not be granted. As a result the carrying amount is considered to approximate its fair value. (ii) - 89 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 26. Financial instruments (Continued) Capital Management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so as to maintain a strong capital base sufficient to maintain future exploration and development of its projects. In order to maintain or adjust the capital structure, the Group may return capital to shareholders, issue new shares or sell assets to reduce debt. The Group’s focus has been to raise sufficient funds through equity to fund exploration and evaluation activities and mine development. The Group monitors also has a debt facility which is not repayable until 31 July 2022. The Group encourages employees to be shareholders through the Long Term Incentive Plan and the Executive Share Option Plan. There were no changes in the Group’s approach to capital management during the year. Risk management policies and procedures are established with regular monitoring and reporting. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. 27. Share-based payments Shared based payments expense Directors and Executives Employee Share Option Plan Consultants 2022 $ 2021 $ 5,329 - - 5,329 24,114 77,508 10,334 111,956 As at 30 June 2022, options were issued to a Director. These options valued at $5,329 was recognised directly in the consolidated statement of profit and loss as share-based payment expense. As at 30 June 2021, options were issued to consultants as part of the Company’s capital raising. These options valued at $158,642 was recognised directly in equity as capital raising transaction costs. Employee Share Option Plan The Group has an Employee Share Option Plan (ESOP) for the granting of options to staff members, directors and consultants. A new ESOP was approved by shareholders on 28 November 2019 and adopted. Options issued under the ESOP vest on the grant date. Other relevant terms and conditions applicable to options granted under the ESOP include: (a) (b) Options issued pursuant to the plan will generally be issued free of charge. The exercise price of the options shall be as the Directors in their absolute discretion determine, provided the exercise price shall not be less than the weighted average of the last sale price of the Company’s shares on ASX at the close of business on each of the 5 business days immediately preceding the date on which the Directors resolve to grant the options. (c) Subject to the above, the options may be exercised at any time prior to the expiration date from the issue date. - 90 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 27. Share-based payments (Continued) (d) (e) (f) (g) (a) The Directors may limit the total number of options which may be exercised under the plan in any year. Options with a common expiry date may have a different exercise price and exercise date. Options shall lapse upon the earlier of: (i) (ii) The expiry of the exercise period; and The expiry of three months after the option holder ceases to be an employee by reason of dismissal, resignation or termination of employment, office or services for any reason, except the Directors may resolve that the options shall lapse on other terms they consider appropriate. Upon exercise the options will be settled in ordinary shares of Matsa Resources Limited. Summary of options issued under the Employee Share Option Plan The following table summarises the number (No.) and the weighted average exercise price (WAEP) of, and movements in, share options issued during the year to employees other than to key management personnel which have been disclosed in the Remuneration Report. 2022 No. 2022 WAEP $ 2021 No. 2021 WAEP $ Outstanding at the beginning of the year Granted Exercised Expired Outstanding at year-end Exercisable at year-end 4,100,000 - - (1,550,000) 2,550,000 2,550,000 0.19 0.17 0.21 0.21 2,850,000 3,400,000 - (2,150,000) 4,100,000 4,100,000 0.17 0.21 - 0.19 0.19 0.19 The outstanding balance as at 30 June 2022 is represented by the following options over ordinary shares, exercisable upon meeting the above terms and conditions:  2,550,000 options with an exercise price of $0.21 each and with an expiry date of 30 October 2023. All have vested and are exercisable at balance date Directors and Executives Options In addition to the ESOP, the Company has issued options to Directors and Executives from time to time. The terms and conditions of those options vary between option holders. There were 1,000,000 (2021: 700,000) options issued to Directors or Executives during the financial year. Options issued to the Executive Chairman and the Executive Director and Executives vested immediately. - 91 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 27. Share-based payments (Continued) Other relevant terms and conditions applicable to options granted as above include:  any Directors or Executives vested options that are unexercised by the anniversary of their grant date will expire or, if they resigned, in accordance with their specific terms and conditions; and  upon exercise, these options will be settled in ordinary shares of Matsa Resources Limited. (b) Summary of options issued to Directors and Executives (i) The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of share options issued. Outstanding at 1 July Granted during the year Expired during the year Outstanding at 30 June Exercisable at 30 June 2022 No. 12,200,000 1,000,000 (5,750,000) 7,450,000 7,450,000 2022 WAEP $ 0.174 0.17 0.17 0.178 0.178 2021 No. 11,500,000 700,000 - 12,200,000 12,200,000 2021 WAEP $ 0.172 0.21 - 0.174 0.174 There were 1,000,000 (2021: 700,000) options issued during the year. Directors During the year ended 30 June 2022, 1,000,000 share options with an exercise price of $0.17 each, were issued to a director. The options vest immediately at the date of grant. The contractual life of each option is two years and there is no cash settlement of the options. Executives No options were issued to executives during the year ended 30 June 2022. In 2021, 700,000 options over ordinary shares with an exercise price of $0.21 each exercisable upon meeting the relevant conditions and until 30 October 2023 were issued an executive. (c) Valuation models of options and performance rights issued to Directors and Executives The fair value of the options is estimated at the date of grant using a Black & Scholes model. The following table gives the assumptions made in determining the fair value of the options granted in the year. Dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Expected life of options (years) Option exercise price ($) Share price at grant date ($) Fair value at grant date ($) 2022 2021 Directors - 71.71 0.54 2.0 0.17 0.05 0.005 Executives - - - - - - - - 92 - Directors - - - - - - - Executives - 67.78 0.13 2.92 0.21 0.12 0.03 MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 27. Share-based payments (Continued) The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. Employee Expenses Share options granted in 2022 - equity settled Share options granted in 2021 - equity settled Total expense recognised as employee costs 28. Key management personnel Consolidated 2022 $ 2021 $ - - - - 111,956 111,956 Details of key management personnel The directors and other members of key management personnel of the Group during the financial year were: Name Position Directors Paul Poli Frank Sibbel Pascal Blampain Andrew Chapman Director and Company Secretary Executive Chairman Non-Executive Director Executive Director Executives David Fielding Group Exploration Manager Key management personnel remuneration has been included in the Remuneration Report section of the Directors’ Report on pages 39 to 47. These transferred disclosures have been audited. Compensation of Key Management Personnel Short-term employment benefits Post-employment benefits Termination benefits Share-based payments 2022 $ 1,087,189 89,726 - 5,329 2021 $ 945,510 70,871 - 24,114 1,182,244 1,040,495 The compensation disclosed above represents an allocation of the key management personnel’s estimated compensation from the Group in relation to their services rendered to the Company. Loans to Key Management Personnel There were no loans to key management personnel during the current or previous financial year. - 93 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 28. Key management personnel (Continued) Other transactions and balances with Key Management Personnel (a) P Poli is a Director of Bulletin Resources Limited. The Consolidated Entity has an agreement with Bulletin to provide accounting, technical and administrative services on an arms-length basis. In the current year $145,140 has been charged to Bulletin for these services (2021: $59,811). At 30 June 2022 there was an outstanding balance of nil (2021: $4,400) for Bulletin. (b) P Poli is a director and the only shareholder of Ultim8 Minesite Security Pty Ltd (‘Ultim8’). During the year, the Consolidated Entity sold two vehicles to Ultim8 for $22,727 (2021: nil). At 30 June 2022 there was an outstanding balance of nil (2021: nil) receivable from Ultim8. (c) P Poli is a director and controlling shareholder of West-Sure Group Pty Ltd which the Consolidated Entity sub-lets storage space from. In the current year $6,371 has been charged to the Consolidated Entity for this service (2021: $6,371). At 30 June 2022, there was an outstanding balance of $1,752 (2021: $1,752) payable to West- Sure. (d) P Poli is a director and controlling shareholder of WA Fleet Systems Pty Ltd which provided the Consolidated Entity with hire car services from time to time. In the current year $1,250 has been charged to the Consolidated Entity for this service (2021: $23,636). At 30 June 2022 there was an outstanding balance of nil (2021: $8,250) payable to WA Fleet Systems. Individual directors and executives compensation disclosure Information regarding individual directors and executives compensation and some equity instruments disclosures as permitted by Corporations Regulation 2M.3.03 is provided in the remuneration report section of the Directors’ report. No director has entered into a material contract with the Company or the Group since the end of the previous financial year and there were no material contracts involving directors’ interests existing at year-end. 29. Related party transactions Subsidiaries Interests in subsidiaries are set out in Note 23. Key management personnel Disclosures relating to key management personnel are set out in the Remuneration Report and Note 28. - 94 - MATSA RESOURCES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 30. Remuneration of auditors The auditor of Matsa Resources Limited is Nexia Perth Audit Services Pty Ltd (Nexia Perth). Amounts received or due and receivable by Nexia Perth Audit Services Pty Ltd for an audit or review of the entity and any other entity in the consolidated group. Amounts received or due and receivable by related practices of Nexia Perth Pty Ltd for: - tax compliance Consolidated 2022 $ 2021 $ 65,750 62,500 19,190 84,940 10,400 72,900 31. Events Subsequent to Balance Date On 29 August 2022, the Company successfully completed a placement to institutional and sophisticated investors to raise approximately $1.98M before costs and was heavily oversubscribed. On 29 September 2022, the Company announced that LGA was not able to settle the purchase of the Devon and Red October projects via the issue of shares and cash. Under the terms of the SPA, LGA has 10 business days to complete the sale via a cash settlement of $12M. Discussions with LGA for a resolution to settlement of the sale is currently ongoing. The Directors consider the reclassification of the Devon and Red October projects as assets held for sale to be appropriate. The impact of the Coronavirus (COVID-19) pandemic is ongoing and whilst it has had no financial impact for the Group up to 30 June 2022, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided. No matter or circumstance has arisen subsequent to the reporting date, which has significantly affected, or may significantly affect the operations of the Group, the result of those operations, or the state of affairs of the Group in subsequent financial years. - 95 - MATSA RESOURCES LIMITED DIRECTORS’ DECLARATION In the opinion of the directors of Matsa Resources Limited (the “Company”): 1. the consolidated financial statements and notes are in accordance with the Corporations Act 2001, including: (ii) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2022 and of its performance, for the financial year ended on that date; and (a) (b) (iii) complying with Australian Accounting Standards and Corporations Regulations 2001; the financial report also complies with International Financial Reporting Standards as disclosed in note 2(b); the remuneration disclosures that are contained in page 39 to 47 of the Remuneration Report in the Directors’ Report comply with the Corporations Act and Australian Accounting Standard AASB 124 Related Party Disclosures and (c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive officer and chief financial officer for the financial year ended 30 June 2022. Signed in accordance with a resolution of the directors; Paul Poli Executive Chairman Perth, 29 September 2022 - 96 -  Independent Auditor’s Report to the Members of Matsa Resources Limited Report on the Audit of the Financial Report Opinion We have audited the Annual financial report of Matsa Resources Limited (the Company) and its subsidiaries (the Group), which comprises the Consolidated Statement of Financial Position as at 30 June 2022, the Consolidated Statement of Profit or Loss, Consolidated Statement of 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 confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material Uncertainty in relation to Going Concern Without modifying our opinion, we draw attention to Note 2 (e) to the Financial Report, which indicates that the Group will require further funding in the next twelve months from the date of this report to fund its planned exploration and administration expenditure. These conditions, along with other matters as set forth in Note 2 (e), indicate the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern and therefore the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. 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. In addition to the matter described in the Material Uncertainty related to Going Concern section, we have determined the matter described below to the be key audit matter to be communicated in our report. Key audit matter How our audit addressed the key audit matter Capitalisation of Exploration and Evaluation assets Refer to Note 10 (Exploration and evaluation assets) As at 30 June 2022 the carrying value of Exploration and evaluation assets was $10,627,811 (2021: $21,437,966). The Group’s accounting policy in respect of Exploration and evaluation assets is outlined in Note 2 (r). This is a key audit matter due to the fact that significant judgement is applied in determining whether: ▪ the Exploration and evaluation assets meet the recognition criteria in terms of AASB 6 Exploration for and Evaluation of Mineral Resources; and ▪ facts and circumstances exist that suggest that the carrying value of the Exploration and evaluation assets are in accordance with AASB 6. Our procedures focussed on evaluating management’s assessment of the capitalised Exploration and evaluation assets’ carrying value at the reporting date. These procedures included, amongst others: ▪ we verified that the rights of tenure to the areas of interest remained current at the reporting date; ▪ obtained evidence of the future intention for the areas of interest, including reviewing future budgeted expenditure and related work programmes; ▪ we obtained an understanding of the status of ongoing exploration programmes for the areas of interest; and ▪ we assessed the appropriateness of the accounting treatment and disclosure in terms of AASB 6. 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. Directors’ responsibility 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 Annual financial report, the directors are responsible for assessing the Group’s ability 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 responsibility 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 Australian Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 39 to 47 of the Directors’ Report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Matsa Resources Limited, for the year ended 30 June 2022, complies with Section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Nexia Perth Audit Services Pty Ltd PTC Klopper Director Perth 29 September 2022 MATSA RESOURCES LIMITED ASX ADDITIONAL INFORMATION The following additional information is required by the Australian Securities Exchange Ltd in respect of listed public companies only. SHAREHOLDING Distribution of Shareholders as at 5 September 2022 Range (size of holding) Number of Holders Number of Units % 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over 63 44 140 755 380 1,382 3,965 146,087 1,186,086 26,604,477 383,014,005 410,954,620 0.001 0.036 0.289 6.474 93.201 100.00 The number of shareholdings held in less than marketable parcels is 330. Twenty Largest Registered Shareholders of Fully Paid Ordinary Shares as at 5 September 2022 Name No. % Duketon Consolidated Pty Ltd RASL AU LLC Goldfire Enterprises Pty Ltd BNP Paribas Nominees Pty Ltd BNP Paribas Nominees Pty Ltd ACF Clearstream Sparta AG HF Resources Pty Ltd HSBC Custody Nominees (Australia) Limited 1 2 3 4 5 6 Mr Paul Poli

7 8 9 10 Citicorp Nominees Pty Limited 11 Mr Paul Poli & Mrs Sonya Kathleen Poli

12 Goldfire Enterprises Pty Ltd 13 Mr Stacey Hubert Carter 14 Scintilla Strategic Investments Limited 15 Capretti Investments Pty Ltd 16 Mr Oliver Nikolovski & Mrs Suzanne Karine Nikolovski L & S Davies Pty Ltd 17 18 Mr Oliver Nikolovski 19 20 Emprise Nominees Pty Ltd Zero Nominees Pty Ltd 63,223,633 62,233,634 21,032,722 12,947,000 11,598,186 10,600,000 6,545,707 4,620,000 4,500,000 3,941,803 3,300,000 3,060,337 2,875,061 2,700,000 2,650,000 2,400,000 2,255,887 2,100,000 2,001,219 2,000,000 226,585,189 15.38 15.14 5.12 3.15 2.82 2.58 1.59 1.12 1.10 0.96 0.80 0.75 0.70 0.66 0.65 0.58 0.55 0.51 0.49 0.49 55.14 - 100 - MATSA RESOURCES LIMITED ASX ADDITIONAL INFORMATION Substantial Shareholders Ordinary shareholder Sparta AG Number 23,717,161 Percentage 5.77% Fully paid Distribution of Optionholders as at 5 September 2022 Range (size of holding) Number of Holders Number of Units % 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over 83 66 29 100 96 374 36,133 162,228 219,735 4,904,637 43,897,520 49,220,253 0.07 0.33 0.45 9.96 89.19 100.00 Twenty Largest Registered Holders of Quoted Options Exercisable at $0.17 each expiring 30 April 2023 Name No. % Mr Bilal Ahmad Mr Mobeen Iqbal Gazump Resources Pty Ltd Mr Stacey Hubert Carter BNP Paribas Nominees Pty Ltd ACF Clearstream Mr Mark Richard Jensen Mr Steven John Diggerman Mr Sufian Ahmad Goffacan Pty Ltd 1 2 3 4 5 6 7 8 9 10 Mr Luke KukulJ 11 12 13 Mr Gordon John Merchant & Mr Dennis Graham Pointing 14 15 Mr Nicholas Dermott McDonald 16 17 Mr Raden Grayson-Widarsito 18 Mr Denis Graham Pointing 19 20 Jetosea Pty Ltd Toner Capital Pty Ltd Zetetic Investments Pty Ltd Sparta AG IQ Global Asset Partners Pty Ltd Scintilla Strategic Investments Limited 5,000,000 3,250,000 2,096,562 1,437,503 1,436,300 1,400,000 1,375,000 1,300,000 1,200,000 1,200,000 1,125,000 956,033 939,206 790,000 725,000 687,500 636,277 600,000 520,000 510,394 27,184,775 10.16 6.60 4.26 2.92 2.92 2.84 2.79 2.64 2.44 2.44 2.29 1.94 1.91 1.60 1.47 1.40 1.29 1.22 1.06 1.04 55.23 - 101 - MATSA RESOURCES LIMITED ASX ADDITIONAL INFORMATION RESTRICTED SECURITIES The Company has no restricted securities on issue. STATEMENT OF UNQUOTED SECURITIES Number of Options 5,750,000 1,000,000 2,000,000 2,000,000 44,079,341 3,250,000 1,000,000 Number of Holders 3 1 1 1 141 12 1 Exercise Price $0.175 $0.35 $0.35 $0.25 $0.30 $0.21 $0.17 Date of Expiry 30 November 2022 30 November 2022 30 November 2022 30 November 2022 30 November 2022 30 October 2023 30 November 2023 - 102 - MATSA RESOURCES LIMITED ASX ADDITIONAL INFORMATION TABLE OF MINERAL RESOURCES AND MINERAL RESERVES AT 30 JUNE 2022 Mineral Resource Estimates – Consolidated Summary & Annual Comparison Project Resource Category Tonnes (‘000) Au (g/t) Metal Oz(‘000) 30 June 2021 Fortitude Devon Red October Measured Indicated Inferred Indicated Inferred Measured Indicated Inferred - 2,988 3,328 341 906 71 408 406 8,448 Mining Depletion Red October Indicated Inferred - - - Resource Adjustments Fortitude Devon Red October Stockpiles Fortitude Devon Red October Stockpiles Total Measured Indicated Inferred Indicated Inferred Measured Indicated Inferred Inferred Measured Indicated Inferred Indicated Inferred Measured Indicated Inferred Inferred 127 33 2,439 - 115 34 75 5 191 3,019 30 June 2022 127 3,021 5,767 341 1,021 105 483 411 191 11,467 - 103 - - 1.8 2.1 4.8 2.1 8.8 5.1 6.1 2.5 - - - 2.2 17.9 1.6 - 4.0 6.4 8.7 18.6 1.0 2.09 2.2 2.0 1.9 4.8 2.3 8.0 5.7 6.3 1.0 2.4 - 175 228 53 61 20 67 80 684 - - - 9 19 122 - 15 7 21 3 6 202 9 194 350 53 76 27 88 83 6 886 MATSA RESOURCES LIMITED ASX ADDITIONAL INFORMATION TABLE OF MINERAL RESOURCES AND MINERAL RESERVES AT 30 JUNE 2022 (continued) Resource Statement Notes • The geographic region for Gold Mineral Resources is Australia. • Figures have been rounded in compliance with the JORC Code (2012). Rounding errors may cause a column to not add up precisely. • Resources exclude recoveries. • Resources include reserves. Ore Reserve Estimates – Consolidated Summary & Annual Comparison (The Ore Reserve estimates are a subset of the Mineral Resource estimates) Project Reserve Category Tonnes (‘000) Au (g/t) Metal Oz(‘000) Fortitude Probable 30 June 2021 1,029 1,029 1.8 1.8 Nil Nil Fortitude Total Mining Depletion Reserve Adjustments 30 June 2022 Probable 1,029 1,029 1.8 1.8 58 58 58 58 Reserve Statement Notes • Figures are rounded to reflect appropriate levels of confidence. Apparent differences may occur due to rounding. • The geographic region for Gold Mineral Resources is Australia. Summary of Governance Arrangements and Internal Controls The Mineral Resource and Reserve estimates are reported in accordance with the JORC 2012 Code, using industry standard techniques and internal guidelines for the estimation and reporting of Ore Reserves and Mineral Resources. The Mineral Resource and Reserve are estimated by suitably qualified employees of Matsa Resources Ltd. There is no change to the reserve from the 2021 Annual Report. Matsa confirms there is no new information pertaining to reserves and no changes to the underlying reserve calculations/assumptions have been made. Competent Persons Statement Resources The information in this document that relates to exploration targets, exploration results and Mineral Resources, is based on information compiled by Pascal Blampain, who is a Member of the Australasian Institute of Mining and Metallurgy and Australian Institute of Geoscientists. Pascal Blampain is a full- time employee, and serves on the Board, of Matsa Resources Limited and has sufficient experience which is relevant to the style of mineralisation and the type of ore deposit under consideration and the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Blampain consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. - 104 - MATSA RESOURCES LIMITED ASX ADDITIONAL INFORMATION Reserves The information in this report that relates to Ore Reserve results is based on information compiled by Mr Frank Sibbel, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Sibbel is a non-executive director of Matsa Resources Limited. Mr Sibbel has sufficient experience which is relevant to the style of mineralisation and the type of ore deposit under consideration and the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Sibbel consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. - 105 - Tenement Type and No. P 39/6116 P 39/6117 E 39/1232 M 39/386 M 39/387 M 39/500 M 39/629 E 39/1760 L 39/222 L 39/235 L 39/237 M 39/1077 M 39/1078 E 39/21593 E 39/21623 E 52/3339 E 39/1752 E 39/1803 E 39/1812 E 39/1819 E 39/1834 E 39/1837 E 39/1863 E 39/1864 E 39/1957 E 39/1958 E 39/1980 E 39/1981 L 39/247 L 39/260 L 39/267 M 39/1 M 39/1065 M 39/1089 M 39/286 M 39/709 M 39/710 P 39/5652 P 39/5669 P 39/5670 P 39/5694 P 39/5841 E 38/2945 MATSA RESOURCES LIMITED SCHEDULE OF MINING TENEMENTS Project Devon Devon Devon Devon Devon Devon Devon Devon Devon Devon Devon Devon Devon Fraser Range Fraser Range Glenburg Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Holder Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Resources Limited Matsa Resources Limited Cundeelee Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Status Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Share Held 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 30% 30% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% - 106 - MATSA RESOURCES LIMITED SCHEDULE OF MINING TENEMENTS Project Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Carey Lake Rebecca Lake Rebecca Paraburdoo Red Dog Red October Red October Red October Red October Red October Red October Red October Red October Red October Red October Red October Symons Hill Symons Hill Galena Tenement Type and No. E 39/1770 E 39/17961 E 39/1840 E 39/18891 E 39/2015 E 39/2128 L 39/291 L /39/295 E 28/26002 E 28/26352 E 47/3518 L 39/268 L 39/217 L 39/273 M 39/411 M 39/412 M 39/413 M 39/599 M 39/600 M 39/609 M 39/610 M 39/611 M 39/721 E 28/2916 E 69/30703 E 66/1053 1= 90% held by Matsa 2= 20% held by Matsa 3= 30% held by Matsa Holder Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Gold Pty Ltd Matsa Resources Limited Matsa Gold Pty Ltd Red October Gold Pty Ltd Matsa Gold Pty Ltd Red October Gold Pty Ltd Red October Gold Pty Ltd Red October Gold Pty Ltd Red October Gold Pty Ltd Red October Gold Pty Ltd Red October Gold Pty Ltd Red October Gold Pty Ltd Red October Gold Pty Ltd Red October Gold Pty Ltd Matsa Resources Limited Matsa Resources Limited Matsa Resources Limited Status Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Share Held 100% 90% 100% 90% 100% 100% 100% 100% 20% 20% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 30% 30% 100% - 107 - www.matsa.com.au 

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