Metals X Limited
Annual Report 2021

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ASX RELEASE 4 OCTOBER 2021 REPLACEMENT ANNUAL REPORT Metals X Limited (Metals X or the Company) (ASX:TSO) refers to its Annual Report dated 30 September 2021 (Annual Report) noting that the Table of Mineral Resources and Ore Reserves contained within the Annual Report contains a typographical error on page 66. The Company advises that the Grade % Sn of the Renison Bell Ore Reserve estimate at 31 March 2021 is amended from 1.90 to 1.41 resulting in a change to the Grade % Sn of the total Ore Reserve estimate at 31 March 2021 from 0.82 to 0.69. The Grade % Cu of the Renison Bell Ore Reserve estimate at 31 March 2021 is also amended from 0.30 to 0.19 resulting in a change to the Grade % Cu of the total Ore Reserve estimate at 31 March 2021 from 0.25 to 0.22. The total tonnes of Tin and Copper ore and metal are reported correctly. An updated version of the Annual Report containing this correction, is attached. This announcement has been authorised by the board of directors of Metals X Limited ENQUIRIES Mr Brett Smith Executive Director E: brett.smith@metalsx.com.au CORPORATE DIRECTORY Level 5, 197 St Georges Terrace Perth WA 6000 Australia ASX Code: MLX T +61 8 9220 5700 E reception@metalsx.com.au ABN 25 110 150 055 www.metalsx.com.au ACN 110 150 055 Annual Report 2021 CONTENTS CORPORATE DIRECTORY .......................................................................................................................................................... 1 CHAIRMAN’S LETTER .................................................................................................................................................................. 2 DIRECTORS’ REPORT ................................................................................................................................................................. 3 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ........................................................................................... 19 CONSOLIDATED STATEMENT OF FINANCIAL POSITION .................................................................................................... 20 CONSOLIDATED STATEMENT OF CASH FLOWS .................................................................................................................. 21 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ..................................................................................................... 22 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS .............................................................................................. 23 DIRECTORS’ DECLARATION .................................................................................................................................................... 60 AUDITOR’S INDEPENDENCE DECLARATION ........................................................................................................................ 61 INDEPENDENT AUDIT REPORT................................................................................................................................................62 TABLES OF MINERAL RESOURCES AND ORE RESERVES ................................................................................................. 66 SECURITY HOLDER INFORMATION ........................................................................................................................................ 68 CORPORATE DIRECTORY Directors Mr Peter Gunzburg (Non-Executive Chairman) Mr Brett Smith (Executive Director) Mr Grahame White (Non-Executive Director) Mr Patrick O’Connor (Non-Executive Director) Company Secretary Ms Shannon Coates Key Management Mr Daniel Broughton (CFO) Share Registry Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace Perth WA 6000 GPO Box Melbourne VIC 3001 Phone: (within Australia) 1300 850 505 Phone: (outside Australia) +61 3 4915 4000 Facsimile: +61 3 9473 2500 Registered Office Level 5, 197 St Georges Terrace Perth WA 6000 Phone: +61 8 9220 5700 E-mail: reception@metalsx.com.au Website: www.metalsx.com.au Postal Address PO Box 7248 Cloisters Square PO WA 6850 Securities Exchange Australian Securities Exchange Central Park 152-158 St George’s Terrace Perth WA 6000 Code: ASX: MLX Domicile and Country of Incorporation Australia 1 CHAIRMAN’S LETTER In the last 12 months management have successfully divested our copper assets and have started a process for the divestment of our nickel assets. With the help of record tin prices, we have halved our debt, substantially reduced corporate overheads, and returned the company to profitability. Through our position in the Renison joint venture, we continue to direct focus on the long-term sustainability of the Renison deposit by increasing ore reserves, improving plant efficiency, and starting a near mine exploration programme. Our aim for the next 12 months is to repay our remaining debt and balance the necessary capital expenditure to upgrade our processing plant whilst continuing to build a cash reserve. Peter Gunzburg Chairman 2 DIRECTORS’ REPORT For the year ended 30 June 2021 The Directors present their report together with the consolidated financial report of Metals X Limited (“Metals X” or the “Company”) and its controlled entities (together the “Group”) for the year ended 30 June 2021 and the Independent Auditor’s Report thereon. 1. Directors The names of the Company's Directors in office during the year and until the date of this report are set out below. Directors were in office for this entire period unless otherwise stated. Independent Non-Executive Chairman – Mr Peter Gunzburg B. Com (appointed 10 July 2020) Mr Gunzburg has over 40 years’ experience acting as a public company director, stockbroker, and investor. Mr Gunzburg has previously been a director of Resolute Ltd, Australian Stock Exchange Ltd, Eyres Reed Ltd, CIBC World Markets Australia Ltd and Fleetwood Corporation Ltd. Mr Gunzburg was the Non-Executive Chairman of ASX listed BARD1 Life Sciences Limited (resigned 28/07/2020). Mr Gunzburg is Chairman of the Board, Chairman of the Remuneration and Nomination Committee and member of the Audit and Risk committee. Executive Director – Mr. Brett Smith MBA, M.A (appointed 2 December 2019 as Non-Executive Director and Executive Director as of 10 July 2020) Mr. Smith has participated in the development of a number of mining and mineral processing projects including coal, iron ore, base and precious metals. He has also managed engineering and construction companies in Australia and internationally. Mr. Smith has served on the board of private and listed mining and exploration companies and has over 32 years international experience in the engineering and construction of mineral processing operations. Mr. Smith is Executive Director and Deputy Chairman of Hong Kong listed company APAC Resources Limited, Executive Director of Hong Kong listed company Dragon Mining Limited and a Non- Executive Director of ASX listed companies Prodigy Gold NL, Elementos NL and Tanami Gold NL. Independent Non-Executive Director – Mr Grahame White B. Eng, MAICD (appointed 10 July 2020) Mr White is a construction and mining executive with comprehensive experience in Australia and Asia. Mr White has held numerous executive management positions in the resources sector and recently served on the Boards of Central West Rural, Forge Group Limited and the Queensland Resource Council. Mr White is Chairman of the Audit and Risk Committee and member of the Remuneration and Nominations Committee. Independent Non-Executive Director – Mr Patrick O’Connor B. Com, FAICD (appointed Non-Executive Director 24 October 2019 and Non-Executive and Executive Chairman on 3 December 2019 and 17 December 2019, respectively. Reverted to Non-Executive Director on 10 July 2020) Mr O’Connor has significant experience as an independent Non-Executive Director and as a Chief Executive Officer. His experience spans across mining (gold, copper, lead, zinc and coal), oil & gas exploration, biotechnology and government utility sectors. Mr O’Connor was previously a Non-Executive Director of Stanmore Coal Ltd. In addition, he has held the roles of Deputy Chairman and Chairman of Perilya Ltd, the operator of the Broken Hill mine in NSW Australia, prior to its takeover and delisting from the ASX. Mr O’Connor spent nine years as a director of the Water Corporation in WA including four years as its Chairman. Mr O’Connor was also the Chief Executive Officer for OceanaGold Corporation at the time of its listing on the ASX and remained for a period as a Non-Executive Director. Prior to OceanaGold, Mr. O’Connor was Managing Director of Macraes Mining Co Ltd for nine years. Mr O’Connor was also appointed as Non-Executive Director and Chairman of FAR Limited on 1 July 2021 and 8 July 202, respectively. Mr O’Connor was Chairman of the Board (3 December 2019 – 10 July 2020), Chairman of the Remuneration and Nomination Committee (24 October 2019 – 10 July 2020) thereafter member of the Remuneration and Nomination Committee and member of the Audit and Risk Committee. Non-Executive Director – Mr Xingwang Bao B Sc (appointed 10 January 2020, resigned 12 November 2020) Independent Non-Executive Director – Mr Brett Lambert B. App Sc, MAICD (appointed 24 October 2019, resigned 10 July 2020) Independent Non-Executive Director – Mr Anthony Polglase B. Eng (Hons) 1st Class, ACSM (appointed 24 October 2019, resigned 10 July 2020) 3 DIRECTORS’ REPORT (Continued) For the year ended 30 June 2021 2. Company Secretary Ms. Shannon Coates – LLB, GIA (cert), GAICD (appointed on 1 December 2020) Ms Coates has over 20 years’ experience in corporate law and compliance. She is currently company secretary to a number of public listed and unlisted companies and has provided company secretarial and corporate advisory services to Boards and various committees across a variety of industries, including financial services, resources, manufacturing and technology. Ms. Fiona Van Maanen – (resigned on 4 December 2020) 3. Directors’ Interests As at the date of this report, the relevant interests of the directors in securities of the Company are: Directors Mr Peter Gunzburg Mr Brett Smith Mr Patrick O’Connor Mr Grahame White Total 4. Directors Meetings Fully Paid Ordinary Shares Options - 210,000 1,000,000 - 1,210,000 - - - - - The number of meetings of Directors’ (including meetings of committees of Directors) held during the year and the number of meetings attended by each Director was as follows: Directors Board Meetings Audit and Risk Committee Meetings Remuneration & Nomination Committee Meetings Eligible to attend Attended Eligible to attend Attended Eligible to attend Attended Mr Peter Gunzburg Mr Brett Smith Mr Patrick O’Connor Mr Grahame White Mr Xingwang Bao Mr Brett Lambert Mr Anthony Polglase 15 15 15 15 7 1 1 15 15 15 15 - 1 1 2 1 2 2 - - - 5. Nature of Operations and Principal Activities 2 1 2 2 - - - 1 - 1 1 - - - 1 - 1 1 - - - The Company is a limited liability company and is domiciled and incorporated in Australia. The Company owns a 50% equity interest in the Renison Tin Operation through its 50% stake in the Bluestone Mines Tasmania Joint Venture and comprises the Renison Tin Mine (“Renison”) located 15km north-east of Zeehan on Tasmania’s west coast and the Mount Bischoff Project, placed on care and maintenance in 2010, which is located 80km north of Renison. The Wingellina Nickel-Cobalt Project forms part of the Company’s Central Musgrave Project straddling the triple-point of the Western Australia, Northern Territory and South Australia borders. Wingellina is development-ready and is the largest undeveloped nickel-cobalt project in Australia. On 25 May 2021, the Company announced it had executed a binding terms sheet with NICO Resources Limited for the sale and spin out of its Nickel-Cobalt portfolio. The associated assets and liabilities have been reclassified as held for sale at 30 June 2021 in the consolidated financial statements. The principal activities of the Group during the period were:   Investment in a joint venture company operating a tin mine in Australia; and exploration and development of base metals projects in Australia. There have been no significant changes in the nature of those activities during the year. 4 DIRECTORS’ REPORT (Continued) For the year ended 30 June 2021 6. Financial Results Overview The Group achieved a consolidated profit after income tax of $87.199 million (2020: loss $80.341 million) and includes $64.274 million from the results and divestment of the Group’s Copper assets and the classification of its Nickel assets as held for sale at year end. Key financial results for the Group include:        Total revenue from continuing operations: $93.834 million (2020: $73.243 million); Contingent consideration income of $10.000 million representing the Mt Gordon Copper Payment, plus the agreed fee of $0.250 million. The associated interest charge of $0.750 million is presented in other income; Total cost of sales of continuing operations: $75.145 million (2020: $70.330 million); Cash flows from operating activities: $4.404 million (2020: outflow of $21.043 million); Cash flows from investing activities: $12.688 million (2020: outflow of $31.285 million); Cash flows used in financing activities: $17.715 million (2020: inflow of $55.059 million); and Closing cash and cash equivalents: $13.472 million (2020: $14.095 million). Covid-19 Pandemic Response The COVID-19 pandemic has had a significant impact on, individuals, communities, and businesses globally. Employees at all levels of the Company’s business were asked to change the way they work, and how they interacted professionally and socially. In line with the various Government health measures, the Group implemented significant controls and requirements at all its sites to protect the health and safety of its workforce, their families, local suppliers, and neighbouring communities, while ensuring a safe environment for operations to continue. The Group’s COVID-19 response protocols reinforce, and operate concurrently with, public health advice. They include:         social distancing protocols; suspension of large indoor gatherings; cancellation of all non-essential travel; flexible and remote working plans for employees; access to site restrictions and temperature screening; self-isolation following international travel, development of symptoms or interaction with a confirmed case of COVID-19; increased inventory of hand sanitiser and hygiene supplies; and increased focus on cleaning and sanitation. As a result, while there was minor travel and logistics issues there were no material additional costs or interruptions to the Company’s operation because of Covid -19 during the reporting period. No adjustments have been made to the Group’s full-year financial results for the impacts of COVID-19. However, the scale and duration of possible future Government measures, vaccine rollout, and their impact on the Group’s operations and financial situation, necessarily remains uncertain. 5 DIRECTORS’ REPORT (Continued) For the year ended 30 June 2021 7. Review of Operations TIN DIVISION Renison Tin Operation (50% MLX) The Renison strategy is focussed on continuing to convert ongoing significant in-mine exploration success into a substantial long-life mining operation, to deliver higher cash margins through an increased mining rate, grade, and recovery, whilst continuing to seek productivity improvements and reduce costs. Renison production performance summary Physicals UG ore mined UG grade mined Ore processed Head grade Recovery Tin produced Tin sold Unit t % Sn t % Sn % t t 30 Jun 2021 30 Jun 2020 Movement Movement % 405,379 1.30% 326,750 1.59% 76.48% 3,974 3,658 424,453 1.18% 344,591 1.42% 73.56% 3,591 3,412 (19,074) 0.12% (17,841) 0.17% 2.92% 383 246 (4.49%) 10.17% (5.18%) 11.97% 3.97% 10.67% 7.21% Renison financial performance summary Financial Revenue from continuing activities Cost of sales Gross profit 30 June 2021 30 June 2020 $’000 73,243 $’000 93,834 (75,145) 18,689 (70,330) 2,913 Movement $’000 20,591 (4,815) 15,776 Movement % 28.11% 6.85% 541.47%   Revenue is derived from the Company’s 50% interest in Renison. Increased tin sales and tin prices delivered a 28.11% increase in revenue for the year. Cost of sales increased by $4.815 million for the year due to the following: o o o Royalty expense increased by $2.560 million to $3.960 million (2020: $1.40 million); Plant and equipment depreciation increased by $0.550 million to $3.780 million (2020: $3.230 million); and Employee costs increased by $1.190 million to $14.220 million (2020: $13.030 million). The cost increase includes redundancy and restructuring costs of $0.500 million and an increase in the number of personnel onsite. Key Projects and Focus Areas Area 5 Project Following completion of the Area 5 Optimisation Study, in conjunction with an updated Renison Life-of-Mine Plan (“LOMP”) during June 2020, the execution phase of the Area 5 Project was initiated in July 2020. The objective of the Area 5 Project is to develop and mine the high-grade Area 5 Ore Reserve, including construction of the requisite surface and underground infrastructure to support the development. Key Area 5 Project activities during the period were:     completion of the upper strip and line section of new ventilation network from surface and commencement of raise bore of first underground ventilation shaft. commencement of detailed engineering for a paste-fill plant. West Coast Council (WCC) and Environmental Protection Authority (EPA) approvals commenced with preliminary site environmental clean-up approved. detailed electrical engineering work commenced for the surface infrastructure upgrade with preferred contractor, further long lead items ordered. geotechnical review and detailed design work on the stoping layout have continued through the year with a potential reduction in development requirements above the current LOMP identified. This iterative process will continue to further strengthen the mine plan and ensure robustness of the current LOMP. 6 DIRECTORS’ REPORT (Continued) For the year ended 30 June 2021 7. Review of Operations (continued) Metallurgical Improvement Program The objective of the Metallurgical Improvement Program (“MIP”) is to improve systems to ensure the increased processing throughput rates are sustained and to increase metallurgical recovery. The program is being advanced through ongoing review and updating of control systems and online analytical infrastructure, improved training and communication of standard operating parameters and upgrade or replacement of key processing infrastructure. Key MIP workstreams progressed during the year were:           on-stream analysis system upgrade – commissioning and project hand-over completed. raw water upgrade commissioning completed. UF Falcon rinse water and CCD wash water upgrade – construction commenced. fine gravity spirals replacement selection test work conducted, and preliminary engineering completed for execution. upgrade of gravity table feed distributors – construction commenced. sulphide scavenger cleaner circuit – preliminary engineering commenced. tin flotation and Ultra Fine Falcon circuits upgrades – completed. final concentrate pumping upgrade – engineering study completed. sulphide flotation feed pumping stability – preliminary engineering completed. talc handling - preliminary engineering work completed for execution. Thermal Upgrade Project The Thermal Upgrade Project scoping study was completed during the year. The study examined the production of a low tin grade concentrate as feed for a tin fumer producing a high grade, ~68% Sn, tin fume product suitable for sale to conventional offtakes, and a separate high grade, ~70% Sn, gravity concentrate, with the aim of achieving a step change in recovery beyond that achieved by the Metallurgical Improvement Program. It also considered the development of the full Rentails Project to improve capital efficiency. A decision announced on 26 July 2021, was made to proceed with an update of the Rentails Definitive Feasibility Study (Rentails DFS Update), to enable a final investment decision for development of the full Rentails Project to be made in 2023. The aim is for the Rentails facility to be designed and operated to be Net Zero Emission through the selection of the technology and energy source for the thermal upgrade plant with consideration of the world’s first use of green hydrogen in tin fuming. Mt Bischoff Project Mt Bischoff is a significant historical tin operation, producing some 60,000 tonnes of tin metal since the late 1800’s. The project was placed on care and maintenance in 2010 and is entering a phase of rehabilitation. COPPER DIVISION Sale of Copper Assets Completed On 31 March 2021, Metals X announced the completion of the sale of its copper asset portfolio, including the Nifty Copper Operation, Maroochydore Copper Project, and the Paterson Exploration Project (including the farm-in agreement with IGO) (together “Copper Assets”) to Cyprium Metals Limited (“Cyprium”) Pursuant to the share sale agreement between Metals X and Cyprium (“Agreement”) all of the shares in Paterson Copper Pty Ltd (“Paterson Copper”), which held the Copper Assets through its two 100%-owned subsidiaries Nifty Copper Pty Ltd and Maroochydore Copper Pty Ltd, were transferred from Metals X to Cyprium. Upon completion of the Agreement, Metals X received:   A gross payment of A$24 million in cash (inclusive of A$1.0 million cash deposit previously held in an escrow account), plus a working capital adjustment payment of approximately A$0.5 million, in addition to reimbursement to Metals X of approximately A$2.1 million for holding costs paid for the Copper assets from 1 January 2020 to the date of completion; A$36 million in aggregate in convertible notes issued by Cyprium (“Convertible Notes”) on terms including: 7 DIRECTORS’ REPORT (Continued) For the year ended 30 June 2021 7. Review of Operations (continued) COPPER DIVISION Sale of Copper Assets Completed (continued) - - - - a four-year maturity from 30 March 2021 convertible at maturity at the election of Metals X, or otherwise redeemable by Cyprium at maturity (with annual interest to be paid in shares at the same conversion price, at the election of Metals X); conversion price of $0.355 per Cyprium share; annual coupon of 4% to be capitalised and paid annually on a default basis on each anniversary of 30 March 2021 until maturity (with annual interest to be paid in shares at the same conversion price, at the election of Metals X);  40.6 million options (“Options”) in Cyprium on the following terms: - - 20.3 million Options exercisable at $0.314 per Option with an expiry date of 30 March 2022; and 20.3 million Options exercisable at $0.355 per Option with an expiry date of 30 March 2023. Completion of the Agreement also resulted in cash backed security bonds being provided in support of the Copper Assets, totalling approximately A$6.5 million, being released to the accounts of Metals X. The sale of the Copper Assets underpins the Company’s strategy to focus on the development of its Tin asset portfolio. The funds received as a result of completion under the Agreement provides working capital to Metals X and will assist in facilitating the Company’s reduction in debt. NICKEL DIVISION Spin Out of Nickel-Cobalt Assets On 25 May 2021, the Company announced it had executed a binding terms sheet with NICO Resources Limited (“NICO”) for the sale and spin out of its Nickel asset portfolio, including the Wingellina Nickel-Cobalt Project located in Western Australia and the Claude Hills Project located in South Australia (together the “Nickel Assets”) (the “Terms Sheet”). The Terms Sheet provides for the sale of all of the shares in Metals Exploration Pty Ltd (“Metals Exploration”), currently a 100%-owned subsidiary of the Company, to NICO with eligible Metals X shareholders to receive a direct holding in NICO shares so as to spin out the Nickel assets from the Company (the “Transaction”). Metals Exploration holds the Nickel Assets through Metex Nickel Pty Ltd (“Metex Nickel”). The registered holders of the tenements that comprise the Nickel Assets are two 100%-owned subsidiaries of Metex Nickel, being Hinckley Range Pty Ltd and Austral Nickel Pty Ltd. In conjunction with the Transaction, NICO proposes to undertake an initial public offering of its shares (“IPO”) and apply for listing on the ASX. Under the Terms Sheet, NICO proposes to raise at least $8 million by the issue of:   approximately 20,000,000 fully paid ordinary shares at $0.20 per share to Metals X (“MLX IPO Shares”); and at least 20,000,000 fully paid ordinary shares at $0.20 per share under the IPO. In addition to receiving the MLX IPO Shares, the consideration payable by NICO to Metals X for the purchase of the Nickel Assets will be $5,000,000, to be satisfied by the issue to Metals X of:   25,000,000 shares in NICO at a deemed issue price of $0.20 per share; and 25,000,000 options to subscribe for shares in NICO, exercisable at $0.25 each, expiring 3 years after grant. Immediately prior to, or simultaneously with, the IPO, Metals X proposes to conduct an in-specie distribution of 25,000,000 shares received in NICO as sale consideration to eligible Metals X shareholders, being approximately 35% of NICO’s total issued share capital on a post-IPO undiluted basis, subject to the approval of Metals X shareholders (Distribution). Metals X will retain the remainder of the NICO shares it obtains under the Transaction (being the MLX IPO Shares and the options) and will directly hold approximately 29% of NICO’s total issued share capital on a post-IPO undiluted basis. 8 DIRECTORS’ REPORT (Continued) For the year ended 30 June 2021 7. Review of Operations (continued) The Transaction is subject to a number of conditions, including:          completion of satisfactory due diligence by the parties; any necessary approval from the Foreign Investment Review Board; ASX notifying Metals X that ASX Listing Rule 11.4 does not apply, or alternatively, Metals X shareholders approving the Transaction in accordance with ASX Listing Rule 11.4.1(b); Metals X’s shareholders approving the Distribution; NICO successfully conducting the IPO and listing on the official list of the ASX; ASX notifying Metals X or NICO that the ASX has determined on an “in principle” basis that the Consideration Shares will not be classified as restricted securities under the ASX listing rules if NICO is listed on the official list of the ASX;  any other approvals required pursuant to the ASX Listing Rules and under the Corporations Act 2001 (Cth); Metals X obtaining any third-party consents or assumptions required for the sale of Metals Exploration’s shares; and no material adverse change occurring with respect to the parties from the date of the Terms Sheet until completion of the Transaction, together, the Conditions Precedent. Under the Terms Sheet, the Conditions Precedent were to be satisfied by 21 September 2021, being 120 days after the date of the Terms Sheet. Completion of the Transaction will occur on the date 5 business days after satisfaction of the Conditions Precedent, or such other date as may be agreed between the parties. The parties intend to formalise the agreement to the Transaction on terms substantially similar to those provided in the Terms Sheet in a share sale and purchase agreement which will supersede the Terms Sheet (“Formal Agreement”). Either party may terminate the Terms Sheet in the event the Formal Agreement is not executed after 90 days from the date of the Terms Sheet. An existing 1.75% net smelter royalty on all metals produced from both the Wingellina Nickel-Cobalt Project and the Claude Hills Project, granted by the current tenement holders in favour of Metals X, will be maintained by Metals X after completion of the Transaction. On 28 June 2021, the Company advised the condition requiring satisfactory due diligence by the parties had been completed. On 21 September 2021, the date to satisfy all Conditions Precedence passed. However, the parties are in the process of extending the date for completion of the Conditions Precedent which have resulted from procedural delays in obtaining the necessary approval from the Foreign Investment Review Board. The assets and liabilities associated with Nickel Cobalt project have been reclassified as assets held for sale at 30 June 2021. Refer to note 11 in the consolidated financial statements. 8. Corporate Repayment of the Citibank Finance Facility On 31 July 2020, the Company made a final payment of $30.620 million (including interest to that date) repaying the Citibank Finance Facility (“Citi Facility”) in full. The Citi Facility was subsequently closed. Asia Cheer Finance Facility On 27 July 2020, the Company executed a new unsecured $26.000 million loan facility (“ACT Loan”) with Asia Cheer Trading Limited (ACT), a subsidiary of the Company’s substantial shareholder, APAC Resources Strategic Holdings Limited. The funds from the ACT Loan were used to repay the Citi Facility. The initial key terms of the ACT Loan were: Repayment date: Until 31 January 2021 Establishment fee: Fixed interest rate: 3.5% 1.0% . 9 DIRECTORS’ REPORT (Continued) For the year ended 30 June 2021 8. Corporate (continued) On 15 December 2020, the Company executed a deed of variation to extend the ACT Loan repayment date to 31 July 2021 and increase the facility amount to $31.000 million (“Outstanding Amount”), all other terms and conditions remain unchanged. The $5.000 million increase was used for general corporate expenditure and to provide working capital. On 14 April 2021, the Company repaid $15.500 million, comprising 50% of the Outstanding Amount. At 30 June 2021, the Outstanding Amount was $15.500 million. Refer to Significant Events After Balance Date for changes to the ACT Loan after year end. Mt Gordon Copper Payment Receivable On 24 December 2020, the Company entered into a binding terms sheet with Capricorn Holdings Pty Ltd (“CCH”) and its parent entity EMR Capital Investment (No 6B) (“ECI”) for the $10.000 million conditional copper price payment (“Copper Payment”), detailing the material terms and timing for Copper Payment pursuant to the Mt Gordon Sale Agreement for the now-named Capricorn Copper Tin Mine. On 1 April 2021, the Company announced that it had agreed to an extension of time for the Copper Payment. A summary of the varied key terms agreed is as follows: Payment Terms Payment of the Copper Payment is to be made in two instalments plus accrued interest: Interest: Security: Extension Fee:   $5.000 million (Tranche 1 Payment) to be paid on or before 30 June 2021; and $5.000 million (Tranche 2 Payment) to be paid on or before 24 June 2022. To accrue on the outstanding balance of the Copper Payment at 12% per annum from 25 December 2020 until final payment of the Copper Payment and accrued interest; ECI to provide an additional specific security over a further 10% of the ordinary shares it holds in CCH, bringing the total specific security of shares it holds in CCH to 20% exercisable in the event of a default by CCH; and CCH will pay to Metals X an extension fee of $0.250 million on or before 30 June 2021. This fee is required to be made regardless of whether the Tranche 1 Payment is paid to the Company prior to 30 June 2021. The Copper Payment was recognised in the consolidated statement of comprehensive income as contingent consideration income for $10.250 million. The Copper Payment was received in full after year end. Refer to note 11 Significant Events After Balance Date. Less than Marketable Parcel Share Sale Facility On 12 October 2020, the Company announced details of a share sale facility (“Share Sale Facility”) established for holders of less than a marketable parcel of shares in the Company’s issued capital, defined in the ASX Listing Rules as a parcel of securities of not less than $500 in value. The Share Sale Facility was provided to shareholders without difficulty, and without incurring any costs, that might otherwise make a sale of their shares uneconomic. Based on the closing price on the ASX of Metals X shares of $0.078 on 9 October 2020, a less than marketable parcel of Metals X shares was 6,410 shares or fewer. The Share Sale Facility closed on 30 November 2020 with the final number of Metals X shares sold being 6,242,379 Metals X shares from 2,621 shareholders. 9. Dividends No dividend was paid or declared during the year and no dividend has been recommended or declared by the Directors for year ended 30 June 2021 (30 June 2020: nil). 10 DIRECTORS’ REPORT (Continued) For the year ended 30 June 2021 10. Unissued Shares under Options As at the date of this report, there are 488,024 ordinary unissued shares under option as follows: Number 66,956 421,068 Type Unquoted Unquoted Exercise Price $1.32 $1.32 Expiry Date 30 June 2023 30 June 2024 During the year, 11,496,308 options were forfeited due to performance criteria not being achieved or cessation of employment. 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. There were no shares issued under option in the Company since year end. 11. Significant Events After Balance Date Receipt of Mt Gordon Copper Payment On 8 July 2021, the Company received $11.000 million as settlement of the Copper Payment pursuant to the Mt Gordon Sale Agreement, and subsequent binding variation agreement, with CCH and its parent entity ECI. The Copper Payment included the first and second instalments of $5.000 million each, the agreed extension fee of $0.250 million, and interest due of $0.750 million. Repayment of ACT Loan Facility On 13 July 2021, the Company repaid $7.75 million, comprising 50% of the outstanding principal amount of $15.50 million to ACT. On 27 July 2021, the Company announced it had agreed to extend the Loan Facility Termination Date from 31 July 2021 to 31 January 2021, with all other terms and conditions remaining unchanged. On 30 September 2021, the Company made a final payment of $7.764 million, comprising $7.750 million principal plus interest, to ACT. The Company has now repaid the ACT loan facility in full. 12. Business Strategies and Prospects With the divestments of the non-tin assets, the Company is looking to develop a broader tin portfolio. This may be through expansions of its existing operations or through acquiring interests in other operations. The Company will also look to extract the maximum value from its participation in the financial instruments and shareholdings in the organisations continuing with its former copper and nickel assets. The Group expects to continue its participation in the Renison joint venture, undertaking exploration, mining, processing, production, and marketing of tin. These are described in more detail in the Review of Operations. 13. Environmental, Regulation and Performance The Group’s operations are subject to the relevant environmental protection legislation (Commonwealth and State legislation). The Group holds various environmental licenses issued under these laws, to regulate its mining and exploration activities in Australia. These licenses include conditions and regulations in relation to specifying limits on discharges into the air, surface water and groundwater, rehabilitation of areas disturbed during mining and exploration activities and the storage of hazardous substances. All environmental performance obligations are monitored by the Board of directors and subjected from time to time to Government agency audits and site inspections. There have been no material breaches of the Group’s licenses and all mining and exploration activities have been undertaken in compliance with the relevant environmental regulations. 14. Corporate Governance In recognising the need 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 at https://www.metalsx.com.au/aboutus/ corporate-governance/. 11 DIRECTORS’ REPORT (Continued) For the year ended 30 June 2021 15. Remuneration Report - Audited The Directors of Metals X present the Remuneration Report (the “Report”) for the Group for the year ended 30 June 2021. This Report forms part of the Directors’ Report and has been audited in accordance with section 300A of the Corporations Act 2001 and its regulations. This Report details the remuneration arrangements for the Company’s Key Management Personnel (“KMP”) defined as those who directly or indirectly, have authority and responsibility for planning, directing, and controlling the major activities of the Group, including any Director (whether executive or otherwise) and Executives of the Company. 15.1 Remuneration Policy The Board recognises that the Company’s performance depends upon the quality of its Directors and Executives. To achieve its financial and operating activities, the Company must attract, motivate, and retain highly skilled Directors and Executives. The Company embodies the following principles in its remuneration framework:     Provides competitive rewards to attract high calibre Directors and Executives; Structures remuneration at a level that reflects the Executive’s duties and accountabilities and is competitive within Australia; Benchmarks remuneration against appropriate industry groups; and Aligns Executive incentive rewards with the creation of value for shareholders. Performance related executive remuneration, including cash bonuses, are based on the Company’s and individual performance, and are determined at the Board’s discretion. 15.2 Company Performance The table below shows the Company’s financial performance over the last five years. Performance summary 30 June 2021 30 June 2020 30 June 2019 30 June 2018 30 June 2017 Closing share price $0.21 $0.08 $0.25 $0.80 $0.67 (Loss)/profit per share from continuing operations (cents) Net assets per share Total shareholder return Dividend paid per shares (cents) 2.53 (1.46) (17.17) (4.30) (17.43) $0.15 172% - $0.06 (68%) - $0.15 (69%) - $0.28 19% - $0.27 12% 1.00 15.3 Remuneration and Nomination Committee Responsibility The Remuneration and Nomination Committee (the “Committee”) is a subcommittee of the Board and is responsible for making recommendations to the Board on KMP remuneration, and the KMP remuneration framework and incentive plan policies. The Committee assesses the appropriateness of the nature and amount of remuneration of KMP 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 KMP. To ensure the Committee is fully informed when making remuneration decisions, it can seek external remuneration advice. No external consultants were utilised during the current year. 15.4 Remuneration of Non-Executive Directors The Company’s Non-Executive Director fee policy is designed to attract and retain high calibre directors who can discharge the roles and responsibilities required in terms of good governance, strong oversight, independence, and objectivity. The Company’s Constitution and the ASX listing rules specify that the aggregate remuneration of Non- Executive Directors, shall be approved periodically by shareholders. The last determination was at the Annual General Meeting held on 26 November 2014 when shareholders approved an aggregate fee pool of $600,000 per year. 12 DIRECTORS’ REPORT (Continued) For the year ended 30 June 2021 15. Remuneration Report – Audited (continued) The amount of the aggregate remuneration sought to be approved by shareholders and the way it is paid to Non-Executive Directors is reviewed annually. 15.5 Remuneration of Executives In determining Executive remuneration, the Committee aims to ensure that remuneration practices are:      Competitive and reasonable, Enabling the Company to attract and retain high calibre talent; Aligned to the Company’s strategic and business objectives and the creation of shareholder value; Transparent and easily understood; and Acceptable to shareholders. The Company’s approach to remuneration ensures that remuneration is competitive, performance-focused, clearly links appropriate reward with desired business performance, and is simple to administer and understand by Executives and shareholders. 15.6 Executive Remuneration Structure The Company’s remuneration structure provides for a combination of fixed and variable pay with the following components fixed remuneration, short-term incentives (“STI”) and long-term incentives (“LTI”). The Company does not currently consider the issue of long-term incentive (“LTI”) to Directors and Executives to be appropriate. 15.7 Fixed Remuneration Fixed remuneration consists of base salary, superannuation and other non-monetary benefits designed to reward for:    The scope of the executive’s role; The executive’s skills, experience, and qualifications; and Individual performance. 15.8 Performance Linked Compensation – STI Directors and Executives may have an STI component included in their remuneration package representing a meaningful “at risk” short-term incentive payment. The payment will be “at risk” in that it will only be payable if a set of clearly defined and measurable performance metrics or Key Performance Indicators (“KPI”) have been met in the applicable performance period. The KPI’s may include a combination of Company KPI’s and Individual KPI’s. The Board must set KPI’s that are based on metrics that are measurable, transparent, and achievable, designed to motivate and incentivise the recipient to achieve high performance, and are aligned with the Company’s short-term objectives and shareholder value creation. The STI, if achieved, will be paid annually in cash depending on the eligible employee’s employment contract. STI opportunities will vary from employee to employee depending on role and responsibility and will be set out in employee’s employment contract. The maximum STI award for the Executive Director for 2021 is $200,000 and represents 67% of FY2021 total fixed remuneration (“TFR”) being subject to performance related criteria On 20 July 2021, the Remuneration and Nomination Committee considered the achievement of the Executive Director STI KPI’s at 30 June 2021 and approved a cash bonus payment of $150,000 to Mr Brett Smith. The STI award represents 50% of Executive Director TFR for FY2021. There were no STI payments approved or paid during FY2020. 13 DIRECTORS’ REPORT (Continued) For the year ended 30 June 2021 15. Remuneration Report – Audited (continued) The STI award threshold for the Directors Executives are subject to annual review of the Board of Directors. KPIs will be set annually as part of the Annual Business Planning Cycle and are targeted to be finalised no later than the 31 July of each financial year as follows:     KPIs for the Company and Executive Director are set and approved by the Board; KPIs for Senior Executives are set by the Executive Director and approved by the Board; KPIs will be reviewed by the Board to ensure that hurdles are objectively measurable and aligned with Company strategy; and KPI achievement may be subject to ‘gate way’ tests as itemised for a particular KPI (for example, irrespective of performance, a safety KPI will not be deemed achieved in the event that the Company experiences a fatality). KPI Targets and Stretch Targets will generally be aligned with the Company’s strategic plan and may include HSE metrics, financial metrics, delivery of projects and growth initiatives, sustainability initiatives and improvements to Company systems and processes. KPI Targets are not the same as Budget Targets. Philosophically, employees are paid their total fixed remuneration (“TFR”) for delivering budget performance and are paid “at risk” compensation for delivering better than budget performance. Stretch performance should be a level beyond this. Targets and Stretch Targets will be developed as part of the Annual Business Planning Cycle. The Board is responsible for the determination of whether the KPI Targets or Stretch Targets have been achieved and how much of the STI will be payable for each performance period. In making such determination it may obtain external expert advice. 15.9 Equity Based Compensation – LTI Long-term incentives reward Directors’ and Executives in a manner which aligns this element of remuneration with the creation of shareholder wealth. As such LTI’s may be offered to Directors’ and Executives’ who can influence the generation of shareholder wealth and thus have an impact on the Company’s performance. The Company prohibits Directors’ or Executives’ from entering arrangements to protect the value of any Company shares or options that the Director or Executive has become entitled to as part of their remuneration package. This includes entering contracts to hedge their exposure. There was no equity-based compensation issued to KMP during the financial year (2020: nil). 15.10 Executive Employment Arrangements and Service Contracts Compensation and other terms of employment for KMP are formalised in contracts of employment. The major provisions of each of the agreements relating to compensation are set out below. A summary of the key terms of employment agreements for KMP is set out below. The Company may terminate employment agreements immediately for cause, in which the executive is not entitled to any payment other than the value of fixed remuneration and accrued leave entitlements up to the termination date. 14 DIRECTORS’ REPORT (Continued) For the year ended 30 June 2021 15. Remuneration Report - Audited (continued) Name Fixed Remuneration Variable STI Super- annuation Resigned Notice period (months) Maximum termination payment (months) Directors Mr Peter Gunzburg1 Mr Brett Smith2 Mr Patrick O’Connor1 Mr Grahame White1 Executives Mr Michael Spreadborough3 Mr Daniel Broughton4 Simon Rigby Stephen Robinson Fiona Van Maanen $100,000 $300,000 $70,000 $70,000 - $150,000 - - $2,500 / day $100,000 $325,000 $375,000 $365,297 - - - - - 9.5% 9.5% 9.5% 9.5% - - 9.5% 9.5% 9.5% - - - - - - 4 Dec 21 4 Dec 21 4 Dec 21 - 6 - - 1 - 1 3 3 - 6 - - - - 6 6 6 1 On 20 July 2021, the Remuneration and Nomination Committee considered Non-Executive Director (“NED”) remuneration and increased NED remuneration for the Chairman to $110,000 and other NEDs to $80,000with effect from 1 July 2021. 2 On 20 July 2021, the Remuneration and Nomination Committee considered the achievement FY2021 STI KPI’s and approved a cash bonus payment of $150,000 to Mr Brett Smith. The STI award represents 50% of FY2021 TFR (exclusive of superannuation). On 28 July 2021, Mr Brett Smith’s TFR increased from $300,000 to $400,000 per annum exclusive of superannuation, plus a total STI award of up to 66% of TFR payable on achievement of FY2022 Executive STI KPI’s. 3 Mr Michael Spreadborough was employed under a service agreement on a fixed day rate that is inclusive of superannuation and any other employment entitlements. Mr Spreadborough resigned from the Company on 6 August 2021. 4 Mr Daniel Broughton provides Chief Financial Officer services under a separate service agreement between Dragon Mining Limited and Metals X. 15.11 Equity Instruments No options over ordinary shares in the Company were granted as compensation to KMP during the year and no options vested during the financial year. 15.12 Modifications of Terms of Equity-Settled Share-Based Payment Transactions No terms of equity-settled share-based payment transactions (including options and rights granted as compensation to KMP) have been altered or modified by the issuing entity during the financial year. 15.13 Exercise of Options Granted as Compensation During the financial year, no shares were issued on the exercise of options previously granted as compensation to KMP. 15.14 Analysis of Options and Rights Over Equity Instruments Granted as Compensation No options have been issued, granted, or will vest to KMP personnel of the Company. 15.15 Analysis of movements in options and rights There were no options granted during the financial year ended 30 June 2021 and 30 June 2020 to KMP. 15 DIRECTORS’ REPORT (Continued) For the year ended 30 June 2021 15. Remuneration Report – Audited (continued) 15.16 Shareholdings of Directors and Key Management Personnel Ordinary Fully Paid Shares Balance 1 July 2020 Granted as Remuneration Net Change Other * Balance 30 June 2021 Directors Mr Peter Gunzburg Mr Brett Smith Mr Patrick O’Connor Mr Grahame White Executives Mr Simon Rigby Mr Stephen Robinson Ms Fiona Van Maanen Mr Daniel Broughton Total - 160,000 1,000,000 - 23,334 338,983 607,882 - 2,130,199 - - - - - - - - - - 50,000 - - (23,334) (338,983) (607,882) - (920,199) - 210,000 1,000,000 - - - - - 1,210,000 Ordinary Fully Paid Shares Balance 1 July 2019 Granted as Remuneration Net Change Other * Balance 30 June 2020 Directors Mr Patrick O’Connor Mr Patrick Gunzburg Mr Brett Lambert Mr Anthony Polglase Mr Brett Smith Mr Grahame White Mr Xingwang Bao Executives Mr Simon Rigby Mr Stephen Robinson Ms Fiona Van Maanen Total - - - - - - - 20,000 129,000 521,041 670,041 - - - - - - - - - - - 1,000,000 - - - 160,000 - - 3,334 209,983 86,841 1,460,158 1,000,000 - - - 160,000 - - 23,334 338,983 607,882 2,130,199 *Represents acquisitions and disposals on market and shares issued under the dividend reinvestment plan, as well as departures and appointments. 16 15.17 Directors and Executive Officers Remuneration In dollars Directors Mr Peter Gunzburg1 (Non-Executive Chairman) Mr Brett Smith (Executive Director) Mr Grahame White1 (Non-Executive Director) Mr Patrick O'Connor2 (Non-Executive Director) Mr. Xingwang Bao3 (Non-Executive Director) Mr. Brett Lambert3 (Independent Non-Executive Director) Mr Anthony Polgase3 (Independent Non-Executive Director) Total all specified Directors 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 Specified Executives 2021 Mr Michael Spreadborough 2020 (Chief Executive Officer) Mr Simon Rigby5 2021 (GM Geology & Business Development) 2020 Mr Stephen Robinson5 2021 2020 (GM Projects and Planning) Ms Fiona Van Maanen5 2021 2020 (CFO and Company Secretary) Mr Daniel Broughton6 2021 2020 (Chief Financial Officer) 2021 2020 2021 2020 Total all specified Directors and Executives Total all named Executives Short-Term Non- Monetary Benefits AUD Salary & Fees AUD Bonuses AUD Long-Term Benefits Employee Entitlements AUD Post- Employment Super- annuation Benefits AUD Share Based Payments Options AUD Termination Payments 98,172 - 294,677 46,237 70,833 - 110,167 270,221 - - 2,151 55,054 2,192 55,054 578,192 426,566 591,777 359,663 171,878 400,437 169,231 389,793 170,358 391,726 50,000 - 1,153,244 1,541,619 1,731,436 1,968,185 - - - - - - 4,276 2,816 - - - - - - 4,276 2,816 10,928 1,661 7,517 7,130 7,327 10,858 7,517 11,053 - - 33,289 30,702 37,565 33,518 - - 150,000 - - - - - - - - - - - 150,000 - - - - - - - - - - - - - 150,000 - - - - - - - - - - - - - - - - - - - 12,103 17,999 11,840 32,876 15,715 8,831 - - 39,658 59,706 39,658 59,706 9,326 - 42,994 4,392 6,729 - 6,806 6,893 - - 204 5,230 219 5,230 66,278 21,745 - - 16,328 38,042 16,077 20,833 16,851 30,783 - - 49,256 89,658 115,534 111,403 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (36,838) 46,085 (45,660) 58,269 (44,591) 56,874 - - (127,089) 161,228 (127,089) 161,228 - - 91,667 - 112,981 - 273,973 - - - 478,621 - 478,621 - Total Emoluments AUD 107,498 - 487,671 50,629 77,562 - 121,249 279,930 - - 2,355 60,284 2,411 60,284 798,746 451,127 602,705 361,324 262,655 509,693 271,796 512,629 439,823 499,267 50,000 - 1,626,979 1,882,913 2,425,725 2,334,040 1Appointed 10 July 2020. 2Resigned as Executive Chairman, reappointed Non-Executive Director 10 July 2020. 3Resigned 12 November 2020. 4Resigned 6 August 2021. 5Resigned 4 December 2020. 6Appointed 4 December 2020. 7Share based payments have been reversed as a result of resignations Proportion of Remuneration Performance Related % - - 31% - - - - - - - - - - - 19% - - - - 9% - 11% - 11% - - - 9% 1% 7% 17 17 DIRECTORS’ REPORT (Continued) For the year ended 30 June 2021 16. Indemnification and Insurance of Directors, Officers and Auditors The Company provides Directors’ and Officers’ liability insurance covering Directors’ and Officers of the Company against liability in their role with the Company, except where:   The liability arises out of conduct involving a wilful breach of duty; or There has been a contravention of Sections 232(5) or (6) of the Corporations Act 2001. The Directors’ have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of this insurance, as such disclosure is prohibited under the terms of the contract. To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year. 17. Lead Auditor’s Independence Declaration The Directors have received confirmation from the auditor of Metals X that they are independent of the Company. A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is included on page 65 of this report. 18. Non-Audit Services The following non-audit services were provided by the entity’s auditor, Ernst & Young. The Directors are satisfied that the provision of non-audit is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor independence was not compromised. Ernst & Young received or are due to receive the following amounts for the provision of non-audit services (refer to note 22 of the consolidated financial statements): Tax Compliance Services $0.104 million 19. Rounding The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (unless otherwise stated), and where noted ($’000) under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors Report) Instrument 2016/191. The Company is an entity to which the instrument applies. Signed in accordance with a resolution of the Directors’. Brett Smith Executive Director 30 September 2021 18 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2021 Continuing operations Revenue Cost of sales Gross profit Contingent consideration income Other income General and administrative expenses Commodity and foreign exchange (loss)/gain Finance costs Fair value change in financial assets Share-based payment reversal/(charges) Rehabilitation provision Profit before tax Income tax expense Profit/(loss) for the period from continuing operations Discontinued operations Notes 3 5(a) 4 4 5(b) 5(c) 5(d) 5(e) 21 17 6 2021 $'000 93,834 (75,145) 18,689 10,250 1,945 (5,775) (1,866) (2,999) 2,337 344 - 22,925 - 2020 $'000 73,243 (70,330) 2,913 - 448 (6,383) 673 (1,494) (83) (137) (8,360) (12,423) - 22,925 (12,423) Profit/(loss) for the period from discontinued operations 25 64,274 (67,918) Profit/(loss) attributable to: Members of the parent 87,199 (80,341) Total comprehensive income/(loss) attributable to: Members of the parent 87,199 (80,341) Basic Earnings and diluted earnings/(loss) per share attributable to the ordinary equity holders of the parent (cents per share) From continuing operations From discontinued operations Total 7 7 2.53 7.08 9.61 (1.46) (7.99) (9.45) 19 CONSOLIDATED STATEMENT OF FINANCIAL POSITION For the year ended 30 June 2021 Notes Current assets Cash and cash equivalents Trade and other receivables Inventories Prepayments Assets classified as held for sale Convertible note receivable Derivative financial instruments Total current assets Non-current assets Other receivables Convertible note receivable Derivative financial instruments Property, plant, and equipment Mine properties and development costs Exploration and evaluation expenditure Total non-current assets Total assets Current liabilities Trade and other payables Liabilities directly associated with assets classified as held for sale Provisions Interest bearing liabilities Total current liabilities Non-current liabilities Provisions Interest bearing liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital Accumulated losses Share based payments reserve Total equity 8 9 10 11 12 12 9 12 12 13 14 15 16 11 17 18 17 18 19 20 21 2021 $'000 13,472 23,427 20,526 570 4,648 360 2,332 65,335 3,457 37,246 3,091 36,034 37,884 352 118,064 183,399 8,675 43 3,531 17,364 29,613 12,456 2,684 15,140 44,753 138,646 2020 $'000 14,095 6,153 20,328 885 - - 1,532 42,993 9,978 - 50 43,315 39,633 13,993 106,969 149,962 7,518 - 3,680 33,108 44,306 51,397 2,468 53,865 98,171 51,791 332,406 (221,597) 27,837 138,646 332,406 (308,796) 28,181 51,791 20 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 30 June 2021 Cash flows from operating activities Note Receipts from customers Payments to suppliers and employees Interest received Other income Interest paid Net cash flows from/(used in) operating activities 8 Cash flows from investing activities Payments for property, plant, and equipment Payments for mine properties and development Payments for exploration and evaluation Payments for other financial assets Proceeds from sale of financial assets Proceeds from disposal of subsidiary Proceeds from sale of property plant and equipment Proceeds from release of performance bond facility Net cash flows from/(used in) investing activities Cash flows from financing activities Repayment of borrowings Payment of lease and hire purchase liabilities Payments for share issue costs Payments for dividends Proceeds from borrowings Proceeds from share issue Net cash flows (used in)/from financing activities Net (decrease)/increase in cash and cash equivalents Cash at the beginning of the year Cash and cash equivalents at the end of the year 8 2021 $'000 86,499 (79,197) 57 68 (3,023) 4,404 (12,618) (8,500) (1,549) (30) 78 26,768 2,018 6,521 12,688 (47,985) (3,039) - - 33,309 - (17,715) (623) 14,095 13,472 2020 $'000 147,468 (167,549) 441 230 (1,633) (21,043) (10,405) (18,230) (3,919) - 155 - 319 795 (31,285) (4,814) (5,369) (2,330) (58) 34,899 32,731 55,059 2,731 11,364 14,095 21 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2021 At 1 July 2019 Loss for the period Other comprehensive income, net of tax Total comprehensive loss for the period Transactions with owners in their capacity as owners Issue of share capital Share issue costs Other Share-based payments At 30 June 2020 At 1 July 2020 Profit for the period Other comprehensive income, net of tax Total comprehensive profit for the period Transactions with owners in their capacity as owners Issue of share capital Share issue costs Other Share-based payments At 30 June 2021 Issued capital Accumulated losses Share based payments reserve Total Equity $'000 302,005 - - - 32,731 (2,330) 30,401 - 332,406 332,406 - - - - - - - $'000 (228,456) (80,340) - (80,340) - - - - (308,796) (308,796) 87,199 - 87,199 - - - - 332,406 (221,597) $'000 28,044 - - - - - - 137 28,181 28,181 - - - - - - $'000 101,593 (80,340) - (80,340) 32,731 (2,330) 30,401 137 51,791 51,791 87,199 - 87,199 - - - (344) 27,837 (344) 138,646 22 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2021 1. Corporate Information and Summary of Accounting Policies The financial report of Metals X Limited (the “Company” or “Parent”) for the year ended 30 June 2021 was authorised for issue in accordance with a resolution of the Directors on 30 September 2021. The Company was incorporated and domiciled in Australia and is a for profit company limited by shares which are publicly traded on the Australian Securities Exchange. The consolidated financial statements comprise the financial statements of the Parent and its subsidiaries (the “Group”). The Company’s registered office address is Level 5, 197 St Georges Terrace, Perth WA 6000. a) Basis of preparation of the consolidated financial report The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has been prepared on a historical cost basis, except for certain financial instruments measured at fair value through profit and loss. The amounts contained in the financial statements have been rounded to the nearest thousand dollars unless otherwise stated (where rounding is applicable) under the option available to the Group under ASIC Corporations (Rounding in Financial Report) Instrument 2016/191. Both the functional and presentation currency of the Group is Australian dollars (A$). b) Statement of compliance The financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board and International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. c) New and amended accounting standards and interpretations Since 1 July 2019, the Group has adopted all Accounting Standards and Interpretations effective from 1 July 2020. The accounting policies adopted are consistent with those of the previous financial year. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective. d) Changes in accounting policies and disclosures Certain new and amended accounting standards and interpretations have been issued that are not mandatory for 30 June 2021 reporting periods. These standards and interpretations have not been early adopted. The Company has performed a preliminary assessment of the standards and interpretations below and anticipates no material impact on the balances and transactions presented in these financial statements when they come into effect. Reference to the Conceptual Framework – Amendments to IFRS 3 – Business Combinations (effective 1 January 2022) The amendments add an exception to the recognition principle of IFRS 3 to avoid the issue of potential ‘day 2’ gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets or IFRIC 21 Levies, if incurred separately. The exception requires entities to apply the criteria in IAS 37 or IFRIC 21, respectively, instead of the Conceptual Framework, to determine whether a present obligation exists at the acquisition date. At the same time, the amendments add a new paragraph to IFRS 3 to clarify that contingent assets do not qualify for recognition at the acquisition date. The amendments are intended to update a reference to the Conceptual Framework without significantly changing requirements of IFRS 3. The amendments will promote consistency in financial reporting and avoid potential confusion from having more than one version of the Conceptual Framework in use. Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 (effective 1 January 2022) The amendment prohibits entities from deducting from the cost of an item of property, plant and equipment (PP&E), any proceeds of the sale of items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss. Classification of Liabilities as Current or Non-current – Amendments to IAS 1 (effective 1 January 2023) The amendments clarify that if an entity’s right to defer settlement of a liability is subject to the entity complying with specified conditions, the entity has a right to defer settlement of the liability at the end of the reporting period if it complies with those conditions at that date. The amendments also clarify that the requirement for the right to exist at the end of the reporting period applies regardless of whether the lender tests for compliance at that date or later. 23 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 1. Corporate Information and Summary of Accounting Policies (continued) Amendments to IAS 37 - Onerous Contracts – Costs of Fulfilling a Contract (effective 1 January 2022) The amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets to specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making. The amendments apply a ‘directly related cost approach’. The costs that relate directly to a contract to provide goods or services include both incremental costs (e.g., the costs of direct labour and materials) and an allocation of costs directly related to contract activities (e.g., depreciation of equipment used to fulfil the contract as well as costs of contract management and supervision). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. The amendments are intended to provide clarity and help ensure consistent application of the standard. Entities that previously applied the incremental cost approach will see provisions increase to reflect the inclusion of costs related directly to contract activities, whilst entities that previously recognised contract loss provisions using the guidance from the former standard, IAS 11 Construction Contracts, will be required to exclude the allocation of indirect overheads from their provisions. AIP IFRS 1 First-time Adoption of International Financial Reporting Standards – Subsidiary as a first-time adopter (effective 1 January 2022) The amendment permits a subsidiary that elects to apply paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported in the parent’s consolidated financial statements, based on the parent’s date of transition to IFRS if no adjustments were made for consolidation procedures and for the effects of the business combination in which the parent acquired the subsidiary. This amendment is also applied to an associate or joint venture that elects to apply paragraph D16(a) of IFRS 1. AIP IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. There is no similar amendment proposed for IAS 39. An entity applies the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment. Amendments to IFRS 4, IFRS 16, IFRS 7, IFRS 9 and IAS 39 - Interest Rate Benchmark Reform – Phase 2 The amendments provide temporary reliefs which address the financial reporting effects when an interbank offered rate is replaced with an alternative nearly risk-free interest rate. Definition of Accounting Estimates - Amendments to IAS 8 (effective 1 January 2023) The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting estimates. Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2 (effective 1 January 2023) The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures. e) Basis of consolidation The consolidated financial statements comprise the financial statements of the Parent and its subsidiaries (the ‘Group') as at 30 June 2021. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and can affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:    power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee); exposure, or rights, to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect its returns. When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: 24 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 1. Corporate Information and Summary of Accounting Policies (continued)    the contractual arrangement with the other vote holders of the investee; rights arising from other contractual arrangements; and the Group’s voting rights and potential voting rights The Group re-assesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income, and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-Group assets and liabilities, equity, income, expenses, and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. f) Transactions and balances Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange at the reporting date. All exchange differences in the consolidated financial report are taken to the profit or loss. g) Other accounting policies Significant and other accounting policies that summarise the measurement basis used and are relevant in understanding of the consolidated financial statements are provided throughout the notes to the consolidated financial statements. h) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction, or production of a qualifying asset (i.e., an asset that necessarily takes a substantial amount of time to prepare for its intended use or sale) are capitalised as part of the cost of that asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. i) Goods and service taxes (GST) 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 consolidated statement of financial position. Cash flows are included in the consolidated 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. j) Significant accounting judgements, estimates and assumptions The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the consolidated 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, independent experts, 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 have been made as well as the following key estimates and assumptions that have the most significant impact on the consolidated financial statements. 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. 25 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 1. Corporate Information and Summary of Accounting Policies (continued) Note Key estimate or judgement Revenue – note 3(a), 3(b) and 3(c)   Identification of the enforceable contract Identification of performance obligations for arrangements subject to CIF Incoterms  Principal versus agent considerations – freight/shipping services  Determining the timing of satisfaction of freight/shipping services Property, plant and equipment and depreciation - note 13  Life of mine method of depreciation provided incorporating residual values and useful lives Mine property and development and amortisation - note 14 Exploration expenditure - note 15  Determination of mineral resources and ore reserves  Life of mine method of amortisation based on units of production (“UOP”) resulting in an amortisation charge proportional to the depletion of the economically recoverable mineral reserves Impairment of capitalised mine development expenditure   Estimate of future capital development expenditure  Impairment of capitalised exploration and evaluation expenditure Provisions - note 17 Convertible note receivable Derivative financial instruments – note 2(g), 12 and 13 Future cash flows (amounts and timing) required to rehabilitate   Discount rate  Share price volatility  Determination of forecast commodity prices  Market interest rate 2. Financial Risk Management Objectives and Policies The Group’s principal financial instruments comprise receivables, payables, lease liabilities, cash and short-term deposits, derivative financial instruments, and equity investments. Risk exposures and responses The Group manages its exposure to key financial risks in accordance with the Group’s financial risk management policy. The objective of the policy is to support the delivery of the Group’s financial targets while protecting future financial security. The Group enters derivative transactions, principally forward commodity swaps, from time to time, to manage the commodity price risks arising from the Group’s operations. The Group did not have any derivative transactions as at 30 June 2021 of these types. Historically, these derivatives provide economic hedges, but do not qualify for hedge accounting and are based on limits set by the Board. The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, commodity risk, credit risk, equity price risk and liquidity risk. The Group uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels of exposure to interest rate, foreign exchange risk and assessments of market forecasts for interest rate, foreign exchange, and commodity prices. Ageing analysis and monitoring of receivables are undertaken to manage credit risk, liquidity risk is monitored through the development of future rolling cash flow forecasts. Primary responsibility for identification and control of financial risks rests with the Board. The Board reviews and agrees policies for managing each of the identified risks, including for interest rate risk, credit allowances and cash flow forecast projections. Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in the notes to the consolidated financial statements. The accounting classification of each category of financial instruments, as defined in the notes to the consolidated financial statements, and their carrying amounts, are set out below: 26 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 2. a) Financial Risk Management Objectives and Policies (continued) Interest rate risk The Group’s exposure to risks of changes in market interest rates relate primarily to the Group’s interest-bearing loans, trade receivables at fair value through the profit and loss, financial assets at fair value through profit or loss, convertible note receivable, other receivables, and cash balances. The Group’s policy is to manage its interest cost using fixed rate debt where possible. The Asia Cheer Trading (ACT) loan facility has a fixed interest rate that is on commercial terms. The Group regularly reviews its interest rate exposure. Within this analysis consideration is given to potential renewals of existing positions, alternative financing positions and the mix of fixed and variable interest rates. The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date. The sensitivity analysis is for variable rate interest bearing loans and cash balances. At 30 June 2021, if interest rates had moved by a reasonably possible 0.25%, as illustrated in the table below, with all other variables held constant, post tax profits and equity would have been affected as follows: Judgement of reasonably possible movements: + 0.25% (25 basis points) - 0.25% (25 basis points) Post tax profit higher/(lower) Other comprehensive income higher/(lower) 2021 $’000 17 (17) 2020 $’000 (23) 23 2021 $’000 - - 2020 $’000 - - A sensitivity of +0.25% or -0.25% has been selected as this is considered reasonable given the current level of short- term and long-term interest rates. The movements in profit are due to possible higher or lower interest payable or receivable from variable rate interest bearing loans and cash balances. At the reporting date the Group’s exposure to interest rate risk for classes of financial assets and financial liabilities is set out below. 2021 ($’000) Financial assets Cash and cash equivalents Trade receivables at fair value through the profit and loss Other receivables Convertible note receivable Financial assets at fair value through profit or loss Financial liabilities Trade and other payables Interest bearing liabilities Net financial assets/(liabilities) 2020 ($’000) Financial assets Cash and cash equivalents Trade receivables at fair value through the profit and loss Other receivables Other financial assets Commodity forward contracts Financial liabilities Trade and other payables Interest bearing liabilities Net financial assets/(liabilities) Floating interest 12,869 9,147 -  - - 26,016  - - - 22,016 Fixed interest Non-interest bearing Total carrying amount 60 - 11,000 22,095 - 33,155  - (20,048) (20,048) 14,161 543 - - 15,511 5,423 21,477  (8,675) - (8,675) 12,802 13,472 9,147 11,000  37,606 5,423 76,648  (8,675) (20,048) (28,723) 48,979 Floating interest Fixed interest Non-interest bearing Total carrying amount 9,674 1,812 4,077 - 1,532 17,095 - (30,186) (30,186) (13,091) 74 - - 9,978 - 10,052 - (5,390) (5,390) 4,662 4,347 - 266 - - 4,613 (7,518) - (7,518) (2,905) 14,095 1,812 4,342 9,978 1,532 31,759 (7,518) (35,576) (43,094) (11,335) 27 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 2. b) Financial Risk Management Objectives and Policies (continued) Credit risk Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted. The Group’s maximum exposures to credit risk at reporting date in relation to each class of financial asset is the carrying amount of those assets as indicated in the consolidated statement of financial position. Credit risk is managed on a Group basis. Credit risk predominantly arises from cash, cash equivalents, derivative financial instruments, deposits with banks and financial institutions and receivables. The Group has in place policies that aim to ensure that derivative counterparties and cash transactions are limited to high credit quality financial institutions and that the amount of credit exposure to any one financial institution is limited as far as is considered commercially appropriate. The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates: Cash and cash equivalents and other financial assets are held with ANZ Bank and the National Australia Bank, Australian Banks with an AA- credit rating (Standard & Poor’s). Significant concentrations of credit risk are in relation to cash and cash equivalents with Australian banks. Receivable balances are monitored on an ongoing basis with the result that the Group does not have a significant exposure to bad debts. The Group does not hold any credit derivatives to offset its credit exposure. The Group trades only with recognised, creditworthy third parties and as such collateral, letters of credit or other forms of credit insurance is not requested nor is it the Group’s policy to securitise its trade and other loans and receivables. The Group evaluates the concentration of risk with respect to trade receivables as low, as its customers are in several jurisdictions and operate in largely independent markets. At 30 June 2021, the Group had two customers (2020: two customers) that each owed the Group $8,899,000 and $248,000 respectively and accounted for approximately 100% (2020: 29%) of all receivables owing. At 31 June 2021, there are $4.031million trade receivables at amortised cost that are past due. c) Equity security price risk The Group’s revenues may be exposed to equity security price fluctuations arising from investments in equity securities. At 30 June 2021, the Group did not hold any listed equity securities and the Groups investments in unlisted equity securities is not considered material. d) Foreign currency risk As a result of tin concentrate sales receipts being denominated in US dollars, the Group’s cash flows can be affected by movements in the US dollar/Australian dollar exchange rate. At the balance date the Group had the following exposure to US dollar foreign currency: Cash and cash equivalents Trade and other receivables 2021 $’000 543 9,147 9,690 2020 $’000 4,347 1,812 6,159 At 30 June 2021, if foreign currency rates had moved by a reasonably possible 10%, as illustrated in the table below, with all other variables held constant, post tax profits and equity would have been affected as follows: Judgement of reasonably possible movements: A$/US$ Rate +10% A$/US$ Rate -10% Post tax profit higher/(lower) Other comprehensive income higher/(lower) 2021 $’000 969 (969) 2020 $’000 616 (616) 2021 $’000 - - 2020 $’000 - - A sensitivity of +10% or -10% has been selected as this is considered reasonable given recent fluctuations in foreign currency rates and management’s expectations of future movements. The overall sensitivity for post-tax profits in 2021 is higher than 2020 due to an increase in the value exposed to fluctuations in US dollar foreign currency. 28 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 2. e) Financial Risk Management Objectives and Policies (continued) Commodity price risk The Group is exposed to movements in the tin price. As part of the risk management policy of the Group, a variety of financial instruments (such as forward commodity swaps) may be used from time to time to reduce exposure to unpredictable fluctuations in the project life revenue streams. At 30 June 2021, the Group did not hold any commodity derivatives (30 June 2020: $1.532 million). f) Liquidity risk Liquidity risk arises from the financial liabilities of the Group and the subsequent ability to meet the obligations to repay the financial liabilities as and when they fall due. The Group’s objective is to maintain a balance between continuity of funding and flexibility using finance and hire purchase leases. The tables below reflect all contractually fixed payables for settlement repayment resulting from recognised financial liabilities as of 30 June 2021. Cash flows for financial liabilities without fixed amount or timing are based on the conditions existing as 30 June 2021. The remaining contractual maturities of the Group’s financial liabilities are: 2021 ($’000) <6 months 6-12 months 1-5 years >5 years Total Financial liabilities Trade and other payables Lease Liabilities Interest bearing loans Total outflow (8,675) (832) (15,528) (25,035) - (1,004) - (1,004) - (2,684) - (2,684) - - - - (8,675) (4,520) (15,528) (28,723) 2020 ($’000) <6 months 6-12 months 1-5 years >5 years Total Financial liabilities Trade and other payables Lease Liabilities Interest bearing loans Total outflow g) Fair values (7,518) (1,979) (31,510) (41,007) - (1,071) - (1,071) - (2,576) - (2,576) - - - - (7,518) (5,626) (31,510) (44,654) For all financial assets and liabilities recognised in the consolidated statement of financial position, carrying amount approximates fair value unless otherwise stated in the applicable notes. The methods for estimating fair value are outlined in the relevant notes to the consolidated financial statements. The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise: Level 1 - the fair value is calculated using quoted prices in active markets. Level 2 - Level 3 - the fair value is estimated using inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from price). the fair value is estimated using inputs for the asset or liability that are not based on observable market data. 29 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 2. Financial Risk Management Objectives and Policies (continued) 30 June 2021 Valuation technique market observable inputs (Level 2) $'000 Valuation technique non-market observable inputs (Level 3) $'000 Quoted market price (Level 1) $'000 Trade receivables at fair value1 Unlisted equity investments2 Convertible note receivable3 Derivative financial instruments4 - - - - - 9,147 30 - - 9,177 Total $'000 9,147 30 - - 37,606 37,606 5,393 42,999 5,393 52,176 30 June 2020 Quoted market price (Level 1) $'000 Valuation technique market observable inputs (Level 2) $'000 Valuation technique non-market observable inputs (Level 3) $'000 - 50 - 50 1,812 - 1,532 3,344 - - - - Total $'000 1,812 50 1,532 3,394 Trade receivables at fair value1 Listed equity investments2 Derivative financial instruments 1The fair value of trade receivables relates to tin concentrate provisionally sold at the reporting date. The fair value is based on the applicable KLM or LME forward prices. 2Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting date without any deduction for transaction costs. The fair value of equity investments and derivatives are based on quoted market prices. Unlisted equity investments are recognised at cost. 3The carrying value of the convertible note receivable on inception was equivalent to $35.070 million and on 30 June 2021 $37,606 million (2020: nil). The change in fair value resulted from $2.536 million in remeasurement. To estimate the fair value of the convertible notes, the Group uses a discounted cash flow (“DCF”) technique, applying market interest rates. In addition, the Group adds the fair value of the conversion option. Exercising the conversion option would result in the Group receiving 101.380 million shares in Cyprium Metals Limited. The fair value is estimated using a Black & Scholes valuation model (“B&S Model”). The inputs to these models and techniques require a degree of judgement, including consideration of the risk-free rates, share price volatility and market interest rates. The inputs used to value the convertible notes at 30 June 2021 are as follows: Expected volatility Risk-free interest rate Expected life Options exercise price Share price at grant date Expiry date/maturity date Face value of convertible notes Market interest rates Fair value per instrument Number of instruments Total Fair Value at 30 June 2021 B&S Model 100% 0.77% 3.75 years $0.3551 $0.250 30 Mar 2025 - - $0.153 101,379,893 $15.511m DCF Total Fair Value at 30 June 2021 - - 3.75 years - - 30 Mar 2025 $36.000 million 20% - - $22.095m $37.606m 30 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 2. Financial Risk Management Objectives and Policies (continued) 4The derivative financial assets are 40.6 million options, consisting of two tranches of 20.3 million options each, to acquire shares in Cyprium Metals Limited. Exercising the options can result in bonus shares being awarded to the Group depending on the copper price on the date of exercise. The fair value of the options on inception was equivalent to $4.542 million and on 30 June 2021, $5.393 million (2020: nil). The change in fair value of $0.851 million was the result of remeasurement using an equivalent valuation technique. The fair value of the options was determined using a B&S Model, which considers factors including the option’s exercise prices, the volatility of the underlying share price, the risk-free interest rate, the market price of the underlying share at measurement date and the expected life of the options. To accommodate the additional award, the Group has increased the Black & Scholes fair value by estimating the fair value of the bonus shares that are most likely to be awarded at the exercise dates, which is judged to be the expiry dates. The number of bonus shares to be awarded is estimated with reference to forecast copper prices on the expiry dates and applying the pre-set factor. The additional fair value is then calculated by applying that factor to the number of options converted and multiplying by the price of Cyprium shares on the measurement dates. The inputs used to value the options at 30 June 2021 are as follows: T1 Options T2 Options T1 Bonus Shares T2 Bonus Shares Total Fair Value at 30 June 2021 Expected volatility Risk-free interest rate Expected life of options Options exercise price Share price at measurement date Forecast copper price per tonne 100% 0.06% 100% 0.06% 0.75 years 1.75 years $0.3141 $0.3551 $0.250 $0.250 $0.205 $0.250 $US 8,752 $US 8,204 Bonus share factor / award 1.2x 1.2x 4.045 m 4.045 m Expiry date 30 Mar 2022 30 Mar 2023 Fair value as at 30 June 2021 $1.338m $2.027m $1.014m $1.014m $5.393m The effects of fair value changes are reflected in the consolidated statement of comprehensive Income. Significant estimates and judgments – level 3 inputs The following significant estimates and judgments were made for inputs used in determining the fair value of financial instruments categorised as level 3: (i) Volatility for buyer options and conversion feature Management used an external expert to assist with the estimate of volatility for the purposes of its Black Scholes valuation technique. Volatility was estimated based on the performance of the shares of the loaned party, Cyprium Metals Limited, over a historical period equivalent to that of the time to expiry of the option being valued. (ii) Market interest rates Management used an external expert to assist with the estimate of the market interest rate of borrowing. The estimate compared the terms and conditions of the Group’s convertible note to a lending transaction that was judged to have the most similar characteristics. The lending rate in this comparable transaction was 15%. The rate was benchmarked to other lending transactions that were similar in terms and conditions but not as alike. The rate was then risk-adjusted by adding 5% to estimate a market interest rate of 20% of which management has adopted in its valuation technique. The risk adjustment was estimated to address differences between the stages of operations when comparing the loaned party in the comparative lending arrangement to that of the Group’s counterparty, Cyprium Metals Limited. A range of 15% - 25% was then estimated to be appropriate to address inherent estimation uncertainty. (iii) Copper price forecasts Management used an external expert to assist with the estimate of future copper prices. Future copper prices were estimated based on the mean of results from more than 40 energy and metals analysts. 31 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 2. Financial Risk Management Objectives and Policies (continued) A quantitative sensitivity analysis as at 30 June 2021 is shown below: Instrument Convertible note receivable Valuation technique DCF Significant unobservable inputs Market interest rates Value/ 20% Black & Scholes Volatility 100% Derivative financial instruments – T1 Black Scholes model plus share price * estimated bonus shares to be awarded based on forecast copper price Copper price forecasts on 31 March 2022 US$8,752 Volatility 100% Derivative financial instruments – T2 Black & Scholes model plus share price * estimated bonus shares to be awarded based on forecast copper price Copper price forecasts on 31 March 2023 US$8,204 Volatility 100% Sensitivity of the input to fair value 1.5% change in the market interest rate would result in a change in fair value by +/-$1.000 million. +/(-) 10% change in volatility would result in a change in fair value of $1.355 and ($1.484) million. US$500 per tonne increase would result in an increase in fair value by $0.500 million. US$500 per tonne decrease would not result in a change in the fair value estimate. +/(-)10% change in volatility would result in a change in fair value of $0.172 million and ($0.174) million. US$500 per tonne increase would not result in a change in the fair value estimate. US$500 per tonne decrease would result in a decrease in fair value by $0.500 million. +/(-)10% change in volatility would result in a change in fair value of $0.242 million and ($0.251) million. h) Changes in liabilities arising from financing activities The ‘Other’ column includes the effect of reclassification of non-current portion of interest-bearing loans and borrowings, including obligations under finance leases and hire purchase contracts to current due to the passage of time. The Group classifies interest paid as cash flows from operating activities. 1 July 2020 $'000 Net Transfers & New Leases Disposals New loans Other 30 June 2021 $'000 Payments Current interest -bearing loans and borrowings Non-current interest - bearing loans and borrowings Total liabilities from financing activities 33,108 (47,985) (1,068) - 33,309 - 17,364 2,468 (3,039) 3,255 - - - 2,684 35,576 (51,024) 2,187 - 33,309 - 20,048 1 July 2019 $'000 Payments Net Transfers & New Leases Disposals New loans Other 30 June 2020 $'000 Current interest -bearing loans and borrowings Non-current interest- bearing loans and borrowings Total liabilities from financing activities 5,495 (10,184) 4,266 (4,390) 35,000 2,921 33,108 4,634 - 755 - - (2,921) 2,468 10,129 (10,184) 5,021 (4,390) 35,000 - 35,576 32 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 3. Revenue Tin concentrate sales Recognition and measurement 2021 $’000 93,834 2020 $’000 73,243 The Group is principally engaged in the business of producing tin in concentrate. Revenue from contracts with customers is recognised when control of the goods or services is transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. The Group has generally concluded that it is the principal in its revenue contracts because it typically controls the goods or services before transferring them to the customer. Based on the current contractual terms, revenue is recognised when control passes to the customer, which occurs at a point in time when the metal in concentrate physically arrives at the customer’s works for tin concentrate. Revenue is measured as the amount to which the Group expects to be entitled, being the estimate of the price expected to be received at the end of the Quotational Period (QP), and a corresponding trade receivable is recognised. The Group’s sales of metal in concentrate allow for price adjustments based on the market price at the end of the relevant QP stipulated in the contract. These are referred to as provisional pricing arrangements and are such that the selling price for metal in concentrate is based on prevailing spot prices on a specified future date after shipment to the customer. Adjustments to the sales price occur based on movements in quoted market prices up to the end of the QP. The QP for tin concentrate is not expected to result in a material adjustment due to the short period between the point of control of the concentrate passes to the customer and the end of the QP. For the provisional pricing arrangements, any future changes that occur over the QP are embedded within the provisionally priced trade receivables and are, therefore, within the scope of AASB 9 Financial Instruments (“AASB 9”) and not within the scope of AASB 15 Revenue from Contracts with Customers (“AASB 15”). Revenue is initially recognised based on the most recently determined estimate of metal in concentrate using the expected value approach based on initial internal assay and weight results. The Group has determined that it is highly unlikely that a significant reversal of the amount of revenue recognised will occur due to variations in assay and weight results. Subsequent changes in the fair value based on the customer’s final assay and weight results are recognised in revenue at the end of the QP. For CIF arrangements, the transaction price (as determined above) is allocated to the metal in concentrate and shipping services using the relative stand-alone selling price method. Under these arrangements, a portion of consideration is received from the customer at, or around, the date of shipment under a provisional invoice. Therefore, some of the upfront consideration that relates to the shipping services yet to be provided is deferred. This is generally not material at the balance sheet date. It is then recognised as revenue over time using an output method (being days of shipping/transportation elapsed) to measure progress towards complete satisfaction of the service as this best represents the Group’s performance. This is on the basis that the customer simultaneously receives and consumes the benefits provided by the Group as the services are being provided. The costs associated with these freight/shipping services are also recognised over the same period as incurred. Key estimates and judgements Revenue from contracts with customers a) Identification of the enforceable contract For tin in concentrate (metal in concentrate) sales, there are master services agreements with key customers that set out the general terms and conditions governing any sales that occur. The customer is only obliged to purchase tin in concentrate when it places an order for each shipment. Therefore, the enforceable contract has been determined to be each purchase order. b) Identification of performance obligations for arrangements subject to CIF Incoterms A proportion of the Group’s metal in concentrate sales subject to CIF Incoterms, whereby the Group is responsible for providing freight/shipping services. The freight/shipping services are a promise to transfer services in the future and are part of the negotiated exchange between the Group and the customer. The Group determined that both the metal in concentrate and the freight/shipping services are capable of being distinct as the customer can benefit from both products on their own. The Group also determined that the promises to transfer the metal in concentrate and the freight/shipping services are distinct within the context of the contract. Consequently, the Group allocated a portion of the transaction price to the metal in concentrate and the freight/shipping services based on relative stand- alone selling prices. 33 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 3. c) Revenue (continued) Principal versus agent considerations – freight/shipping services As noted above, in some arrangements subject to CIF Incoterms, the Group is responsible for providing freight/shipping services. While the Group does not actually provide nor operate the vessels, the Group has determined that it is principal in these arrangements because it has concluded it controls the specified services before they are provided to the customer. This is on the basis that the Group obtains control of a right to freight/shipping services after entering into the contract with the customer, but before those services are provided to the customer. The terms of the Group’s contract with the service provider give the Group the ability to direct the service provider to provide the specified services on the Group’s behalf. In addition, the Group has concluded that the following indicators provide evidence that it controls the freight/shipping services before they are provided to the customer:   The Group is primarily responsible for fulfilling the promise to provide freight/shipping services. Although the Group has hired a service provider to perform the services promised to the customer, it is the Group itself that is responsible for ensuring that the services are performed and are acceptable to the customer (i.e., the Group is responsible for fulfilment of the promise in the contract, regardless of whether the Group performs the services itself or engages a third-party service provider to perform the services). The Group has discretion in setting the price for the services to the customer as this is negotiated directly with the customer. d) Determining the timing of satisfaction of freight/shipping services The Group concluded that revenue for freight/shipping services is to be recognised over time because the customer simultaneously receives and consumes the benefits provided by the Group. The fact that another entity would not need to re-perform the freight/shipping services that the Group has provided to date demonstrates that the customer simultaneously receives and consumes the benefits of the Group’s performance as it performs. The Group determined that the input method is the best method for measuring progress of the freight/shipping services because there is a direct relationship between the Group’s effort (i.e., time elapsed) and the transfer of service to the customer. The Group recognises revenue on the basis of the time elapsed relative to the total expected time to complete the service. 4. Contingent Consideration, Interest Income and Other Income Contingent consideration income (i) Interest income (ii) Other income Total other income 2021 $’000 10,250 1,886 59 1,945 2020 $’000 14 434 - 448 (i) Includes contingent consideration income of $10.000 million representing the copper price contingent payment (“Copper Payment”), included in the Mt Gordon Sale Agreement transacted in 2015 and payable by Capricorn Copper Holding Ltd (“CCH”). On 24 December 2020, the Company entered into a binding term sheet with Capricorn Copper Holdings Pty Ltd and its parent entity, EMR Capital Investment (No. 6B) Pte Ltd, detailing the material terms and timing for payment of the Copper Payment. On 1 April 2021, the Company announced that it has agreed to an extension of time and payment terms in exchange for an agreed fee of $0.250, plus interest of $0.750 million. The Copper Payment was received on 8 July 2021. Refer to note 29 Significant Events After Period End. Reconciliation of contingent consideration income Copper Payment Agreed extension fee Interest income (ii) Total 2021 $’000 10,000 250 750 11,000 (ii) Interest 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. Interest income includes $0.750 million interest on the Copper Payment and income and accretion on the convertible notes. 34 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 5. Expenses a) Cost of sales Salaries, wages expense and other employee benefits Superannuation expense Mining Processing Other production costs Changes in stockpiles Write down in value of stores inventory to NRV Royalty expense Depreciation - property, plant, and equipment Depreciation - buildings Mine properties and development costs amortisation Total cost of sales b) General and administration expenses Salaries and wages expense Directors' fees and other benefits Superannuation expense Other employee benefits Consulting expenses Travel and accommodation expenses Net loss/(gain) on sale of assets Administration costs Depreciation – other assets Total general and administration expense c) Commodity and foreign exchange Foreign exchange loss/(gain) Forward commodity swaps Total commodity and foreign exchange d) Finance costs Interest Borrowing costs Unwinding of rehabilitation provision discount Total finance costs e) Fair value change in financial assets Fair value change in financial assets through profit and loss (note 12) Total fair value change in financial assets Recognition and measurement 2021 $’000 14,223 1,351 27,940 14,706 3,956 (5,557) 207 3,957 3,784 466 10,112 75,145 1,925 623 240 14 1,548 131 108 926 260 5,775 409 1,457 1,866 770 2,199 30 2,999 (2,337) (2,337) 2020 $’000 13,027 1,238 23,846 15,292 3,411 (1,615) 41 1,400 3,231 451 10,009 70,330 2,618 560 299 34 2,020 237 (558) 940 233 6,383 171 (844) (673) 1,355 102 37 1,494 83 83 Salaries, wages, and other employee benefits are recognised as and when employees render their services. Expenses for non-accumulating personal leave are recognised when the leave is taken and measured at the rates paid or payable. Refer to note 17 for the accounting policy relating to short term and long-term employee benefits. Provisions and other payables are discounted to their present value when the effect of time value of money is significant. The impact of the unwinding of these discounts is reported in finance costs. 35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 6. Income Tax (a) Major components of income tax expense/(benefit): Income statement Current income tax expense Current income tax expense/(benefit) Adjustments in respect of current income tax of previous years Deferred income tax Relating to origination and reversal of temporary differences in current year (Recognition)/derecognition of carry forward losses and other temporary differences Income tax reported in the income statement 2021 $'000 2020 $'000 13,560 - (25,432) 1,723 11,892 629 (25,452) 23,080 - - (b) A reconciliation of income tax benefit and the product of accounting loss before income tax multiplied by the Group's applicable income tax rate is as follows: Total accounting profit/(loss) before income tax 87,199 (80,340) At statutory income tax rate of 30% (2020: 30%) 26,160 (24,102) Non-deductible items Share-based payments Sundry items Deductible items (Derecognition)/recognition of net deferred tax assets not previously recognised Income tax expense/(benefit) reported in income the statement of comprehensive income (103) 6 (611) (25,452) 41 3 (745) 24,803 - - 36 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 6. Income Tax (continued) Deferred income tax at 30 June relates to the following: Deferred tax liabilities Exploration Deferred mining Mine site establishment and refurbishment Consumables Prepayments Diesel rebate Non-current financial assets Derivative held for trading Gross deferred tax liabilities Deferred tax assets Property, plant and equipment Derivative Financial Instruments Inventories Legal costs Accrued expenses Provision for employee entitlements Provision for fringe benefits tax Provision for rehabilitation Unrecognised timing differences Gross deferred tax assets Deferred tax income/(expense) Statement of Financial Position Statement of Other Comprehensive Income 2021 $'000 (1,207) (9,179) (1,800) (1,777) - (18) - - (13,981) 9,168 - 333 274 38 1,308 3 3,503 (646) 13,981 2020 $'000 (4,040) (9,052) (2,729) (8,451) - (16) 361 - (23,927) 14,731 (460) 5,408 149 47 1,330 5 15,194 (12,477) 23,927 2021 $'000 (2,833) 127 (929) (6,674) - 2 361 - 5,563 (460) 5,075 (125) 9 22 2 11,691 2020 $'000 1,156 (255) (605) (669) (2) (39) 986 26 1,127 460 106 (132) - 1,411 (6) (2,909) 11,831 655 At 30 June 2021, there are unrecognised losses of $240,199,000 (2020: $254,180,000) for the Group, of which $156,354,000 (2020: $156,354,000) are subject to a restricted rate of utilisation. 37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 6. Income Tax (continued) Recognition and measurement Current income tax Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the Group operates and generates taxable income. Current income tax relating to items recognised directly in equity is recognised in equity and not in the consolidated statement of comprehensive income. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Deferred tax Deferred tax is provided for using the balance sheet full liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred income tax liabilities are recognised for all taxable temporary differences except:   when the deferred income tax liability arises from the initial recognition of goodwill or 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 in respect of taxable temporary differences associated with investments in subsidiaries, associates, and interests in joint ventures, when 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 except:   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 in respect of 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 profit and loss. Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. 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. Tax consolidation legislation Metals X Limited and its wholly owned Australian controlled entities have implemented the tax consolidation legislation as of 1 July 2004. The head entity, Metals X Limited and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. The Group has applied the group allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group. Members of the group have entered into a tax sharing agreement that provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payments obligations. No amounts have been recognised in the consolidated financial statements in respect of this agreement on the basis that the possibility of default is remote. 38 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 6. Income Tax (continued) Tax consolidation legislation (continued) Members of the group have also entered into tax sharing agreements. The tax funding agreement provides for the allocation of current taxes to members of the tax consolidated group. The allocation of taxes under the tax funding agreement is recognised as an increase/decrease in the controlled entities intercompany accounts with the tax consolidated group head company, Metals X Limited. The nature of the tax funding agreement is such that no tax consolidation contributions by or distributions to equity participants are required. 7. Earnings Per Share The following reflects the data used in the basic and diluted earnings per share computations. For basic and diluted earnings/(loss) per share: Profit/(loss) attributable to continuing operations ($’000) Profit/(loss) attributable to discontinued operations ($’000) Weighted average number of ordinary shares outstanding during the period used in the calculation of basic and diluted earnings/(loss) per share Basic and diluted earnings/(loss) per share (cents) From continuing operations From discontinued operations Total Recognition and measurement 2021 2020 22,925 64,274 87,199 (12,422) (67,644) (80,340) 907,266,067 849,817,790 2.53 7.08 9.61 (1.46) (7.99) (9.45) 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:    cost 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; and other non-discriminatory changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares. The result is divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. The Company had 488,024 (2020: 11,984,332) share options on issue which are anti-dilutive and are therefore not required to be included in the calculation of diluted earnings per share. There have been no transactions involving ordinary shares or potential ordinary shares since that would significantly change the number of ordinary shares or potential ordinary shares outstanding between the reporting date and before the completion of these consolidated financial statements. 39 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 8. Cash and Cash Equivalents Cash at bank and in hand - denominated in AUD Cash at bank and in hand - denominated in USD Short-term deposits Total 2021 $'000 12,869 543 60 2020 $'000 9,674 4,347 74 13,472 14,095 Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. Refer to note 2(b) for more details on the Group’s credit risk management practices. As all deposits are on demand or have maturity dates of less than twelve months, the Group has assessed the credit risk on these financial assets using lifetime expected credit losses. In this regard, the Group has concluded that the probability of default is insignificant. Recognition and measurement Cash and cash equivalents in the consolidated 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. Reconciliation of net profit after income tax to net cash flows from operating activities Profit/(loss) after income tax Amortisation and depreciation Impairment reversal in discontinued operations – note 25 Fair value change in financial assets Borrowing costs Impairment loss on assets Share based payments Rehabilitation expense Exploration and evaluation expenditure written off Gain on disposal of property, plant, and equipment Gain on disposal of Copper asset portfolio – note 25 Interest accrued on convertible note Changes in assets and liabilities (Increase)/decrease in inventories (Increase)/decrease in trade and other receivables and prepayments Increase/(decrease) in trade and other creditors Decrease in provisions Net cash flows from/(used in) operating activities 2021 $'000 87,199 14,651 (15,753) (2,337) - - (344) (587) - (432) (60,930) (1,054) 20,413 (198) (16,860) 1,157 (108) 4,404 2020 $'000 (80,340) 23,508 - 83 102 15,363 137 8,587 105 (319) - - (32,774) 23,868 10,431 (17,887) (4,681) (21,043) 40 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 9. Trade and Other Receivables Current Trade receivables at fair value through profit or loss (i) Contingent consideration receivable – Mt Gordon (ii) Other receivables at amortised cost (iii) Non-current 2021 $’000 9,147 11,000 3,280 23,427 2020 $’000 1,811 - 4,342 6,153 Other receivables – performance bond facility (iv) 3,457 9,978 (i) On 30 June 2021, tin concentrate sales totalling 520 tonnes remained open to price adjustment (2020: 303 tonnes). Trade receivables (subject to provisional pricing) are non-interest bearing but are exposed to future commodity price movements over the quotational period (“QP”) and are measured at fair value through profit or loss up until the date of settlement. These trade receivables are initially measured at the amount which the Group expects to be entitled, being the estimate of the price expected to be received at the end of the QP. For tin concentrate 80% - 85% of the provisional invoice (based on the provisional price) is received in cash within four weeks of the arrival of shipment at smelter. The QP for tin concentrate is not expected to result in a material adjustment due to the short period between the point of control of the concentrate passes to the customer and the end of the QP. (ii) (iii) (iv) The contingent consideration receivable of $11.000 million includes the $10.000 million contingent copper price payment included in the Mt Gordon Sale Agreement, plus the agreed fee of $0.250 million and interest of $0.750 million. Cash calls advanced to the Bluestone Mines Tasmania Joint Venture Pty Ltd of $2.306 million, GST receivable $0.764 million, and other debtors of $0.210 million. The performance bond facility is interest bearing and is used as security for government performance bonds. The fair value approximates cost. Refer to note 2(b) for credit risk assessment. Bonds held by Metals X to secure Patterson Copper obligations for Nifty rehabilitation provisions and key commercial contracts of approximately $6.521 million, were returned following the completed sale of its Copper Assets. 10. Inventories Ore stocks at net realisable value Tin in circuit - at cost Tin concentrate - at cost Stores and spares at cost Provision for obsolete and impairment stores and spares 2021 $'000 1,201 105 14,433 5,895 (1,108) 20,526 2020 $'000 798 52 9,332 28,171 (18,025) 20,328 Recognition and measurement 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. 41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 11. Assets Classified as Held for Sale On 25 May 2021, the Company announced that it has signed a binding term sheet with NICO Resources Limited (“NICO”) for the sale and spin out of its nickel asset portfolio, including the Wingellina Nickel-Cobalt Project located in Western Australia and the Claude Hills Project located in South Australia (together “Nickel Assets”) (the “Term Sheet”). As at 30 June 2021, the Nickel Assets were available for immediate sale and the sale was considered highly probable within a 12-month period. The associated assets and liabilities were consequently presented as held for sale. Assets and liabilities comprising the disposal group are remeasured at the lower of their carrying value and fair value less costs to sell. Any cumulative impairment losses recognised previously in accordance with IAS 36 Impairment of Assets should be reversed and allocated against the carrying value of each asset classified as held for sale. Any excess of carrying value over fair value less cost to sell should be recognised as an impairment. No impairment has been reversed because of this reclassification. Once classified as held-for-sale, property, plant and equipment are no longer amortised or depreciated. (a) Results for the Nickel Assets for the year are presented as follows: 2021 $’000 2020 $’000 Revenue Cost of sales Gross profit Other income Administration costs Loss for the period from discontinued operations (b) The assets and liabilities classified as held for sale at 30 June 2021: Assets Cash and bonds Other receivables Inventory Property, plant, and equipment Exploration Liabilities Trade and other payables Provision for rehabilitation Carrying value of assets held for sale (c) The net cash flows for assets held for sale: Net cash flows (used in)/from operating activities Net cash flows used in investing activities Net cash outflow - - - 6 32 38 2021 $'000 20 34 29 397 4,168 4,648 28 15 43 4,605 2021 $’000 (62) (1,110) (1,172) - - - 4 36 40 2020 $’000 76 (1,340) (1,416) 42 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 12. Financial Assets at Fair Value Through Profit or Loss Current Convertible notes Derivative financial assets Forward commodity swaps Non-current Shares – Australian listed Shares – Australian unlisted Derivative financial assets Convertible notes Australian shares 2021 $’000 360 2,332 - 2,692 - 30 3,061 37,246 40,337 2020 $’000 - - 1,532 1,532 50 - - 50 On 4 January 2021, the Company sold its remaining 1,113,541 listed shares in Nelson Resources Limited for $0.070 cents per share to receive $0.780 million (less transaction costs). On 28 June 2021, the Company acquired 600,000 unlisted shares in NICO Resources Limited for $0.05 cents per share for $0.030 million. Recognition and measurement Listed equity investments are designated as fair value through profit or loss on initial recognition with all changes in fair value subsequently being recorded in profit or loss within the consolidated statement of comprehensive income. Dividends on listed equity investments are also recognised as other income in the consolidated statement of comprehensive income when the right of payment has been established. The fair value of listed equity investments has been determined directly by reference to published price quotations in an active market. Unlisted equity investments are initially recognised at cost. Financial assets and debt instruments Financial assets are financial instruments. A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. On 30 March 2021, the Group completed the sale of its Copper Assets to Cyprium Metals Limited (“Cyprium”) and received $60.000 million worth of consideration, which included four (4) convertible notes with a value of $9.000 million each, for an aggregate of $36.000 million, plus 40.6 million options, consisting of two tranches of 20.3 million options each, to acquire Cyprium shares. The convertible notes were issued by Cyprium on the following basis:      a four-year maturity from 30 March 2021; convertible at maturity at the election of Metals X, or otherwise redeemable by Cyprium at maturity; conversion price of $0.355 (based on the Buyer’s 20-day VWAP to Completion x 1.3); annual coupon of 4% to be capitalised and paid annually on a default basis on each anniversary of Completion until maturity (with annual interest to be paid in shares at the same conversion price, at the election of Metals X); and Cyprium can elect annually to repay all or some of the convertible notes at face value x 1.15, with Metals X able to convert the convertible notes into Cyprium shares in the event Cyprium elects to repay early. The 40.6 million options were issued by Cyprium on the following basis:   20.3 million options exercisable at $0.314 per option with an expiry date of 30 March 2022; and 20.3 million options exercisable at $0.355 per option with an expiry date of 30 March 2023. Initial recognition and measurement  The Group initially recognises financial assets in the following measurement categories: 43 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 12. Financial Assets at Fair Value Through Profit or Loss (continued)    those to be measured at fair value through profit or loss (“FVTPL”); fair value through other comprehensive income (“FVTOCI”), and financial assets measured at amortised cost (“Debt Instruments”).  The classification of financial assets at initial recognition, depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at FVTOCI. At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed. For a financial asset to be classified and measured at amortised cost or FVTOCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (“SPPI”) on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured at FVTPL, irrespective of the business model. The Group reclassifies debt investments when and only when its business model for managing those assets changes. Convertible notes are financial assets with embedded derivatives which are considered in their entirety when determining whether their cash flows are solely the payment of principal and interest. Subsequent measurement Equity instruments The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to the consolidated statement of comprehensive income following the derecognition of the investment. Dividends from such investments continue to be recognised in the consolidated statement of comprehensive income as other income when the Group’s right to receive payment is established. Changes in the fair value of financial assets at FVTPL are recognised in other gains/(losses) in the consolidated statement of comprehensive income as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVTOCI are not reported separately from other changes in fair value. Debt instruments The subsequent measurement of Debt Instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories for Debt Instruments:  Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate (“EIR”) method. Any gain or loss arising on derecognition is recognised directly in the consolidated statement of comprehensive income and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the consolidated statement of comprehensive income.  Financial assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVTOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in the consolidated statement of comprehensive income. When the financial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in finance income using the EIR. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in the consolidated statement of comprehensive income.  Assets that do not meet the criteria for amortised cost or FVTOCI are measured at FVTPL. A gain or loss on a debt investment that is subsequently measured at FVTPL is recognised in the consolidated statement of comprehensive income in other gains/(losses) in the period in which it arises Impairment Further disclosures relating to impairment of financial assets are also provided in:    Disclosures for significant assumptions in note 1(j). Financial assets at fair value through profit and loss, note 12. Trade and other receivables, note 9. 44 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 12. Financial Assets at Fair Value Through Profit or Loss (continued) The Group recognises an allowance for expected credit losses (“ECL’s”) for all debt instruments not carried at FVTPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. The Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Financial liabilities at FVTPL Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the Consolidated Statement of Comprehensive Income. Financial liabilities designated upon initial recognition at FVTPL are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. The Group has not designated any financial liability as at FVTPL. Financial liabilities at amortised cost (loans and borrowings) After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in Consolidated Statement of Comprehensive Income when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by talking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Consolidated Statement of Comprehensive Income. This category generally applies to interest-bearing loans and borrowings. For more information, refer to note 18. Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the consolidated statement of comprehensive income. Estimates and judgments Fair value measurement of financial instruments These financial assets cannot be measured based on quoted prices in active markets and are therefore measured using valuation techniques. The convertible note receivable conveys a right to receive cash upon maturity of 30 March 2025 or the option to convert the principle amount outstanding into shares of Cyprium Metals Limited. The notes attract interest at a coupon rate of 4% per annum to be capitalised and paid annually, payable in cash unless Metals X elects to receive the interest in fully paid ordinary Cyprium shares. To determine the fair value of the convertible notes, the Group estimates the fair value of the right to receive the cash using discounted cash flow techniques and market interest rates. In addition, the Group adds the fair value of the conversion option, which is estimated using the Black Scholes valuation model. Refer to note 1(j). The inputs to this model and technique requires a degree of judgement, including consideration of the risk-free rate, Cyprium share price volatility and market coupon rates. The Group’s derivative financial instruments are options to acquire shares in Cyprium with an additional award of shares granted by a factor dependant on commodity prices on the date of exercise. To determine the fair value of these instruments, the Group has used Black Scholes. To accommodate for the additional award, the Group has increased the Black Scholes fair value by multiplying the quoted price of Cyprium shares on the Option grant dates by the most likely factor to apply on the estimated dates of exercise (assumed to be the dates of expiry). Refer to note 1(j). The inputs to these models and techniques require a degree of judgement, including consideration of the risk-free rates, Cyprium share price volatilities and forecast commodity prices. Changes in assumptions relating to the above factors could affect the reported fair value of financial assets. See note 1(j) for further disclosures. The financial assets estimated fair value of $39.612 million was recognised at the sale completion date (note 25(b{{and remeasured to $42.999 million (note 2(g)) as at the reporting date. Future developments may require further revisions to the estimate. The convertible note and derivative financial instruments are classified as financial assets at fair value through profit or loss. 45 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 13. Property, Plant, and Equipment Plant and equipment Gross carrying amount - at cost Accumulated depreciation and impairment Net carrying amount Land and buildings Gross carrying amount - at cost Accumulated depreciation and impairment Net carrying amount Capital work in progress at cost Gross carrying amount - at cost Net carrying amount Total property, plant, and equipment Reconciliations: Reconciliations of the carrying amounts of property, plant, and equipment at the beginning and end of the reporting period: Plant and equipment At 1 July net of accumulated depreciation Transfer from capital in progress Disposals Disposal and discontinued operations Impairment loss Depreciation charge for the year At 30 June net of accumulated depreciation Land and buildings At 1 July net of accumulated depreciation Transfer from capital in progress Disposals Disposal and discontinued operations Impairment loss Depreciation charge for the year At 30 June net of accumulated depreciation Capital work in progress At 1 July Additions Transfer to mine properties & development Transfer to plant and equipment Transfer to land and buildings At 30 June 2021 $'000 56,299 (35,693) 20,606 6,723 (3,424) 3,299 12,129 12,129 36,034 31,521 8,429 (57) (15,244) - (4,043) 20,606 5,843 - (388) (1,690) - (466) 3,299 5,951 15,420 (813) (8,429) - 12,129 2020 $'000 77,185 (45,664) 31,521 11,035 (5,192) 5,843 5,952 5,952 43,315 37,677 9,729 (3,378) - (3,454) (9,052) 31,521 5,529 1,377 (25) - (220) (817) 5,843 3,260 15,214 (1,416) (9,729) (1,377) 5,951 46 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 13. Property, Plant, and Equipment (continued) Recognition and measurement Plant and equipment are stated at historical cost less accumulated depreciation and any impairment in value. 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 or mine properties and development at cost on completion. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset, or where appropriate, over the estimated life of the mine. Major depreciation periods are:    Mine specific plant and equipment is depreciated using – the shorter of life of mine and useful life. Useful life ranges from 2 to 10 years. Buildings – the shorter of life of mine and useful life. Useful life ranges from 5 to 40 years. Office Plant and equipment is depreciated at 33% per annum for computers and office machines and 20% per annum for other office equipment and furniture. 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 profit and loss in the period the item is derecognised Key estimates and judgements Life of mine method of amortisation and depreciation The Group applies the life of mine method of amortisation and depreciation to its mine specific plant and to mine properties and development based on ore tonnes mined. These calculations require the use of estimates and assumptions. Significant judgement is required in assessing the available reserves and the production capacity of the plants to be depreciated under this method. Factors that are considered in determining reserves and production capacity are the Group’s history of converting resources to reserves and the relevant time frames, the complexity of metallurgy, markets, and future developments. When these factors change or become known in the future, such differences will impact pre-tax profit and carrying values of assets. 14. Mine Properties and Development Recognition and measurement 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. Key estimates and judgements In determining amortisation of its Mine capital development, the Group applies the unit of production method and factors in future development spend required to access the remaining ore reserves. For Mine site establishment, the Group applies the life of mine method of amortisation, which is also based on ore tonnes mined. Determination of mineral resources and ore reserves The determination of reserves impacts the accounting for asset carrying values, depreciation and amortisation rates and provisions for mine rehabilitation. The Group estimates its mineral resource and reserves in accordance with the Australian code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 (the “JORC code”). The information on mineral resources and ore reserves were prepared by or under the supervision of Competent Persons as defined in the JORC code. The amounts presented are based on the mineral resources and ore reserves determined under the JORC code. There are numerous uncertainties inherent in estimating mineral resources and ore reserves and assumptions that are valid at the time of estimation may change significantly when new information becomes available. Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of reserves and may, ultimately, result in the reserves being restated. Determination of future capital development spend Management estimates its future capital development spend based on historical annual requirements forecasted over the remaining estimated life of mine. 47 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 14. Mine Properties and Development (continued) Development areas at cost Gross carrying amount - at cost Impairment Net carrying amount Mine site establishment Gross carrying amount - at cost Accumulated depreciation and impairment Net carrying amount Mine capital development Gross carrying amount - at cost Accumulated depreciation and impairment Net carrying amount 2021 $'000 - - - 40,909 (34,315) 6,594 112,175 (80,885) 31,290 2020 $'000 72,715 (72,490) 225 43,390 (34,426) 8,964 207,190 (176,747) 30,444 Total mine properties and development 37,884 39,633 Movement in mine properties and development Development areas at cost At 1 July Additions Disposal and discontinued operations At 30 June Mine site establishment At 1 July net of accumulated amortisation Additions Impairment loss Transfer from capital work in progress (Decrease)/increase in rehabilitation provision Amortisation charge for the year At 30 June net of accumulated amortisation Mine capital development At 1 July net of accumulated amortisation Additions Impairment loss Adjustment to rehabilitation liability Amortisation charge for the year At 30 June net of accumulated amortisation 225 - (225) - 8,964 - - 813 (540) (2,643) 6,594 30,444 8,315 - - (7,469) 31,290 109 116 - 225 11,109 143 (1,395) 1,416 370 (2,679) 8,964 31,329 17,971 (8,631) 736 (10,961) 30,444 48 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 15. Exploration and Evaluation Expenditure Exploration and evaluation costs carried forward in respect of mining areas of interest Pre-production areas At Cost Net carrying amount Movement in exploration and evaluation At 1 July net of accumulated impairment Additions Transfers to assets held for sale Expenditure written off At 30 June net of accumulated impairment Recognition and measurement 2021 $'000 2020 $'000 352 352 13,993 13,993 13,993 - (13,641) - 352 10,179 3,919 - (105) 13,993 Expenditure on acquisition, exploration and evaluation relating to an area of interest is carried forward at cost where rights to tenure of the area of interest are current and;   it is expected that expenditure will be recouped through successful development and exploitation of the area of interest or alternatively by its sale and/or; 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 profit and loss or provided against. The carrying value of capitalised exploration and evaluation expenditure is assessed for impairment regularly and if after expenditure is capitalised, information becomes available suggesting that the recovery of expenditure is unlikely or that the Group no longer holds tenure, the relevant capitalised amount is written off to profit or loss in the period when the new information becomes available. The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on the successful development and commercial exploitation or sale of the respective mining areas. Amortisation of the costs carried forward for the development phase is not recognised pending the commencement of production. Key estimates and judgements 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 Group decides to exploit the related area interest 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. 49 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 16. Trade and Other Payables Trade creditors Sundry creditors and accruals Recognition and measurement 2021 $'000 3,129 5,546 8,675 2020 $'000 3,779 3,739 7,518 Trade and other payables are initially recognised, at fair value and subsequently measured at amortised cost using the effective interest rate method. Trade creditors are non-interest bearing and generally on 30-day terms. Sundry creditors and accruals are non- interest bearing and generally on 30-day terms. Due to the short-term nature of these payables, their carrying value approximates their fair value. 17. Provisions Current Provision for annual leave Provision for sick leave Provision for long service leave Non-current Provision long service leave Provision for rehabilitation Rehabilitation movement Balance at 1 July Arising during the year Disposal of copper asset portfolio Reclassification of liability as held for sale Rehabilitation borrowing discount unwound Balance at 30 June Provision for long service leave 2021 $’000 2,657 - 874 3,531 793 11,663 12,456 50,465 (460) (38,537) (15) 30 11,663 2020 $’000 2,679 2 999 3,680 752 50,645 51,397 40,952 9,467 - 226 50,645 The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. Provision for rehabilitation Environmental obligations associated with the retirement or disposal of mining properties and/or of exploration activities are recognised when the disturbance occurs and are based on the extent of the damage incurred. The provision is measured as the present value of the future expenditure. The rehabilitation liability is remeasured at each reporting period in line with the change in the time value of money (recognised as an interest expense in the Consolidated Statement of Comprehensive the provision), and additional Income and an disturbances/change in the rehabilitation cost are recognised as additions/changes to the corresponding asset and rehabilitation liability. The carrying value of the provision is calculated by applying an inflation factor of 1.10% (2020: 0.70%) which has been estimated based on rates throughout the period and a weighted average discount rate of 0.34% (2020: 0.26%), which has been estimated using government bond yields for an equivalent period of that of the expected cash payments. Costs are inflated and discounted with reference to the Group’s anticipated timing of payment, which is estimated based on the Group’s life of mine and planned activities. A majority of the payments are anticipated within 5 years (2020: 6 years). increase in 50 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 18. Interest Bearing Liabilities Current liabilities Lease liabilities relating to right of use assets Hire purchase liabilities Citibank finance facility 1 ACT finance facility Non-current liabilities Lease liabilities Hire purchase liabilities 2021 $'000 94 1,742 - 15,528 17,364 - 2,684 2,684 2020 $'000 191 2,731 30,186 - 33,108 137 2,331 2,468 1On 31 July 2020, the Company made a final payment of $30.814 million (including principal and interest to that date) fully repaying the Citibank Finance Facility and closing out the associated hedge contracts. The facility has been closed.  ACT Finance Facility On 27 July 2020, the Company executed an unsecured loan facility with Asia Cheer Trading Limited (ACT) for a $26.000 million unsecured term loan facility (ACT Loan). The ACT Loan was fully utilised on 31 July 2020 to fully repay the Citibank Facility. On 15 December 2020, the Company executed a deed of variation to extend the ACT Loan repayment date from 31 January 2021 to 31 July 2021 and increase the facility amount by $5.000 million to $31.000 million. Upon execution the Company made a further $5.000 million drawdown, less establishment fees, from its ACT Loan, the funds to be used for working capital and general corporate expenditure. At 31 December 2020, the key terms of the ACT Loan are as follows:    Repayment date: 31 July 2021 Establishment fee: Fixed interest rate 3.5% 1.0% On 14 April 2021, the Company repaid $15.500, comprising 50% of the outstanding principal amount of $31.000 million. As at 30 June 2021, the ACT Loan of $15.500 million remains outstanding plus the interest accrued. Refer to note 29 Significant Events After Period End for additional repayment information. Recognition and measurement Financial liabilities at amortised cost (loans and borrowings) This is the category most relevant to the Group. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the consolidated statement of comprehensive income. This category generally applies to interest bearing loans and borrowings. Leases Group as lessor The Group has entered into lease contracts for various items of plant, machinery, vehicles, equipment, and remote area residential accommodation. These leases have an average life of between one month and three years with renewal options included in the contracts. The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. The Group's obligations under its leases are secured by the lessor's title to the leased assets. Generally, the Group is restricted from assigning and subleasing the lease assets. The Group also has certain leases of machinery with lease terms of 12 months or less and leases of office equipment with low value. The Group applies the short-term lease and lease of low-value assets recognition exemptions for these leases. Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period: Reconciliations of the carrying amounts of right-of-use assets and lease liabilities at the beginning and end of the year. 51 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 18. Interest Bearing Liabilities (continued) Right of use assets At 1 July Transition adjustment on 1 July 2019 Additions Depreciation Impairment Disposal and discontinued operations Disposals At 30 June Lease liabilities At 1 July Transition adjustment on 1 July 2019 Additions Accretion of interest Payments Disposal and discontinued operations Disposals At 30 June Current lease liabilities Non-current lease liabilities The maturity analysis of lease liabilities is disclosed in note 2(f). The following amounts are recognised in profit or loss: Depreciation expense of right-of-use assets Interest expense on lease liabilities Expense relating to short-term leases (included in cost of sales) Total amount recognised in profit or loss 2021 $'000 698 - - (90) - (518) - 90 328 - - 12 (102) (144) - 94 94 - 94 90 12 10 112 2020 $'000 - 776 2,176 (442) (61) - (1,751) 698 - 776 2,173 94 (593) - (2,122) 328 2,922 2,468 5,390 442 94 10 546 The Group had total cash outflows for lease liabilities related to right of use assets plus hire purchase liabilities related to the Renison operations of $3.039 million in 2021 (2020: $5.369 million). Recognition and measurement The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Group as a lessee The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. i) Right-of-use assets The Group recognises right-of-use assets at the lease commencement date, which is when the assets are available for use. The assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any make-good obligations and initial direct costs incurred. Right-of-use 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, assessed in accordance with the Group’s impairment policies. 52 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 18. Interest Bearing Liabilities (continued) If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. ii) Lease liabilities At the commencement date of the lease, the Group recognises lease liabilities 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 are fixed payments or index-based variable payments incorporating the Group’s expectations of extension options and do not include non-lease components of a contract. The lease liability is re-measured 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, with any excess recognised in the consolidated statement of comprehensive income. iii) Short-term leases and leases of low-value assets The Group has elected not to recognise assets and lease liabilities for short term leases (lease term of 12 months or less) and leases of low value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. 19. Issued Capital Share capital Average number. of shares Ordinary shares fully paid 907,266,067 907,266,067 30 Jun 2021 30 Jun 2020 Movements in issued capital Balance at 1 July 2020 Balance at 30 June 2021 Recognition and measurement 30 Jun 2021 AU$’000 332,406 30 Jun 2020 AU$’000 332,406 AU$'000 No. of Shares 332,406 332,406 907,266,067 907,266,067 Issued and paid-up capital is recognised at the fair value of the consideration received by the Group. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction in the proceeds received. Dividend Reinvestment Plan The Company operates a dividend reinvestment plan (DRP) which allows eligible shareholders to elect to invest dividends in ordinary shares.  There were no shares issued under the DRP in the 2021 financial year (2020: nil). Options on issue Unissued ordinary shares of the company under option at the date of this report are as follows: Type Unlisted options Unlisted options Total Expiry Date 30 June 2023 30 June 2024 Exercise Price Number of options $1.32 $1.32 66,956 421,068 488,024 The unlisted options were issued pursuant to the Metals X Limited Employee Option Scheme and can only be exercised pursuant to the scheme rules. Capital management gearing ratio Gearing ratio Net debt Capital1 2021 $000 14.49% 20,048 138,365 2020 $000 68.69% 35,576 51,791 53 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 19. Issued Capital (continued) 1Includes issued capital and all other equity reserves attributable to the equity holders of the parent for the purpose of the Group’s capital management. The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios to support its business and maximise the shareholder’s value. The Group manages its capital structure and adjusts considering changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Group’s may return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 30 June 2021 and 30 June 2020. The Group monitors capital using a gearing ratio, which is net debt divided by the aggregate of equity and net debt. The Group includes in its net debt, interest-bearing loans and borrowings, trade and other payables, less cash, and short-term deposits. Net debt in the current year is higher due to the Citi Finance Facility. 20. Accumulated Losses At 1 July Net profit/(loss) attributable to members of the parent entity At 30 June 21. Reserves Share based payments reserve At 1 June Share based payments At 30 June 2021 $’000 (308,796) 87,199 (221,597) 2020 $’000 (228,456) (80,340) (308,796) 28,044 (344) 27,837 28,044 137 28,181 This reserve is used to recognise the fair value of rights and options issued to employees in relation to equity-settled share-based payments. During the year ended 30 June 2021, the Company recognised income for reversal of ($0.344) million for share based payments (30 June 2020: $0.137million) in the profit and loss. There were no share-based payments granted during the year. 22. Auditor Remuneration Fees to Ernst & Young (Australia) 2021 $'000 2020 $'000 Fees for auditing the statutory financial report of the parent covering the group and auditing the statutory financial reports of any controlled entities 185 212 Fees for other assurance and agreed-upon-procedures services under other legislation or contractual arrangements where there is discretion as to whether the service is provided by the auditor or another firm: - Renison joint Venture audit Fees for other services - tax compliance Total fees to Ernst & Young (Australia) 52 64 104 341 47 323 54 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 23. Commitments Capital commitments Commitments relating to joint arrangements At 30 June 2021 the Group has capital commitments that relate principally to the purchase and maintenance of plant and equipment for its mining operations. Refer to note 13. Estimated capital expenditure contracted for at reporting date, but not recognised as liabilities for the Group: Within one year Mineral tenement commitments 2021 $’000 9,037 2020 $’000 1,632 The Company has tenements in which the mining operations are located. These tenement leases have a life of up to twenty-one years. To maintain current rights to explore and mine the tenements the Group is required to perform minimum exploration work to meet the expenditure requirements specified by the relevant state governing body. There are no restrictions placed on the lessee by entering into these contracts. The commitments include Joint Operation commitments as disclosed in note 24. Within one year After one year but not more than five years After more than five years Other commitments 2021 $’000 128 319 441 888 2020 $’000 875 3,228 6,347 10,450 The Group has obligations for various expenditures such as state government royalties, production-based payments, and exploration expenditure. Such expenditures are predominantly related to the earning of revenue in the ordinary course of business. 24. Interest in Joint Operations The Group's interest in the assets and liabilities of joint operations are included in the consolidated statement of financial position. Renison Tin Project Subsidiary Bluestone Mines Tasmania Pty Ltd has a 50% interest and participating share in the Renison Tin Project, which is operated and managed by Bluestone Mines Tasmania Joint Venture Pty Ltd. The Group is entitled to 50% of the production. The Renison Tin Project is located in Tasmania. Recognition and measurement Joint arrangements are arrangements over which two or more parties have joint control. Joint Control is the contractual agreed sharing of control of the arrangement which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. Joint arrangements are classified as ether a joint operation or a joint venture, based on the rights and obligations arising from the contractual obligations between the parties to the arrangement. To the extent the joint arrangement provides the Group with rights to the individual assets and obligations arising from the joint arrangement, the arrangement is classified as a joint operation and as such, the Group recognises its:      Assets, including its share of any assets held jointly; Liabilities, including its share of liabilities incurred jointly; Revenue from the sale of its share of the output arising from the joint operation; Share of revenue from the sale of the output by the joint operation; and Expenses, including its share of any expenses incurred jointly To the extent the joint arrangement provides the Group with rights to the net assets of the arrangement, the investment is classified as a joint venture and accounted for using the equity method. Under the equity method, the cost of the investment is adjusted by the post-acquisition changes in the Group’s share of the net assets of the joint venture. 55 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 25. Discontinued Operations On 30 March 2021, Metals X completed the sale of its Copper asset portfolio including the Nifty Copper operations, the Maroochydore Copper project, and the Paterson exploration project to Cyprium. (a) Copper assets and liabilities disposed of at 30 March 2021: Assets Prepayments Inventories Property plant & equipment Exploration and evaluation expenditure Liabilities Trade and other payables Interest bearing liabilities Rehabilitation provision Carrying value of Copper assets disposal group (i) (b) Consideration received for Copper asset portfolio: Consideration received: Cash consideration Convertible note receivable Derivative financial instruments Working capital adjustment Carrying value of Copper assets disposal group (i) Profit on disposal of Copper assets (ii) As at 30 Mar 2021 $'000 272 16,858 16,499 11,023 44,652 647 18 38,537 39,202 5,450 30 Mar 2021 $’000 24,000 35,070 4,542 2,768 66,380 (5,450) 60,930 On 25 May 2021, the Company announced that it had signed a binding term sheet with NICO Resources Limited (NICO) for the sale and spin out of its Nickel asset portfolio. The assets, liabilities and cash flows from this discontinued operation are as shown in note 11. 56 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 25. Discontinued Operations (continued) (c) The results for the discontinued Copper and Nickel asset portfolios during the year are presented as follows: Revenue Cost of sales Gross loss Profit on disposal of Copper assets (ii) Impairment reversal upon categorising as assets held for sale Other income Commodity and foreign exchange trading gains Fair value loss on provisionally priced trade receivables Rehabilitation interest accretion Finance and admin costs Care and maintenance costs Loss on sale of assets Exploration and evaluation expenditure written off Impairment loss on assets Profit/(loss) for the period from discontinued operations (d) The net cash flows incurred by the Copper and Nickel assets is as follows: Net cash flows used in operating activities Net cash flows from/(used in) investing activities Net cash outflow 26. Key Management Personnel Compensation of Key Management Personnel Short-term employee benefits Post-employment benefits Other long-term benefits Share-based payment Termination payments 2021 $’000 - - - 60,930 15,753 73 1 - (187) (87) (8,463) (3,747) - - 64,274 (9,699) 30 (9,669) 2020 $’000 70,206 (95,840) (25,634) - - 220 546 (2,066) (190) (308) (24,744) - (105) (15,363) (67,644) (1,414) (15,965) (17,379) 2021 $ 1,919,001 115,534 39,658 (127,089) 478,621 2,425,725 2020 $ 2,961,955 201,941 94,140 75,087 472,757 13,805,880 1KMP compensation for 2020 includes total emoluments paid to KMP who are no longer disclosed in the Remuneration Report. 57 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 27. Related Party Disclosure Subsidiaries The consolidated financial statements of the Group include Metals X and the subsidiaries listed in the following table: Name Bluestone Australia Pty Ltd Metals Exploration Pty Ltd Paterson Copper Pty Ltd (formerly Cupric Pty Ltd) Subsidiary companies of Bluestone Australia Pty Ltd Country of Ownership Interest Incorporation Australia Australia Australia 2021 100% 100% - 2020 100% 100% 100% Bluestone Mines Tasmania Pty Ltd Australia 100% 100% Subsidiary companies of Metals Exploration Pty Ltd Austral Nickel Pty Ltd Hinckley Range Pty Ltd Metex Nickel Pty Ltd Subsidiary companies of Paterson Copper Pty Ltd Nifty Copper Pty Ltd Maroochydore Copper Pty Ltd Transactions with related parties Related party transactions Shareholder’s Loan & Interest: Asia Cheer Trading Limited (subsidiary of Company’s substantial shareholder APAC Resources Strategic Holdings Limited) Jointly controlled operations Bluestone Mines Tasmania Joint Venture Pty Ltd (Manager of the Renison Tin Project) 2021 2020 2021 2020 Australia Australia Australia Australia Australia 100% 100% 100% - - 100% 100% 100% 100% 100% Sales to related parties $’000 Purchases and interest charges from related parties $’000 Amounts owed by related parties $’000 Amounts owed to related parties $’000 - - 126 888 1,583 - 170 - - - - 64 15,528 - 48 - 58 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) For the year ended 30 June 2021 28. Parent Entity Disclosure Current assets Total assets Current Liabilities Total Liabilities Issued capital Accumulated losses Share based payment reserve Total Equity Profit/(Loss) of the parent entity Total comprehensive profit/(loss) of the parent entity 29. Significant Events After Period End Receipt of Mt Gordon Copper Payment 2021 $'000 30,913 119,219 15,750 15,750 341,685 (266,053) 27,836 103,469 82,526 82,526 2020 $'000 16,133 22,050 762 762 341,685 (348,578) 28,181 21,288 (90,587) (90,587) On 8 July 2021, the Company received $11 million as settlement of the Copper Payment pursuant to the Mt Gordon Sale Agreement, and subsequent binding variation agreement, with Capricorn Copper Holdings Pty Ltd (CCH) and its parent entity, EMR Capital Investment (No. 6B) Pte Ltd. The payment from CCH includes the first and second instalments of $5,000,000 each, the agreed extension fee of $250,000, and interest due, being a total payment of $11 million. Repayment of ACT Loan Facility On 13 July 2021, the Company repaid $7.75 million, comprising 50% of the outstanding principal amount of $15.50 million to ACT. On 27 July 2021, the Company announced it had agreed to extend the Loan Facility Termination Date from 31 July 2021 to 31 January 2021, with all other terms and conditions remaining unchanged. On 30 September 2021, the Company made a final payment of $7.764 million, comprising $7.750 million principal plus interest, to ACT. The Company has now repaid the ACT loan facility in full. Spin Out of Nickel-Cobalt Assets As described in the Director’s Report, on 21 September 2021, the date to satisfy all Conditions Precedent to the binding term sheet to sell the assets passed. However, the parties involved in the sale are in the process of extending the date for completion of the Conditions Precedent which have resulted from procedural delays in obtaining the necessary approval from the Foreign Investment Review Board. 59 DIRECTORS’ DECLARATION For the year ended 30 June 2021 In accordance with a resolution of the Directors of Metals X Limited, I state that: In the opinion of the Directors: (a) the consolidated financial statements and notes of the Group are in accordance with the Corporations Act 2001, including: (i) (ii) giving a true and fair view of the financial position as at 30 June 2021 and the performance for the year ended on that date of the Group; and complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and the consolidated financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 1(b) and; there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. this declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2021. (b) (c) (d) On behalf of the Board Brett Smith Executive Director 30 September 2021 60 Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Auditor’s independence declaration to the Directors of Metals X Limited As lead auditor for the audit of Metals X Limited for the financial year ended 30 June 2021, I declare to the best of my knowledge and belief, there have been: a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Metals X Limited and the entities it controlled during the financial year. Ernst & Young Philip Teale Partner 30 September 2021 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation PT:DA:MLX:009 Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Independent auditor’s report to the members of Metals X Limited Report on the audit of the financial report Opinion We have audited the financial report of Metals X Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes to the consolidated 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: a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2021 and of its consolidated financial performance for the year ended on that date; and b. Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the current year. The matters we identified are addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on the matters. For the matters below, our description of how our audit addressed the matters is provided in that context. We have determined the matters described below to be key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report, Including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation PT:DA:MLX:010 1. Fair value of financial assets through profit and loss Why significant How our audit addressed the key audit matter As described in note 25 discontinued operations, the Group completed the sale of its copper asset portfolio on 30 March 2021. As part of the proceeds, the Group received non-cash consideration initially recognised at a fair value of $39.6 million. The non- cash consideration consists of the following financial assets:   a convertible note from the buyer; and options to acquire shares in the buyer. These financial assets are required to be subsequently measured at fair value through profit or loss under AASB 9 Financial Instruments. At 30 June 2021, the fair value of these financial assets through profit or loss changed to $43.0 million resulting in a gain and interest earned of $3.4 million reported in the Group’s profit for the period. Due to the inherent complexity and judgement required to value these financial assets, management engaged an independent expert to assist in determining the fair value. Given the size of the financial assets relative to the Group’s total assets and judgements involved in determining fair value, this was considered a key audit matter. Our procedures included:      Assessed the Group’s recognition, measurement, classification and treatment of the financial instruments, in accordance with the accounting standards, which included understanding of the terms and conditions within the Convertible Note Deed Assessed the competency and objectivity of management’s expert Read the valuation reports prepared by the Group’s external expert and:   compared the inputs used by the expert to supporting evidence; and re-computed the fair value outcomes based on the inputs and techniques applied For the options and convertible note conversion feature, we engaged our internal valuation specialist to determine our own point estimate based on the appropriate valuation techniques and compared the results to that the management’s expert Assessed the adequacy of disclosures in the financial report. Information other than the financial statements and auditor’s report The directors are responsible for the other information. The other information comprises the information included in the Company’s 2021 annual report, 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, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the financial report The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation PT:DA:MLX:010 In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating 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 have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:       Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors. Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation PT:DA:MLX:010 We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated to the Directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the Directors' report for the year ended 30 June 2021. In our opinion, the Remuneration Report of Metals X Limited for the year ended 30 June 2021, 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. Ernst & Young Philip Teale Partner Perth 30 September 2021 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation PT:DA:MLX:010 TABLES OF MINERAL RESOURCES AND ORE RESERVES As at 31 March 2021 Mineral Resource Estimates (50% MLX) – Consolidated Summary & Annual Comparison Project 31 Mar 2020 Renison Bell Rentails Total Mining Depletion Renison Bell Rentails Total Resource Adjustments Renison Bell Rentails Total 31 Mar 2021 Renison Bell Rentails Tonnes1 (Mt) Tin (%Sn) Copper (%Cu) 18.5 23.9 42.4 (0.82) - (0.82) 0.5 - 0.5 18.2 23.9 1.57 0.44 0.93 1.25 - 1.25 3.95 - 3.95 1.65 0.44 0.20 0.22 0.21 0.24 - 0.24 0.36 - 0.36 0.20 0.22 Contained Metal Tin Copper (kt) 292 104 396 (10.3) - (10.3) 19.80 - 19.80 302 104 (kt) 36.6 52.7 89.3 (1.94) - (1.94) 1.8 - 1.8 36.5 52.7 Total 1Figures are rounded according to JORC Code guidelines and may show apparent addition errors. Contained metal does not imply recoverable metal. 42.1 89.2 0.96 0.21 406 Ore Reserve Estimates (50% MLX) – Consolidated Summary & Annual Comparison The Ore Reserve estimates are a subset of the Mineral Resource estimates Ore Kt Grade % Sn 8,100 22,310 30,410 1.02 0.44 0.60 Tin Metal Kt Sn 82 99 181 8,100 22,310 30,410 Copper Ore Kt Grade % Cu Metal Kt Cu (1,583) - 1.20 - (19) - (1,583) - 1,320 - 3.56 - 47 - 1,320 - 7,837 22,310 1.41 0.44 110 99 7,837 22,310 0.21 0.23 0.22 0.27 - 0.15 - 0.19 0.23 17 51 68 (4) - 3 - 16 51 67 Project 30 Jun 2019 Renison Bell Rentails Mining Depletion Renison Bell Rentails Reserve Adjustments Renison Bell Rentails 31 Mar 2021 Renison Bell Rentails 30,147 30,147 Renison Bell and Rentails Resources and Reserves are 50% owned by Metals X. The geographic region for Tin Mineral Resources and Ore Reserves is Australia. For further details on total Mineral Resources refer to ASX announcement dated 7 June 2021. For further details on total Ore Reserves refer to ASX announcement dated 17 June 2020. Ore Reserves have been adjusted to reflet mining depletion to 31 March 2021. 0.69 0.22 209 66 COMPETENT PERSONS STATEMENT The information in this report that relates to Mineral Resources has been compiled by Bluestone Mines Tasmania Joint Venture Pty Ltd technical employees under the supervision of Mr Colin Carter B.Sc. (Hons), M.Sc. (Econ. Geol), AusIMM. Mr Carter is a full-time employee of the Bluestone Mines Tasmania Joint Venture Pty Ltd and has sufficient experience which is relevant to the style of mineralisation and types of deposit under consideration and to the activities 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 Carter consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. The information in this report that relates to Tin Ore Reserves has been compiled by Bluestone Mines Tasmania Joint Venture technical employees under the supervision of Mr Mark Recklies, B Engineering (Mining Engineering), AusIMM. Mr. Recklies is a full-time employee of Bluestone Mines Tasmania Joint Venture. Mr Recklies has sufficient experience which is relevant to the style of mineralisation and types of deposit under consideration and to the activities 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 Recklies consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. STATEMENT OF GOVERNANCE ARRANGEMENTS AND INTERNAL CONTORLS Governance of Metals X’s Mineral Resources and Ore Reserves development and management activities is a key responsibility of the Executive Management of the Company. Senior geological and mining engineering staff of the Company oversee reviews and technical evaluations of the estimates and evaluate these with reference to actual physical and cost and performance measures. The evaluation process also draws upon internal skill sets in operational and project management, ore processing and commercial/financial areas of the business. 
 The Executive Director (in consultation with senior staff) is responsible for monitoring the planning, prioritisation and progress of exploratory and resource definition drilling programs across the Company and the estimation and reporting of resources and reserves. These definition activities are conducted within a framework of quality assurance and quality control protocols covering aspects including drill hole siting, sample collection, sample preparation and analysis as well as sample and data security. A four-level compliance process guides the control and assurance activities: 1. Provision of internal policies, standards, procedures and guidelines; 2. Mineral Resources and Ore Reserves reporting based on well-founded assumptions and compliance with external standards such as the Australasian Joint Ore Reserves Committee (JORC) Codes; 3. 4. Internal review of process conformance and compliance; and Internal assessment of compliance and data veracity. The objectives of the estimation process are to promote the maximum conversion of identified mineralisation into JORC 2012 compliant Mineral Resources and Ore Reserves. Metals X reports its Mineral Resources and Ore Reserves on an annual basis, in accordance with ASX Listing Rule 5.21 and clause 14 of Appendix 5A (the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC code) 2012 Edition). Mineral Resources are quoted inclusive of Ore Reserves. Competent Persons named by Metals X are members of the Australasian Institute of Mining and Metallurgy and/or the Australian Institute of Geoscientists and qualify as Competent Persons as defined in the JORC Code 2012. CORPORATE GOVERNANCE The Company’s 2021 Corporate Governance Statement is available for in the Corporate Governance section of the Company’s website: https://www.metalsx.com.au/aboutus/corporate-governance/. 67 SECURITY HOLDER INFORMATION As at 31 August 2021 Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as follows. The information is current as at 31 August 2021. Issued Equity Capital Number of holders Number on issue Voting Rights Ordinary Shares 4,072 907,266,067 Options 2 488,024 The voting rights for each class of security on issue are: Ordinary fully paid shares Each ordinary shareholder is entitled to one vote for each share held. Options The holders of options have no rights to vote at a general meeting of the company. Distribution of Holdings of Equity Securities Fully Paid Ordinary Shares Holding ranges 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total Unlisted options expiring 30 June 2023 Holding ranges 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total Unlisted options expiring 30 June 2024 Holding ranges 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total Unmarketable Parcels Ordinary Shares Number of Holders 269 539 815 1,993 456 4,072 Number of Holders 0 0 0 1 0 1 Number of Holders 0 0 0 0 1 1 Options Options Units 60,419 1,647,995 6,668,660 68,125,597 830,763,396 907,266,067 Units 0 0 0 66,956 0 66,956 Units 0 0 0 0 421,068 421,068 The number of shareholders holding less than a marketable parcel was 340 as at 31 August 2021 (being 1,755 shares based on a closing share price of $0.2850 at 31 August 2021). 68 SECURITY HOLDER INFORMATION (Continued) As at 31 August 2021 Substantial Shareholders Substantial Shareholders as disclosed in substantial shareholder notices provided to the Company as at 31 August 2021. Old Peak Group Ltd1 APAC Resources Limited and its related bodies corporate2, 5 Credit Suisse Holdings (Australia) Limited (on behalf of Credit Suisse Group AG and its affiliates)3 Bank of America Corporation and its related bodies corporate4 Number of Ordinary Shares 148,485,759 130,627,608 55,329,373 54,695,622 Percentage (%) 16.36 15.31 6.10 6.03 1. As lodged on 11 May 2021 2. As lodged on 3 October 2019 3. As lodged on 3 August 2021 4. As lodged on 4 August 2021 5. On16 September 2021, APAC Resources Limited acquired on-market 48,968,711 Metals X Limited shares taking its percentage interest to 19.80%. On Market Buy Back There is no current on-market buy-back. Restricted Securities The Company has no restricted securities on issue. Top 20 Shareholders Rank Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 CITICORP NOMINEES PTY LIMITED SUN HUNG KAI INVESTMENT SERVICES LIMITED BNP PARIBAS NOMS PTY LTD NATIONAL NOMINEES LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA JINCHUAN GROUP LTD FARJOY PTY LTD J P MORGAN NOMINEES AUSTRALIA PTY LIMITED BNP PARIBAS NOMINEES PTY LTD CS FOURTH NOMINEES PTY LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED NATIONAL NOMINEES LIMITED NGE CAPITAL LIMITED BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM MRS YUQIN ZHUANG BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD BNP PARIBAS NOMINEES PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED MR RAM SHANKER KANGATHARAN CS THIRD NOMINEES PTY LIMITED Total Number of Ordinary Shares Percentage (%) 146,854,893 79,536,595 16.19 8.77 73,197,236 59,641,333 48,832,964 44,000,000 40,897,831 29,998,030 25,171,869 19,768,769 17,941,694 10,729,448 10,284,250 10,189,465 9,700,000 6,583,078 5,862,328 5,635,858 5,000,000 4,336,880 8.07 6.57 5.38 4.85 4.51 3.31 2.77 2.18 1.98 1.18 1.13 1.12 1.07 0.73 0.65 0.62 0.55 0.48 654,162,521 72.10 69

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