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2023 ReportMRG Metals Limited Consolidated Financial Statements 30 June 2023 1 Annual Report MRG Metals Ltd ABN: 83 148 938 532 For the Year ended 30 June 2023 MRG Metals Limited Consolidated Financial Statements 30 June 2023 Contents Review of Operations Directors’ Report Auditor’s Independence Declaration Corporate Governance Statement Statement of Financial Position Statement of Profit or Loss and Other Comprehensive Income Statement of Changes in Equity Statement of Cash Flows Notes to the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report ASX Additional Information Corporate Directory 2 Page 3 68 79 80 88 89 90 91 92 112 113 117 120 MRG Metals Limited Consolidated Financial Statements 30 June 2023 Review of Operations MRG Metals is pleased to provide a summary of the Company’s activities for the 2023 financial year across its portfolio of Heavy Mineral Sands (HMS) projects, located in southern Mozambique. 3 MRG has defined a JORC Resource over 2 billion tonnes with further upside from a JORC Exploration Target. The Company believes that this could potentially be one of the largest HMS discoveries worldwide in the last decade. Through the Company’s extensive activities at its Corridor Projects, MRG is in a position with multiple pits demonstrating Mineral Resource Estimates which could lead to a mine start-up operation. MRG Metals Limited Consolidated Financial Statements 30 June 2023 4 During the financial year, MRG’s activities were highlighted by the release of results from the Scoping Study and Preliminary Economic Assessment for the Corridor Central and Corridor South Projects, specifically the Koko Massava, Nhacutse and Poiombo deposits. Corridor Projects The Corridor Projects covers 2 licences, Corridor Central and Corridor South covering a total of 387km2. MRG’s key focus of the last financial year has been the Koko Massava, Nhacutse and Poimobo targets. The Nhacutse and Poiombo deposits sit adjacent, approximately 4 km apart, and a similar distance between the Nhacutse and Koko Massava deposit to the northwest. All three deposits are in a very close economic radius and approximately 40 km from the proposed port at Chongoene. MRG Metals Limited Consolidated Financial Statements 30 June 2023 Corridor Projects 5 Scoping Study and Preliminary Economic Assessment Within the December 2022 quarter, MRG announced the results of the Scoping Study and Preliminary Economic Assessment by IHC Mining for the Corridor Central (11142C) and Corridor South (11137C) Projects, specifically the Koko Massava, Nhacutse and Poiombo deposits. This was released following the earlier Pre-Feasibility Metallurgical Process Development Test Work carried out by IHC Mining on the Koko Massava prospect which returned excellent results. Cautionary Statement The Scoping Study and Preliminary Economic Assessment referred to in this report has been undertaken to determine the potential viability of an open pit mine and ilmenite processing plant constructed onsite at the Corridor Sands project in Mozambique and to reach a decision to proceed with more definitive studies. The Scoping Study and Preliminary Economic Assessment has been prepared to an accuracy level of +30-35%. The results should not be considered a profit forecast or production forecast. The Scoping Study and Preliminary Economic Assessment is a preliminary technical and economic study of the potential viability of the Corridor Sands project. In accordance with the ASX Listing Rules, the Company advises it is based on low-level technical and economic assessments that are not sufficient to support the estimation of Ore Reserves. Further evaluation work including infill drilling and appropriate studies are required before MRG Metals Ltd (MRG) will be able to estimate any Ore Reserves or to provide any assurance of an economic development case. 82% of the scheduled throughput over the first 11 years of production, at Nhacutse and Poiombo deposits, is in the Indicated Mineral Resource category, with 18% in the Inferred Mineral Resource category. 50% of the scheduled throughput over years 12 to 25 of production, at Koko Massava deposit, is in the Indicated Mineral Resource category, with 50% in the Inferred Mineral Resource category. The Company has concluded that it has reasonable grounds for disclosing a production target which includes a modest amount of Inferred material. However, MRG, in consultation with IHC Mining, intends to conduct infill drilling to increase the confidence of the Inferred Mineral Resources to Indicated Mineral Resources and to increase the confidence of the Indicated Mineral Resources to Measured Mineral Resources. There is a low level of geological confidence associated with Inferred Mineral Resources, and there is no certainty that further exploration work MRG Metals Limited Consolidated Financial Statements 30 June 2023 6 will result in the determination of Indicated Mineral Resources or that the production target itself will be realised. The Scoping Study and Preliminary Economic Assessment is based on the material assumptions outlined elsewhere in the announcement. These include assumptions about the availability of funding. While MRG considers all the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the Scoping Study and Preliminary Economic Assessment will be achieved. To achieve the range of outcomes indicated in the Scoping Study Preliminary Economic Assessment, initial funding in the order of USD$239 million will likely be required. Investors should note that such funding may only be available on terms that dilute or otherwise affect the value of MRG’s existing shares. Debt funding via offtake pre-funding will be investigated. It is also possible that the Company could pursue other value realisation strategies such as a sole, partial sale or joint venture of the project. If it does, this could materially reduce the Company’s proportionate ownership of the project. The Company has concluded it has a reasonable basis for providing the forward-looking statements included in this announcement and believes that it has a reasonable basis to expect it will be able to fund the development of the Project. Given the uncertainties involved, Investors should not make any investment decisions based solely on the results of the Scoping Study Preliminary Economic Assessment. No Ore Reserve has been declared. This ASX release has been prepared in compliance with the current JORC Code (2012) and the ASX Listing Rules. All material assumptions, including sufficient progression of all JORC Modifying Factors, on which the production target and forecast financial information are based have been included in this ASX release. MRG Metals Limited Consolidated Financial Statements 30 June 2023 7 Figure 2: Map of the MRG HMS Projects MLA’s Corridor Central (11142C) and Corridor South (11137C), showing roads and towns. MRG Metals Limited Consolidated Financial Statements 30 June 2023 8 Figure 3: Cash flow over the life of the project MRG Metals Limited Consolidated Financial Statements 30 June 2023 Table 1: Scoping Study and PEA key economics summary 9 Corridor Sands Scoping Study Project Summary Mining Physics Total Mining Inventory Contained THM Average Grade Mining Rate Mine Life Pricing (Average life of mine) Titano-Magnetite Ilmenite Non mag Production Titano-Magnetite Ilmenite Non-mag Capital Expenditure CAPEX (start up capital) Key Financial Metrics Revenue Free cash flow (After tax) Cash costs CAPEX (including deferred) NPV (after-tax) IRR (after-tax) Payback (discounted, after-tax) Life of Mine Background Mt Mt % Mtpa Years USD/t USD/t USD/t ktpa ktpa ktpa USD M $M $/t Ore $/t HMC $M $/t Ore $/t HMC $M $/t Ore $/t HMC $M $M % Year Years 513 27.8 5.4 19.7 26 90 256 320 262 369 48 239 3262 6.4 139.6 938 1.8 40.1 -1603.3 -3.1 -68.6 279 258 21% 5.5 26 The Scoping Study and Preliminary Economic Assessment Report (Report) has been prepared for MRG Metals Limited (MRG) by IHC Mining (IHC), based on assumptions as identified throughout the text and upon information and data supplied by others. IHC has, in preparing the Report exercised due care consistent with the intended level of accuracy, using its professional judgment and reasonable care. However, no warranty should be implied as to the accuracy of estimates or other values and all estimates and other values are only valid as at the date of the Report and will vary thereafter. Parts of the Report have been prepared or arranged by third party contributors, as detailed in the document. While the contents of those parts have been generally reviewed by IHC for inclusion into the Report, they have not been fully audited or sought to be verified by IHC. IHC is not in a position to, and does not, verify the accuracy or completeness of, or adopt as its own, the information and data supplied, either from the request for information (RFI) process or free issued by others and disclaims all liability, damages or loss with respect to such information and data. In respect of all parts of the Report, whether or not prepared by IHC, no express or implied representation or warranty is made by IHC or by any person acting for and/or on behalf of IHC to any third party that the MRG Metals Limited Consolidated Financial Statements 30 June 2023 10 contents of the Report are verified, accurate, suitably qualified, reasonable or free from errors, omissions or other defects of any kind or nature. Third parties who rely upon the Report do so at their own risk and IHC disclaims all liability, damages or loss with respect to such reliance. IHC disclaims any liability, damage and loss to MRG and to third parties in respect of the publication, reference, quoting or distribution of the Report or any of its contents to and reliance thereon by any third party. Scoping Study and PEA Summary 1. Introduction MRG Metals Limited (MRG) is looking at developing a mining and processing operation in Mozambique. The Corridor Sands project (CSP) incorporates the Corridor Central (6620L) and Corridor South (6621L) licences. These two licences are now under mining licence application (MLA) (refer ASX release 21 October 2022), with INAMI having accepted the MLAs and changing the licence numbers accordingly, Corridor Central to 11142C (17.31956 Ha) and Corridor South to 11137C (18.23168 Ha). The MLAs were accepted by INAMI on the 6th of October 2022 and 3rd of October 2022 respectively for Corridor Central and Corridor South. The two licences are currently 100% owned by MRG Metals Limited (MRG) through its ownership of its subsidiaries, Sofala Mining & Exploration Limitada and Sofala Mining & Exploration I Limitada, in Mozambique. MRG is committed to working with INAMI to further the application process to the approval of Mining Licences, with Environmental Management Plan (EMP) and Social and Labour Plan (SLP) studies and reports, as well as the land-use licence / licences (DUAT) to take place after Mining Licences have been granted. All land in Mozambique is owned by the Mozambican government and land-use administered through rental and DUAT’s. Studies on existing DUAT’s will take place in the process, but no heritage sites within the mining areas or native title is applicable. The project comprises the Koko Massava, Nhacutse and Poiombo deposits. The envisioned strategy for the initial operation has been developed with the aim of enabling MRG to identify a clear path towards project execution. MRG plans to mine and process Run of Mine (ROM) material by establishing Mining Unit Plant (s) (MUP) and a Wet Concentrator Plant (WCP) initially capable of processing 20.1mtpa. The WCP will produce two streams, namely a Heavy Mineral Concentrate (HMC) that will be transported to a proposed Mineral Separation Plant (MSP) and a Titano-Magnetite final product that will be also transported to the MSP for offsite storage prior to loading on bulk carriers – sea freight. The MSP will be sized to handle 536Ktpa. Within the bounds of this Study, products will be stored on the MSP site for onward transport by others by road and sea on an FOB basis. 2. Basis of Study The purpose of this section is to set out the Scoping Study inputs, methods, key activities, deliverables, results and recommendations clearly for MRG Metals and its intended parties. The Study report generally brings together the technical scoping outcomes, capital and operating costs and financial modelling. IHC Mining provided a proposal outlining the scope of the study to be performed. The scope of work outlined in the proposal broadly included the following: In-house assessment of IHC Mining historical works of similar projects; • • Desktop metallurgy (in addition to existing test work); • Desktop investigative engineering; • • • Preliminary calculations; Concept sketch layouts; and Study management. MRG Metals Limited Consolidated Financial Statements 30 June 2023 11 This was to comprise two packages of work, specifically, a Scoping Study and associated financial modelling for: • Mining Unit Plant (MUP); • Wet Concentrator Plant (WCP); • Mineral Separation Plant (MSP); • General Process Infrastructure. In undertaking the study, the following items were excluded: • Detailed building layouts (to support local authority applications); • 3D Modelling for buildings, designs and any other equipment; • Permitting and approvals; and • Investigations as described in section 14 Capital Cost Estimate. Deliverables and activities undertaken during this scoping study include: Scoping of mining strategy and mining unit(s); • General review, registration and management of client data and key input information; • Convene internal and external kick-off meetings; • Development of a basis of study guiding document; • Prepare preliminary requests for information (RFI’s) and develop a register; • • Development of a basic mining inventory and schedule; • • Undertaking of mining options investigation; • Drafting of concept sketch site layouts of mining, wet processing, dry processing and port facilities; • Development of a Block Flow Diagram outlining high level plant Interaction; • Compiling mass and water balances • Assessing stockpile strategies and volumes, water consumption, reticulation and management, plant Scoping of process plants; consumables (power, diesel, gas etc) and man power requirements; • Undertaking preliminary engineering calculations sufficient to compile a Class 5 estimate; • Completing preliminary equipment selections; • Preparing mechanical equipment list with power draws; • Compiling a Class 5 Capital Budget Estimate (+/-35% accuracy); • Compiling a Class 5 Operating Cost Estimate (+/-35% accuracy); • Development of preliminary project execution schedule; • Development of a preliminary financial model; and • Preparation of final scoping study report. 3. Geology and Resources The deposits are hosted by the palaeodunes in the Chongoene-Chibuto area. The palaeodunes are known to host significant heavy mineral sand mineralisation. Recent drilling has intersected high total heavy mineral (THM) grades, from surface extending to a depth of up to 55m over a strike of 8km. The mineralisation is hosted within the red to brownish, medium grained sand units. The mineralisation zone is geologically continuous along strike, with grades varying along and across strike. In December 2021, MRG released a Mineral Resource Estimate (MRE) for their Koko Massava orebody which delivered a High-Grade Zone of 103Mt @ 6.6% THM at a 5.5% cut-off grade (Table 2.1 and 2.2; refer ASX Announcement 16 December 2021). The updated MRE comprised a total Mineral Resource of 1,534Mt @ 5.1% THM, with 17% slimes, containing 78Mt of THM with an assemblage of 38% ilmenite, 32% titano- magnetite, 1% rutile and 1% zircon. The JORC categories are specifically stated as: • • an Indicated Mineral Resource of 557Mt @ 5.1% THM and 17% slimes containing 28Mt of THM with an assemblage of 38% ilmenite, 32% titano-magnetite, 1% rutile and 1% zircon. an Inferred Mineral Resource of 977Mt @ 5.0% THM and 16% slimes containing 49 Mt of THM with an assemblage of 38% ilmenite, 32% titano-magnetite, 1% rutile and 1% zircon. MRG Metals Limited Consolidated Financial Statements 30 June 2023 12 In April 2022, MRG then announced the results of the updated JORC Mineral Resource estimates for its Nhacutse and Poiombo deposits at Corridor Sands with a combined Inferred Resource of 860Mt @ 4.9% THM (Table 2.3 and 2.4; refer ASX Announcement 8 April 2022). The MRE included high-grade zones totalling 256Mt @ 6.0% THM. Table 2-1: Mineral Resource estimate for Nhacutse and Poiombo at 4% THM cut-off grade Summary of Mineral Resources(1) Mineral Assemblage (2) Mineral Resource Category Indicated Inferred Deposit Global Grand Total Notes: Material In Situ THM BD M H T S E M L S I S O M L I T U R R Z I G A M T I M R H C H T O M A D N A H T O M N (Mt) 524 337 860 (Mt) (gcm3) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) 26 16 42 1.74 1.74 1.74 5.0 4.7 4.9 22 17 20 1 1 1 44 41 43 1 1 1 1 1 1 27 27 27 3 4 3 2 5 3 8 10 9 4 3 3 (1) Mineral resources reported at a cut-off grade of 4% THM (2) Mineral assemblage is reported as a percentage of in-situTHM Table 2-2: Mineral Resource estimate for Nhacutse and Poiombo at 5.5% THM cut-off grade Summary of Mineral Resources(1) Mineral Assemblage (2) Mineral Resource Category Indicated Inferred Deposit Global Grand Total Notes: Material In Situ THM BD M H T S E M L S I S O M L I T U R R Z I G A M T I M R H C H T O M A D N A H T O M N (Mt) 186 71 257 (Mt) (gcm3) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) 11 4 15 1.75 1.75 1.75 5.9 6.2 6.0 22 18 21 1 1 1 43 41 43 1 1 1 1 1 1 27 27 27 3 4 4 2 5 3 8 10 9 4 3 4 (1) Mineral resources reported at a cut-off grade of 5% THM (2) Mineral assemblage is reported as a percentage of in-situTHM Table 2-3: Mineral Resource estimate for Koko Massava at 4% THM cut-off grade Summary of Mineral Resources(1) Mineral Assemblage (2) Mineral Resource Category Indicated Inferred Deposit Global Grand Total Notes: Material In Situ THM BD M H T S E M L S I S O M L I T U R R Z I G A M T I M R H C H T O M A D N A H T O M N (Mt) 557 977 1,531 (Mt) (gcm3) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) 28 49 77 1.74 1.74 1.74 5.1 5.1 5.1 17 16 17 1 1 1 38 38 38 1 1 1 1 1 1 32 32 32 4 4 4 4 4 4 8 8 8 3 3 3 (1) Mineral resources reported at a cut-off grade of 4% THM (2) Mineral assemblage is reported as a percentage of in-situTHM MRG Metals Limited Consolidated Financial Statements 30 June 2023 13 Table 2-4: Mineral Resource estimate for Koko Massava at 5.5% THM cut-off grade Summary of Mineral Resources(1) Mineral Assemblage (2) Mineral Resource Category Indicated Inferred Deposit Global Grand Total Notes: Material In Situ THM BD M H T S E M L S I S O M L I T U R R Z I G A M T I M R H C H T O M A D N A H T O M N (Mt) (Mt) (gcm3) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) 58 45 103 4 3 7 1.8 1.8 1.8 6.4 6.8 5.1 15 12 17 1 1 1 39 37 39 1 1 1 1 1 1 33 34 33 4 4 4 3 4 3 7 5 6 3 2 3 (1) Mineral resources reported at a cut-off grade of 5.5% THM (2) Mineral assemblage is reported as a percentage of in-situTHM 4. Mining Strategy Review and selection of the appropriate mining methodology was based upon a conventional open pit unconsolidated free-dig, free flowing dry sand mining operation. Wet Mining operations were ruled out due to the mining pits relationship to the water table. At this stage of project development, conventional truck and shovel and dozer trap were considered. Apart from the superior economics, the broad acre deposit, little to no overburden combined with a pit depth of nominally up to 50 metres are well suited to dozer trap mining. This mining methodology is well understood and is currently being employed by a variety of Tier 1 mineral sands producers. Mining would be conducted by large bulldozers pushing ore to in pit screening and slurrying units known as mining unit plant (MUP). The MUP receives ROM ore mined by bulldozers. The MUP is designed to be relocatable and is placed adjacent to the lower ore level of the mine face. Process water from the plant reservoir is piped to the MUP and used to slurry and transport the screened ore back to the processing plant. Oversize material is rejected and disposed of in the mine void. Processing of ore will be conducted in two distinct stages. The WCP receives ore as slurry from the mine and after removal of clay, silt and oversize, the sands will be processed by spiral gravity separators to yield a HMC and low intensity magnets (LIMs) to yield a titano-magnetite product. The HMC and titano-magnetite product will be trucked to the MSP, the titano-magnetite will not undergo further processing and be stored as final product. At the MSP, the HMC feed stock will undergo various stages of magnetic, electrostatic separation and pyrometallurgy to isolate and upgrade the TiO2 products. Non-mag containing zircon, rutile and lighter minerals will be removed in wet gravity separation processes and a non-mag concentrate produced. The products will be conveyed to storage shed facilities on the MSP site and then reloaded on a ship loading conveyor as bulk sea freight. Coarse and fine tails will be trucked back to the WCP site and dumped into a tails reclaim hopper, mixed with WCP tailings and pumped back to the mine void. The mining inventory for the Nhacutse-Poiombo & Koko-Massava is included in Table 3. Tonnages and grades are rounded as appropriate and mineral assemblage is reported as a percentage of in situ HM. The reference point for the Mining Inventory is the point of feed to the MUP, i.e., the tonnes and grade reported are in-situ. The production profile over the life of mine (LOM) is shown in Figure 4. MRG Metals Limited Consolidated Financial Statements 30 June 2023 14 Table 3: Mining Inventory for PEA (showing valuable mineral component) Ore HM HM SLIMES OS BD ILM ILMA LX RUT TIMAG ZIR Deposit Mt Mt % % % g/cm3 %HM %HM %HM %HM %HM %HM Nhacutse & Poiombo 248 13.5 5.5 20 0.6 1.75 39.9 4.0 0.3 1.1 26.7 1.3 Koko Massava 265 14.3 5.4 16 0.9 1.75 37.1 2.2 0.3 1.2 32.1 1.2 Total 513 27.8 5.4 18 0.8 1.75 38.5 3.1 0.3 1.1 29.5 1.3 Resource Breakdown :Nhacutse and Poiombo: 82% Indicated,18% Inferred : Koko Massava 50% Indicated, 50% Inferred. Figure 4: Production Profile for Life of Mine (LOM) 5. Metallurgical Testwork IHC Mining completed scoping study level metallurgical test work in August 2020 for the Corridor Sands Project. The test work was conducted on a ~100kg sample of composited drill sample material derived from MRG’s Koko Massava deposit. The sample was characterised as per MRG’s standard methodology developed for the geological modelling, metallurgical evaluation and production forecasting of the CSP. The feed material contained minimal +2.0mm oversize particles/organics, 15.6% fines (-45μm) and 5% heavy mineral (2.85s.g.) content. XRF analysis indicated the HM to contain 24.6% TiO2 and 0.96% ZrO2. QEMSCAN analysis calculated the HM mineralogy to contain 0.2% rutile, 2.0% altered ilmenite, 28.8% ilmenite, 16.6% titano-magnetite and 1.2% zircon. MRG Metals Limited Consolidated Financial Statements 30 June 2023 15 The material was processed through a simulated feed preparation process to remove fines and oversize particles. The screened sand fraction represented a mass yield of 87.3% with respect to ROM material. A sample of generated fines was used to complete fines handling test work, which confirmed the fines to settle readily and consolidate well when using conventional flocculent. The screened sand fraction was then processed through a two-stage (rougher-cleaner) wet table circuit to simulate a wet concentration process. The material was amenable to upgrading by gravity separation. The circuit produced a HMC containing 83.0% HM, and recovered 93.5% of the TiO2 units and 93.7% of the ZrO2 units. The HMC represented a mass yield of 4.35% with respect to ROM material. The resultant HMC was then processed through a typical mineral sands concentrate upgrade process (CUP), utilising a two-stage LIMS (non-mag scavenger), two-stage WHIMS (non-mag scavenger) and two-stage wet table (rougher-scavenger) to further upgrade the WHIMS non-mags. This circuit produced a titano-magnetite product, a low-Ti concentrate, a magnetic concentrate and a non-magnetic concentrate. The CUP magnetic concentrate was then processed through the ilmenite upgrade process, consisting of electrostatic and dry magnetic separation. The produced magnetic fraction represented a mass yield of 1.60% with respect to ROM material, contained 43.5% TiO2 and was elevated in chrome (1.4% Cr2O3). Further magnetic fractionation test work concluded that the chrome could not be adequately removed by magnetic separation alone and that chemical alteration by ultra-low temperature roasting (ULTR) plant would be required. The roasting process successfully enhanced the magnetic susceptibility of the ilmenite species, allowing for more effective rejection of chrome-bearing minerals by the proceeding dry magnetic separation circuit. The produced ULTR Ilmenite contained 47.1% TiO2, 0.10% Cr2O3, 0.92% SiO2 and negligible U+Th. This product represents 1.42% of the ROM mass and meets typical primary ilmenite specification. Despite the low mass yield, the CUP’s non-magnetic concentrate was further processed by electrostatic, magnetic and gravity separation methods to produce a Ti concentrate and a Zr concentrate. The developed flow sheet is a relatively simple process which uses typical mineral sands separation methodologies. The production of the titano-magnetite product has proven particularly robust and consistent throughout the scoping study and pre-feasibility study metallurgical test work completed to date. The non- magnetic concentrate, while representing a low mass yield, is a potential value adding stream for future consideration. The production of a primary ilmenite product has proven to be somewhat more demanding, with multiple stages of magnetic separation required in conjunction with ULTR treatment. Each progressive stage of mineral separation introduces ilmenite mineral losses. With ilmenite proving to be a major driver for the project, there is opportunity to optimise ilmenite recovery through alternate process flow sheet options. Two major process routes have been investigated to date – the WHIMS-oriented scoping study test work flow sheet and the current design as presented herein (and as currently being developed during pre-feasibility study test work). The latter’s main advantage is reducing opportunity for ilmenite mineral losses in the WHIMS circuit. It is possible that this may cause a net increase in operating costs due to the increased drying requirements. To identify the optimum choice, a high-level cost-benefit analysis is recommended to be conducted for these two process options once metallurgical test work results are finalised for this processing option. Pending the results of this investigation, further options for reducing ilmenite losses may also be available, such as the removal of the mineral separation steps prior to roasting. While this would increase the energy intensive roasting requirement, it would eliminate the ilmenite mineral losses associated with the pre-ULTR MSP circuit. The ilmenite upgrade (to final product) would then occur entirely through the magnetic separation post-ULTR, wherein the ilmenite magnetic susceptibility has been enhanced and normalised by the roasting process. It is recommended that these option assessments are completed prior to commencement of a bankable feasibility study, such that the bankable feasibility metallurgical test work can confirm and optimise the selected circuit and assess its response to ore variability. MRG Metals Limited Consolidated Financial Statements 30 June 2023 6. Modifying Parameters 16 Mining recovery and dilution have been considered in design and given the bulk, non-selective mining method used, it is not considered that application of further modifying factors is appropriate. No cutting or factoring of grades were made. The same modifying factors were used on both deposits. Exchange Rates: All dollar values referred to in this report are in United States Dollars (USD) unless explicitly stated otherwise. Therefore, no exchange rate has been assumed. Commodity Prices: Product prices are a function of supply and demand, and product quality. Those used for optimisation value modelling purposes are included in Table 4. Prices were based on those supplied by MRG and have subsequently been updated. These updated prices were confirmed by TZMI. TZMI conducted a detailed Market Study for MRG, the study loo ed particularly at incorporating TZMI’s latest supply/demand projections on global sulfate ilmenite, rutile and zircon markets. The study had the following focus: Introduction to the mineral sands value chain and industry structure. Phase 1 • • Overview of existing major producers and likely new projects that are currently under investigation. • Review of supply of sulfate ilmenite, rutile and zircon, outlining the key producers/regions and a supply outlook to 2030. • Demand analysis segmented by end-use markets and key customers by individual feedback type and zircon. An overview of the global TiO2 pigment sector (supply and demand) and forecasts to 2030 will be included, as this TiO2 pigment is the dominant driver for consumption of titanium feedstocks. • Review of sulfate ilmenite requirement for the beneficiation sector. • Detailed analysis of global supply/demand balances and indicative outlook to 2030 for sulfate ilmenite, rutile and zircon. • Price forecasts of individual feedstock products – sulfate ilmenite, rutile as well as zircon through to 2025 and provision of long-term inducement prices for each of the aforementioned product for the period post 2025. For context, historical prices from 2010 to 2020 will be provided. Phase 2 • Product quality assessment of planned sulfate ilmenite and non-magnetic concentrate from the company’s HM project in Mozambique based on indicative quality obtained from bulk metallurgical testwork undertaken at IHC Mining. • Primary research on the titanomagnetite market in China, covering market dynamics and pricing trends, market segmentation and relative size. • Commentary on market placement, key target markets and achievable pricing of the planned products (Sulfate ilmenite, titanomagnetite and non- magnetic concentrate) from the Corridor project. A co- product credit will also be provided for the monazite/xenotime contained in the non-magnetic concentrate. • Overview of the global concentrate market, with particular focus on cross-border volumes and pricing, as well as introduction to the concentrate pricing methodology. The new prices confirmed by TZMI are higher than these, however that will simply drive a higher valuation for the financial modelling and result in a more robust operation and economics. Table 4: Product Prices Product US$/t product Ilmenite Product Non Magnetic Product Titano-Magnetic Product 195.02 525.00 84.00 MRG Metals Limited Consolidated Financial Statements 30 June 2023 Royalties: 17 Royalties include provision for government royalties and are assigned based on a percentage of sales price. An ad valorem royalty of 6% is used in this study. Operating Costs: The operating cost and revenue assumptions used for pit optimisation are summarised in Table 5. These are derived from the scoping study and industry standards for similar sized and style of operation. No contingency has been applied to operating cost because the pit limit selection process always selects a pit shell that assumed a reduced revenue (which is the same as increased cost, effectively). Table 5: Operating Cost Assumptions Description Surface costs Clearing & topsoil removal cost Rehabilitation cost Mining costs Unit US$/ha US$/ha Overburden removal cost (if applicable) US$/BCM Mining unit Oversized handling cost Pumping cost to WCP WCP costs Fine tails handling cost WCP cost Tailings cost CUP cost Miscellaneous costs US$/t mined US$/t o/s generated US$/t moved US$/t fine generated US$/t feed in US$/t moved US$/t feed in Royalty - percentage of sales price % Overhead cost MSP costs IUP cost Shipping and Storage Transport cost to port facilities Bagging cost Wharf cost US$/t HMC US$/t feed in US$/t moved US$/t moved US$/t moved Value 4,200 23,333 1.21 0.81 0.70 0.52 0.77 0.22 0.46 3.56 6 16.13 30.34 5.54 0.43 6.30 MRG Metals Limited Consolidated Financial Statements 30 June 2023 Process Recoveries: Process recoveries and yields used in this study are included below. Table 6: Product Recoveries HM Assemblag e WCP % CUP Titano Magnetic % CUP Ilmenite product % CUP Non Magnetic % RUT LX ILMA ILM TIMAG ZIR ANDA CHROM HEMA NMOTH MOTH 90.79 86.53 83.61 84.46 74.55 87.58 80.75 85.31 80.99 80.75 80.99 0 0 0.67 1.01 80.10 0 0 5.45 33.27 0 33.27 8.64 58.73 86.96 91.12 14.04 15.22 14.52 79.52 47.04 14.52 47.04 86.30 34.37 6.47 0.54 0.13 81.16 24.61 7.97 4.51 24.61 4.51 Other recoveries: • Mining recovery used for the optimisation process: 98%; • Sand in HMC: 9%. 7. Block Flow Diagram 18 IUP % 3.05 33.55 58.73 98.43 91.05 0 0 35.37 32.42 0 ULTR % 15.00 15.00 96.70 96.70 5.00 0 0 6.50 68.10 0 32.42 68.10 An overview of the processing stages and associated throughputs and products are summarised in the below table and Figure 5: Table 7: Process Overview 20.1 Mtpa Mined Ore Note Qty MUP 1 MUP 2 WCP - MSP ULTR Post Mag Sep Titano-Magnetite Ilmentite Non Mag Concentrate Pit 1 Pit 2 ROM Rougher HF HF ULTR HF Hybrid Ex WCP -tph - damp Ex post mag sep – dry Ex MSP - damp 1 1 1 1 1 1 1 1 1 1 Feed (T/h) 1350 1350 2700 2272 72.3 60.2 58.4 58.6 52.6 9.7 Availability 85% 85% 85% 85% 85% 85% 85% 85% 85% 85% Annual (Mtpa) 10.05 10.05 20.1 16.92 0.538 0.448 0.435 0.436 0.392 0.072 PLANTS PRODUCTS MRG Metals Limited Consolidated Financial Statements 30 June 2023 19 Figure 5: Scoping Study Process Staging Flowsheet – Corridor Sands Project (Koko Massava, Nhacutse and Poiombo Deposits). 8. Process Areas The proposed mining equipment would consist of two identical MUP’s. Each of the MUP’s will be capable of processing up to 1,500t/h solids with an average of 1,350 tph, which equates to the total operating feed rate of 2,700tph (20.1mtpa). MRG Metals Limited Consolidated Financial Statements 30 June 2023 20 Each MUP would operate in a separate mining pit, the pumping metrics adopted for the study start up case were a 2,500m pumping distance for each MUP to the centrally located WCP. As the mine progresses further away from WCP, deferred capital will be applied. The ore will be mined using dozers, the ore pushed down from the mining face to a receival hopper, the ROM then slurried, wet screened with a vibrating screen (2.0mm) and then pumped via overland slurry pipe to the WCP for de-sliming and further processing. The sand tails will be returned to the pit along with slimes as a co-disposal operation. The WCP receives ROM material as a slurry via an overland pipeline from the two (2) MUP’s located in separate mining pits. The WCP receives, de-slimes and processes the ROM producing three streams; a titano- magnetite product (deemed a final product). A HMC suitable for further processing at the MSP and two (2) tailings stream that are returned to the mining voids. The MSP receives HMC by truck from the WCP site where it is dumped in windrows ready for feeding into the plant. The HMC is then fed by Front End Loader (FEL) into a hopper and then dried prior to being processed using conventional electrostatic separators and rare earth drum magnets. A non-conductor stream is fed to a wet circuit using wet shaking tables. This initial stage produces a hi-mag suitable for presentation to the ULTR and a non-mag concentrate product along with a tailing stream. The titano-magnetite product is also unloaded and stored at the MSP site where it is loaded on the ship loading facility for export. This material is not treated further at the MSP, but merely stored on site for additional draining to meet the 5% total moisture limit (TML) requirement. The ULTR process conditions lower ilmenite and iron bearing minerals by partial reduction to homogenise the magnetic susceptibility, while keeping the ilmenite in a temperature range that avoids the solubility of TiO2 being affected by rutilisation. Central to this process is a fluid bed reactor (referred to as the roasting stage) fluidised with reducing gases, within a temperature range of 575 °C to 625 °C. The result is an upgraded ilmenite with a higher TiO2 content (47.1% increased from 43.5%) and lower Cr2O3 content, while the total iron oxide is decreased, the remaining iron is predominately FeO, which is favourable for feed stocks presented to the sulphate process. The product load-out facility consists of the storage and materials handling equipment required to load the final products on to the wharf facility and then on to ocean going vessels. With the selected option being the Chongoene MRG built facility, provision includes the loadout conveyors for both Titano-magnetite, Ilmenite and non-mag products. The final products are reloaded from their respective storage sheds and compounds on to transverse loading conveyors and on to a main ship loading conveyor for export. 9. Schedule A total project execution duration of 157 weeks has been estimated, including project feasibility and approvals through to detailed design, construction and commissioning. An arbitrary plant signoff and handover, scheduled in this study to take place at the end of third quarter 2025, will be affected by numerous factors, including the timing of grant of Mining Licence applications. 10. Cost Estimate The cost estimate has been developing in accordance with the AusIMM requirements for a class 5 scoping study, with engineering development to between 1 – 2% and a cost accuracy of +/- 30 – 35%. MRG Metals Limited Consolidated Financial Statements 30 June 2023 21 The scoping study has considered the following 4 scenarios, each scenario assumes a fixed mine site based W P, x mobile MUP’s and port based M P: 1. MRG owned port and loading facility at Chongoene, with WCP relocation from Nhacutse / Poiombo to Koko Massava (Base case; Figure 6); 2. Use of shared port facility at Chongoene, with WCP relocation from Nhacutse / Poiombo to Koko Massava; 3. Use of shared port at Maputo, with WCP relocation from Nhacutse / Poiombo to Koko Massava; and 4. MRG owned port and loading facility at Chongoene, with single WCP location at Nhacutse / Poiombo, and additional booster pumps and field pipework for mining at Koko Massava. The tables below outline the CAPEX estimates for the Scenario 1: Base case, 2, 3 and 4: Table 8: CAPEX Cost Distribution Inclusive of Direct cost, Indirect cost & Contingency Cost Centre Area 0000 – Operational Establishment Area 1000 – Mobile MUP Area 2000 – Wet Concentrator Plant Area 3100 – Ilmenite Drying Plant Area 3200 – Ultra Low Temperature Roast Area 3300 – Final Magnetic Separation Area 4000 – Load Out and Storage Cost (M’s) by Scenario (USD) 2 3 4 17.25 36.53 97.52 30.93 32.10 2.00 5.72 17.25 36.53 97.52 30.78 32.10 1.99 5.68 34.25 36.53 97.52 30.93 32.10 2.00 5.72 1 (Base Case) 34.25 36.53 97.52 30.93 32.10 2.00 5.72 Total Project Costs 239.04 222.04 221.84 239.04 Table 9: CAPEX Cost Breakdown of Direct cost, Indirect cost & Contingency Cost Centre Direct Cost Indirect Cost Total Project Costs (Excluding Contingency) Contingency Total Project Costs Cost (M’s) by Scenario (USD) 1 (Base Case) 167.38 40.48 207.86 31.18 239.04 2 3 4 155.72 37.36 193.08 28.97 222.04 155.56 37.34 192.90 28.94 221.84 167.38 40.48 207.86 31.18 239.04 As noted, the initial capex for scenarios 1 and 4 is the same, however scenario 4 incurs an additional $40m in deferred capital to coincide with the WCP move to Koko Massava. MRG Metals Limited Consolidated Financial Statements 30 June 2023 Figure 6: Corridor Sands Project MSP & Port Layout 22 11. Operational Estimate The OPEX is based on a 2,700 tph operation, assuming a plant availability of 85%. The tables below outline the OPEX estimates for the Scenario 1 (Base case), Scenario 2 and 3, noting that the start-up OPEX of scenario is the same as scenario. Costs shown in millions of USD. MRG Metals Limited Consolidated Financial Statements 30 June 2023 Table 10: Operating Cost Scenario 1 (Base Case) and Scenario 4 23 0000 1000 2000 3100 3200 4000 Area Description Admin MUP WCP MSP ULTR Mining Labour Mobile Equipment Other Consumables Electrical Power Maintenance Operating Spare Parts Rehabilitation Transport - Cartage Loading - Wharfage Annual Operating Cost 0.00 0.54 0.00 0.00 0.12 0.35 0.00 0.00 0.00 0.00 1.01 14.07 0.93 0.00 0.00 6.45 0.00 0.00 0.00 0.00 0.00 0.00 1.48 0.29 1.77 12.76 2.07 1.04 0.00 0.00 0.00 0.00 1.42 0.18 2.53 0.47 0.71 0.35 0.00 0.00 0.00 21.45 19.41 5.66 0.00 0.43 0.00 4.64 2.43 0.71 0.36 0.00 0.00 0.00 8.56 Load Out 0.00 0.34 0.02 0.00 0.06 0.12 0.06 0.00 0.00 0.00 0.60 Site Wide 0.00 Annual Cost 14.07 0.36 0.18 0.00 0.10 0.00 0.00 0.48 3.20 0.00 4.33 5.49 0.67 8.94 22.39 3.61 1.81 0.48 3.20 0.00 61.02 Table 11: Operating Cost Scenario 2 0000 1000 2000 3100 3200 4000 Area Description Admin MUP WCP MSP ULTR Mining Labour Mobile Equipment Other Consumables Electrical Power Maintenance Operating Spare Parts Rehabilitation Transport - Cartage Loading - Wharfage Annual Operating Cost 0.00 0.54 0.00 0.00 0.12 0.18 0.00 0.00 0.00 0.00 0.84 14.07 0.93 0.00 0.00 6.45 0.00 0.00 0.00 0.00 0.00 0.00 1.48 0.29 1.77 12.76 2.07 1.04 0.00 0.00 0.00 0.00 1.42 0.18 2.53 0.47 0.71 0.35 0.00 0.00 0.00 21.45 19.41 5.66 0.00 0.43 0.00 4.64 2.43 0.71 0.36 0.00 0.00 0.00 8.56 Load Out 0.00 0.34 0.02 0.00 0.06 0.12 0.06 0.00 0.00 0.00 0.60 Site Wide 0.00 Annual Cost 14.07 0.36 0.18 0.00 0.10 0.00 0.00 0.48 3.20 9.24 5.49 0.67 8.94 22.39 3.61 1.81 0.48 3.20 9.24 13.57 70.08 MRG Metals Limited Consolidated Financial Statements 30 June 2023 Table 12: Operating Cost Scenario 3 24 0000 1000 2000 3100 3200 4000 Area Description Admin MUP WCP MSP ULTR Mining Labour Mobile Equipment Other Consumables Electrical Power Maintenance Operating Spare Parts Rehabilitation Transport – Cartage Loading – Wharfage Annual Operating Cost 0.00 0.54 0.00 0.00 0.12 0.18 0.00 0.00 0.00 0.00 0.84 14.07 0.93 0.00 0.00 6.45 0.00 0.00 0.00 0.00 0.00 0.00 1.48 0.29 1.77 12.76 2.07 1.04 0.00 0.00 0.00 0.00 1.42 0.18 2.53 0.47 0.71 0.35 0.00 0.00 0.00 21.45 19.41 5.66 0.00 0.43 0.00 4.64 2.43 0.71 0.36 0.00 0.00 0.00 8.56 Load Out 0.00 0.34 0.02 0.00 0.06 0.12 0.06 0.00 0.00 0.00 0.60 Site Wide 0.00 0.36 0.18 0.00 0.10 0.00 0.00 0.48 Annual Cost 14.07 5.49 0.67 8.94 22.39 3.61 1.81 0.48 22.20 22.20 9.91 9.91 33.24 89.75 12. Financial Modelling The Corridor Sands Project Scoping Study included financial modelling as a part of the evaluation and pathway valuation outcomes (the development of a PEA). The development of the Financial Model was based on a historical model supplied by IHC and subsequently modified by Duncan Freeman of Freeman Financial Modelling (FFM). An initial audit and review of the as-supplied Financial Model was carried out by FFM under the direction of and in collaboration with IHC. The financial modelling of 4 scenarios or cases was carried out. These are first detailed in Table 13 and are described as: Scenario 2: Client leased port facility at Chongoene; Scenario 3: Client leased port facility at Maputo; and Scenario 4: a variation on the Base Case where a WCP plant move from the Nhacutse and • Base Case or Scenario 1: Client owned and managed port facility at Chongoene; • • • • Poiombo to Koko Massava minesite is executed rather than incorporating the extra pumping. This case was selected as a comparator and the order of magnitude differential (if any) could be extrapolated to the other Scenarios. The financial modelling used the following assumptions: • CAPEX/OPEX as prepared by the IHC engineering team with assumptions on power and transport and owners costs provided by the Client; • Pricing as supplied by the Client, derived from open source data and TZMI studies; • Assumed cost of capital of 8% as specified by the Client; • Operational metrics developed by IHC; • CAPEX spend commencing Jan-2024; • Final commissioning Jan-2025; and • An assumed 6 month ramp up to full production (reflected in the model by an end of Q1 start mining date - i.e. 3 full months of production but spread over 6 months). MRG Metals Limited Consolidated Financial Statements 30 June 2023 25 Of the 4 Scenarios, the one that generates the most favourable metrics, is Scenario 4, which utilises the WCP move in Year 13 of the project (operational Year 12, as the project includes just over 12 months of build time). A summary of the various scenario metrics is presented in Table 13, but the NPV value of US$258M is the most favourable outcome taking all of the inputs into consideration. A payback period of 6 whole years (5.5 years) on a CAPEX spend of US$279M including deferred capital is a favourable outcome. The project is not overly sensitive to CAPEX, but is quite sensitive to Product Pricing. A range of ± 35% was used for the sensitivity analysis (Figure 7) which is in line with the order of accuracy for the overall Scoping Study. The project is assisted with elevated pricing and the future of mineral sands markets will be in part, dictate the development pathway for the Corridor Sands Project. Were MRG to secure fair market off-take agreements for ilmenite and titano-magnetite, then the future of the project would have a definitive pathway to development. Sensitivities Price (+ / - 35%) -56 572 Opex (+ / - 35%) 108 408 Capex (+ / - 35%) 184 332 (400) (300) (200) (100) 0 100 200 300 400 Axis value represents USD'm change. Value next to bar represent resultant NPV Figure 7: Sensitivity analysis MRG Metals Limited Consolidated Financial Statements 30 June 2023 Table 13: Summary of Key Financial Metrics from Modelling Scenarios 26 SCENARIO SELECTED Base Case Scenario 2 Scenario 3 Scenario 4 MINING INVENTORY SELECTED Reserve 1 Reserve 1 Reserve 1 Reserve 1 PRICING MODEL Cash flows Revenue Free cash flow (After tax) Cash costs CAPEX (including deferred) NPV (after- tax) IRR (after- tax) Payback (discounted, after-tax) $M $/t Ore $/t HMC $M $/t Ore $/t HMC $M $/t Ore $/t HMC RCCR $M $M % Year Life of Mine Years Funding Base 3,262 6.4 139.6 882 1.7 37.7 -1,715.60 -3.3 -73.4 1.9 250 255 21% 6 26 Base 3,262 6.4 139.6 771 1.5 33 -1,894.80 -3.7 -81.1 1.7 233 220 20% 6 26 Base 3,262 6.4 139.6 449 0.9 19.2 -2,369.60 -4.6 -101.4 1.4 232 91 13% 8 26 Base 3,262 6.4 139.6 938 1.8 40.1 -1,603.30 -3.1 -68.6 2 279 258 21% 6 26 To achieve the range of outcomes indicated in the Scoping Study, initial funding in the order of US$239m will likely be required, which includes all pre-production costs of which the preproduction capital. The Company has formed the view that there is a reasonable basis to believe that requisite future funding for development of the Project will be available when required. The grounds on which this reasonable basis is established include: - The Project has strong technical and economic fundamentals which provides an attractive return on capital investment and generates robust cashflows at conservative ilmenite, non-magnetic product and titano-magnetic product prices. This provides a strong platform to source debt and equity funding. - The Board has a strong track record of equity raisings, having raised in excess of $27 million over the last 11 years. - The Company has received significant interest from various potential Offtakers/Partners regarding financing for the project, with preliminary discussions occurring. - The Company has appointed TZMI to assist in marketing during the PFS STAGE. TZMI has extensive expertise and has identified potential buyers for the products identified in the Scoping Study, but has yet to make approaches on the Company’s behalf as both MRG and TZMI believe further product upgrade is possible in the PFS stage. - MRG will consider a range of funding sources, with the objective of securing the most cost competitive and value maximising option for the Company. MRG Metals Limited Consolidated Financial Statements 30 June 2023 27 - Given the scale of the operation, the Project is expected to generate substantial free cash flow per year to service debt, which will enhance the debt capacity of the Project. As a result, a greater percentage of debt funding may be achievable when compared to smaller scale, lower margin projects. - - MRG will preferentially engage with offtake counterparties that may contribute funding to the Project which may include: conventional equity at the corporate and/or project level; convertible notes or bond; debt financing in the form of either conventional project debt financing, prepayment for product or royalties; or a combination of the above. Sources of equity funding may include private equity funds specialising in resource project investment; institutional funds; strategic investors; and high net worth, sophisticated and retail investors. Depending on market conditions, the equity component may be structured with a combination of ordinary and hybrid equity. Given the above, the Company has concluded that it has a reasonable basis to expect that the upfront project capital cost could be funded following the completion of a positive bankable feasibility study and obtaining the necessary project approvals. - There is, however, no certainty that the Company will be able to source funding as and when required. Typical project development financing would involve a combination of debt and equity. It is possible that such funding may only be available on terms that may be dilutive to or otherwise affect the value of the Company’s existing shares. 13. Conclusions and Recommendations The pit optimisation and preliminary mine planning exercise carried out on the CSP deposits, Koko Massava, Nhacutse and Poiombo demonstrates that there are substantive, economically exploitable pits to potentially support a mining operation of approximately 25 years duration. The global Mining Inventory developed for the Scoping Study and PEA totalled 513Mt at an average THM grade of 5.4% for a total contained THM of 27.8Mt. The following recommendations flow from this work package and are in no particular order of importance, but should be taken for consideration: • The next phase of work should establish a firm basis for mineral pricing based on off-take agreements so as to firm up the revenue drivers for the project; • Consideration of other mining methodologies should be considered such as hydraulic mining as a cost competitive and practical alternative to dozer trap; • • Detailed work needs to be undertaken on the nature of the slimes and the direct impact this has on flocculent / coagulant usage as well as handling with respect to water recovery, solar drying requirements and potential for co-disposal; If the project is deemed to be overall positive in economics from the financial modelling (most likely), then planning for the next phase of detailed pit optimisation and mine planning needs to be considered; • As per a Framework Environmental & Social Management Program developped by Coastal Environmental Services (CES) for MRG as part of the MLAs for Corridor Central and Corridor South, a significant amount of studies will take place to develop the Environmental Management Plan (EMP) and Social and Labour Plan (SLP). These studies will feed into future economic studies on the project and includes: o Water Quality Monitoring, including hydrogeology study, development of piezometers, bores, baseline data, etc; o Meteorology; o Air Quality Monitoring; o Noise and Vibration Monitoring; o Waste Disposal Facilities and Practices; o Floral and Faunal Monitoring; o Soil and Rehabilitation Monitoring; o Occupational Health and Safety Monitoring; and o Socio-Economic Monitoring. • The most likely next step is a PFS phase and one of the key deliverables from that level of study will be a Probable Ore Reserve. In order to undertake that work, there is a considerable amount of background study work that needs to be completed, including but not restricted to: MRG Metals Limited Consolidated Financial Statements 30 June 2023 o Transport study; o Power study; o Port development study; and o Investigation of alternative mining methodologies. Forward Looking Statement(s) 28 Statements relating to the estimated or expected future production, operating results, cash flows and costs and financial condition of MRG’s planned work at the Company’s project and the expected results of such work are forward-looking statements. Forward-looking statements that are not historical facts and are generally, but not always, identified by words such as the following: expects, plans, anticipates, forecasts, believes, intends, estimates, projects, assumes, potential and similar expressions. Forward-looking statements also include reference to events or conditions that will, would, may, could or should occur. Information concerning exploration results, metallurgical results and Mineral Resource Estimates may also be deemed to be forward-looking statements, as it constitutes a prediction of what might be found to be present when and if a project is developed. These forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable at the time they are made, are inherently subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward- looking statements, including, without limitation: uncertainties related to raising sufficient financing to fund the planned work in a timely manner and on acceptable terms; changes in the planned work resulting from logistical, technical or other factors; the possibility that results of work will not fulfil projections/expectations and realise the perceived potential of the Company’s projects; uncertainties involved in the interpretation of drilling results and other tests and the estimation of Heavy Mineral Sands resources; risk of accidents, equipment breakdowns and labour disputes or other unanticipated difficulties or interruptions; the possibility of environmental issues at the Company’s projects; the possibility of cost overruns or unanticipated expenses in work programs; the need to obtain permits and comply with environmental laws and regulations and other government requirements; fluctuations in the price of heavy mineral sands and other risks and uncertainties. New Very High Valuable Minerals Identified at Azaria Target MRG announced the laboratory and excellent mineralogical results of the new Azaria Very High VHM Target, located east of the Company’s Koko Massava deposit within the Corridor Central (11142C) HMS projects (refer ASX Announcement 10 November 2022). Laboratory results from 3 aircore drillhole (22CCAC776 – 22CCAC778) drilled within the Azaria Target confirmed the laboratory THM grades from reconnaissance auger holes, indicating large areas of >3%THM, while hole 22CCAC777 with 4.38 % THM over 19.5m also confirms areas with >4% THM (also shown by auger holes 20CCHA505 @ 4.01% THM over 12.0m and 20CCHA195 @ 4.21% THM over 13.0m; both from surface). Importantly, excellent mineralogical results from 5 lithologically composited HMC samples from the 3 aircore holes (refer Table 15) confirmed Azaria as an exciting new large target for very high value HMC situated in the White Sand lithology. With average VHM (Zircon, Rutile, Leucoxene, Altered Ilmenite and Ilmenite) results from the 5 samples at 72.4%, the VHM is significantly higher than the average of 41% VHM found within the Koko Massava MRE area (refer ASX Announcement 16 December 2021) or the average 43% VHM from the Global Nhacutse and Poiombo MRE area (refer ASX Announcements 8 April 2022). The additional 9.1% of Titanomagnetite then also results in an economic product of >80% of the HMC within the Azaria Target. Additionally, the high value Zircon and Rutile Heavy Minerals are also higher than found in Koko Massava, Nhacutse and Poiombo deposits (Zircon at 2.8% vs the 1.2% in Koko Massava and the 1.3% in Nhacutse and Poiombo; Rutile at 1.9% vs the 1.2% in Koko Massava and the 1.1% in Nhacutse and Poiombo) (refer ASX Announcements 16 December 2021 and 8 April 2022). Corridor South (11142C) Drilling Program and Mineralogy MRG Metals Limited Consolidated Financial Statements 30 June 2023 29 Ongoing mineralogical studies have identified a very strong lithological boundary in the eastern side of the Corridor licences (yellow line, Figure 8), with red/red-brown coloured sand to the west of the boundary (Type 1 sand) and white/grey coloured sand to the east of the boundary (Type 2 sand; refer ASX Announcements 11 August 2021, 1 April 2022 and 7 April 2022). The VHM% in the Type 2 sand is as high as 73.37% from previous studies (refer ASX Announcement 31 July 2020). 3 Aircore holes (22CCAC776 - 22CCAC778) were drilled in a large area of Type 2 White Sand lithology east of the Koko Massava deposit (refer Figure 8). A total of 67 samples (inclusive of QAQC samples) were collected at 1.5m intervals and analyses at Western Geolabs in Perth, Australia (refer Table 14). Aircore drillhole 22CCAC777 returned 4.38% THM over 19.5m; 22CCAC778 returned 3.50% THM over 19.5m and 22CCAC776 returned 3.20% THM over 16.5m, all with mineralisation from surface. Individual 1.5m intervals showed THM results as high as 8.15% THM. Figure 8: Map showing the location of the 3 new Aircore holes, all laboratory obtained aircore and auger THM % drilling grades, the Red/White Sand lithological boundary (yellow line) and the position of the new Azaria Target within the Corridor Central (11142C) licence. 5 Heavy Mineral Concentrate (HMC) composites, derived from all observed lithologies and from all 3 holes drilled, were also sent for mineralogical investigations. Mineralogical investigation and analyses were done by SJMetMin Laboratories. The average total VHM of 72.4%, as well as the high individual valuable minerals, clearly illustrates the samples are from the Type 2 White Sand. Table 14: Summary collar and Assay THM% results for 3 Reconnaissance Aircore Holes within new Azaria Target within Corridor Central (11142C). MRG Metals Limited Consolidated Financial Statements 30 June 2023 DRILLHOLE INFORMATION 30 MINERALISATION LAB RESULTS HOLE ID UTM EAST WGS84 UTM NORTH WGS84 ELEV'N (M) 22CCAC776 7255396 22CCAC777 7258587 22CCAC778 7260418 572859 573950 573827 68 79 84 EOH (M) 33.0 33.0 31.5 DRILL TYPE AIRCORE AIRCORE AIRCORE FROM TO INTERSECTION (M) % LAB THM 0.0 0.0 0.0 16.5 19.5 19.5 16.5 19.5 19.5 3.20 4.38 3.50 Table 15: Quantitative QEMSCAN mineralogy results from 3 Aircore drillholes within New Azaria Target at Corridor Central (11142C). Sample BH ID Mineral Zircon Rutile Alt-Ilmenite II (TiO₂ 74%) Alt-Ilmenite I (TiO₂ 62%) CCMIN 07 CCMIN 08 CCMIN 09 CCMIN 10 CCMIN 11 AC776 AC777 AC778 3.0 2.1 0.5 6.4 3.0 2.0 0.3 6.7 2.8 1.7 0.3 5.5 2.8 1.8 0.4 6.0 2.6 1.8 0.3 5.9 Ilmenite (TiO₂ 52%) Titanomagnetite 60.4 8.6 62.4 7.9 59.7 12.4 63.5 6.1 60.5 10.6 Hematite Chromite Magnetic Others Andalusite Non-magnetic Others 3.2 5.4 0.9 6.3 3.3 3.1 4.8 0.7 6.0 3.1 4.6 4.5 0.8 3.3 4.6 1.9 4.4 0.8 7.1 5.2 4.6 4.8 1.1 4.9 3.1 TOTALS: 100.00 100.00 100.00 100.00 100.00 Min Max Ave StDev Average 2.6 1.7 0.3 5.5 59.7 6.1 1.9 4.4 0.7 3.3 3.1 3.0 2.1 0.5 6.7 63.5 12.4 4.6 5.4 1.1 7.1 5.2 2.8 1.9 0.3 6.1 61.3 9.1 3.5 4.8 0.9 5.5 3.9 0.2 0.2 0.1 0.5 1.6 2.4 1.1 0.4 0.1 1.5 1.0 72.4 Total VHM in HMC 9.1 Titanomagnetite 18.5 Total Non-VHM in HMC New Very High Valuable Minerals Identified at Cihari Target MRG announced the laboratory and mineralogical results of the new Cihari High VHM Target, located within the north-east of the Company’s Nhacutse deposit in the Corridor South (11137 C) HMS projects (refer ASX Announcement 16 November 2022; (also refer Tables 16-17 and Figures 1, 9 and 10). Laboratory results from 5 aircore drillhole (22CCAC790 – 22CCAC794) within the north-east of the Nhacutse deposit confirmed the high-grade laboratory THM grades from 2 historic reconnaissance aircore and 1 auger drillholes. The new approximately 1.3km² Cihari Target has therefore been confirmed (refer Figure 9) as a significant VHM target. The 2 historic aircore drillholes returned >4% THM laboratory results (20CSAC540 @ 4.21% THM over 24.0m from surface and 20CSAC587@ 4.22% THM over 30.0m from surface; refer ASX Announcements 24 November 2020 and 7 January 2021), combined by the new results of 22CCAC790 (4.20 % THM over 36.0m from surface) and 22CCAC794 (4.26 % THM over 36.0m from surface) (refer Table 16) indicates an approximate 1km² area of >4%THM within the Cihari Target (refer Figure 10). Drill spacing in the Cihari target is at <500m inter-hole spacing. Importantly, mineralogical results from 4 lithologically composited HMC samples from the 5 aircore drillholes (refer Table 17) has confirmed Cihari as an exciting new large target for high value HMC situated in the Red MRG Metals Limited Consolidated Financial Statements 30 June 2023 31 Sand lithology. With average VHM (Zircon, Rutile, Leucoxene, Altered Ilmenite and Ilmenite) results from the 4 samples at 58.1%, plus 21.6% Titanomagnetite, the valuable product of the HMC at Cihari Target is 79.7%. The VHM is significantly higher than the average of 41% VHM found within the Koko Massava MRE area (refer ASX Announcement 16 December 2021) or the average 43% VHM from the Global Nhacutse and Poiombo MRE area (refer ASX Announcement 8 April 2022). Corridor South (11137 C) Drilling Program and Mineralogy Ongoing mineralogical studies have identified a very strong lithological boundary in the eastern side of the Corridor licences (yellow line, Figures 9 and 10), with red/red-brown coloured sand to the west of the boundary (Type 1 sand) and white/grey coloured sand to the east of the boundary (Type 2 sand). The mineralogical studies have identified very high VHM sand in the white Type 2 sand east of the boundary, but also found a significant increase in VHM content of the HMC from west to east within the Type 1 red sand, with significantly higher VHM content of the HMC close to the boundary in the red sand (refer ASX Announcements 11 August 2021 and 1 April 2022). The VHM% in the 5 aircore drillholes reported here are situated in the Type 1 red sand, but very close to the lithological boundary (refer Figures 9 and 10). A total of 119 samples (inclusive of QAQC samples) were collected at 1.5m intervals and analyses at Western Geolabs in Perth, Australia (refer Table 16). Aircore drillhole 22CCAC790 returned 4.20% THM over 36.0m; 22CCAC794 returned 4.26% THM over 36.0m, 22CCAC791 returned 3.37% THM over 36.0m, 22CCAC792 returned 3.72% THM over 16.5m and 22CCAC793 returned 3.37% THM over 18.0m, all with mineralisation from surface. Drillholes 22CCAC790, ‘791 and ‘794 were still in >3% THM sand at end of hole. Mineral Concentrate (HMC) composites, derived from all observed lithologies and from all 5 drillholes drilled, were also sent for mineralogical investigations. Mineralogical investigation and analyses were done by SJMetMin Laboratories, with results as per Table 17. Figure 9: Map showing the location of the 5 new Aircore drillholes, all laboratory obtained aircore and auger THM % drilling grades, the Red/White Sand lithological boundary (yellow line) and the position of the new Cihari Target within the Corridor South (11137 C) licence. MRG Metals Limited Consolidated Financial Statements 30 June 2023 32 Figure 10: Map showing the location of the 5 new aircore drillholes and historic aircore and auger drillholes within the new Cihari Target within the Corridor South (11137 C) licence, as well as Red/White Sand lithological boundary (yellow line) and the >4% THM area (in blue). Table 16: Summary collar and Assay THM% results for 3 Reconnaissance aircore drilloles within new Cihari Target within Corridor South (11137C). DRILLHOLE INFORMATION MINERALISATION LAB RESULTS HOLE ID UTM EAST WGS84 UTM NORTH WGS84 ELEV'N (M) EOH (M) DRILL TYPE FROM TO INTERSECTION (M) % LAB THM 22CCAC790 7250017 575442 22CCAC791 7250802 575795 22CCAC792 7250219 576195 22CCAC793 7249893 576184 22CCAC794 7250517 575457 81 78 79 78 82 36.0 AIRCORE 36.0 AIRCORE 33.0 AIRCORE 30.0 AIRCORE 36.0 AIRCORE 0.0 0.0 0.0 0.0 0.0 36.0 36.0 16.5 18.0 36.0 36.0 36.0 16.5 18.0 36.0 4.20 3.37 3.72 3.37 4.26 MRG Metals Limited Consolidated Financial Statements 30 June 2023 33 Table 17: Quantitative QEMSCAN mineralogy results from 5 aircore drillholes within New Cihari Target at Corridor South (11137C). Sample CCMIN 26 CCMIN 27 CCMIN 28 CCMIN 29 BH ID Mineral Zircon Rutile Alt-Ilmenite II (TiO₂ 74%) Alt-Ilmenite I (TiO₂ 62%) Ilmenite (TiO₂ 52%) Titanomagnetite Hematite Chromite Magnetic Others Andalusite Non-magnetic Others 22CCAC790 & 22CAAC794 22CCAC790 & 22CAAC794 22CCAC791 & 22CAAC792 & 22CSAC793 22CCAC791 & 22CAAC792 & 22CSAC793 Min Max Ave StDev Average 1.9 1.1 0.2 3.9 52.2 22.9 8.5 3.2 0.8 3.4 2.0 1.7 1.0 0.2 3.7 50.8 23.5 9.6 3.5 0.9 3.2 2.0 1.6 1.1 0.2 4.1 51.2 20.8 9.0 4.0 1.0 4.3 2.7 1.7 1.2 0.2 5.6 49.1 19.4 8.0 4.8 1.6 4.9 3.4 1.6 1.0 0.2 3.7 1.9 1.2 0.2 5.6 1.7 1.1 0.2 4.3 49.1 52.2 50.8 19.4 23.5 21.6 8.0 3.2 0.8 3.2 2.0 9.6 4.8 1.6 4.9 3.4 8.8 3.9 1.1 3.9 2.5 0.1 0.1 0.0 0.9 1.3 1.9 0.7 0.7 0.3 0.8 0.7 58.1 Total VHM in HMC 21.6 Titanomagnetite 20.2 Total Non-VHM in HMC TOTALS: 100.00 100.00 100.00 100.00 New VHM Data highlights Malambane Target as a Significant Discovery MRG announced excellent laboratory and mineralogical results of the Malambane High VHM Target, located within the east of the Poiombo Mineral Resource Estimate (MRE) area of the Company’s Corridor South (11137 C) HMS projects (refer ASX Announcement 15 December 2022 and Tables 18 and 19; Figures 11, 12, 13). Malambane infill aircore drilling was undertaken as part of a drilling program to define the high VHM content of the Heavy Mineral Concentrate (HMC) close to the well-established red sand/white sand lithological boundary (refer ASX Announcements 11 August 2021 and 1 April 2022). The drilling took place in the red sand, close to the lithological boundary (refer Figures 11, 12, 13). Drilling in the Malambane target area previously was very widely spaced (1,000m by 500m), with the drilling of these latest 15 infill aircore holes bringing spacing to approximately 500m by 500m. Laboratory results from the 15 infill aircore drillhole (22CCAC800 – 22CCAC813 and 22CCAC821) returned excellent results (refer Table 18; Figures 12 and 13), with: 3 holes (22CCAC802, 22CCAC804 and 22CCAC821) with >6% THM, 2 holes (22CCAC805 and 22CCAC810) with 5-6% THM, 4 holes (22CCAC801, 22CCAC806, 22CCAC809 and 22CCAC813) with 4-5% THM, and • • • • The remaining 6 holes with 3-4% THM, all mineralised from surface (refer Table 18, Figures 11 and 12 ). The Silt content for the 15 holes is on average 14.3%. During the completed Corridor Project Scoping Study (refer ASX Announcement 3 November 2022), 2 high grade pit areas were identified, one west of the town of Poiombo, the other east of Poiombo on the red/white sand boundary. The western pit has a surface area of approximately 0.9km², while the eastern has a surface area of approximately 0.3km². The eastern pit was based on the laboratory results of the historical aircore hole 20CSAC352 (refer Figure 4 and ASX Announcement 25 March 2020), this hole drilled in early 2020 was MRG Metals Limited Consolidated Financial Statements 30 June 2023 34 twinned during the report period by hole 22CCAC821 (refer Figure 13), with very good correlation in the results thus clearly proving the very high grade in this area. The >5% THM grades from new aircore holes 22CCAC802, 22CCAC804, 22CCAC805, 22CCAC810 (refer Table 18), as well as the 5.93% THM over 36.0m from surface in the historical aircore drillhole 20CSAC349 (refer ASX Announcement 25 March 2020) shows the large approximately 1.3km² high-grade Malambane Target (refer Figure 13, blue area) situated outside the current Scoping Study pit area in the east of the Poiombo MRE area (refer Figure 13). This target area is larger than the combined area of the 2 current Poiombo pit areas in the Scoping Study, thus clearly showing the potential for additional very high grade sand in the Malambane Target. Very importantly, the mineralogical results from 14 composite samples of Heavy Mineral Concentrate (HMC) from the aircore holes returned high Valuable Heavy Mineral (VHM) results (refer Table 19 and Figure 13), averaging 61.6% VHM (53.9% Ilmenite, 4.7% Altered Ilmenite, 0.2% Leucoxene, 1.9% Zircon and 1.0 % Rutile) plus 21.0% Titanomagnetite. This clearly confirmed Malambane as not just a very high grade target, but also as a high value HMC Target. The VHM is significantly higher than the average of 41% VHM found within the Koko Massava MRE area (refer ASX Announcement 16 December 2021) or the average 43% VHM from the Global Nhacutse and Poiombo MRE area (refer ASX Announcement 8 April 2022). Figure 11: Map showing the locality of the 15 infill aircore drillholes in yellow within Corridor South (11137 C) licence. MRG Metals Limited Consolidated Financial Statements 30 June 2023 35 Corridor South (11137 C) Drilling Program and Mineralogy The laboratory THM% and mineralogy results in the 15 aircore drillholes reported here are situated in the Type 1 red sand (refer ASX Announcements 11 August 2021 and 1 April 2022), but close to the lithological boundary (refer Figures 11, 12, 13). A total of 366 samples (inclusive of QAQC samples) were collected at 1.5m intervals and analyses at Western Geolabs in Perth, Australia (refer Table 18). Several of the aircore holes were still in high THM% grade at the end of drilling, with 22CSAC801 at 5.55% THM and 22CSAC809 at 6.88% THM in the final 1.5m intervals; while holes 22CSAC804 and 22CSAC805 were in >4% THM in the final drilling intersection. The eastern high-grade pit in the recently completed Corridor Project Scoping Study (refer ASX Announcement 2 November 2021) was based on the laboratory results of the historical aircore hole 20CSAC352 (refer Figure 4 and ASX Announcement 25 March 2020). This hole was twinned during the drilling program reported here by hole 22CCAC821 (refer Table 18 and Figure 13). Aircore hole 20CSAC352 was sampled at 3m intervals and had an end of hole depth of 36m, still in 5.02% THM grade; while 22CCAC821 was sampled at 1.5m intervals and had an end of hole depth of 39m. The two holes have the following laboratory THM results: o 20CSAC352 o 22CCAC804 – 36.0m 36.0m @ 5.12 % THM, including – 21.0m 21.0m @ 6.06 % THM. – 37.5m 37.5m @ 5.43 % THM, including – 21.0m 21.0m @ 6.41 % THM. The results from the twin hole 22CCAC821 clearly confirms the presence of the very high THM grade sand in the Malambane Target. 14 Mineral Concentrate (HMC) composites, derived from all observed lithologies within the drillholes, were also sent for mineralogical investigations. Mineralogical investigation and analyses were done by SJMetMin Laboratories (refer Table 18) via XRF, XRD and QEMSCAN analyses. Figure 12: Map showing 15 new Aircore drillholes only with laboratory obtained Total Heavy Mineral (THM) % grades. Aircore holes are close to the Red/White Sand lithological boundary (yellow line), with position of the Poiombo MRE Area outlined in green, the Scoping Study 2 pit areas are shown in orange. MRG Metals Limited Consolidated Financial Statements 30 June 2023 36 Figure 13: Map showing 15 new Aircore drillholes, as well as historic MRG aircore and hand auger holes with laboratory obtained Total Heavy Mineral (THM) % grades, the Red/White Sand lithological boundary (yellow line), the Poiombo MRE outline (green), 2 pit optimisation areas (orange) as well as the new >5% THM Malambane target area (in blue). MRG Metals Limited Consolidated Financial Statements 30 June 2023 37 Table 18: Summary collar and Assay THM% results for 15 Infill aircore drillholes within Malambane Target within Corridor South (11137C). DRILLHOLE INFORMATION MINERALISATION LAB RESULTS HOLE ID UTM EAST WGS84 UTM NORTH WGS84 ELEV'N (M) EOH (M) DRILL TYPE FROM TO INTERSECTION (M) % LAB THM 22CSAC800 7244833 576902 22CSAC801 7244438 577201 81 84 33.0 AIRCORE 36.0 AIRCORE 22CSAC802 7244004 576798 79 34.5 AIRCORE 22CSAC803 7244561 576478 75 34.5 AIRCORE 22CSAC804 7244805 575925 87 36.0 AIRCORE 22CSAC805 7244559 576061 22CSAC806 7244178 575789 22CSAC807 7244363 575621 22CSAC808 7244556 575495 88 76 79 78 34.5 AIRCORE 34.5 AIRCORE 34.5 AIRCORE 34.5 AIRCORE 22CSAC809 7244867 575235 85 37.5 AIRCORE 22CSAC810 7243394 577269 86 34.5 AIRCORE 22CSAC811 7242513 577984 116 34.5 AIRCORE 22CSAC812 7243237 578091 22CSAC813 7242856 578427 22CSAC821 7243635 577806 75 76 72 34.5 AIRCORE 34.5 AIRCORE 39.0 AIRCORE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 30.0 0.0 0.0 0.0 0.0 0.0 31.5 36.0 33.0 21.0 30.0 22.5 16.5 19.5 33.0 30.0 34.5 37.5 37.5 27.0 21.0 31.5 21.0 19.5 31.5 36.0 33.0 21.0 30.0 22.5 16.5 19.5 33.0 30.0 34.5 37.5 7.5 27.0 21.0 31.5 21.0 19.5 3.67 4.57 5.72 6.03 3.83 5.54 6.09 5.05 4.47 3.66 3.95 4.91 7.42 5.23 3.01 3.22 4.67 6.41 MRG Metals Limited Consolidated Financial Statements 30 June 2023 38 Table 19: Quantitative QEMSCAN mineralogy results from aircore drillholes within Malambane Target at Corridor South (11137C). Sample CCMIN 35 CCMIN 36 CCMIN 37 CCMIN 38 CCMIN 39 CCMIN 40 CCMIN 41 CCMIN 42 BH ID 22CSAC800, 22CSAC801 22CSAC800, 22CSAC801 22CSAC802, 22CSAC803 22CSAC802, 22CSAC803 22CSAC804, 22CSAC805 22CSAC804, 22CSAC805 22CSAC806, 22CSAC807, 22CSAC808, 22CSAC809 22CSAC806, 22CSAC807, 22CSAC808, 22CSAC809 CCMIN 43 CCMIN 44 22CSAC810 22CSAC810 Mineral Zircon Rutile Alt-Ilmenite II (TiO₂ 74%) Alt-Ilmenite I (TiO₂ 62%) Ilmenite (TiO₂ 52%) Titanomagnetite Hematite Chromite Magnetic Others Andalusite Non-magnetic Others VHM in HMC Titanomagnetite in HMC Non-VHM in HMC Total 2.1 1.3 0.2 5.5 54.5 20.2 7.8 3.7 0.7 2.2 1.8 63.6 20.2 16.2 1.5 1.0 0.2 4.7 53.2 22.5 8.7 4.3 0.8 1.4 1.5 60.7 22.5 16.7 1.9 0.9 0.2 3.8 57.0 20.0 7.9 4.4 0.7 1.8 1.5 63.8 20.0 16.2 1.8 1.0 0.2 4.0 52.8 23.0 8.2 4.0 0.8 2.1 2.2 59.7 23.0 17.3 1.7 1.1 0.2 5.0 56.5 19.1 7.5 3.9 0.7 2.5 1.7 64.5 19.1 16.4 1.8 1.1 0.2 4.6 53.0 21.7 7.9 3.1 0.8 3.4 2.4 60.7 21.7 17.6 1.8 0.8 0.1 4.6 55.6 21.1 8.6 3.6 0.7 1.1 1.9 63.0 21.1 15.9 1.6 0.9 0.1 4.9 53.8 22.2 9.2 3.3 0.7 1.5 1.8 61.3 22.2 16.4 2.1 1.0 0.2 5.7 55.8 18.3 7.0 4.2 1.1 2.4 2.1 64.8 18.3 16.9 1.7 1.0 0.2 4.4 49.8 23.9 8.2 2.7 1.0 4.3 2.8 57.1 23.9 19.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Sample CCMIN 45 CCMIN 46 BH ID 22CSAC811 22CSAC811 CCMIN 47 22CSAC812, 22CSAC813 CCMIN 48 22CSAC812, 22CSAC813 Mineral Zircon Rutile Alt-Ilmenite II (TiO₂ 74%) Alt-Ilmenite I (TiO₂ 62%) Ilmenite (TiO₂ 52%) Titanomagnetite Hematite Chromite Magnetic Others Andalusite Non-magnetic Others VHM in HMC Titanomagnetite in HMC Non-VHM in HMC 2.2 1.3 0.2 4.7 53.7 19.5 8.0 3.7 0.8 3.7 2.2 62.1 19.5 18.4 1.5 1.0 0.2 4.2 50.4 21.9 7.4 3.4 1.3 4.5 4.2 57.3 21.9 20.8 2.1 1.1 0.2 5.8 55.8 18.6 7.1 3.6 0.8 2.5 2.3 65.0 18.6 16.4 2.0 0.9 0.1 4.3 52.0 21.7 8.5 3.6 1.1 3.3 2.5 59.3 21.7 19.0 Total 100.0 100.0 100.0 100.0 Min Max Ave StDev Average 1.5 0.8 0.1 3.8 2.2 1.3 0.2 5.8 1.9 1.0 0.2 4.7 49.8 57.0 53.9 18.3 23.9 21.0 7.0 2.7 0.7 1.1 1.5 9.2 4.4 1.3 4.5 4.2 8.0 3.7 0.9 2.6 2.2 0.2 0.1 0.0 0.6 2.2 1.7 0.6 0.5 0.2 1.1 0.7 61.6 Total VHM in HMC 21.0 Total Titanomagnetite in HMC 38.4 Total Non-VHM in HMC 100.00 Very High Mineral Assemblage Intersected in Aircore Drilling at Viaria and Zulene Targets MRG announced the laboratory Total Heavy Mineral (THM) and mineralogical results of infill aircore drilling within the Viaria and Zulene Targets, located within the south of the Company’s Corridor South (11137 C) HMS Project (refer ASX Announcement 19 December 2022; Tables 20 and 21; Figures 1, 14 and 15). Laboratory results from 7 infill aircore holes (comprising 4 holes at Zulene Target and 3 holes at Viaria Target) within Mining Licence Application (MLA) Corridor South (11137 C) have delivered some high THM results (refer Table 20, Figure 15). The results from hole 22CCAC815 in Viaria in particular is very encouraging. To MRG Metals Limited Consolidated Financial Statements 30 June 2023 39 date the Viaria target only had 1 aircore drilled. Even with the inclusion of these latest 3 holes, the area still remains totally under-drilled, however it now contains a significant >4% THM target of approximately 1.4 km² (refer Figure 15). Importantly, mineralogical results from 6 composite HMC samples for Viaria and 5 composite HMC samples Zulene have confirmed the high VHM content of the HMC (refer Tables 21 and 22) in the south and close to the red sand/white sand lithological boundary. The high VHM content of the HMC for Viaria and the large >4% THM target area has confirmed Viaria as an exciting large target for high value HMC situated in the Red Sand lithology (refer Figure 15). The Viaria Target is also >1.5km from any town. With average VHM (Zircon, Rutile, Leucoxene, Altered Ilmenite and Ilmenite) results at Viaria at 63.5%, plus 19.1% Titanomagnetite, the valuable product of the HMC at Viaria Target is 82.6%. The VHM is significantly higher than the average of 41% VHM found within the Koko Massava MRE area (refer ASX Announcement 16 December 2021) or the average 43% VHM from the Global Nhacutse and Poiombo MRE area (refer ASX Announcement 8 April 2022). Figure 14: Map showing the locality of the 3 Viaria and 4 Zulene infill aircore drillholes in yellow within Corridor South (11137 C) licence. Viaria and Zulene Infill Aircore Drilling Program and Mineralogy The Viaria and Zulene infill aircore drilling followed on from other targets generated – Azaria and Chihari - and excellent results from the Malambane Target from ongoing aircore drilling and mineralogical studies in and around the very strong lithological boundary in the eastern side of the Corridor licences (yellow line, Figures 14 and 15), as well in the south of within Corridor South (11137 C) where the Viaria and Zulene targets are situated. MRG Metals Limited Consolidated Financial Statements 30 June 2023 40 Viaria is close to the red sand/white sand boundary, while Zulene Target is in the southwestern corner of the licence (refer Figure 14). The laboratory THM% and mineralogy results in the 7 aircore drillholes (total 240.0m drilled), 3 in Viaria and 4 in Zulene, reported here are situated in the Type 1 red sand (refer ASX Announcements 11 August 2021 and 1 April 2022), but close to the lithological boundary (refer Figures 14 and 15). A total of 167 samples (inclusive of QAQC samples) were collected at 1.5m intervals and analyses at Western Geolabs in Perth, Australia (refer Table 20). 6 Heavy Mineral Concentrate (HMC) composites samples from Varia (refer Table 21) and 5 HMC composites samples from Zulene (refer Table 22), derived from all observed lithologies within the drillholes, were sent for mineralogical investigations. Mineralogical investigation and analyses were done by SJMetMin Laboratories via XRF, XRD and QEMSCAN analyses. Figure 15: Map showing the location and lab obtained grades of the 7 new Aircore drillholes, all laboratory obtained aircore and auger THM % drilling grades, the Red/White Sand lithological boundary (yellow line) and the position of the Viaria and Zulene >4% THM Targets within the Corridor South (11137 C) licence. MRG Metals Limited Consolidated Financial Statements 30 June 2023 41 Table 20: Summary collar and Assay THM% results for 7 Infill aircore drilloles within the Viaria and Zulene Targets within Corridor South (11137C). DRILLHOLE INFORMATION MINERALISATION LAB RESULTS HOLE ID UTM EAST WGS84 UTM NORTH WGS84 ELEV'N (M) EOH (M) DRILL TYPE FROM TO INTERSECTION (M) % LAB THM 22CSAC814 7238544 580718 22CSAC815 7237901 580323 22CSAC816 7238151 22CSAC817 7236791 22CSAC818 7236929 22CSAC819 7236204 22CSAC820 7236208 581308 576708 576024 576704 576248 83 89 97 62 51 66 73 36.0 AIRCORE 33.0 AIRCORE 33.0 34.5 34.5 34.5 34.5 AIRCORE AIRCORE AIRCORE AIRCORE AIRCORE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 34.5 19.5 15.0 22.5 34.5 34.5 28.5 24.0 34.5 19.5 15.0 22.5 34.5 34.5 28.5 24.0 3.15 3.96 4.05 3.54 2.38 2.46 3.15 3.82 Table 21: Quantitative QEMSCAN mineralogy results from 3 aircore drillholes within the Viaria Target. Sample Target CCMIN 49 CCMIN 50 CCMIN 51 CCMIN 52 CCMIN 53 CCMIN 54 Viaria Viaria Viaria BH ID AC814 AC814 AC815 AC815 AC816 AC816 Mineral Zircon Rutile Alt-Ilmenite II (T ₂ %) Alt-Ilmenite I (T ₂ %) m (T ₂ 52%) Min Max Ave StDev Average 2.1 1.2 0.2 5.2 2.2 1.2 0.2 5.4 2.0 1.3 0.2 5.6 2.1 1.4 0.2 5.2 1.7 1.3 0.2 4.7 2.4 1.4 0.2 4.7 1.7 1.2 0.2 4.7 2.4 1.4 0.2 5.6 2.1 1.3 0.2 5.1 55.3 55.5 55.0 54.3 56.1 52.6 52.6 56.1 54.8 0.3 0.1 0.0 0.4 1.2 63.5 Total VHM in HMC Titanomagnetite 18.9 19.1 18.4 19.6 18.9 19.8 18.4 19.8 19.1 0.5 19.1 Total Titanomagnetite in HMC Hematite Chromite Magnetic Others Andalusite Non-magnetic Others 7.1 3.3 0.9 3.9 1.9 6.7 3.5 1.1 3.2 2.0 7.4 3.9 0.9 3.6 1.8 7.5 3.5 0.8 3.4 1.9 7.4 3.4 0.9 3.3 2.0 7.5 4.0 1.0 3.9 2.4 6.7 3.3 0.8 3.2 1.8 7.5 4.0 1.1 3.9 2.4 7.3 3.6 0.9 3.6 2.0 0.3 0.3 0.1 0.3 0.2 VHM in HMC 64.1 64.5 64.0 63.2 64.0 61.3 36.5 Total Non-VHM in HMC Titanomagnetite in HMC Non-VHM in HMC 18.9 19.1 18.4 19.6 18.9 19.8 100.0 17.1 16.5 17.6 17.2 17.1 18.9 Total 100.0 100.0 100.0 100.0 100.0 100.0 MRG Metals Limited Consolidated Financial Statements 30 June 2023 42 Table 22: Quantitative QEMSCAN mineralogy results from 3 aircore drillholes within the Zulene Target at Corridor South (11137C). Sample CCMIN 55 CCMIN 56 CCMIN 57 CCMIN 58 Target BH ID Zulene Zulene AC817, AC819 AC817, AC819 AC818, AC820 AC818, AC820 Mineral Zircon Rutile Alt- m (T ₂ 74%) Alt- m (T ₂ 62%) m (T ₂ %) Titanomagnetite Hematite Chromite Magnetic Others Andalusite Non-magnetic Others VHM in HMC Titanomagnetite in HMC Non-VHM in HMC Total 1.8 1.3 0.2 5.2 53.9 19.5 7.4 3.6 1.0 3.9 2.3 62.3 19.5 18.2 2.2 1.3 0.2 5.4 55.4 19.4 7.2 3.5 1.1 2.6 1.8 64.5 19.4 16.0 2.2 1.2 0.2 5.4 55.5 19.0 8.1 3.7 0.9 2.2 1.7 64.4 19.0 16.6 Min Max Ave StDev Average 1.8 2.2 2.0 1.2 1.3 1.2 0.2 0.1 0.2 0.2 0.2 0.0 62.6 Total VHM in HMC 5.2 5.4 5.3 0.1 1.9 1.2 0.2 5.3 50.6 50.6 55.5 53.8 2.3 20.3 19.0 20.3 19.6 0.5 19.6 Total Titanomagnetite in HMC 6.9 8.1 7.4 3.5 4.3 3.8 0.9 1.7 1.1 2.2 4.5 3.3 0.5 0.4 0.4 1.1 1.7 3.2 2.2 0.7 6.9 4.3 1.7 4.5 3.2 59.1 20.3 20.6 37.4 Total Non-VHM in HMC 100.0 100.0 100.0 100.0 100.0 Marao Aircore Drilling Excellent analytical results were reported from a reconnaissance aircore hole drilling program at three targets previously defined by MRG at its Marao (6842L) Heavy Mineral Sands licence, particularly at Mogonde Target (refer ASX Announcement 12 December 2022. Three targets, Magonde, Maduacua and Mandende (refer ASX Announcements 18 March 2021, 8 July 2021 and 18 June 2021) were generated via reconnaissance hand auger grid drilling, and the aircore drilling took place at 1km inter-drill line and 500m inter borehole spacing. The very widely spaced reconnaissance aircore drillholes were drilled in all 3 targets (Figures 16 and 17). MRG Metals Limited Consolidated Financial Statements 30 June 2023 43 Figure 16: Reconnaissance aircore drillholes at Marao (6842L), position of the Magonde, Mandende and Maduacua Targets as well as 2 mineralogy data points. MRG Metals Limited Consolidated Financial Statements 30 June 2023 44 Figure 17: Aircore holes and auger holes drilled at Marao (6842L). Given multiple aircore holes returned >3%THM grades within the holes, the three targets were proven as prospective, with the prospectivity of Marao further supported given the mineralogy is better than that reported at Koko Massava, Nhacutse and Poiombo. Magonde in particular was established as a very high grade target. Magonde Aircore Drilling Delivers Very High VHM Mineralogy Results MRG announced excellent mineralogy results from heavy mineral concentrate (HMC) samples sourced from three target testing aircore drillholes within MRG’s Magonde Target in the Marao (6842L) Heavy Mineral Sands licence (Figures 1, 18 and 19; refer ASX Announcements 16 March 2022 and 21 July 2022). MRG also announced the laboratory results for hand auger drillholes in the Magonde Target area. The Magonde Target was generated via visual estimated THM grade of reconnaissance hand auger grid drilling (Figure 19, refer ASX Announcement 18 March 2021). Three very widely spaced target testing aircore drillholes were then drilled during March 2022 within the Magonde Target (Figures 18 and 19; refer ASX Announcement 16 March 2022), with the highest laboratory derived grade of 6.04% THM over 27.0m from surface returned from 22MUAC003 within the Target (Figures 18 and 19; refer ASX Announcement 21 July 2022). Laboratory grade from selected hand auger drillholes delivered five drillholes with >3% THM, which very clearly defines the Magonde Target as a >3% THM Target, with the target area 2.6 km² (refer Figure 19, red area). With two of the auger drillholes returning >4% THM results from surface (21MUHA014 and 21MUHA015), a higher >4% THM grade target including the very high grade aircore drillhole 22MUAC003 has an area of 1.1km² (refer Figure 19, yellow area). MRG Metals Limited Consolidated Financial Statements 30 June 2023 45 Five Composite samples were generated from HMC of all three aircore drillholes, covering all interpreted lithologies (red sand at surface, grey sand at depth, refer Table 23). The mineralogical results follow the very encouraging results from initial grab sample from within the Magonde target (sample 20MR03; refer Figure 19 and ASX Announcement 27 April 2021) that showed 50.05% VHM content results (Ilmenite, Altered Ilmenite, Rutile and Zircon) from Scanning Electron Microscopy (SEM). The mineralogical results from the aircore HMC composites show even higher VHM results from the red sand lithology than the grab samples, with between 58.2% and 61.8% VHM in the Magonde Target. Additionally, Titanomagnetite content of the HMC in these samples are between 14.2% and 15.1%. The VHM + Titanomagnetite product is therefore in the 73.4% to 76.5% of the HMC range. The red sand portion of 22MUAC003 with the very high VHM has 5.25% THM from surface to 19.5m. This clearly shows the potential for high grade and high value HMC within the Magonde Target in Marao, with follow-up closer spaced aircore drilling and additional mineralogical work to follow in 2023. The VHM % for the Magonde red sand lithology is significantly higher than results reported in MRG’s updated Koko Massava JORC Mineral Resource estimate of average 41% VHM of the HMC for the high- grade area (refer ASX Announcement 16 December 2021) and from the updated Nhacutse and Poiombo JORC Mineral Resource Estimate at average 45% and 46 % VHM respectively of the HMC within the >4% THM areas (refer ASX Announcement 8 April 2022). The low VHM grey sand lithology intersected at depth in Magonde (samples Mumin 02 and Mumin 05; Table 231) has not been seen in any other MRG Project to date. This low VHM lithology, that still has high VHM grade, will be studied further during infill aircore drilling. Figure 18: Target testing aircore drillholes at Marao 6842L, with the 3 holes within Magonde Target clearly shown (22MUAC001 to 22MUAC003). MRG Metals Limited Consolidated Financial Statements 30 June 2023 46 Figure 19: Laboratory results for aircore holes and Visually Estimated (VIS EST) results for auger holes drilled at Marao (6842L) (refer ASX Announcement 21 July 2022). MRG Metals Limited Consolidated Financial Statements 30 June 2023 47 Table 23: Summary mineralogy data of 5 composite samples derived from QEMSCAN, XRF and XRD analyses for 3 target testing aircore drillholes at Magonde Target, Marao (6842L). Sample Locality Target BH ID Mumin 01 Mumin 02 Mumin 03 Mumin 04 Mumin 05 Marao Marao Marao Magonde Magonde Magonde 22MUAC001 22MUAC002 22MUAC003 Interval (m) Lithology 0.0 - 27.0 Red Sand 27.0 - 34.5 Gray Sand 0.0 - 12.0 Red Sand 0.0 - 19.5 Red Sand 19.5 - 25.5 Gray Sand Mineral Zircon Rutile Leucoxene Altered Ilmenite Ilmenite Min Max Ave StDev Average 2.6 2.0 0.3 6.9 1.2 1.2 0.1 2.8 2.8 2.4 0.4 7.4 2.5 2.0 0.2 6.0 1.4 1.2 0.2 4.7 50.0 22.0 48.9 47.6 24.2 1.2 1.2 0.1 2.8 2.8 2.4 0.4 7.4 2.1 1.8 0.3 5.5 0.7 0.5 0.1 1.8 22.0 50.0 38.5 14.1 48.16 Total VHM in HMC Titanomagnetite 14.6 9.2 14.2 15.1 8.6 8.6 15.1 12.4 3.2 12.35 Total Titanomagnetite in HMC Hematite Chromite Magnetic Others Andalusite Non-magnetic Others 4.2 3.4 2.1 9.1 4.8 VHM in HMC Titanomagnetite in HMC 61.8 14.6 Non-VHM in HMC 23.5 2.1 2.5 27.1 9.4 22.6 27.2 9.2 63.6 4.7 3.2 1.6 10.4 4.1 61.8 14.2 24.0 3.4 3.6 5.7 6.4 7.5 58.2 15.1 26.6 1.7 2.5 1.7 2.5 4.7 3.6 3.2 3.0 1.3 0.5 30.1 1.6 30.1 13.3 14.1 39.49 Total Non-VHM in HMC 2.4 9.0 4.5 4.5 10.4 8.0 4.1 22.6 12.0 20.9 31.7 8.6 59.7 Total 100.0 100.0 100.0 100.0 100.0 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 Metallurgical Testwork 48 During the June quarter, MRG completed highly successful metallurgical testwork on non-magnetic (nonmag) concentrate that had been assigned a low value in the existing PEA. These metallurgy results are expected to significantly and positively impact the economic model to be associated with an updated PEA. Previous Scoping and PEA testwork conducted at IHC Mining on a bulk sample generated from the Koko Massava deposit produced a non-magnetic concentrate as a potential product stream. The valuable mineral in the concentrate was predominantly zircon, with rutile as a secondary product. The concentrate was degraded by high grades of U and Th associated with monazite and with aluminosilicates. The objective of the sighter testwork was to investigate potential product grades in the concentrate and to identify potential issues that would impact the grade and recoveries of those products. The sample used for the sighter testwork (Figure 20) was a composite of processing streams reconstituted to a non-magnetic concentrate by IHC Mining (Table 24). The sighter metallurgical testing involved single stage RER magnetic separation on the non-magnetic concentrate, followed by primary stage of electrostatic separation on the nonmag stream to further isolate potential zircon and rutile products by to separate the TiO2 bearing minerals from the zircon. The two streams were then processed through stages of gravity, electrostatic and magnetic separation to isolate potential zircon and rutile products. The RER magnetic separation work resulted in upgrading the nonmag by a significant reduction in mass of the nonmag concentrate by removing deleterious minerals such as aluminosilicates and Monazite, as well as significant reductions in Fe2O3 and Cr2O3. The electrostatic separation, followed by gravity, electrostatic and magnetic separation, resulted in a number of near Zircon and Rutile product streams. Further optimised testing will result in upgrading the Zircon and Rutile streams further. Testwork to optimise a Monazite product from the reject magnetic stream needs to still take place. TZMI calculated value for combined Zircon and Rutile non-magnetic products are now more than USD$900 per ton, up from approximately USD$350 per ton used in the PEA, with additional work to be done, including on the Monazite in the magnetic rejects, to determine value. TZMI estimated the unit prices of ZrO2 and TiO2 at US$15.95 per % and US$8.12 per % respectively, multiply the values against the ZrO2 (47.9%) and TiO2 (15.4%) content of the non-magnetic concentrate, to a total value of more than USD1,000 per ton. Further metallurgy results are expected shortly from sighter testwork at newly discovered Azaria and Malambane deposits, where substantially higher VHM mineralogy has been discovered and is being progressed in anticipation of providing further upside into an updated PEA. Summary of testwork and results The following comments are made based on the results of the initial sighter testwork on the non-magnetic concentrate: • The grade of the reconstituted non-magnetic sample closely matched the results from IHC Mining for the same sample (Table 24). The exception to this is the CaO grade of 0.59% compared to the 0.05% in the Reported (IHC) assay. While this may warrant further investigation, the distribution of CaO in the primary separation stage was 85% reporting to mag rejects, therefore did not adversely affect the grades of products in the context of this sighter. • The non-magnetic concentrate had a ZrO2+HfO2 grade of 30%, equating to an approximate zircon content of 45.5%. The grade of TiO2 in the sample was 16.7% and the grade of Fe2O3 was 14.1% (Refer ASX Announcement 31 August 2022). MRG Metals Ltd Consolidated Financial Statements 30 June 2023 49 • The principle contaminant minerals in the concentrate were aluminosilicates, both para-magnetic and non- magnetic with the associated oxides Al2O3, SiO2 and Fe2O3. Additionally, the sample had a high grade of monazite, associated with the oxides CeO2, P2O5 and Th. A calculation of the monazite content based on an approximate CeO2 content of 26% in monazite was 7.1%. The combined grades of U and Th in the was 5,293 ppm. • The primary process tested in the sighter metallurgical testwork was a single stage of magnetic separation using an RER magnetic separator (Figure 20). The process sought to reduce the grades of U and Th through the rejection of monazite to a magnetic reject. Additionally, this process would reduce the mass and increase the grades of zircon in rutile in the concentrate through the rejection of para-magnetic gangue mineral. Figure 20: Met testwork flowsheet MRG Metals Ltd Consolidated Financial Statements 30 June 2023 50 • The processing rejected 39.8% of the mass, 97.5% of the Fe2O3, 95.1% of the CeO2 and 75.6% of the Al2O3 to the magnetic stream with a loss of 4% of the ZrO2 (Table 25). The non-magnetic stream had a ZrO2+HfO2 grade of 47.87% equating to an approximate zircon content of 72.5%. • There was a recovery of 60.3% of the TiO2 to the non-magnetic stream (Table 25). The ratio of TiO2 to Fe2O3 in the non-magnetic stream indicates that this is associated with high TiO2 and low Fe2O3 mineral, rutile and HiTi/leucoxene. The TiO2 reporting to the magnetic fraction is likely secondary type ilmenite although this could be further investigated in future testwork. The grades and distributions of the Cr2O3 are notable in regard to this with 98.3% of the Cr2O3 reporting to the magnetics at a grade of 4.05% (Table 25). • The distributions of CeO2 and P2O5 indicate that greater than 90% of the monazite has reported to the magnetic rejects (Table 25). The combined grades of U and Th in the nonmagnetic concentrate are reduced from 5,293ppm in the pre-RER concentrate (Figure 21) to 1,212ppm in the post RER concentrate (Figure 22). While this grade exceeds a typical target for shipping the results do indicate the potential to greatly reduce the U and Th through a stage of magnetic separation. • Further sighter tests were conducted on a sub-split of the RER non-magnetic concentrate using an IRM (Figure 20). The results of these tests indicate that magnetic separation can be used to reduce the grades of U and Th in the non-magnetic concentrate with the additional benefit of increasing the grade of zircon (Figures 22 and 23). However, the recovery of zircon is likely to be impacted as lower grades are targeted. • Post RER separation, the non-magnetic stream was processed to isolate potential zircon and rutile products (Figure 22). The processing involved a primary stage of electrostatic separation to separate the TiO2 bearing minerals from the zircon. The two streams were then processed through stages of gravity, electrostatic and magnetic separation. • The processing recovered a high-grade zircon product with a ZrO2+HfO2 grade of 66.2% (Table 26). The grades of TiO2 and Fe2O3 in this were less than 0.1% and the grade of Al2O3 was 0.12%. The combined grade of U and Th was 398ppm (Table 26). • A number of near zircon product grade streams were generated in the processing (Table 24, 26 and 27). These were degraded by varying grades of TiO2, Fe2O3, Al2O3 and U and Th. This initial processing indicates that aluminosilicates, notably kyanite, are likely to have the greatest impact on zircon recovery. The un-optimised wet gravity processing conducted in this initial sighter does however indicate that much of the Al2O3 should be rejectable through an optimised processing. • The impact of monazite on the zircon product grade and recovery will likely be reduced with an optimised rejection of this mineral in the primary magnetic separation of the non-magnetic concentrate. It is not possible to comment on the potential to reduce the TiO2 and Fe2O3 grades in the near zircon product grade streams in this stage of testwork, however it is notable that the final zircon stream recovered had grades of less than 0.1% without the inclusion of acid leaching. • The processing recovered a high-grade rutile product with a TiO2 grade of 95.5% and Fe2O3 grade of 0.49% (Table 28). The product had a SiO2 grade of 1.26% and a ZrO2 grade of 0.5%. Other contaminants were V2O5 at 0.39% and Cr2O3 at 0.23%. The combined grade of U and Th was 60ppm (Figure 21). • A number of near rutile product grade streams were generated in the processing (Table 28). These were degraded by varying grades of SiO2, Al2O3 and ZrO2 associated with misreporting non-conductors from the primary electrostatic separation. It is likely that an optimised separation in this stage of separation will reduce the impact of these non-conductors on the grade and recoveries of rutile. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 Table 24: Sighter test head grade 51 Oxide TiO2 Fe2O3 Al2O3 SiO2 Cr2O3 ZrO2+HfO2 CaO MgO MnO CeO2 Th XRF U XRF K2O Nb2O5 P2O5 SO3 V2O5 LOI @1000°C % % % % % % % % % % ppm ppm % % % % % % Reported (IHC) Received Grades 16.7 14.3 5.98 23.5 1.42 29.5 0.05 0.47 0.25 1.65 15.35 14.1 6.21 23.2 1.64 30.0 0.59 0.53 0.27 1.85 4634 4840 464 0.06 0.09 1.79 0.51 0.11 N/R 453 0.06 0.08 1.99 0.05 0.09 0.47 Table 25: RER separation results TiO2 (%) Fe2O3 (%) ZrO2+HfO2 (%) Al2O3 (%) SiO2 (%) Stream Mass (%) Mag Non-mag 39.8 60.2 Grade Distr. Grade Distr. Grade Distr. Grade Distr. Grade Distr. 15.30 39.7 34.50 97.5 3.03 4.0 11.8 75.6 11.4 19.5 15.35 60.3 0.58 2.5 47.87 96.0 2.52 24.4 31.1 80.5 Calc. Total 100.0 15.33 100.0 14.07 100.0 30.04 100.0 6.21 100.0 23.2 100.0 CeO2 (%) P2O5 (%) Th (ppm) U (ppm) Cr2O3 (%) Grade Distr. Grade Distr. Grade Distr. Grade Distr. Grade Distr. 4.42 95.1 4.63 92.5 11000 90.4 470 41.3 4.05 98.3 0.15 4.9 0.25 7.5 770 9.6 442 58.7 0.05 1.7 1.85 100.0 1.99 100.0 4839 100.0 453 100.0 1.64 100.0 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 52 Table 26: Initial sighter zircon processing; individual stream grades and recoveries Zircon Gravity Tail 2 Zircon Conductors Zircon Gravity Tail 1 Zircon Mags Zircon Oxide Mass % N/M conc. ZrO2+HfO2 TiO2 Fe2O3 Al2O3 SiO2 Cr2O3 ZrO2+HfO2 CaO MgO MnO CeO2 Th XRF U XRF K2O Nb2O5 P2O5 SO3 V2O5 LOI @1000°C % % % % % % % % % % % ppm ppm % % % % % % Recoveries 1.60 3.45 Grades 0.6 0.25 0.21 32.3 0.01 64.6 0.10 0.0 0.02 0.2 893 373 0.01 0.01 0.3 0.2 0.01 0.45 7.46 16.4 0.07 0.09 0.12 32.8 0.00 66.2 0.04 0.00 0.01 0.02 152 246 0.01 0.00 0.11 0.09 0.00 0.30 2.49 5.1 0.11 0.41 0.42 31.4 0.01 61.9 0.20 0.02 0.02 1.01 3188 657 0.02 0.01 1.12 0.10 0.02 0.81 13.93 13.80 29.26 27.5 0.1 0.34 1.41 32.7 0.01 63.1 0.15 0.0 0.02 0.1 793 527 0.02 0.01 0.3 0.0 0.01 0.62 0.22 0.42 2.69 34.2 0.01 59.9 0.19 0.02 0.03 0.12 750 580 0.03 <0.01 0.24 0.05 0.01 0.76 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 53 Table 27: Initial sighter zircon processing streams; cumulative grades and recoveries Oxide Rutile Rutile para-mag Rutile HTR Mid Rutile IRM Mag Rutile Non- cond. Rutile Gravity Tail 2 Rutile Gravity Tail 1 Mass TiO2 (total) TiO2 (non-mag post RER) TiO2 Fe2O3 Al2O3 SiO2 Cr2O3 ZrO2+HfO2 CaO MgO MnO CeO2 Th XRF U XRF K2O Nb2O5 P2O5 SO3 V2O5 LOI @1000°C % N/M conc. % % % % % % % % % % % % ppm ppm % % % % % % 1.01 6.28 10.4 95.50 0.49 0.26 1.3 0.23 0.46 0.02 0.72 4.41 7.32 93.4 1.11 0.48 1.9 0.23 0.47 0.03 <0.01 <0.01 0.01 <0.01 30 30 0.04 0.35 <0.01 <0.01 0.39 0.08 0.02 0.01 40 40 0.08 0.61 0.01 0.01 0.30 0.16 Recoveries 0.33 1.99 3.3 Grades 92.50 0.94 0.48 2.6 0.25 1.77 0.03 <0.01 0.02 <0.01 80 60 0.07 0.42 0.02 <0.01 0.32 0.22 0.09 0.48 0.80 80.6 10.70 0.88 2.8 0.58 1.04 0.08 0.1 0.20 0.02 100 40 0.09 0.62 0.04 0.06 0.22 0.07 2.51 12.17 20.2 74.40 0.90 0.57 8.2 0.19 12.56 0.10 <0.01 0.02 0.09 500 260 0.08 0.32 0.12 0.03 0.26 0.52 1.93 10.11 16.76 80.2 1.34 0.95 7.8 0.20 7.19 0.08 0.0 0.03 0.07 320 180 0.13 0.39 0.09 0.02 0.22 0.58 5.18 21.67 35.9 64.10 1.75 2.36 14.2 0.17 14.42 0.14 0.03 0.04 0.09 480 330 0.16 0.35 0.13 0.05 0.16 0.84 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 54 Table 28: Initial sighter rutile processing streams; cumulative grades and recoveries Oxide Rutile 1 Rutile 2 Rutile 3 Rutile 4 Rutile 5 Rutile 6 Rutile 7 Mass TiO2 (total) TiO2 (non-mag post RER) TiO2 Fe2O3 Al2O3 SiO2 Cr2O3 ZrO2+HfO2 CaO MgO MnO CeO2 Th XRF U XRF K2O Nb2O5 P2O5 SO3 V2O5 LOI @1000°C % N/M conc. % % % % % % % % % % % % ppm ppm % % % % % % Recoveries 1.7 10.7 17.7 Grades 94.6 0.75 0.35 1.51 0.23 0.5 0.02 2.1 12.7 21.0 94.28 0.78 0.37 1.69 0.23 0.7 0.03 1.0 6.3 10.4 95.50 0.49 0.26 1.26 0.23 0.5 0.02 2.2 13.2 21.8 93.7 1.20 0.39 1.73 0.25 0.7 0.03 4.7 25.3 42.0 83.32 1.04 0.49 5.22 0.22 7.1 0.07 6.6 35.4 58.8 82.4 1.13 0.62 5.98 0.21 7.1 0.07 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 0.01 0.01 0.01 0.02 <0.01 <0.01 <0.01 <0.01 30 30 0.04 0.35 <0.01 <0.01 0.39 0.08 34 34 0.05 0.46 0.0 41 38 0.05 0.45 0.01 <0.01 <0.01 0.35 0.11 0.35 0.13 44 38 0.06 0.46 0.01 0.01 0.34 0.13 0.02 0.05 289 158 0.07 0.38 0.07 0.02 0.30 0.34 0.02 0.06 298 164 0.08 0.39 0.07 0.02 0.27 0.41 11.8 57.1 94.7 74.35 1.40 1.39 9.60 0.19 10.3 0.10 0.02 0.03 0.07 378 237 0.12 0.37 0.10 0.03 0.22 0.60 Figure 21: Magnetic separation of Concentrate: zircon recovery vs grades of U & Th MRG Metals Ltd Consolidated Financial Statements 30 June 2023 55 Figure 22: Post Primary RER magnetic separation of Concentrate: zircon recovery vs grades of U & Th Figure 23: Post Primary RER magnetic separation of Concentrate: recovery ZrO2, CeO2, U & Th Sighter Metallurgical Testwork at Azaria And Malambane Excellent sighter metallurgical test results were released from AML Laboratories on three composite Heavy Mineral (HM) samples from the new Azaria and Malambane targets, located within the Company’s Corridor Sands Projects. These outstanding results continue to improve the Company’s knowledge of the resources and will help in identifying the priority resources for early mine life economics. The objective of the sighter testwork was to investigate potential product grades in the HMC from the two targets areas, as well as an initial comparison of the HMC of the Azaria and Malambane targets versus the Koko Massava MRG Metals Ltd Consolidated Financial Statements 30 June 2023 56 bulk sample HM concentrate. The three samples used for the sighter testwork were 2 HMC samples from 5 aircore holes and 2 distinctly different lithologies at Malambane (upper-red sand MAL 1 HMC and lower-red/brown sand MAL 2 HMC) and 1 HMC from 3 aircore holes at Azaria. The sighter metallurgical testing returned excellent results including: • • • concentrates of ilmenite, zircon and titanomagnetite generated; the testwork clearly showing Azaria HMC with significantly less coatings; and very good potential mass recoveries of ilmenite, titanomagnetite, zircon and rutile. Further optimised testing with larger HMC sample size will be undertaken to carry out additional work on the rutile in the non magnetic Middling, as well as work on the monazite in the same fraction. Summary of testwork and results An Orekinetics Coronastat high-tension roll (HTR) with a 300mm diameter roll was used in the electrostatic separations. A Readings induced roll magnet (IRM) set with a field strength of 15,000 Gauss was used in the magnetic separations of the HTR non-conductors and the HTR middlings (Refer Figure 24). A Carpco lift magnet in a non-magnetic reprocess configuration at increasing field intensities was used for the detailed fractionation of the HTR conductors (Refer Figure 24). Figure 24: Initial sighter testwork flowsheet The following comments are made based on the grades of the HM composites (Refer Table 29): MRG Metals Ltd Consolidated Financial Statements 30 June 2023 57 • The grades of the 2 Malambane HMCs, MAL 1 and MAL 2, are comparable. The MAL 1 composite (upper lithology) has a slightly higher TiO2 grade and slightly lower Fe2O3 grade than the MAL 2 composite (lower lithology) at 30% TiO2 compared to 28.4% TiO2 and 53.75% Fe2O3 compared to 54.93% Fe2O3. The grades of contaminant oxides are comparable in both samples. • The Azaria HMC, AZA 1, had a higher TiO2 grade than both the MAL composites at 33.2% and a significantly lower Fe2O3 grade of 45.6%. The grades of contaminant oxides were higher in the Azaria sample than in both Malambane samples. • The MAL 1 composite had a ZrO2 grade of 1.46% and the MAL 2 composite had a ZrO2 grade of 1.38% equating to approximate zircon contents of 2.2% and 2.1% respectively. The AZA composite had a ZrO2 grade of 2.18% equating to an approximate zircon content of 3.3%. • A visual distinction between the MAL 1 and MAL 2 HM composites was evident when observed under the microscope. The MAL 1 HM, identified by the client as “Upper red sand” had a high number of grains coated with red material (Refer Figure 25). This material was evident in the MAL 2 sample, but at a lower level and coated grains were not observed (Refer Figure 26). The AZA 1 HM composite was free of this material (Refer Figure 27). Table 29: HM Composite head grade Mass (g) 327 220 125 MAL 1 MAL 2 AZA 1 TiO2 Fe2O3 Al2O3 SiO2 Cr2O3 ZrO2+HfO2 CaO MgO MnO CeO2 Th XRF U XRF K2O Nb2O5 P2O5 SO3 V2O5 LOI @1000°C % % % % % % % % % % ppm ppm % % % % % % Grades 30.02 53.75 28.4 54.93 33.21 45.56 6.44 5.7 1.89 1.46 0.02 0.64 0.80 0.05 148 26 0.02 0.04 0.06 0.01 0.32 6.75 6.54 1.73 1.38 0.02 0.63 0.79 0.05 162 24 0.02 0.04 0.06 0.01 0.34 8.36 8.4 2.11 2.18 0.02 0.72 0.87 0.04 152 40 0.02 0.05 0.06 0.00 0.23 -1.71 -1.83 -1.79 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 58 Figure 25: Malambane HMC (MAL 1) Figure 26: Malambane HMC (MAL 2) MRG Metals Ltd Consolidated Financial Statements 30 June 2023 59 Figure 27: Azaria HMC (AZA 1) Potential mass recoveries of HM to Product streams (Refer Table 30): • Ilmenite: Assuming material reporting to magnetic fractions between 1,000 Gauss and 6,000 Gauss of the HTR Conductors reporting to ilmenite at a grade of 48% TiO2 in product; • Titanomagnetite: Assuming material reporting to magnetic fractions at 500 Gauss and 1,000 Gauss Conductors reporting to product; • Rutile: Assuming TiO2 material reporting to non-magnetic fractions of the HTR Conductors and HTR Middlings reporting to rutile at a grade of 95% TiO2 in product; • Zircon: Assuming TiO2 material reporting to non-magnetic fractions of the HTR Middlings and Clerici sinks for the non-conductors reporting to zircon at a grade of 66% ZrO2+HfO2 in product; • The ilmenite product quality achieved in this testwork indicates the opportunity for improvement by low temperature roasting of the ilmenite to reduce Cr2O3 levels and thereby increase the TiO2 grade of the product; Insufficient mass of sample was available to isolate a clean zircon product in the testwork, with approximately 5% gangue mineral in the product, predominantly aluminosilicates and monazite. Given the relatively low distribution of these minerals to the final zircon it would be anticipated that an optimised processing would reduce these contaminant levels; and • • Clean grains of rutile were observed in the expected concentrates but at very low levels. Given the low grade of rutile in the HM and the low sample mass used, the rutile grades presented are potentially underestimated. In future testwork using larger samples it may be possible to isolate a rutile product. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 60 Table 30: HM Composite processing: Potential mass recoveries based on sighter results MAL 1 MAL 2 AZA 1 HM Mass 42.0 26.4 0.76 1.66 % % % % 48.8 24.2 0.80 1.92 56.9 11.4 0.98 2.92 Ilmenite Titanomagnetite Rutile Zircon (recoverable) 2023 Exploration Program During the March quarter, MRG commenced planning for a targeted exploration program during 2023, following the excellent Q4 2022 Total Heavy Mineral (THM) and mineralogy results from aircore drilling and associated laboratory metallurgical testwork results at Corridor Central (11142C), Corridor South (11137C) and Marao (6842L) licences. The exploration activities and 2023 HMS work plan (refer Table 31) will focus on new data to update and hopefully further increase the already substantial NPV for the Corridor Project. This will likely comprise: infill / extension aircore drilling of Azaria and Malambane for MRE and pit optimisation purposes; • • mineralogical and metallurgical studies, with new grade and metallurgical recovery work to be undertaken initially on Azaria and Malambane drill samples; and further study of the non-magnetic part of the existing PEA material to upgrade the zircon recoveries. • MRG Metals Ltd Consolidated Financial Statements 30 June 2023 61 Table 31: Work program for 2023, with priority rating of targets. Funding Priority 2023 Deposit / Target Mineralogy VHM (Total %) Next Step 2023 Koko Massava + Nhacutse + Poiombo PEA ( NPV ) A$417M Malambane Azaria Cihari Viaria Zulene Magonde Mandende Maduacua Corridor North 45 61.6 72.4 58.1 63.5 62.6 58.2 58.7 57.4 NA Patricio, Fotinho, Adriano (REE + U) NA Olinga (REE + U) NA 1 2 3 7 8 9 10 11 12 13 4 5 6 Linhuane NA Application for Mining Licences for Corridor Projects Focussed metallurgy aimed to upgrade non-magnetic product value, to in turn substantially increase the project NPV Initial metallurgy to confirm significant VHM mineralogy results compared to Koko Massava, Nhacutse + Poiombo Initial metallurgy to confirm significant VHM mineralogy results compared to Koko Massava, Nhacutse + Poiombo Initial metallurgy to confirm significant VHM mineralogy results compared to Koko Massava, Nhacutse + Poiombo To be announced To be announced To be announced To be announced To be announced To be announced upon grant of ELA Field work to commence immediately upon grant of ELA. Geological mapping, stream sediment sampling, auger drilling Field work to commence immediately upon grant of ELA. Geological mapping, stream sediment sampling, auger drilling Field work to commence immediately upon grant of ELA. Auger drilling to follow up very high THM historic anomalies MRG announced the successful submittal of Mining Licence Applications (MLA’s) for the Company’s Corridor Central (6620L) and Corridor South (6621L) Heavy Mineral Sands (HMS) licences. The submission was accepted by INAMI, with subsequent renumbered by INAMI of Corridor Central to 11142C and Corridor South to 11137C. The MLA’s follow initial results from the Scoping and Preliminary Economic Analysis (PEA) (refer ASX Announcements 23 August 2022 and 31 August 2022). The MLA’s also follows the recent 4 ELA’s for REE and U, namely Patricio (10999L; 19,763.06 Ha), Fotinho (11000L; 19,865.18 Ha), Adriano (11002L; 19,777.14 Ha) and Olinga (11005L; 19.148,72 Ha). MRG will now work with INAMI to progress all MLAs and ELAs. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 62 MRG will focus future exploration activities within Corridor Central (6620L) and Corridor South (6621L) on the very high Valuable Heavy Mineral (VHM) area discovered east of a very strong lithological boundary. Results from a recent reconnaissance aircore drilling program, as well as mineralogical studies, are expected soon. Further exploration will then aim to deliver these deposits for MRE, with the possibility of significantly improving the economics of the projects. Uranium & Rare Earth Element Licence Application MRG made a new exploration licence application (ELA) in the Zambezia Province of Mozambique for Uranium (U) and Rare Earth Elements (REEs)(refer ASX Announcement 15 November 2022). The new U and REE Olinga ELA (11005 L, 19,148.72 Ha) is situated 890 km North-East of MRG’s existing Heavy Mineral Sands (HMS) projects at Corridor Sands (MLAs 11142 C and 11137 C) and 270 km Northeast of the port city of Beira. It is also 115 km East-Northeast of the 3 new MRG REE and U ELAs (refer ASX Announcement 11 May 2022; refer Figure 28). The ELA application, in combination with the 3 recent ELAs Patricio (10999 L; 19,763.06 Ha), Fotinho (11000 L; 19,865.18 Ha) and Adriano (11002 L; 19,777.14 Ha), will further expand on MRG’s exploration licence portfolio (combined 78,554.10 Ha for the 4 ELAs), while also diversifying the Company’s portfolio from HMS projects to now include a fourth licence with REE and U as targets. A Report supplied to MRG by Dr Luc Antoine on historic reconnaissance exploration that took place in 2014 showing highly anomalous results from the 3 new REE and U ELAs (refer ASX Announcement 11 May 2022), but with a walkover of the U and REE area of this new ELA. No analysis was done on samples collected from the U and REE target area. MRG considers the U and REE ELA as prospective for 2 reasons: 1. The airborne radiometric spectrometer data of a regional national airborne geophysical survey shows some very highly anomalous radiometric areas over the target area of the Olinga 11005 L ELA, with the anomalous data characterised by a higher U:Th ratio compared the 3 REE and U ELAs (refer Figure 29). The ELA area includes granites of different ages (refer Figure 30), with the contact between the granites as a main target for exploration. 2. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 63 Figure 28: Map of the location of MRG’s new Uranium and Rare Earth ELA (Olinga, 11005 L) in relation to the 3 Rare Earth and Uranium ELAs (Patricio, 10999 L, Adriano, 11000 L and, Fotinho, 11002 L); the MRG Corridor Projects (HMS) and the local port city of Beira. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 64 Figure 29: Map showing MRG’s Uranium and Rare Earth ELA (Olinga 11005 L) plotted on airborne radiometric spectrometer data of a regional national airborne geophysical survey. Figure 30: Map showing MRG’s Uranium and Rare Earth Exploration Licence Application (ELA; 11005 L) plotted on the regional geology map. Field based exploration activities will commence on the applied for REE + U projects immediately upon grant of their Exploration Licences. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 Corporate Jangamo Mining Concession 65 Late in 2022 (ASX Announcements 9 November 2022 and 30 December 2022) MRG advised that it had, subject to Due Diligence, secured an option to acquire Savannah Resources Plc’s Jangamo Mining Concession in Mozambique. During the quarter, MRG advised that the Due Diligence period in relation to the option agreement had lapsed and both parties had mutually decided not to proceed with entering into an Option Agreement. Placement and Options Entitlement Offer During the March quarter, MRG Metals Limited completed a capital raising (announced 23 November 2022) comprising: • 3 for 5 pro-rata non-renounceable entitlement offer of options to existing Shareholders closed on 13 January 2023 raising $312,683. • A Placement of fully paid ordinary shares, with 2 for 3 free attaching options, raising $60,000 from Directors, after approval from the General Meeting held on 13 January 2023. • Placement of fully paid ordinary shares, with 2 for 3 free attaching options, raised $840,000 (completed in November). The 3 for 5 pro-rata non-renounceable entitlement offer of Options to existing Shareholders raised $312,682.80 on closing on 13 January 2023. This resulted in the issue of 312,682,557 listed MRQO Options, exercisable at $0.008 and expiring 31 December 2025. The Board sought Shareholder approval at a General Meeting of the Company, held on 13 January 2023, to take up $60,000 under the same terms as the Placement. This resulted in the issue of 15,000,000 fully paid ordinary shares at $0.004 per share, together with 10,000,001 free attaching MRQO listed options, exercisable at $0.008 and expiring 31 December 2025. Proposed use of funds: • Corridor Sands HMS Project - improvement programs to increase project economics towards Feasibility. Follow up drilling, mineralogy and metallurgy to test high VHM Azaria and Cihari targets. • Exploration at HMS, Rare Earth Elements and Uranium Projects should these Exploration Licences be granted. • Working Capital, costs of the Placement and expenses of the Offers. Events Subsequent to end of Financial Year Memorandum of Understanding to Form Joint Venture on Mozambique Corridor Sands Projects On 26 July 2023, MRG Metals Limited entered a Memorandum of Understanding (MOU) with Tianjin Lanqi Materials Company Limited (“LANQI”) for a Joint Venture operation (“JV”) on its Mozambique Corridor Sands projects. Key aspects of the MOU are: - A period of 3 months Due Diligence commencing from today. During the period of Due Diligence, LANQI shall send their technical team to Mozambique for field inspection and sampling of the Corridor Projects. MRG shall send their representatives to assist LANQI to carry out this work. - During the period of Due Diligence, LANQI shall also draft a JV agreement and shall send it to MRG together with LANQI’s decision to proceed to JV, such that the JV is signed at or before completion of the Due Diligence period. - A commitment to purchase AUD$500,000 shares at 0.4c upon successful completion of Due Diligence and entering the JV. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 66 Key Terms of the JV are: - Both parties shall sign a JV Agreement upon or before completion of Due Diligence period that parties will set up a JV company in Mozambique owned 75 % by LANQI and 25 % by MRG, achieved upon first production. - LANQI shall invest USD 3 million dollars (and at the commencement of the JV place USD$3 million into the JV trust account) for the following stages: o To finish the JV company set up in Mozambique and company working capital. i) Working capital to cover JV company in-country costs estimated at $40k USD for minimum of 12 months. ii) MRG Management involvement in JV at $15k USD/month for minimum of 18 months. o To complete the mine exploration and feasibility report for the Initial Corridor Project. o To design the engineering and construction plan of the Initial Corridor Project. o To get the mining licence approval from the Government. - LANQI shall invest all funds necessary to develop the initial mining operation and all subsequent funds for mine expansion either on the Initial Corridor Project or subsequent Corridor Projects. - LANQI shall guarantee that the total output of the HMC in the Initial Corridor Project shall be not less than 100,000 tpa at 18 months from the date any mining commences on the Initial Corridor Project; the total output of the HMC in Initial Corridor Project shall be increased to 200,000 tpa at or before 3 years from the date any mining commences and to 400,000 tpa at or before 5 years from the date any mining commences. - The JV Agreement shall specify obligation of the parties to retain JV equity with the intention of not limiting MRG’s rights should the HMC production profile not deliver 100,000 tpa by 18 months, 200,000 tpa by 36 months, 400,000 tpa by 5 years and also should the JV not have implemented further expansion plans by 5 years from the date any mining commences in the Initial Corridor project. Key Terms of the Offtake Agreement are: LANQI shall be the Offtaker for all HMC products in the Initial Corridor Project. 1. 2. The offtake price fixing can be referred to the export prices of the same quality HMC which shall be processed by other companies in Mozambique and the JV shall coordinate independent review mechanism agreeable to both Parties. 3. The JV company shall give 5% sales commission for the offtake agreement. Definitions: - Corridor Projects means Mineral Sands projects in Mozambique including Corridor Central (11142C), Corridor South (11137C), Corridor North (10779L) and Linhuane (7423L). “Initial Project” means the first of the Corridor Projects chosen by the JV for commencement of production. - Placement On 7 August 2023, MRG Metals Limited completed a capital raising (announced 1 August 2023) comprising: • Placement of 200,000,000 fully paid ordinary shares at $0.0025, with 1 for 2 free attaching MRQO options (100,000,000 options), raised $500,000 Issuance of 10,000,000 MRQO options for payment of Lead Manager fees. • Proposed use of funds: • Progress Rare Earth Elements and Uranium Projects should these Exploration Licences be granted. • Working Capital. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 Tenements The Tenements held by the Group at reporting date are as follows: 67 Project Norrliden Malanaset Malanaset Corridor Central Corridor South Corridor North Linhuane Marão Marruca Olinga Patricio Fotinho Adriano Tenement K nr 1 nr 100 nr 101 11142C 11137C 10779L 7423L 6842L 6846L 11005L 10999L 11000L 11002L % Owned 10 10 10 100 100 100 100 100 100 100 100 100 100 Note Application Application Application Application Application Application MRG Metals Ltd Consolidated Financial Statements 30 June 2023 68 Directors’ Report The Directors of MRG Metals Ltd present their report together with the financial statements of the consolidated entity, being MRG Metals Ltd (‘MRG’ or ‘the Company’) and its controlled entities, MRG Metals (Australia) Pty Ltd, MRG Metals (Exploration) Pty Ltd, Sofala Resources Pty Ltd, Sofala Mining & Exploration Lda, Sofala Mining & Exploration I Lda, Sofala Mining & Exploration II Lda, Sofala Mining & Exploration III Lda, Sofala Mining & Exploration IV Lda, Sofala Mining & Exploration V Lda, Sofala Mining & Exploration VI Lda, Sofala Mining & Exploration VII Lda, Sofala Mining & Exploration VIII Lda, Sofala Mining & Exploration IX Lda and Sofala Mining & Exploration X Lda (‘the Group’) for the year ended 30 June 2023 and the Independent Auditor’s Report thereon. Director details The following persons were directors of MRG Metals Ltd during or since the end of the financial year. Mr Andrew Van Der Zwan BE Chemical Engineering (hons) Independent Non Executive Director since 07/01/2013 Chairman since 08/10/2013 Director since 14/02/2011 Andrew has over 30 years engineering and commercial experience, both local and international. He was a Non Executive Director of Gulfx Ltd for 11 years and was employed in various senior positions within the worldwide operations of Exxon Mobil for 17 years. Other current directorships: Argo Exploration Ltd (ASX: AXT) since 19/03/2013 Previous directorships (last 3 years): JVG Global Ltd since May 2019 until Deregistration in March 2022 Interests in shares and options: 44,156,679 shares 4,166,667 options Mr Shane Turner CA, Bachelor of Business Independent Non-Executive Director Director since incorporation 24/01/2011 Shane is a Chartered Accountant and has over 30 years financial and accounting experience. He has been employed with KPMG, a large regional public accounting practice, operated his own public accounting practice and now is employed with RSM Australia. He has been Company Secretary and CFO of White Rock Minerals (ASX: WRM) since August 2015. He was a Non Executive Director and Company Secretary for Metminco (ASX: MNC) for 2 years. Other current directorships: None Previous directorships (last 3 years): None Interests in shares and options: 26,982,509 shares 1,666,667 options MRG Metals Ltd Consolidated Financial Statements 30 June 2023 69 Mr Christopher Gregory BSc Geology, MAusIMM, MAIG, FSEG, MAICD Independent Non-Executive Director since 12/08/2013 Director since 12/08/2013 Chris has extensive global minerals industry experience over 38 years, at both technical and executive levels. Career foundation of 22 years in the Asia-Pacific region with Rio Tinto. Past Vice President – Operational Geology at Mandalay Resources (TSX: MND). Founding Partner and Director of Sasak Minerals, vended into SensOre (Private). Other current directorships: None Previous directorships (last 3 years): None Interests in shares and options: 69,813,986 shares 4,166,667 options Company secretary Shane Turner is a Chartered Accountant and the Group Chief Financial Officer. Shane has held senior positions with a number of professional accounting firms and has a degree in Business. Shane has held the role of Company Secretary at White Rock Minerals (ASX: WRM) since August 2015. Shane has previously held the role of Company Secretary for Metminco (ASX: MNC) for 2 years. He has been the Company Secretary of MRG since incorporation on 24/01/2011. Principal activities During the period, the principal activities of entities within the Group were exploration and development of heavy mineral sands, rare earths and uranium within Mozambique. There have been no significant changes in the nature of these activities during the period. Review of operations and financial results The operating result of the Group for the year ended was a loss of $846,894 (2022 loss $702,340). Refer detailed Review of Operations that precedes this report. Earnings per share (0.04) cents (2022 (0.04) cents). Further information on the detailed operations of the Group during the year is included in the Review of Operations Report. Significant changes in the state of affairs During the year, the Group carried out exploration and development on its Heavy Mineral Sands projects in Mozambique and applied for Rare Earth and Uranium tenements in Mozambique. MRG announced the results of a Scoping Study and Preliminary Economic Assessment by IHC Mining for the Corridor Central (11142C) and Corridor South (11137C) Projects, specifically the Koko Massava, Nhacutse and Poiombo deposits. Based on the positive outcome of the Scoping Study and Preliminary Economic Assessment, mining licence applications were lodged for the Corridor Central and Corridor South Projects. During the year, the Group raised $1,268,123 from placements and an entitlement offer. Dividends There were no dividends declared or paid during the financial period. Events arising since the end of the reporting period Since the end of the year the following significant events have occurred: MRG Metals Ltd Consolidated Financial Statements 30 June 2023 70 Memorandum of Understanding to Form Joint Venture on Mozambique Corridor Sands Projects On 26 July 2023, MRG Metals Limited entered a Memorandum of Understanding (MOU) with Tianjin Lanqi Materials Company Limited (“LANQI”) for a Joint Venture operation (“JV”) on its Mozambique Corridor Sands projects. Key aspects of the MOU are: - A period of 3 months Due Diligence commencing from today. During the period of Due Diligence, LANQI shall send their technical team to Mozambique for field inspection and sampling of the Corridor Projects. MRG shall send their representatives to assist LANQI to carry out this work. - During the period of Due Diligence, LANQI shall also draft a JV agreement and shall send it to MRG together with LANQI’s decision to proceed to JV, such that the JV is signed at or before completion of the Due Diligence period. - A commitment to purchase AUD$500,000 shares at 0.4c upon successful completion of Due Diligence and entering the JV. Key Terms of the JV are: - Both parties shall sign a JV Agreement upon or before completion of Due Diligence period that parties will set up a JV company in Mozambique owned 75 % by LANQI and 25 % by MRG, achieved upon first production. - LANQI shall invest USD 3 million dollars (and at the commencement of the JV place USD$3 million into the JV trust account) for the following stages: o To finish the JV company set up in Mozambique and company working capital. i) Working capital to cover JV company in-country costs estimated at $40k USD for minimum of 12 months. ii) MRG Management involvement in JV at $15k USD/month for minimum of 18 months. o To complete the mine exploration and feasibility report for the Initial Corridor Project. o To design the engineering and construction plan of the Initial Corridor Project. o To get the mining licence approval from the Government. - LANQI shall invest all funds necessary to develop the initial mining operation and all subsequent funds for mine expansion either on the Initial Corridor Project or subsequent Corridor Projects. - LANQI shall guarantee that the total output of the HMC in the Initial Corridor Project shall be not less than 100,000 tpa at 18 months from the date any mining commences on the Initial Corridor Project; the total output of the HMC in Initial Corridor Project shall be increased to 200,000 tpa at or before 3 years from the date any mining commences and to 400,000 tpa at or before 5 years from the date any mining commences. - The JV Agreement shall specify obligation of the parties to retain JV equity with the intention of not limiting MRG’s rights should the HMC production profile not deliver 100,000 tpa by 18 months, 200,000 tpa by 36 months, 400,000 tpa by 5 years and also should the JV not have implemented further expansion plans by 5 years from the date any mining commences in the Initial Corridor project. Key Terms of the Offtake Agreement are: LANQI shall be the Offtaker for all HMC products in the Initial Corridor Project. 4. 5. The offtake price fixing can be referred to the export prices of the same quality HMC which shall be processed by other companies in Mozambique and the JV shall coordinate independent review mechanism agreeable to both Parties. 6. The JV company shall give 5% sales commission for the offtake agreement. Definitions: - Corridor Projects means Mineral Sands projects in Mozambique including Corridor Central (11142C), Corridor South (11137C), Corridor North (10779L) and Linhuane (7423L). “Initial Project” means the first of the Corridor Projects chosen by the JV for commencement of production. - MRG Metals Ltd Consolidated Financial Statements 30 June 2023 Placement 71 On 7 August 2023, MRG Metals Limited completed a capital raising (announced 1 August 2023) comprising: • Placement of 200,000,000 fully paid ordinary shares at $0.0025, with 1 for 2 free attaching MRQO options (100,000,000 options), raised $500,000 Issuance of 10,000,000 MRQO options for payment of Lead Manager fees. • Proposed use of funds: • Progress Rare Earth Elements and Uranium Projects should these Exploration Licences be granted. • Working Capital. Likely developments Progress Corridor HMS projects to Production should Joint Venture be formed with Tianjin Lanqi Materials Company Limited. Explore on Mozambique HMS, Rare Earth Elements and Uranium Projects tenement Applications if granted. Look for opportunities to expand our projects. Pursue a sale of Norrliden. Business risk management The Company is committed to the effective management of risk to reduce uncertainty in the Company’s business outcomes and to protect and enhance shareholder value. There are various risks that could have a material impact on the achievement of the Company’s strategic objectives and future prospects. Key risks and mitigation activities associated with the Company's objectives are set out below: The Company is committed to the effective management of risk to reduce uncertainty in the Company’s business outcomes and to protect and enhance shareholder value. There are various risks that could have a material impact on the achievement of the Company’s strategic objectives and future prospects. Exploration risk The Company’s projects are at various stages of exploration, and potential investors should understand that mineral exploration is a high-risk undertaking. There can be no assurance that exploration of these projects, or any other tenements that may be acquired in the future, will result in the discovery of an economic mineral deposit. The future exploration activities of the Company may be affected by a range of factors including geological conditions, limitations on activities due to seasonal weather patterns, unanticipated operational and technical difficulties, industrial and environmental accidents, local title processes, changing government regulations and many other factors beyond the control of the Company. In addition, the tenements forming the projects of the Company may include various restrictions excluding, limiting or imposing conditions upon the ability of the Company to conduct exploration activities. While the Company will formulate its exploration plans to accommodate and work within such access restrictions, there is no guarantee that the Company will be able to satisfy such conditions on commercially viable terms, or at all. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 72 The Company uses a number of exploration techniques in order to reduce the level of exploration risks and continues to explore new and innovative technologies through its day to day operations. Regulatory risk The Company’s mining and exploration activities are dependent upon the maintenance (including renewal) of the tenements in which the Company has or acquires an interest. Maintenance of the Company’s tenements is dependent on, among other things, the Company’s ability to meet the licence conditions imposed by relevant authorities. Although the Company has no reason to think that the tenements in which it currently has an interest will not be renewed, there is no assurance that such renewals will be given as a matter of course and there is no assurance that new conditions will not be imposed by the relevant authority or whether the Company will be able to meet the conditions of renewal on commercially reasonable terms, if at all. The Company works with local government and mining departments to ensure it meets the required level of reporting requirements and to reduce any potential for breach of regulatory requirements Future funding risk The Company has no operating revenue and is unlikely to generate any operating revenue in the foreseeable future. Exploration and development costs and pursuit of its business plan will use funds from the Company's current cash reserves and the amounts raised under future Equity Offers. Any additional equity financing may be dilutive to Shareholders, may be undertaken at lower prices than the then market price (or Offer Price) or may involve restrictive covenants which limit the Company's operations and business strategy. Debt financing, if available, may involve restrictions on financing and operating activities. Although the Directors believe that additional capital can be obtained, no assurances can be made that appropriate capital or funding, if and when needed, will be available on terms favourable to the Company or at all. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its activities and this could have a material adverse effect on the Company's activities and could affect the Company's ability to continue as a going concern. The Company’s funding requirements are reviewed on a regular basis in order to mitigate future funding risk. Farm in and joint venture risk The Company is contemplating a joint venture on its Mozambique Corridor Sands projects. This joint venture arrangement would be subject to conditions and expenditure requirements to achieve certain ownership percentage ownership of the relevant projects. There is a risk that the requirements (including in respect of expenditure) under any farm-in arrangements or that, even if such requirements are met, a commercially viable resource will not be located on the project. In addition, any joint venture arrangement will be subject to risks typically associated with arrangements of that kind, including but not limited to that either party may seek to terminate or withdraw from the arrangement or fail to meet their obligations thereunder. There is also the potential for disputes in respect of the obligations of the parties to the joint venture. Environmental regulation The consolidated entity holds participating interests in a number of exploration tenements. The various authorities granting such tenements require the tenement holder to comply with the terms of the grant of the tenement and all directions given to it under those terms of the tenement. To the best of the Directors' knowledge, the Group has adequate systems in place to ensure compliance with the requirements of all environmental legislation described MRG Metals Ltd Consolidated Financial Statements 30 June 2023 73 above and are not aware of any breach of those requirements during the financial year and up to the date of the Directors' report. Directors’ meetings The number of meetings of directors held during the period and the number of meetings attended by each director were as follows: Name Board meetings Mr A Van Der Zwan Mr S Turner Mr C Gregory A 6 6 6 B 6 6 6 Where: A is the number of meetings the Director was entitled to attend B is the number of meetings the Director attended Movement in shares: Opening balance at 1 July 2022 Capital Raising - placement Issue of Ordinary Shares – corporate mandate Capital Raising - placement Capital Raising - placement Less costs associated with capital raisings Closing balance at 28 September 2023 Movements in options: Date 29/11/2022 02/12/2022 19/01/2023 07/08/2023 Issue price (cents) 0.4 0.4 0.4 0.25 - No of shares 1,747,058,628 210,000,000 13,860,000 15,000,000 200,000,000 - 2,185,918,628 $ 27,761,631 840,000 55,440 60,000 500,000 (78,426) 27,761,631 2023 Issue of options - placement Issue of options - corporate mandate Issue of options - corporate mandate Issue of options - placement Issue of options - corporate mandate Issue of options - placement Issue of options - corporate mandate Issue of options - corporate mandate Issue of options – rights issue Issue of options - placement Issue of options - placement Issue of options - corporate mandate Closing balance at 28 September 2023 Date 04/02/2021 04/02/2021 No. options 1 July 2022 162,000,000 9,042,000 Issued/ (Expired) (162,000,000) (9,042,000) No. options 30 June 2023 - - Ex. price (cents) 2.5 2.5 Expiry date 30/06/2023 30/06/2023 30/11/2021 15,000,000 (15,000,000) 20/01/2022 20/01/2022 100,000,000 19,194,375 (100,000,000) (19,194,375) - - - 29/11/2022 29/11/2022 02/12/2022 19/01/2023 19/01/2023 07/08/2023 07/08/2023 - - - - - - - 140,000,000 10,000,000 140,000,000 10,000,000 9,240,000 9,240,000 0.8 31/12/2025 312,682,557 10,000,001 100,000,000 10,000,000 312,682,557 10,000,001 100,000,000 10,000,000 0.8 0.8 0.8 0.8 31/12/2025 31/12/2025 31/12/2025 31/12/2025 305,236,375 286,686,183 591,922,558 2.5 2.5 2.5 0.8 0.8 30/06/2023 30/06/2023 30/06/2023 31/12/2025 31/12/2025 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 74 Remuneration Report (audited) The Directors of MRG Metals Ltd (‘the Group’) present the Remuneration Report prepared in accordance with the Corporations Act 2001 and the Corporations Regulations 2001. The remuneration report is set out under the following main headings: a. Principles used to determine the nature and amount of remuneration b. Details of remuneration c. Service agreements d. Share-based remuneration e. Bonuses included in remuneration f. Other information (a) Principles used to determine the nature and amount of remuneration The principles of the Group’s executive strategy and supporting incentive programs and frameworks are: • To align rewards to business outcomes that deliver value to shareholders; • To drive a high performance culture by setting challenging objectives and rewarding high performing individuals; and • To ensure remuneration is competitive in the relevant employment market place to support the attraction, motivation and retention of executive talent. MRG Metals Ltd has structured a remuneration framework that is market competitive and complementary to the reward strategy of the Group. The Board, in accordance with its charter as approved by the Board, is responsible for determining and reviewing compensation arrangements for the directors and the executive team. The remuneration structure that has been adopted by the Group consists of the following components: • Fixed remuneration being annual salary; and • Superannuation to meet statutory obligations. The Board assesses the appropriateness of the nature and amount of remuneration on a periodic basis by reference to recent employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team. The payment of bonuses, share options and other incentive payments are reviewed by the Board annually as part of the review of executive. All bonuses, options and incentives must be linked to pre-determined performance criteria. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 75 (b) Details of remuneration Details of the nature and amount of each element of the remuneration of each key management personnel (‘KMP’) of MRG Metals Ltd are shown in the table below. Director and other Key Management Personnel Remuneration Short term employee benefits Post- employment benefits Long-term benefits Termination benefits Share-based payments Name Cash salary and fees ($) Cash bonus ($) Superannuation ($) Long-term bonus ($) Termination payments ($) Performance Rights ($) Total ($) % of remuneration that is performance based Non-executive directors Mr A Van Der Zwan Mr S Turner Mr C Gregory 2023 Total Non-executive directors Mr A Van Der Zwan Mr S Turner Mr C Gregory 2022 Total 100,000 100,000 100,000 300,000 100,000 100,000 100,000 300,000 - - - - - - - - 10,500 10,500 10,500 31,500 10,000 10,000 10,000 30,000 - - - - - - - - - - - - - - - - - - - 110,500 110,500 110,500 - 331,500 4,796 4,796 4,796 114,796 114,796 114,796 14,388 344,388 0% 0% 0% 0% 4% 4% 4% 4% MRG Metals Ltd Consolidated Financial Statements 30 June 2023 76 (c) Service agreements Remuneration and other terms of employment for Directors and other Key Management Personnel are formalised in a service agreement. The major provisions of the agreements relating to remuneration are set out below: Base salary Name Mr A Van Der Zwan 50,000 Mr A Van Der Zwan - Consultant 50,000 50,000 Mr C Gregory 50,000 Mr C Gregory - Consultant 50,000 Mr S Turner - Director 50,000 Mr S Turner – Consultant Term of agreement Rotation per Corporations Act 2001 Nil Nil No fixed term Rotation per Corporations Act 2001 Nil No fixed term Nil Rotation per Corporations Act 2001 Nil Nil No fixed term Notice period Remuneration of Non-Executive Directors is not to exceed $150,000. Base fees for the 2023 financial year were $50,000 per annum. (d) Share based remuneration During the year there was no share based remuneration. (e) Bonuses included in remuneration No short-term incentive cash bonuses were awarded as remuneration during the financial year. (f) Other information Loans to key management personnel (KMP) – there were no loans from the Group to KMP’s during the financial year (2022: nil). The Group used the accounting and taxation services of RSM Australia, an entity associated with Mr. Turner and Mr. Turner. The amounts billed were based on normal market rates and amounted to $38,000 to Mr. Turner and $1,710 to RSM (2022 $38,000 to Mr. Turner). Shares held by key management personnel The number of ordinary shares in the Company held by each of the Group’s key management personnel, including their related parties, is set out below: 2023 Key Management Person Van Der Zwan Turner Gregory 2022 Key Management Person Van Der Zwan Turner Gregory Balance at start of year 37,906,679 24,482,509 63,563,986 125,953,174 Balance at start of year 37,906,679 24,482,509 63,563,986 125,953,174 Received on exercise - - - - Other changes - - - - Additions 6,250,000 2,500,000 6,250,000 15,000,000 Received on exercise - - - - Other changes - - - - Additions - - - - Held at the end of the reporting period 44,156,679 26,982,509 69,813,986 140,953,174 Held at the end of the reporting period 37,906,679 24,482,509 63,563,986 125,953,174 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 77 Options held by key management personnel The number of options to acquire shares in the Company held by each of the key management personnel of the Group; including their related parties are set out below. Balance at start of year - - - - Deleted on Additions 4,166,667 1,666,667 4,166,667 10,000,001 exercise Ceased/Lapsed - - - - - - - - Held at the end of the reporting period 4,166,667 1,666,667 4,166,667 10,000,001 2023 Key Management Person Van Der Zwan Turner Gregory 2022 Nil The results of the Group for the five years to 30 June 2023 are summarised below, together with the factors that are considered to affect total shareholders return: 2023 2022 2021 2020 2019 Net profit/(loss) attributable to equity holders of the parent Closing share price at period end Closing cash balance $(846,894) $0.002 $575,046 $(702,340) $0.0065 $1,017,533 $(665,660) $0.008 $1,610,733 $(1,897,244) $0.010 $721,248 $(4,089,395) $0.005 $423,937 End of audited remuneration report. Environmental legislation The Group’s projects are subject to environmental regulation under laws in Sweden and Mozambique; specifically the Group is required to comply with terms of the grant of the tenement and all directions given to it under those terms of the tenement which it holds. There have been no known breaches of the tenement conditions, and no such breaches have been notified by any government agency during the period ended 30 June 2023. Indemnities given and insurance premiums paid to auditors and officers During the year, MRG Metals Ltd negotiated a premium to insure officers of the Group. The officers of the Group covered by the insurance policy include all directors. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else to cause detriment to the Group. Details of the amount of the premium paid in respect of the insurance policies are not disclosed as such disclosure is prohibited under the terms of the contract. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 78 The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnity any current or former officer or auditor of the Group against a liability incurred as such by an officer or auditor. Non-audit services During the period, William Buck Audit (Vic) Pty Ltd, the Group’s auditors, performed no other services in addition to their statutory audit duties. Details of the amounts paid to the auditors of the Group, and its related practices for audit and non-audit services provided during the year are set out in note 15 to the Financial Statements. A copy of the auditor’s independence declaration as required under s307C of the Corporations Act 2001 is included on page 79 of this financial report and forms part of this Directors’ Report. Proceedings of behalf of the Group No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking responsibility on behalf of the Group for all or part of those proceedings. Signed in accordance with a resolution of the directors. Andrew Van Der Zwan Chairman 28 September 2023 AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF MRG METALS LIMITED I declare that, to the best of my knowledge and belief, during the year ended 30 June 2023 there have been: — no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and — no contraventions of any applicable code of professional conduct in relation to the audit. William Buck Audit (Vic) Pty Ltd ABN 59 116 151 136 J. C. Luckins Director Melbourne, 28 September 2023 Level 20, 181 William Street, Melbourne VIC 3000 +61 3 9824 8555 vic.info@williambuck.com williambuck.com William Buck is an association of firms, each trading under the name of William Buck across Australia and New Zealand with affiliated offices worldwide. Liability limited by a scheme approved under Professional Standards Legislation. 79 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 80 Corporate Governance Statement MRG Metals Ltd has adopted comprehensive systems of controls and accountability as the basis for the administration of corporate governance. To the extent that they are applicable, MRG has adopted the Corporate Governance Principles and Recommendations, 4th Edition as published by ASX Corporate Governance Council in February 2019 and became effective for financial years commencing with the financial year ended 30 June 2022. The Corporate Governance Statement is current at 30 June 2023 and has been approved by the Board of Directors. ASX Corporate Governance Council Recommendation Principle 1: Lay solid foundations for management and oversight Recommendation 1.1: A listed entity should have and disclose a board charter setting out: MRG policy The Company's Corporate Governance framework includes a Board Charter, which details the specific responsibilities of the Board and identifies those areas of authority delegated to senior executives. (a) The respective roles and responsibilities of its board and management; and (b) Those matters expressly reserved to the board and those delegated to management. Recommendation 1.2: A listed entity should: (a) Undertake appropriate checks before appointing a director or senior executive or putting someone forward for election as a director; and (b) Provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. Recommendation 1.3: A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. Recommendation 1.4: The company secretary of a listed entity should be accountable directly to the Board, through the chair, on all matters to do with the proper functioning of the Board. Recommendation 1.5: A listed entity should: (a) Have and disclose a diversity policy; (b) Through its board or a committee of the board set measurable objectives for achieving gender diversity in the composition of its board, senior executives and workforce generally; and (c) Disclose in relation to each reporting period: (1) The measurable objectives set for that period to achieve gender diversity; (2) The entity’s progress towards achieving those objectives; and (3) Either: The Company's Board Charter provides that appropriate checks should be undertaken before the appointment of a director. If checks reveal any information that is relevant , then the Company will disclose that information to Shareholders. The Company's Board Charter provides that all directors and senior executives, at the time of their appointment, should execute a written agreement that sets out the key terms of their appointment. The Company's Board Charter sets out the role of the Company Secretary and ensures that the Company Secretary is accountable to the Board, through the Chairman. The Company's Diversity Policy requires the Board to set out measurable objectives for achieving gender diversity. The Diversity Policy requires the Board to annually assess its diversity objectives and report on the Company's progress in achieving those objectives. At the end of each reporting period, the Diversity Policy requires the Company to report on its progress and set out the respective proportion of men and women across the whole of the Company (including their representation in key management positions). The Company is not a “relevant employer” under the Workplace Gender Equality Act as it does not employ 100 or more employees in Australia. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 ASX Corporate Governance Council Recommendation MRG policy 81 (A) The respective proportions of men and women on the board, in senior executive positions and across the whole workforce (including how the entity has defined “senior executive” for these purposes); or (B) If the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act. Recommendation 1.6: A listed entity should: (a) Have and disclose a process for periodically evaluating the performance of the Board, its committees and individual Directors; and (b) Disclose for each reporting period whether a performance evaluation has been undertaken in accordance with that process during or in respect of that period. Recommendation 1.7: A listed entity should: (a) Have and disclose a process for evaluating the performance of its senior executives at least once every reporting period; and (b) Disclose for each reporting period whether a performance evaluation has been undertaken in accordance with that process during or in respect of that period. The Company Secretary plays an integral role in monitoring the conduct and activities of Board, ensuring the Board has an appropriate mix of skills and experience and reviewing individual director's performance. The Chairman is responsible for reviewing the performance of the Company Secretary. Currently, there are no senior executives. However, if there were, the Chairman would be responsible for reviewing the individual performance of senior executives. Principle 2: Structure the board to be effective and add value Recommendation 2.1: A listed entity should: (a) Have a nomination committee which: (1) Has at least three members, a majority of whom are independent directors; and (2) Is chaired by an independent director, and disclose: (3) The charter of the committee; and (4) The members of the committee; and (5) As at the end of each reporting period, the number of times the committee met throughout the period and the individual The Company does not currently have a nomination committee. The Board does not consider it necessary given the size of the Company's current operations. Board appointments will be decided by the Board as a whole, taking into consideration the needs of the Company at the relevant time. Where the Company considers there is a need to review the skills and competencies of the existing Directors and to supplement that experience, the Company would consider engaging appropriately qualified third parties to assist with the review. The Company's Board Charter requires the Board to develop succession plans for the future management of the Company. 82 MRG policy The Company's Board Charter sets out the directors' obligations to prepare and disclose a Board skills matrix. The skills, experience and expertise relevant to the position of director held by each director are disclosed in the Directors’ Report and on the Company’s website. The Company's Board Charter sets out the directors' obligations in relation to conflicts of interests and the disclosure requirements of the Board. Details of each director are disclosed in the Directors’ Report and on the Company’s website. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 ASX Corporate Governance Council Recommendation attendances of the members at those meetings; or (b) If it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. Recommendation 2.2: A listed entity should have and disclose a Board skills matrix setting out the mix of skills the Board currently has or is looking to achieve in its membership. Recommendation 2.3: A listed entity should disclose: (a) The names of the directors considered by the board to be independent directors: (b) If a director has an interest, position or relationship of the type described in Box 2.3 of Corporate Governance Principles and Recommendations fourth edition but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position or relationship in question and an explanation of why the board is of that opinion; and (c) The length of service of each director. Recommendation 2.4: A majority of the Board of a listed entity should be independent Directors. Recommendation 2.5: The Chair of the Board of a listed entity should be an independent Director and, in particular should not be the same person as the Chief Executive Officer of the entity. Recommendation 2.6: A listed entity should have a program for inducting new Directors and for periodically reviewing whether there is a need for existing directors to undertake professional development to maintain the skills and knowledge needed to perform their role as directors effectively. All of the Company's current directors, being Chris Gregory, Andrew Van Der Zwan and Shane Turner, are independent directors. Andrew Van Der Zwan, an independent director, is the Chairman of the Board. The Company's Board Charter requires the Board to implement an induction procedure to assist newly appointed directors to gain an understanding of the Company's policies and procedures. In addition, the Board Charter requires the Board to develop continuing education opportunities in order to provide the directors with the ability to enhance their skills. Principle 3: Instil a culture of acting lawfully, ethically and responsibly Recommendation 3.1: A listed entity should articulate and disclose its values. The Board has established a Code of Conduct as to the practices necessary to maintain confidence in the MRG Metals Ltd Consolidated Financial Statements 30 June 2023 ASX Corporate Governance Council Recommendation MRG policy 83 Company's integrity, practices necessary to take into account the Company's legal obligations and the reasonable expectations of shareholders and the responsibility and accountability of individuals for reporting and investigating reports of unethical practices. The Code of Conduct is available on the Company's website. The Company’s Whistleblower Policy is available on the Company's website. The board is informed of any material incidents that occur as a result of this policy. Recommendation 3.2: A listed entity should: (a) Have and disclose a code of conduct for its directors, senior executives and employees; and (b) Ensure that the board or a committee of the board is informed of any material breaches of that code. Recommendation 3.3: A listed entity should: (a) Have and disclose a whistleblower policy; and (b) Ensure that the board or a committee of the board is informed of any material incidents under that policy. Recommendation 3.4: A listed entity should: (a) Have and disclose an anti-bribery and corruption policy; and (b) Ensure that the board or a committee The Company’s Anti-Bribery & Corruption Policy is available on the Company's website. The board is informed of any material incidents that occur as a result of this policy. of the board is informed of any material breaches of that policy. Principle 4: Safeguard the integrity of corporate reports Recommendation 4.1: The Board of a listed entity should: The Company does not currently have an audit committee. The Board does not consider it necessary given the size of the Company's current operations. The functions of this committee will be carried out by the whole Board. The Company Secretary has significant experience in financial and accounting matters and will be primarily responsible for monitoring and preparing the financial reports. External resources will be commissioned where necessary. (a) Have an Audit Committee which: (1) Has at least 3 members, all of whom are non-executive Directors and a majority of whom are independent Directors; (2) Is chaired by an independent Director who is not the chair of the Board; and And disclose: (3) The charter of the committee; (4) The relevant qualifications and experience of the members of the committee; and (5) In relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) If it does not have an audit committee, disclose that fact and the processed it MRG Metals Ltd Consolidated Financial Statements 30 June 2023 ASX Corporate Governance Council Recommendation MRG policy employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. 84 the the that comply with Recommendation 4.2: The Board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been financial properly maintained and statements appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and is operating internal control which system effectively. Recommendation 4.3: A listed entity should disclose its process to verify the integrity of any periodic corporate report it releases to the market that is not audited or reviewed by an external auditor. Principle 5: Make timely and balanced disclosure Recommendation 5.1: A listed entity should have and disclose a written policy for complying with its continuous disclosure obligations under the ASX listing rule 3.1. Recommendation 5.2: A listed entity should ensure that its board receives copies of all material market announcements promptly after they have been made. Recommendation 5.3: A listed entity that gives a new and substantive investor or analyst presentation should release a copy of the presentation materials on the ASX Market Announcements Platform ahead of the presentation. Principle 6: Respect the rights of securityholders Recommendation 6.1: A listed entity should provide information about itself and its governance to investors via its website. The Company's process and practices comply with the Recommendation. In particular, the CFO of the Company provides a declaration in relation to the Company's financial statements that, in his opinion, the financial records of the Company have been maintained and that the financial statements comply with appropriate accounting standards and give a true the financial position and and fair view of performance of the Company and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. Half Year and Annual accounts are reviewed or audited by an external auditor. Quarterly activity reports are prepared by the Company’s Geologist and are reviewed and approved by the Board before release to the market. Quarterly cash flow reports are prepared by the Company’s CFO and certified that they have been prepared in accordance with appropriate accounting standards and are reviewed and approved by the Board before release to the market. The Company has established a Continuous Disclosure Policy which applies to all directors and senior management. A copy of the Continuous Disclosure Policy is available on the Company's website. This recommendation is satisfied. All members of the board receive the ASX Announcement direct from ASX once lodged. This recommendation is satisfied. The Company's Continuous Disclosure Policy requires the Company to include all of its corporate governance policies on its websites. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 ASX Corporate Governance Council Recommendation Recommendation 6.2 A listed entity should have an investor relations program to facilitate effective two-way communication with investors. Recommendation 6.3: A listed entity should disclose how it facilitates and encourages participation at meetings of security holders. 85 MRG policy the Board should endeavour The Company's Board Charter sets out the manner to in which communicate with its shareholders and the manner in which shareholders can make enquiries to the Company. This includes emails to Shareholders on its Mailing List and via Social Media. The Company's Board Charter sets out the Company's goal to encourage participation at general meetings. All Shareholders are notified of meetings. Recommendation 6.4: A listed entity should ensure that all substantive resolutions at a meeting of security holders are decided by a poll rather than a show of hands. This recommendation is satisfied. All resolutions at a meeting of MRG Metals’ security holders are decided by a poll. This recommendation is satisfied. Given the size of the Company's current operations, the Board has formed the view that a separate risk committee is not necessary. The Board itself monitors all areas of operational and financial risk risk and considers strategies management arrangements on an ongoing basis. If considered necessary, external input will be sought to assess and counteract identified risks. for appropriate Recommendation 6.5: A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security register electronically. Principle 7: Recognise and manage risk Recommendation 7.1: The Board of a listed entity should: (a) Have a committee or committees to oversee risk, each of which: (1) Has at least 3 members, a majority of whom are independent Directors; (2) Is chaired by an independent Director, And disclose: (3) The charter of the committee; (4) The members of the committee; and (5) At the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) If it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processed it employs for overseeing the entity’s risk management framework. Recommendation 7.2: The Board or a committee of the Board should: (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound and that the entity is operating with The Board requires that Andrew Van Der Zwan, as Chairman undertakes a review of the Company's risk management framework annually to ensure that the framework continues to be sound, and disclose, in relation to each reporting period, whether such a review has taken place. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 ASX Corporate Governance Council Recommendation MRG policy 86 due regard to the risk appetite set by the Board; and (b) Disclose, in relation to each reporting period, whether such a review has taken place. Recommendation 7.3: A listed entity should disclose: (a) if it has an internal audit function, how the function is structured and what role it performs; or (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its governance, risk management and internal control processes. Given the size of the Company's current operations, the Board has formed the view that the appointment of an internal auditor is not necessary. The Board will oversee the risk management and internal control process. If considered necessary, external input will be sought to assess and review the effectiveness of the Company's risk management and internal control process. Recommendation 7.4: A listed entity should disclose whether it has any material exposure to environmental or social risks and, if it does, how it manages or intends to manage those risks. The Company discloses various material risks to company strategy, and how it manages those risks within the Directors’ Report section of its Annual Report. The Company does not currently have a remuneration committee. The Board does not consider it necessary given the size of the Company's current operations. The Board is responsible for making recommendations regarding director and management The Company's Board Charter sets out the principles that should be considered by the Board in making recommendations to management in remuneration packages. remuneration packages. relation Principle 8: Remunerate fairly and responsibly Recommendation 8.1: The Board of a listed entity should: (a) Have a remuneration committee which: (1) Has at least 3 members, a majority of whom are independent Directors; (2) Is chaired by an independent Director, And disclose: (3) The charter of the committee; (4) The members of the committee; and (5) At the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) If it does not have a remuneration committee, disclose that fact and the processed it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive. 87 MRG policy the scope of the performance of The Board is aware of the need to ensure remuneration remains competitive and consistent with competitor companies and that remuneration reflects the performance of the Company over time. The directors performing an executive role are their remunerated based on responsibilities and the Company. Non-executive directors are paid fees within the total as determined by shareholders. The Company provides the requisite disclosure regarding executive remuneration policies in its annual report. The Company offers at its discretion to Directors, equity-based remuneration in the form of options to purchase shares and performance rights. This incentive assists in aligning their interests with those of shareholders. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 ASX Corporate Governance Council Recommendation Recommendation 8.2: A listed entity should separately disclose its policies and practices regarding the remuneration of Non-Executive Directors and the remuneration of Executive Directors and other senior executives. Recommendation 8.3: A listed entity which has an equity-based remuneration scheme should: (a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme, and (b) Disclose that policy or a summary of it. The Board actively monitors the Company's governance framework, related practices and overall culture. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 Statement of Financial Position As of 30 June 2023 Assets Current Cash and cash equivalents Other receivables Total current assets Non-current Deposits Plant & Equipment Exploration & Evaluation Total non-current assets Total assets Liabilities Current Trade and other payables Total current liabilities Total liabilities Net assets Equity Share capital Reserve Retained earnings Total equity 88 Notes Consolidated Consolidated 2022 $ 2023 $ 8 7 8 11 12 10 575,046 362,349 937,395 1,017,533 321,471 1,339,004 23,096 51,831 5,794,788 5,869,715 6,807,110 22,980 72,026 5,176,689 5,271,695 6,610,699 59,524 59,524 59,524 6,747,586 205,916 205,916 205,916 6,404,783 9 9 28,951,328 - (22,203,742) 27,761,631 160,168 (21,517,016) 6,747,586 6,404,783 This statement should be read in conjunction with the notes to the financial statements. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 Statement of Profit or Loss and other Comprehensive Income for the year ended 30 June 2023 89 Interest income Employee benefits expense Consultants Administration expenses Impairment of exploration Foreign Exchange Gain/(Loss) (Loss) before tax Tax expense (Loss) after tax Other comprehensive income, net of tax Total comprehensive (losses) Earnings per share Basic earnings per share Diluted earnings per share Notes Consolidated 2023 $ Consolidated 2022 $ 5 12 14 16 6,268 (231,500) (5,552) (515,496) (112,948) 12,334 (846,894) - (846,894) - (846,894) 727 (244,388) (5,984) (461,970) - 9,275 (702,340) - (702,340) - (702,340) Cents Cents (0.04) (0.04) (0.04) (0.04) This statement should be read in conjunction with the notes to the financial statements. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 90 Statement of Changes in Equity for the year ended 30 June 2023 Issued Capital $ Reserves $ Retained earnings $ Total equity $ Balance at 1 July 2022 27,761,631 160,168 (21,517,016) 6,404,783 Loss after income tax expense for the period Total comprehensive loss for the period - - - - (846,894) (846,894) (846,894) (846,894 Transactions with owners in their capacity as owners: Issue of share capital Transaction costs Options lapsed 955,440 (78,426) - 312,683 - (160,168) - - 160,168 1,268,123 (78,426) - Balance at 30 June 2023 28,638,645 312,683 (22,203,742) 6,747,586 Balance at 1 July 2021 26,355,247 310,978 (21,103,876) 5,562,349 Loss after income tax expense for the period Total comprehensive loss for the period - - - - (702,340) (702,340)) (702,340) (702,340) Transactions with owners in their capacity as owners: Issue of share capital Transaction costs Vesting of Share based payments Lapsed Rights/Options 1,651,110 (244,726) - - - - 138,390 (289,200) - - - 289,200 1,651,110 (244,726) 138,390 - Balance at 30 June 2022 27,761,631 160,168 (21,517,016) 6,404,783 This statement should be read in conjunction with the notes to the financial statements. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 Statement of Cash Flows for the year ended 30 June 2023 Operating activities Interest received Payments to suppliers and employees Net cash used in operating activities Investing activities Payment for term deposits Payment for exploration & evaluation Acquisition of plant & equipment Net cash used in investing activities Financing activities Proceeds from issue of capital Payment of transaction costs Net cash from financing activities 91 Notes Consolidated Consolidated 2022 $ 2023 $ 6,268 (939,818) (933,550) 800 (669,287) (668,487) 17 (116) (688,168) (5,310) (693,594) (22,980) (1,308,736) (2,623) (1,334,339) 1,212,683 (28,026) 1,184,657 (442,487) 1,017,533 - 575,046 1,651,110 (244,726) 1,406,384 (596,442) 1,610,733 3,242 1,017,533 Net change in cash and cash equivalents Cash and cash equivalents, beginning of year Effect of movements in exchange rates Cash and cash equivalents, end of year 8 This statement should be read in conjunction with the notes to the financial statements. 92 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 Notes to the consolidated financial statements Nature of operations 1 The activities of MRG Metals Ltd and its controlled entities, MRG Metals (Australia) Pty Ltd, MRG Metals (Exploration) Pty Ltd, Sofala Resources Pty Ltd, Sofala Mining & Exploration Lda, Sofala Mining & Exploration I Lda, Sofala Mining & Exploration II Lda, Sofala Mining & Exploration III Lda, Sofala Mining & Exploration IV Lda, Sofala Mining & Exploration V Lda, Sofala Mining & Exploration VI Lda, Sofala Mining & Exploration VII Lda, Sofala Mining & Exploration VIII Lda, Sofala Mining & Exploration IX Lda and Sofala Mining & Exploration X Lda are exploration and development of heavy mineral sands, rare earths and uranium in Mozambique. General information and statement of compliance 2 The consolidated general purpose financial statements of the Group have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. Compliance with Australian Accounting Standards results in full compliance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). MRG Metals Ltd is the Group's ultimate parent company. MRG Metals Ltd is a public company incorporated and domiciled in Australia. The consolidated financial statements for the year ended 30 June 2023 were approved and authorised for issue by the board of directors on 28 September 2023 (see note 25). New Accounting Standards and Interpretations adopted 3 The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The adoption of these Accounting Standards did not have any significant impact on the financial performance or position of the Group. Summary of accounting policies Overall considerations 4 4.1 The significant accounting policies that have been used in the preparation of these consolidated financial statements are summarised below. The consolidated financial statements have been prepared using the measurement bases specified by Australian Accounting Standards for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below. The financial statements are presented in Australian dollars, which is the Group’s presentation currency. 4.2 Basis of measurement Going Concern The financial report has been prepared on the going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. 93 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 The Group recorded a loss after tax of $846,894 and net cash outflows from operating and investing activities were $1,627,144 for the year ended 30 June 2023. The Group’s financial position as at 30 June 2023 was as follows: • The Group had available cash reserves of $575,046; • The Group’s current assets of $937,395 exceed current liabilities of $59,524 by $877,871; • The Group’s main activity is exploration and as such it does not presently have a source of operating income, rather it is reliant on equity raisings or funds from other external sources to fund its activities. Current forecasts indicate that cash on hand as at 30 June 2023 will not be sufficient to fully fund the planned exploration and operational activities during the next twelve months. The Group raised $500,000 via a Placement subsequent to 30 June 2023 (refer Note 23). The Group’s position as at 31 August 2023 was as follows: • The Group had available cash reserves of $792,390; • The Group continued to have a positive working capital position; and • There have been no material changes to the Group’s liabilities or non-cancellable commitments since 30 June 2023. These factors indicate a material uncertainty exists that may cast significant doubt on the entity’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business. As a result, the Group may be required to relinquish title to certain tenements, significantly curtail further expenditures and may have to realise its assets and extinguish its liabilities other than in the ordinary course of business and at amounts different from those stated in the financial report. The Directors are confident that the Group will be able to secure sufficient funds or reduce or defer expenditure to ensure that the Group can meet essential operational and expenditure commitments for at least the next twelve months. Accordingly, the financial statements for the year ended 30 June 2023 have been prepared on a going concern basis as, in the opinion of the Directors, the Group will be in a position to continue to meet its essential operating costs and pay its debts as and when they fall due for at least twelve months from the date of this report. 4.3 Basis of consolidation The Group financial statements consolidate those of the parent company and its subsidiary undertakings drawn up to 30 June 2023. The parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 30 June. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. Segment reporting 4.4 Operating segments are presented using the ‘management approach’, where information is presented on the same basis as the internal reports provided to chief operating decision makers, being the Board of 94 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 Directors. The Board of Directors are responsible for the allocation of resource to operating segments and assessing their performance. 4.5 Interest income is recognised on an accrual basis using the effective interest method. Revenue Operating expenses 4.6 Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin. Exploration and evaluation 4.7 Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit or loss in the year in which the decision to abandon the area is made. A regular review for impairment is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Income taxes 4.8 Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity. Current income tax assets and/or liabilities comprise those obligations to, or claims from, the Australian Taxation Office (ATO) and other fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with investments in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future taxable income. Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax assets and liabilities from the same taxation authority. Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except where they relate to items that are recognised in other comprehensive income (such 95 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 as the revaluation of land) or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively. Cash and cash equivalents 4.9 Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. Other Receivables 4.10 Other receivables are recognised at amortised cost, less any impairment. Trade Payables 4.11 These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial period and which are unpaid. Due to their short term nature they are measured at amortised cost and not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. Earnings per share 4.12 Basic earnings per share is calculated by dividing the profit attributable to the owners of MRG Metals Ltd, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial period, adjusted for bonus elements in ordinary shares issued during the financial period. Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. Equity 4.13 Share capital represents the nominal value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from share capital, net of any related income tax benefits. Retained earnings include all current and prior period retained profits. 4.14 The Group provides post employment benefits through various accumulation funds. Post employment benefits An accumulation fund is a superannuation fund under which the Group pays fixed contributions into an independent entity. The Group has no legal or constructive obligations to pay further contributions after its payment of the fixed contribution. Contributions to the funds are recognised as an expense in the period that relevant employee services are received. Provisions, contingent liabilities and contingent assets 4.15 Provisions are recognised when present obligations as a result of a past event will probably lead to an outflow of economic resources from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. Provisions are not recognised for future operating losses. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material. All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. 96 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 Possible inflows of economic benefits to the Group that do not yet meet the recognition criteria of an asset are considered contingent assets. Goods and Services Tax (GST) 4.16 Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST components of investing and financing activities, which are disclosed as operating cash flows. 4.17 Significant management judgement in applying accounting policies The following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the financial statements. Deferred tax assets/Tax losses The assessment of the probability of future taxable income in which deferred tax assets can be utilised is based on the Group's latest approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in the numerous jurisdictions in which the Group operates are also carefully taken into consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilised without a time limit, that deferred tax asset is usually recognised in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and circumstances. The Group has not recognised a deferred tax asset with regard to unused tax losses and other temporary differences, as it has not been determined whether the Company will generate sufficient taxable income against which the unused tax losses and other temporary differences can be utilised in the foreseeable future. Estimation uncertainty When preparing the financial statements management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results. Information about significant judgements, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Share based payments Share based payments involve assumptions made by management regarding the date of recognition and application of market price. Refer Note 4.22. Exploration and evaluation assets At each reporting date, the directors review the carrying amount of each area of interest, with reference to the indicators of impairment outlined in AASB 6 Exploration for and Evaluation of Mineral Resources. One or more of the following facts and circumstances indicate that an entity should test exploration and evaluation assets for impairment (the list is not exhaustive): MRG Metals Ltd Consolidated Financial Statements 30 June 2023 97 (a) (b) (c) (d) the period for which the entity has a right to explore in the specific area has expired during the period or will expire in the near future and is not expected to be renewed. substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned. exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area. sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale. 4.18 Other intangible assets Recognition of other intangible assets When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds and the carrying amount of the asset, and is recognised in profit or loss within other income or other expenses. Property, plant & equipment Recognition and measurement 4.19 (i) Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Any gains and losses on disposal of an item of property, plant and equipment are recognised in profit or loss. (ii) Depreciation Items of property, plant and equipment are depreciated from the date that they are installed and are ready for use. Depreciation is recognised in profit or loss or capitalised in exploration and evaluation on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives for the current and comparative periods are as follows: • • Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. plant and equipment 2-20 years 4-20 years motor vehicles 4.20 Asset held for sale When the Group intends to sell a non-current asset or a group of assets (a disposal group), and if sale within 12 months is highly probable, the asset or disposal group is classified as ‘held for sale’ and presented separately in the statement of financial position. Assets classified as ‘held for sale’ are measured at the lower of their carrying amounts immediately prior to their classification as held for sale and their fair value less costs to sell. Once classified as ‘held for sale’, the assets are not subject to depreciation or amortization. Any profit or loss arising from the sale or re-measurement of discontinued operations is presented as part of a single line item, profit or loss from discontinued operations. If an asset held for sale has not been sold within 12 months and a sale is not certain, then an impairment is charged against that asset. 4.21 Share based payments Share-based remuneration is recognised as an expense in profit or loss, with a corresponding credit to share option reserve or capitalised as a cost of raising capital.. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 98 In addition equity settled share based payment transactions, the company shall measure the goods or services rendered and the corresponding increase in equity, directly at fair value of the goods or services received, unless that fair value cannot be estimated reliably. The Company issued shares and options to a Manager in consideration for corporate advisory services, calculated on the same basis as the Placement in November 2022 (13,860,000 shares @ $0.004 and 9,240,000 MRQO options). 4.22 Foreign currency translation The financial statements are presented in Australian dollars, which is Group's functional and presentation currency. The Group’s exploration assets are located in Mozambique. Foreign currency transactions Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Foreign operations The assets and liabilities of foreign operations are translated into Australia dollars using the exchange rates at the reporting date. The expenses of foreign operations are translated into Australian dollars using the average exchange rates. 5 Employee benefit expense Employee benefit expense incurred Employee benefit expense capitalised in exploration assets Consolidated 2023 $ 331,500 (100,000) 231,500 Consolidated 2022 $ 344,388 (100,000) 244,388 Segment reporting 6 The Group is organised into one operating segment, which is the exploration and development of heavy mineral sands within Mozambique. This operating segment is based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers) in assessing performance and in determining the allocation of resources. Non current assets excluding financial instruments are located in Mozambique. 7 Other receivables GST receivables Interest Receivable Mozambique VAT receivable Other receivables The receivables noted above are not impaired nor past due. Consolidated 2023 $ 12,316 521 349,512 362,349 Consolidated 2022 $ 31,715 97 289,659 321,471 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 Cash and cash equivalents 8 Cash and cash equivalents include the following components: Cash at bank and in hand: - Australian dollars - United States dollars - Mozambique meticals Cash and cash equivalents 99 Consolidated 2023 $ 574,841 18 187 575,046 Consolidated 2022 $ 1,003,355 13,786 392 1,017,533 Short term deposit (Australian dollars) 23,096 22,980 The effective interest rate on the short-term bank deposit is 2.7% (2022: 0.2%); this deposit has an average maturity of 365 days. The $23,096 is restricted cash as it is security for Company credit cards. Equity Share capital & reserves 9 9.1 The share capital of MRG Metals Ltd consists of fully paid ordinary shares, the shares do not have a par value. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at the shareholders' meeting of MRG Metals Ltd. Details SHARES Total at 1 July 2022 Additions during the year Costs of raising Total share capital at 30 June 2023 OPTIONS RESERVE Total at 1 July 2022 Additions during the year Lapsed during the year Total issued options at 30 June 2023 SHARE BASED PAYMENTS RESERVE Total at 1 July 2022 Lapsed during year Total reserve at 30 June 2023 SHARE CAPITAL & RESERVES Consolidated 2023 $ 27,761,631 955,440 (78,426) 28,638,645 Quantity 1,747,058,628 238,860,000 - 1,985,918,628 305,236,375 481,922,558 (305,236,375) 481,922,558 - 312,683 (857,402) 312,683 160,168 (160,168) - 28,951,328 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 100 Details SHARES Total at 1 July 2021 Additions during the year Costs of raising Total share capital at 30 June 2022 OPTIONS RESERVE Total at 1 July 2021 Additions during the year Total issued options at 30 June 2022 SHARE BASED PAYMENTS RESERVE Total at 1 July 2021 Vesting expense Lapsed Rights/Options Total reserve at 30 June 2022 PERFORMANCE RIGHTS Total at 1 July 2021 Forfeited Total rights at 30 June 2022 Consolidated 2022 $ 26,355,247 1,651,110 (244,726) 27,761,631 - - - 310,978 138,390 (289,200) 160,168 - - Quantity 1,540,669,878 206,388,750 - 1,747,058,628 171,042,000 134,194,375 305,236,375 332,000,000 (332,000,000) - SHARE CAPITAL & RESERVES 27,921,799 (i) Movements in issued capital: Opening balance at 1 July 2021 Capital Raising - placement Issue of Ordinary Shares – corporate mandate Less costs associated with capital raisings Closing balance at 30 June 2022 Opening balance at 1 July 2022 Capital Raising - placement Issue of Ordinary Shares – corporate mandate Capital Raising - placement Less costs associated with capital raisings Closing balance at 30 June 2023 Date 20/01/2022 20/01/2022 Date 29/11/2022 02/12/2022 19/01/2023 Issue price (cents) 0.8 0.8 - Issue price (cents) 0.4 0.4 0.4 - No of shares 1,540,669,878 200,000,000 6,388,750 - 1,747,058,628 No of shares 1,747,058,628 210,000,000 13,860,000 15,000,000 - 1,985,918,628 $ 26,355,247 1,600,000 51,110 (244,726) 27,761,631 $ 27,761,631 840,000 55,440 60,000 (78,426) 28,638,645 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 (ii) Movements in options: 101 2022 Issue of options - placement Issue of options - corporate mandate Issue of options - corporate mandate Issue of options - placement Issue of options - corporate mandate Closing balance at 30 June 2022 Date 04/02/2021 04/02/2021 30/11/2021 20/01/2022 20/01/2022 No. options 1 July 2021 162,000,000 9,042,000 Issued/ (converted) - - No. options 30 June 2022 162,000,000 9,042,000 Ex. price (cents) Expiry date 2.5 30/06/2023 2.5 30/06/2023 - - - 15,000,000 15,000,000 2.5 30/06/2023 100,000,000 19,194,375 100,000,000 19,194,375 2.5 30/06/2023 2.5 30/06/2023 171,042,000 134,194,375 305,236,375 2023 Issue of options - placement Issue of options - corporate mandate Issue of options - corporate mandate Issue of options - placement Issue of options - corporate mandate Issue of options - placement Issue of options - corporate mandate Issue of options - corporate mandate Issue of options – rights issue Issue of options - placement Closing balance at 30 June 2023 Date 04/02/2021 04/02/2021 No. options 1 July 2022 162,000,000 9,042,000 Issued/ (Expired) (162,000,000) (9,042,000) No. options 30 June 2023 - - 30/11/2021 15,000,000 (15,000,000) 20/01/2022 20/01/2022 100,000,000 19,194,375 (100,000,000) (19,194,375) - - - Ex. price (cents) Expiry date 2.5 30/06/2023 2.5 30/06/2023 2.5 30/06/2023 2.5 30/06/2023 2.5 30/06/2023 29/11/2022 29/11/2022 02/12/2022 19/01/2023 19/01/2023 - - - 140,000,000 10,000,000 140,000,000 10,000,000 0.8 31/12/2025 0.8 31/12/2025 9,240,000 9,240,000 0.8 31/12/2025 - - 305,236,375 312,682,557 10,000,001 176,686,183 312,682,557 10,000,001 481,922,558 0.8 31/12/2025 0.8 31/12/2025 Dividends 9.2 No dividends were declared or paid during the year. There are no franking credits outstanding at period end. Trade and other payables 10 Trade and other payables recognised in the Statement of Financial Position can be analysed as follows: Current - - Other payables and accrued expenses Trade payables Consolidated 2023 $ 17,857 41,667 59,524 Consolidated 2022 $ 161,055 44,861 205,916 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 11 Plant and equipment Plant & Equipment Accumulated Depreciation 102 Consolidated 2023 $ 105,582 (53,751) 51,831 Consolidated 2022 $ 100,272 (28,246) 72,026 12 Exploration and evaluation assets Cost as at 1 July 2022 Other exploration costs Impairment (i) Cost as at 30 June 2023 (i) During the year, the Marruca tenement was applied to be surrendered due to lack of good exploration results and better opportunities with other tenement applications. The surrender has yet to be processed by INAMI, but the capitalised costs to date for this tenement have been impaired. Cost as at 1 July 2021 Other exploration costs Cost as at 30 June 2022 Consolidated 2023 $ 5,176,689 731,047 (112,948) 5,794,788 Consolidated 2022 $ 3,781,312 1,395,377 5,176,689 The recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. The relinquishments represent the capitalised amounts written off during the period when ownership of the tenements is abandoned. Asset held for sale 13 The Norrliden project is currently being marketed for sale. The Norrliden asset was previously recognised as a non- current exploration and evaluation asset. The asset held for sale is recognised at lower of the carrying value and fair value less cost to sell. Non-current assets held for sale Less Impairment (a) 2023 608,596 (608,596) - 2022 608,596 (608,596) - (a) Refer Note 4.21. If an asset held for sale has not been sold within 12 months and a sale is not certain, then an impairment is charged against that asset. The Company took the view that as a sale was not achieved in the last 12 months, then an impairment was made against the asset. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 103 Income tax expense 14 The relationship between the expected tax expense based on the tax rate of MRG Metals Ltd and the reported tax expense in profit or loss can be reconciled as follows, also showing major components of tax expenses: Profit/(loss) before tax Expected tax expense/(benefit) @ 25% (2022 25%) Adjustment for non-deductible expenses: - Movement in accruals - Impairment of asset held for sale Current period tax (loss) not recognised Deferred tax expense: Temporary differences - - Unused tax losses Deferred tax assets not recognised Consolidated 2023 $ (846,894) (211,723) Consolidated 2022 $ (702,340) (175,585) 798 - (210,925) (210,925) 798 210,925 211,723 875 - (174,710) (174,710) 875 174,710 175,585 The above potential tax benefit has not been recognised as the recovery is uncertain. The carry forward tax losses at 30 June 2023 were $19,610,201. The taxation benefit of tax losses and temporary differences not brought to account will only be obtained if: - - - the Group derives future assessable income of a nature and an amount sufficient to enable the benefit from the deductions for the losses to be realised; the Group continues to comply with the conditions for deductibility imposed by law; and no change in tax legislation adversely affects the Group in realising the benefits from deducting the tax losses. 15 Auditor remuneration Audit services Audit services remuneration Other services Total Auditor’s remuneration Consolidated 2023 $ 34,901 34,901 - 34,901 Consolidated 2022 $ 34,500 34,500 - 34,500 Earnings per share 16 The weighted average number of shares for the purposes of diluted earnings per share can be reconciled to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows: Loss after income tax Weighted average number of shares used in basic earnings per share Weighted average number of shares used in diluted earnings per share Consolidated 2023 $ (846,894) 1,884,892,765 1,884,892,765 Consolidated 2022 $ (702,340) 1,632,272,556 1,632,272,556 Earnings Per Share (0.04) cents (0.04) cents MRG Metals Ltd Consolidated Financial Statements 30 June 2023 104 Diluted Earnings Per Share (0.04) cents (0.04) cents The rights to options held by option holders have not been included in the weighted average number of ordinary shares for the purposes of calculating diluted EPS as they do not meet the requirements for the inclusion in AASB 133 “Earnings per Share”. The rights to options are non-dilutive as the Group is loss generating. 17 Reconciliation of cash flows from operating activities Cash flows from operating activities (Loss) after income tax expense for the year Cash flows excluded from loss attributable to operating activities Non cash flows in loss: Depreciation Impairment of exploration Foreign exchange (gain)/loss Vesting charges for share based payments transactions Change in other assets and liabilities: (Increase)/decrease in trade and other receivables Increase/(decrease) trade and other payables Net cash used in operating activities Related party transactions 18 The Parent entity is MRG Metals Ltd. Consolidated 2023 $ Consolidated 2022 $ (846,894) (702,340) - 112,948 (12,334) - (40,878) (146,392) (933,550) 19,802 (9,275) 138,390 (107,299) (7,765) (668,487) MRG Metals Ltd owns 100% of the shares of MRG Metals (Australia) Pty Ltd. (2022 100%) MRG Metals Ltd owns 100% of the shares of MRG Metals (Exploration) Pty Ltd. (2022 100%) MRG Metals Ltd owns 100% of the shares of Sofala Resources Pty Ltd. (2022 100%) Sofala Resources Pty Ltd owns 99% of the shares of Sofala Mining & Exploration Lda. (2022 99%), Sofala Mining & Exploration I Lda, Sofala Mining & Exploration II Lda, Sofala Mining & Exploration III Lda, Sofala Mining & Exploration IV Lda, Sofala Mining & Exploration V Lda, Sofala Mining & Exploration VI Lda, Sofala Mining & Exploration VII Lda, Sofala Mining & Exploration VIII Lda, Sofala Mining & Exploration IX Lda and Sofala Mining & Exploration X Lda (Mozambique Companies). Sofala Mining & Exploration Limitada to Sofala Mining & Exploration IX Lda own the HMS tenements. Mozambique law requires a separate company for each licence application. MRG Metals (Australia) Pty Ltd and MRG (Exploration) Pty Ltd have no Assets or Liabilities. The Group's related parties include its key management and others as described in Note 18.2. Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were given or received. Transactions with related parties 18.1 The following transactions occurred with related parties: Payment for goods and services: The Group used the accounting and taxation services of RSM Australia, an entity associated with Mr. Turner and Mr. MRG Metals Ltd Consolidated Financial Statements 30 June 2023 105 Turner. The amounts billed were based on normal market rates and amounted to $38,000 to Mr. Turner and $1,710 to RSM (2022 $38,000 to Mr. Turner and $6,870 to RSM). Receivable from and payable to related parties There were no trade receivable from or trade payables to related parties. Loans to/from related parties There were no loans to or from related parties at the reporting date. Terms and conditions All transactions are made on normal commercial terms and conditions and at market rates. 18.2 Transactions with key management personnel Key management of the Group are the Board of Directors. Key management personnel remuneration is set out in the Remuneration Report in the Director’s Report. Short term benefits Post employment benefits Share based payments Total KMP remuneration Consolidated 2023 $ 300,000 31,500 - 331,500 Consolidated 2022 $ 300,000 30,000 14,388 344,388 Equity instruments held by KMP 18.3 The number of shares in the Company by each of the key management personnel of the Group, including their related parties are set out below: Year ended 30 June 2023 Key Management Person Van Der Zwan Turner Gregory Balance at start of year 37,906,679 24,482,509 63,563,986 125,953,174 Received on exercise - - - - Other changes - - - - Additions 6,250,000 2,500,000 6,250,000 15,000,000 Held at the end of the reporting period 44,156,679 26,982,509 69,813,986 140,953,174 Year ended 30 June 2022 Key Management Person Van Der Zwan Turner Gregory Balance at start of year 37,906,679 24,482,509 63,563,986 125,953,174 Received on exercise - - - - Additions - - - - Held at the end of the reporting period 37,906,679 24,482,509 63,563,986 125,953,174 Other changes - - - - MRG Metals Ltd Consolidated Financial Statements 30 June 2023 106 The number of options in the Company by each of the key management personnel of the Group, including their related parties are set out below: Year ended 30 June 2023 Key Management Person Van Der Zwan Turner Gregory Balance at start of year - - - - Additions 4,166,667 1,666,667 4,166,667 10,000,001 Year ended 30 June 2022 Nil. Deleted on Held at the end of the reporting period exercise Ceased/Lapsed 4,166,667 - 1,666,667 - - 4,166,667 - 10,000,001 - - - - Performance rights held by key management personnel The number of performance rights held by each of the key management personnel of the Group; including their related parties are set out below. Year ended 30 June 2023 Nil Year ended 30 June 2022 Key Management Person Van Der Zwan Turner Gregory Balance at start of year 4,000,000 4,000,000 4,000,000 12,000,000 Deleted on Additions - - - - exercise Ceased/Lapsed (4,000,000) (4,000,000) (4,000,000) (12,000,000) - - - - Held at the end of the reporting period - - - - 19 There were no contingent assets or liabilities in the current financial year (2022 Nil). Contingent assets and contingent liabilities 20 Commitments for expenditure Exploration and evaluation: Within 12 months After 12 months but not later than 5 years 2023 $ 2022 $ 45,068 180,272 270,736 1,082,944 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 107 Exploration and evaluation: In order to maintain current rights of tenure for exploration tenements, the Group is required to meet the minimum exploration requirements of the Mining Department. The Group holds four tenements in Mozambique, each year the Mozambique mining regulations require companies to submit exploration programs which indicate the expected mining expenditure for the year. Mozambique New Mining Law Regulations require a minimum spend of 60% of the exploration program submitted for the year. The commitment for FY23 to FY26 is the Group’s estimated tenement expenses to be incurred for each licence at a rate of 60%, which is expected to be the best estimate of the required commitment. 21 Financial instrument risk Risk management objectives and policies The Group is exposed to various risks in relation to financial instruments. The main types of risks are market risk (including interest rate risk), credit risk and liquidity risk. The Group's risk management is carried out by the board of directors and focuses on actively securing the Group's short to medium-term cash flows by minimising the exposure to financial markets. The Group does not engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed are described below. Foreign currency sensitivity 21.1 The Group's transactions during the year have been carried out in Australian Dollars, United States Dollars (USD), and Mozambican Meticals (MZN). There is a risk that changes in foreign exchange rates will affect the Group’s income or amounts to be paid or received arising from its financial obligations. The Group’s objective of foreign currency risk management is to manage and control foreign currency risk exposures within acceptable parameters, while optimising the return. The Group’s exposure to foreign currency risk relates primarily to foreign exchange rates applicable to the Group’s foreign currency denominated obligations recognised in the balance sheet. Foreign currency risk refers to the risk that the value of a financial commitment, recognised asset or liability will fluctuate due to changes in foreign currency rates. The primary foreign currency exposure is to the MZN and USD. Management monitors the exposure to foreign exchange risk on an ongoing basis by regularly reviewing forward foreign exchange rates applicable to its foreign currency denominated obligations. The Group’s exposure to assets and liabilities to MZN at 30 June 2022 is set out below (Australian dollar equivalents): Reported exchange rate Cash at Bank Trade and other payables Total exposure 30 June 2023 42.37 187 (4,267) (4,080) The Group’s exposure to assets and liabilities to USD at 30 June 2023 is set out below (Australian dollar equivalents): Reported exchange rate 30 June 2023 0.6630 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 108 Cash at Bank Total exposure 18 18 The table below shows the effect on profit after income tax expense and total equity from MZN currency exposures, had the rates been 10% higher or lower than the year end rate. Whilst directors cannot predict movements in foreign currency rates, a sensitivity of 10% is considered reasonable taking in to account the current level of exchange rates and the volatility observed on a historical basis. Foreign exchange rates - 10% Foreign exchange rates + 10% 30 June 2023 Increase/(Decrease) in profit after income tax (408) 408 Increase/(Decrease) in Equity (408) 408 Interest rate sensitivity 21.2 The Group's only exposure to interest rate risk is in relation to a deposit held. Deposits are held with reputable banking financial institutions. At 30 June 2023, there was $23,096 on deposit at 2.7% (Note 8). An increase/decrease by 30% or 0.0081 basis points would have a favourable/adverse effect on profit for the year of $187. The percentage change is based on the expected volatility of interest rates using market data and analysts’ forecasts. Credit risk analysis 21.3 Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to minimal credit risk as its only exposure is to interest receivable and GST refunds. Liquidity risk analysis 21.4 Liquidity risk is that the Group might be unable to meet its obligations. The Group manages its liquidity needs by monitoring actual and forecast cash inflows and outflows due in day-to-day business. The Group's working capital, being current assets less current liabilities, at 30 June 2023 was $877,871. The Directors are confident that the Group will be able to secure sufficient funds or reduce or defer expenditure to ensure that the Group can meet essential operational and expenditure commitments for at least the next twelve months. Based on this, the directors are satisfied the Group will have sufficient funds to pay its debts as and when they fall due. As at 30 June, the Group's non-derivative financial liabilities have contractual maturities (including interest payments where applicable) as summarised below: 30 June 2023 Trade and other payables Total 30 June 2022 Current Non current Within 6 months $ 59,524 59,524 6 to 12 months $ - - 1 to 5 years $ - - Later than 5 years $ - - Current Non current Within 6 months $ 6 to 12 months $ 1 to 5 years $ Later than 5 years $ MRG Metals Ltd Consolidated Financial Statements 30 June 2023 109 Trade and other payables Total The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the liabilities at the reporting date. Unless otherwise stated, the carrying amounts of financial instruments reflect their fair values due to their short term nature. 205,916 205,916 - - - - - - Capital risk management 22 The Group’s objectives when managing capital is to ensure the Group's ability to continue as a going concern so that it can provide an adequate return to shareholders. The Group would look to raise capital when an opportunity to invest in a business, company or tenement is seen as value adding. 23 Since the end of the year the following significant events have occurred: Post-reporting date events Memorandum of Understanding to Form Joint Venture on Mozambique Corridor Sands Projects On 26 July 2023, MRG Metals Limited entered a Memorandum of Understanding (MOU) with Tianjin Lanqi Materials Company Limited (“LANQI”) for a Joint Venture operation (“JV”) on its Mozambique Corridor Sands projects. Key aspects of the MOU are: - A period of 3 months Due Diligence commencing from today. During the period of Due Diligence, LANQI shall send their technical team to Mozambique for field inspection and sampling of the Corridor Projects. MRG shall send their representatives to assist LANQI to carry out this work. - During the period of Due Diligence, LANQI shall also draft a JV agreement and shall send it to MRG together with LANQI’s decision to proceed to JV, such that the JV is signed at or before completion of the Due Diligence period. - A commitment to purchase AUD$500,000 shares at 0.4c upon successful completion of Due Diligence and entering the JV. - - Key Terms of the JV are: Both parties shall sign a JV Agreement upon or before completion of Due Diligence period that parties will set up a JV company in Mozambique owned 75 % by LANQI and 25 % by MRG, achieved upon first production. LANQI shall invest USD 3 million dollars (and at the commencement of the JV place USD$3 million into the JV trust account) for the following stages: o To finish the JV company set up in Mozambique and company working capital. i) Working capital to cover JV company in-country costs estimated at $40k USD for minimum of 12 months. ii) MRG Management involvement in JV at $15k USD/month for minimum of 18 months. o To complete the mine exploration and feasibility report for the Initial Corridor Project. o To design the engineering and construction plan of the Initial Corridor Project. o To get the mining licence approval from the Government. - LANQI shall invest all funds necessary to develop the initial mining operation and all subsequent funds for mine expansion either on the Initial Corridor Project or subsequent Corridor Projects. LANQI shall guarantee that the total output of the HMC in the Initial Corridor Project shall be not less than 100,000 tpa at 18 months from the date any mining commences on the Initial Corridor Project; the total output of the HMC in Initial Corridor Project shall be increased to 200,000 tpa at or before 3 years - MRG Metals Ltd Consolidated Financial Statements 30 June 2023 110 from the date any mining commences and to 400,000 tpa at or before 5 years from the date any mining commences. The JV Agreement shall specify obligation of the parties to retain JV equity with the intention of not limiting MRG’s rights should the HMC production profile not deliver 100,000 tpa by 18 months, 200,000 tpa by 36 months, 400,000 tpa by 5 years and also should the JV not have implemented further expansion plans by 5 years from the date any mining commences in the Initial Corridor project. Key Terms of the Offtake Agreement are: LANQI shall be the Offtaker for all HMC products in the Initial Corridor Project. The offtake price fixing can be referred to the export prices of the same quality HMC which shall be processed by other companies in Mozambique and the JV shall coordinate independent review mechanism agreeable to both Parties. The JV company shall give 5% sales commission for the offtake agreement. Definitions: Corridor Projects means Mineral Sands projects in Mozambique including Corridor Central (11142C), Corridor South (11137C), Corridor North (10779L) and Linhuane (7423L). “Initial Project” means the first of the Corridor Projects chosen by the JV for commencement of production. Placement On 7 August 2023, MRG Metals Limited completed a capital raising (announced 1 August 2023) comprising: Placement of 200,000,000 fully paid ordinary shares at $0.0025, with 1 for 2 free attaching MRQO options (100,000,000 options), raised $500,000 Issuance of 10,000,000 MRQO options for payment of Lead Manager fees. - 7. 8. 9. - - • • Proposed use of funds: Progress Rare Earth Elements and Uranium Projects should these Exploration Licences be granted. • • Working Capital. Parent entity information 24 Information relating to MRG Metals Ltd (‘the parent entity’) Statement of financial position Current assets Total assets Current liabilities Total liabilities Issued capital Reserves Retained earnings Statement of comprehensive income Profit/(loss) for the period Total comprehensive income 2023 $ 2022 $ 937,395 6,807,110 59,524 59,524 1,339,004 6,610,699 205,916 205,916 28,951,328 - (22,203,742) 6,747,586 27,761,631 160,168 (21,517,016) 6,404,783 (846,894) (846,894) (702,340) (702,340) MRG Metals Ltd Consolidated Financial Statements 30 June 2023 111 Authorisation of financial statements 25 The consolidated financial statements for the year ended 30 June 2023 were approved by the board of directors on 28 September 2023. Andrew Van Der Zwan Chairman Shane Turner Director/Secretary MRG Metals Ltd Consolidated Financial Statements 30 June 2023 112 Directors’ declaration 1. In the opinion of the directors of MRG Metals Ltd: a the consolidated financial statements and notes of MRG Metals Ltd are in accordance with the Corporations Act 2001, including i. giving a true and fair view of its financial position as at 30 June 2023 and of its performance for the financial period ended on that date; and ii. complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and b there are reasonable grounds to believe that MRG Metals Ltd will be able to pay its debts as and when they become due and payable. 2. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive officer and chief financial officer for the financial period ended 30 June 2023. 3. The consolidated financial statements comply with International Financial Reporting Standards. Signed in accordance with a resolution of the directors: Dated at Melbourne, the 28th day of September 2023. _______________________Andrew Van Der Zwan Director MRG Metals Limited Independent auditor’s report to members REPORT ON THE AUDIT OF THE FINANCIAL REPORT Opinion We have audited the financial report of MRG Metals Limited (the Company and its subsidiaries (the Group)), which comprises the consolidated statement of financial position as at 30 June 2023, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, and the directors’ declaration. In our opinion, the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: i. giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial performance for the year ended on that date; and ii. complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the 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. Material Uncertainty Related to Going Concern We draw attention to Note 4.2 in the financial report, which indicates that the Group incurred a net loss after income tax of $846,894 and net cash outflows from operating and investing activities of $1,627,144 for the year ended 30 June 2023. As stated in Note 4.2, these events, or conditions, along with other matters as set forth in Note 4.2 indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Level 20, 181 William Street, Melbourne VIC 3000 +61 3 9824 8555 vic.info@williambuck.com williambuck.com.au William Buck is an association of firms, each trading under the name of William Buck across Australia and New Zealand with affiliated offices worldwide. Liability limited by a scheme approved under Professional Standards Legislation. 113 Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matter described below to be the key audit matter to be communicated in our report. KEY AUDIT MATTER Exploration and evaluation assets How our audit addressed it During the year, additions to exploration and evaluation assets in Mozambique totalled $731k as detailed in Note 12. Accounting for these costs requires a significant amount of judgements and estimates and there is a risk that capitalisation of these costs may not be appropriate. The Group is also required to assess at each reporting date if there are any triggers for impairment which may suggest that the carrying value is in excess of recovering value in accordance with AASB 6 Exploration for and Evaluation of Mineral Resources. Management is required to exercise judgement in evaluating whether any impairment triggers exist. During the year, impairment to exploration and evaluation assets in Mozambique totalled $112k as detailed in Note 12 due to the Group’s intention to relinquish tenement 6864L. Due to the judgements involved in assessing recoverability of capitalised exploration and evaluation assets, this was considered a Key Audit Matter. In order to address this risk, our audit procedures included the following: — Reviewing the directors’ assessment of the criteria for the capitalisation of exploration expenditure and evaluation of whether an impairment charge is required; — Understanding and vouching the underlying contractual entitlement to explore and evaluate each area of interest, including an evaluation of the Group’s renewal in that area of interest at its expiry; — Examining project spend per each area of interest and comparing this spend to budgeted expenditure; — Agreeing a sample of expenditure capitalised to underlying support and ensuring that it is appropriately recorded in accordance with AASB 6 Exploration for and Evaluation of Mineral Resources and is directly attributable to that area of interest; — Evaluating management’s impairment analysis which included the Group’s analysis of recoverability of the carrying value of the tenements; and — From an overall perspective, comparing the market capitalisation of the Group to the net carrying value of its assets on the statement of financial position to identify any other additional indicators of impairment. We also assessed the adequacy of the Group’s disclosures in respect of capitalised exploration costs and the planned expenditures. 114 Other Information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2023 but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of these financial statements is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our independent auditor’s report. 115 Report on 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 2023. In our opinion, the Remuneration Report of MRG Metals Limited, for the year ended 30 June 2023, 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. William Buck Audit (Vic) Pty Ltd ABN 59 116 151 136 J. C. Luckins Director Melbourne, 28 September 2023 116 117 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 ASX Additional Information Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report is set out below. The information is effective as at 11 September 2023. Substantial Shareholders There was one substantial shareholder at 11 September 2023. Name 10 Bolivianos P/L Holdings Range 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,000 and over Ordinary Shares Number Held 111,930,199 %of quoted shares 5.12 Shareholders 47 15 48 562 1,374 2,046 There were 874 holders of less than a marketable parcel of ordinary shares. Ordinary Shares Twenty largest quoted shareholders Number Held 10 Bolivianos P/L CJ & M Gregory S/F A/C BNP Paribas Nominees P/L JNW SFund P/L JNW S/F A/C M Fimeri Citicorp Nominees P/L C Niu Rob Roy P/L John Wright Family A/C AJ Barker S & E Turner Turner S/F A/C Finger Lakes P/L Anvil Investment A/C R Joekar KV Van Der Zwan Harleston Family A/C Altera P/L S/F A/C A & KV Van Der Zwan S/F A/C EJ Heymann D & J Furfaro First Investment Partners P/L Jolanza P/L Jolanza A/C MC Anderson 111,930,199 51,813,536 43,114,144 38,100,000 38,096,666 34,857,160 34,125,000 32,951,031 30,000,000 26,982,509 26,451,677 25,000,000 23,241,679 21,902,877 20,625,000 20,135,000 20,000,000 18,400,000 18,000,450 17,349,000 653,075,928 %of quoted shares 5.12 2.37 1.97 1.74 1.74 1.59 1.56 1.51 1.37 1.23 1.21 1.14 1.06 1.00 0.94 0.92 0.91 0.84 0.82 0.79 29.88 118 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 Restricted equity securities Nil Securities exchange The Company is listed on the Australian Securities Exchange and shares are quoted under the code MRQ. Twenty largest quoted optionholders Number Held A Knowles Benjay P/L C Niu 10 Bolivianos P/L R Joekar MF Durward FZ Feng M Fimeri First Investment Partners P/L Vivo Trading P/L Simmo Enterprises P/L PJ Savage & C Savage P&C Savage S/F A/C Superhero Securities Limited Riya Investments P/L D Kenley V Brizzi & RL Brizzi Brizzi Family S/F A/C R Gropel JY Kiu Or Poon Blind Tiger P/L DG Borrowdale S/F A/C SJ Reid & LS Reid Lilypilly S/F A/C 32,000,000 28,184,810 25,000,000 22,396,000 20,000,000 20,000,000 19,999,996 19,200,000 19,200,000 13,458,333 12,413,333 11,640,000 10,522,494 10,000,000 10,000,000 10,000,000 9,999,995 9,999,994 7,871,298 7,083,333 318,969,586 Options %of quoted options 5.41 4.76 4.22 3.78 3.38 3.38 3.38 3.24 3.24 2.27 2.10 1.97 1.78 1.69 1.69 1.69 1.69 1.69 1.33 1.20 53.89 Securities exchange The Company is listed on the Australian Securities Exchange and options are quoted under the code MRQO. 119 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 Tenements The Tenements held by the Company at reporting date are as follows: Project Norrliden Malanaset Malanaset Corridor Central Corridor South Corridor North Linhuane Marão Marruca Olinga Patricio Fotinho Adriano Tenement K nr 1 nr 100 nr 101 11142C 11137C 10779L 7423L 6842L 6846L 11005L 10999L 11000L 11002L % Owned 10 10 10 100 100 100 100 100 100 100 100 100 100 Note Application Application Application Application Application Application 120 MRG Metals Ltd Consolidated Financial Statements 30 June 2023 Corporate Directory Directors & Secretary Andrew Van Der Zwan Non Executive Chairman Christopher Gregory Non Executive Director Shane Turner Non Executive Director and Company Secretary Principal place of business 12 Anderson Street West, Ballarat VIC 3350 Telephone: +61 3 5330 5800 Fax: +61 3 5330 5890 Email: info@mrgmetals.com.au, www.mrgmetals.com.au Registered office 12 Anderson Street West, Ballarat Victoria 3350 PO Box 237, Ballarat VIC 3353 Telephone: +61 3 5330 5800 Fax: +61 3 5330 5890 Corporate Accountant and Registered ASIC Agent RSM Australia 12 Anderson Street West, Ballarat VIC 3350 PO Box 685, Ballarat VIC 3353 Telephone: +61 3 5330 5800 Fax: +61 3 5330 5890 www.rsm.com.au Solicitors Moray & Agnew Level 6, 505 Little Collins Street, Melbourne VIC 3000 Telephone: +61 3 9600 0877 Fax: +61 3 9600 0894 www.moray.com.au Share Registry Automic Pty Ltd Level 5, 126 Phillip Street, Sydney NSW 2000 Telephone: 1300 288 664 Auditor William Buck Audit (Vic) Pty Ltd Level 20 181 William Street, Melbourne Vic 3000 Telephone (office): +61 3 9824 8555 Website: www.williambuck.com Stock Exchange Listing ASX Codes: MRQ, MRQO
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