ABN 12 143 890 671 Gound Floor, 5 Ord Street West Perth WA 6005 Telephone: +61 (8) 9324 1061 Facsimile: +61 (8) 9324 1014 Email: Web: info@musgraveminerals.com.au www.musgraveminerals.com.au A A N N N N U U A A L L R R E E P P O O R R T T 2 2 0 0 1 2 0 9 CORPORATE DIRECTORY DIRECTORS Graham Ascough Non-Executive Chairman Robert Waugh Managing Director Kelly Ross Non-Executive Director John Percival Non-Executive Director COMPANY SECRETARY Patricia (Trish) Farr REGISTERED OFFICE & PRINCIPAL PLACE OF BUSINESS Ground Floor, 5 Ord Street West Perth, WA 6005 Telephone: Facsimile: Email: Web: AUDITOR +61 (8) 9324 1061 +61 (8) 9324 1014 info@musgraveminerals.com.au www.musgraveminerals.com.au BDO Audit (WA) Pty Ltd 38 Station Street Subiaco, WA 6008 LEGAL ADVISORS O’Loughlins Lawyers Level 2, 99 Frome Street Adelaide, SA 5000 SHARE REGISTRY Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace Perth, WA 6000 Telephone: Facsimile: +61 (8) 9323 2000 +61 (8) 9323 2033 SECURITIES EXCHANGE LISTING The Company is listed on the Australian Securities Exchange Ltd (“ASX”) Home Exchange: Perth, Western Australia ASX Code: MGV Musgrave Minerals Ltd (“Musgrave” or “the Company”) (ASX: MGV) is an Australian resources company focused on gold exploration and near-term development at the Cue Project in the Murchison Province of Western Australia. A description of the Company’s operations and principal activities is included in the Review of Operations and the Directors’ Report. CONTENTS CHAIRMAN’S LETTER REVIEW OF OPERATIONS TENEMENT SCHEDULE Cover photo: DIRECTORS’ REPORT Drill rig at Starlight with night sky (photo by Cliff Harris) AUDITOR’S INDEPENDENCE DECLARATION FINANCIAL STATEMENTS DIRECTORS’ DECLARATION INDEPENDENT AUDITOR’S REPORT ADDITIONAL INFORMATION 2 3 15 16 25 26 53 54 57 PAGE 1 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 CHAIRMAN’S LETTER Mining Limited (“Evolution”). Evolution is currently sole-funding the joint venture and can earn up to a 75% interest through expenditure of $18M. Musgrave is managing the initial work programs, with the Phase 1 drilling program complete (22,879m) and the follow-up Phase 2 program (~21,900m) underway. Assays received for the first phase of the program have identified multiple regolith gold halos that potential overlie significant accumulations of gold in the underlying basement. Once the current Phase 2 aircore drilling is complete, the priority basement targets will be tested with reverse circulation (RC) and/or diamond drilling. The Company continually reviews the ongoing situation relating to COVID-19 and the implications for the health and wellbeing of our employees, contractors and stakeholders. We are pro-active with respect to our response and have operational procedures and plans in-place in-line with official health advice and government directives. Musgrave will continue to operate within these guidelines, and I’m pleased to say that, to date, we remain incident free. Logistics and planning are more complex but there have not been significant delays or cost impacts on our programs to date related to COVID-19. I would like to take this opportunity, on behalf of the Board, to thank all our Shareholders for their ongoing support. I would also like to thank the staff, management, contractors and my fellow Directors for their ongoing efforts. We are committed to progressing the Company by identifying and testing new targets, growing our resources and progressing towards development, through high-quality exploration and technical studies for the benefit of all Musgrave shareholders. Graham Ascough Chairman On behalf of the Board of Directors, it is my pleasure to present the 2020 Annual Report for Musgrave Minerals Limited (“Musgrave” or “Company”). The Company’s Cue Project (“Cue”) in the well- endowed, gold producing Murchison region of Western Australia is proving to be a game changer. The outstanding success of our exploration programs at Cue have been transformational for Musgrave and the highlight for 2020 is the discovery of the high- grade, near surface Starlight gold lode at Break of Day. The Starlight discovery was not an overnight success, although the impacts on the Company were immediately positive. Musgrave has been exploring at Cue for the past 4 years and in that time we have made new discoveries and have grown the resource base to approximately 613koz gold, a figure that is expected to grow as it does not yet include the recent Starlight or White Light high-grade discoveries. The Starlight discovery resulted from the culmination of the years of experience at Cue and subsequent in-depth analysis of results by our highly motivated and talented team that recognised the potential for high-grade ‘link lodes’ at Break of Day. This was an excellent example of true exploration insight and the first holes into Starlight and then subsequently White Light, are a testament to the perseverance and analytical excellence of our team who have identified a further 18 similar targets along the belt that are now in the process of being drill tested. During the year, the Lena resource, located ~150m west of Break of Day, was updated, adding 172koz and bringing our total resource base to 6.45Mt @ 3.0g/t Au for 613,000 ounces of contained gold. We look forward to completing the Break of Day resource update in 2020 that will no doubt add further high-grade ounces to this already significant figure. We anticipate the resource update will lead to the commencement of feasibility studies on Break of Day and Lena that will investigate the profitable development of a ‘stand-alone’ operation at Cue. In parallel with the feasibility work, Musgrave will continue to capitalise on its exploration strengths and accelerate drilling programs across a range of high priority targets at Cue that will include testing for new high-grade targets regionally, extending the existing lodes at Break of Day and targeting discovery opportunities at Mainland. A substantial drilling program on Lake Austin is continuing under our Joint Venture with Evolution PAGE 2 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 REVIEW OF OPERATIONS Musgrave Minerals Ltd (“Musgrave” or “the Company”) (ASX: MGV) is an Australian resources company focused on gold exploration and development at the Cue Project in the Murchison Province of Western Australia. Exploration activities for the financial year have been focused on the Cue Project. The Company has had significant exploration success during the year with the discovery of the Starlight and White Light high- grade gold lodes at Break of Day. Musgrave has an estimated 613koz of gold in resources on the Cue Project and completed more than 50,000m of drilling during the year. The total Indicated and Inferred JORC Mineral Resources on the project are: 6.45Mt @ 3.0g/t Au for 613,000 ounces of gold (see ASX announcements 14 July 2017, and 17 February 2020). The new Starlight and White Light discoveries are not included in this resource estimate. exploration drilling at Cue and commencing feasibility studies to de-risk future development. Exceptional hits such as 14m @ 191.4g/t Au from 4m and 77m @ 13.3g/t Au from 7m down hole (see ASX announcement 28 July 2020, “Bonanza gold grades continue at Starlight with 3m @ 884.7g/t Au”) have highlighted the near-surface gold potential at the new Starlight discovery adjacent to the existing Break of Day lodes. The Break of Day resource, excluding Starlight, currently stands at 868Kt @ 7.2g/t Au for 199Koz gold (see ASX announcements 14 July 2017, and 17 February 2020). Musgrave intends to update the Break of Day resource estimate, including Starlight and White Light in late 2020. Musgrave also has tenement applications in the Musgrave Geological Province of South Australia (Figure 1). Musgrave’s intent is to continue to grow the resource base, accelerate exploration and commence feasibility studies to develop a low-cost operation capable of returning significant value to shareholders. 2020 was a very successful year for Musgrave, with significant value accretion and share price growth achieved following the near surface high-grade Starlight gold discovery. The Company’s near-term priority is expanding our gold resources through extensional and accelerated greenfield Figure 1: Musgrave Minerals’ Project Location Map Drilling at Starlight - Cue Project PAGE 3 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 REVIEW OF OPERATIONS in Legend currently valued at approximately $2 million. Musgrave also holds 1,308,750 ordinary shares in Cyprium Metals Ltd (ASX: CYM) currently valued at approximately $200,000. During financial year 2020, Musgrave successfully secured an Exploration Incentive Scheme (“EIS”) co-funded drilling grant of $150,000 to drill test for a deep extension of the Starlight mineralisation. Inputting geological data into a Toughbook field computer at Cue Corporate During the year, Musgrave spent $2.9 million on exploration activities. The Company successfully completed a capital raising in April 2020 to raise $6.0M (before costs) through a share placement to institutional and sophisticated investors. During the year, 1.9 million unlisted options were exercised, raising $209,732. At 30 June 2020 the Company’s capital structure comprised: • • 464,742,285 fully paid ordinary shares; and 21,650,000 unlisted options at various exercise prices and expiry dates In September 2019, Musgrave announced that it had entered into an Earn-In and Joint Venture Exploration Agreement with Evolution Mining Limited (ASX: EVN) (“Evolution”) over a select area of Lake Austin and surrounds (“JV Area”) on the Cue Project. The JV Area excludes all the known resources including Lena, Break of Day/Starlight and the Mainland option area. Evolution can earn a 75% interest in the JV area by sole funding $18 million on exploration over a five-year term with a minimum commitment of $4 million in the first two years. Musgrave will manage the JV during the initial period. On 1 May 2020, Musgrave entered into a joint venture with Cyprium Australia Pty Ltd (“Cyprium”) on the non-gold rights over the northern Cue tenure including the Hollandaire copper deposit. Cyprium (ASX: CYM) has earned an 80% interest in the non- gold rights over the area with Musgrave free carried to a definitive feasibility study and retaining 100% of the gold rights. The farm-out of base metals at Hollandaire has allowed Musgrave to focus on its priority gold targets, resulting in the discovery of the Starlight and White Light gold lodes at Break of Day and delivering significant value accretion to its shareholders. Musgrave will continue to maximise its exploration strengths and accelerate drilling across high priority targets at Cue with the aim of making further high- grade gold discoveries that would add value to a stand-alone operation. During the year Musgrave sold 7.5 million shares in Legend Mining Ltd (ASX: LEG)(“Legend”) and used part of the proceeds to exercise 10 million Legend, 4 cent options which added $634,000 to its cash position. The Company now holds 12.5 million shares PAGE 4 5 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 REVIEW OF OPERATIONS Response to COVID-19 Musgrave is continuing to review the ongoing situation relating to the COVID-19 pandemic and the implications for the health and wellbeing of our employees, contractors and stakeholders. The Company has been pro-active with respect to its response to COVID-19 and has developed operational procedures and plans in line with official health advice and government directives. Musgrave will continue to operate within these guidelines and will adapt its procedures as required. The Company remains an active explorer and will continue to advance the Cue Gold Project. Exploration Activities Cue Project During the year the Company focused on exploration and resource growth. This culminated in the discovery of the new Starlight and White Light gold lodes at Break of Day and a significant upgrade to the Lena gold resource. High-grade gold was also intersected in reverse circulation (“RC”) drilling at the Mainland-Consols prospect at Cue. On the Evolution Joint Venture on Lake Austin, the Company completed a Phase 1 regional aircore drilling program and following an assessment of the positive results has subsequently commenced a Phase 2 follow-up program. “Exploration and discovery success has been a prime driver for growth of the Company in 2020” Break of Day Starlight The Company discovered the new Starlight gold lode at Break of Day in early 2020 and commenced a large RC and diamond drilling program with the aim of delivering an updated JORC resource estimate for Break of Day that will include Starlight. The drilling has successfully defined the Starlight lode over a strike length of approximately 115m with the deepest intersect to date at ~320 vertical metres (Figures 4 and 5). A maiden resource estimate for Starlight will be included in a resource update for Break of Day, scheduled for late 2020. Significant RC intercepts from the Starlight lode include: o 14m @ 191.1g/t Au from 4m (20MORC068) including; o 3m @ 884.7g/t Au from 5m including; 1m @ 2,518.8g/t Au from 6m o 77m @ 13.3g/t Au from 7m (20MORC058) including; o o o 8m @ 99.0g/t Au from 7m and 4m @ 45.5g/t Au from 38m and 3m @ 11.5g/t Au from 81m 68m @ 5.9g/t Au from 21m (20MORC057) including; o 8m @ 48.5g/t Au from 21m 60m @ 13.1g/t Au from 77m (20MORC031) including; o o 3m @ 90.9g/t Au from 77m and 21m @ 23.79g/t Au from 106m 48m @ 4.4g/t Au from 30m (20MORC032) including; o 6m @ 29.1g/t Au from 77m 42m @ 6.8g/t Au from 70m (20MORC018) including; o 4m @ 65.9g/t Au from 70m 42m @ 5.6g/t Au from 146m (20MORC013) including; o 5m @ 32.2g/t Au from 165m 31m @ 44.8g/t Au from 37m (20MORC037) including; o 6m @ 228.0g/t Au from 38m 22m @ 5.8g/t Au from 15m (20MORC067) including; o 3m @ 26.2g/t Au from 31m 22m @ 21.0g/t Au from 2m (20MORC036) 12m @ 109.4g/t Au from 40m (20MORC033) including; o 4m @ 326.8g/t Au from 40m 12m @ 19.5g/t Au from 3m (20mORC085) 12m @ 9.4g/t Au from 129m (20MORC069) 9m @ 16.5g/t Au from 225m (20MORC029) 9m @ 10.7g/t Au from 52m (20MORC055) o o o o o o o o o o o o o PAGE 5 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 REVIEW OF OPERATIONS o o o o o o o 8m @ 17.0g/t Au from 74m (20MORC071) and 4m @ 16.0g/t Au from 149m 6m @ 55.8g/t Au from 108m (20MORC012) 6m @ 35.8g/t Au from 131m (20MORC040) 6m @ 32.3g/t Au from 61m (20MORC061) 5m @ 14.3g/t Au from 90m (20MORC064) 4m @ 48.2g/t Au from 85m (20MORC038) Diamond drilling at Starlight has returned the following significant intercepts: o 16m @ 13.7g/t Au from 18m (20MODD008) including; o o 4m @ 40.8g/t Au from 18m and 9m @ 6.1g/t Au from 25m o o 5.6m @ 12.7g/t Au from 257.6m (20MODD010) 4.7m @ 7.0g/t Au from 132.2m (20MODD009) (see MGV ASX announcements dated 21 April 2020, 3 June 2020, 9 June 2020, 29 June 2020, 6 July 2020, 28 July 2020, 31 July 2020 and 19 August 2020). Visible gold in RC quartz chips from the Starlight lode at Break of Day, 20MORC068, 6-7m, 1m @ 2,518.8g/t Au within 14m @ 191.1g/t Au from 4m “Starlight has produced some stunning, high-grade gold results in near surface drilling with a maiden resource estimate scheduled for later in 2020” Figure 2: Schematic 3D model showing Starlight and White Light lodes at Break of Day, Cue Project PAGE 6 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 REVIEW OF OPERATIONS Diamond drilling at White Light has returned the following significant intercept: o 3.8m @ 40.5g/t Au from 100.2m (20MODD007) including; o 0.75m @ 203.3g/t Au from 100.2m (see MGV ASX announcements dated 28 July 2020). White Light At Break of Day, the Company discovered the new White Light gold lode located parallel to, and 75m south of Starlight, highlighting the potential for multiple parallel lodes. This new lode has been confirmed in RC and diamond drilling with new intercepts aligning with a number of historical, isolated gold intersections. RC and diamond drilling programs focused on delivering a JORC resource estimate for White Light commenced in July 2020. The drilling has successfully defined the White Light lode over a strike length of approximately 100m with the deepest intersect to date at 187 vertical metres (Figures 2, 3, 4 and 5). The White Light lode remains open down plunge. Significant RC intercepts from the White Light lode include: o o o o o o o 6m @ 48.2g/t Au from 211m (20MORC050) 6m @ 5.4g/t Au from 111m (20MORC048) 9m @ 5.1g/t Au from 21m (20MORC004) 3m @ 38.8g/t Au from 72m (20MORC001) 3m @ 13.9g/t Au from 53m (19MORC017) 3m @ 7.2g/t Au from 128m (19MORC031) 11m @ 54.0g/t Au from 217m (17MORC084) (see MGV ASX announcements dated 5 September 2017, 9 October 2019, 3 December 2019, 22 April 2020 and 29 June 2020). Figure 3: Plan showing Starlight and White Light lodes and recent drill collars at Break of Day, Cue Project Visible gold in core from the White Light lode at Break of Day, 20MODD007, 100.2m, 0.75m @ 203.3g/t Au PAGE 7 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 REVIEW OF OPERATIONS Figure 4: Cross sections showing Starlight and White Light lodes at Break of Day, Cue Project Figure 6: Cue prospect Location Map Figure 5: Long section of the Starlight lode, Break of Day, Cue Project showing select drill hole assays PAGE 8 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 REVIEW OF OPERATIONS A significant exploration program with accelerated drilling is planned for the coming year. The objective is to continue to grow the resource base and progress development studies to define a clear path to a stand-alone operation which will deliver first gold production for the Company. Lena At Lena, the team undertook two successful exploration programs and expanded the resource estimate to 4.3Mt @ 2.3g/t Au for 325Koz gold (see ASX announcement 17 February 2020, “Lena Resource Update”) (Table 1). Since the previous Mineral Resource estimate, (published in July 2017) the Company has added 172,000 ounces of gold, increasing the Mineral Resources at Lena by 112% and improving the overall grade of the deposit by 28% to 2.3g/t gold. The update increased the resources in the higher confidence Indicated category by 72%. The updated total Indicated and Inferred Mineral Resources for the Cue Project, incorporating the Lena and Break of Day deposits and several smaller deposits, now stands at 6.45Mt @ 3.0g/t Au for 613,000 ounces of contained gold (see MGV ASX announcements 12 March 2020, “Half Yearly Accounts”). Drilling at Lena extends to a maximum depth of 400m below surface where the mineralisation remains open down plunge. The mineralisation has been interpreted and estimated to a depth of 430m and the mineralisation remains open over much of the 1.5km strike length of the deposit (Figures 7 and 8). Figure 7: Lena Long section schematic showing current resource boundary of the 16 gold lodes and the opportunity at depth to extend the resource. Figure 8: Lena long section block model showing resource classifications (Indicated Resources in green and Inferred Resources in blue. The black zones are unclassified). PAGE 9 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 REVIEW OF OPERATIONS Table 1: Lena Gold Deposit February 2020 Mineral Resource (0.5g/t Au cut-off above 1260mRL, 2.0g/t Au cut-off below 1260mRL) Cut-off Grade Indicated Inferred Surface 1,260mRL 0.5g/t Au Cut-off Below 1,260mRL 2.0g/t Au Cut-off Total Tonnes Mt 2.16 0.09 2.25 Au g/t 1.6 2.3 1.7 Au Koz 115 Tonnes Mt 0.87 7 1.18 121 2.05 Au g/t 1.7 4.1 3.1 Au Koz 47 Tonnes Mt 3.03 158 1.27 204 4.31 Total Au g/t 1.7 4.0 2.3 Au Koz 161 164 325 *Rounding discrepancies may occur (See MGV ASX announcement 17 February 2020, “Lena Mineral Resource more than doubles and gold grade increases”). “There is significant upside potential at Lena with high-grade gold mineralisation remaining open down plunge below the existing resource.” Mainland The Mainland Prospect area covers the northern extension of the shear corridor that hosts Musgrave’s Break of Day/Starlight and Lena gold deposits and the Lake Austin North gold discovery. An RC drilling program was completed at Mainland where drilling returned high-grade intercepts at the Consols Prospect. A high-grade shoot is defined over a strike extent of approximately 100m (Figure 9) (see MGV ASX announcements 27 November 2019, 13 January 2020 and 16 March 2020). A soil geochemical survey has been completed over areas with no historical drilling on the northern part of the Mainland project area, where regolith interpretation suggests cover thickness is minimal. The area is interpreted to be the continuation of the Break of Day/Lena shear corridor. A number of new gold targets have been generated and an aircore drilling program is scheduled for late 2020 to test these new targets. Figure 9: Geological cross section from the Consols Prospect, Mainland RC sample piles with view looking south, Consols prospect, Mainland, Cue Project PAGE 10 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 REVIEW OF OPERATIONS Development Options On completion of the planned resource update at Break of Day, which will include the new Starlight and White Light gold discoveries, the Company will commence preparation for submittal of a Mining Proposal for the Cue Gold Project. Musgrave has commenced environmental baseline studies, a hydrological assessment and metallurgical studies in preparation for future development at Cue. Musgrave will continue to maximise its exploration strengths and accelerate drilling across high priority gold targets at Cue with the aim of expanding the current resources and making further high-grade gold discoveries that would enhance a stand-alone operation. Regional (100% MGV) Musgrave has identified 18 regional gold targets derived through a combination of geophysical data, geochemistry, broad spaced historical regional drilling, structural analysis and regional geology that show an analogous setting to Starlight (Figure 10). Systematic first phase, near-surface drill testing of these new targets has commenced. Anomalous results will be prioritised and followed up with more detailed and deeper drilling. “The identification of the new high- grade Starlight lode has highlighted the potential upside of the belt and the opportunity for Musgrave to make further near surface discoveries and grow the existing resource base.” Evolution JV – Lake Austin The Lake Austin area, part of the Evolution Earn-in and Exploration Joint Venture executed in September 2019, is highly prospective for gold and significantly underexplored. Evolution has committed to a minimum exploration spend of $4 million over the first two years and can earn a 75% interest in the JV area by sole funding $18 million in exploration within five years. If Evolution does not spend the entire $18 million within five years, Musgrave will retain 100% ownership (see MGV ASX announcement dated 17 September 2019). Musgrave is managing the exploration in the first two years. The existing gold resources including Lena and Break of Day/Starlight and the Mainland option area, are excluded from the Evolution Agreement (Figures 11). A large regional aircore Phase 1 drilling program was completed over Lake Austin in May 2020, with 249 holes drilled for 22,879m. The program was successful in identifying multiple high-priority basement gold targets for follow-up drill testing (Figure 11). Significant intercepts from the Phase 1 program include: o o 6m @ 4.2g/t Au from 116m (20MOAC031) 9m @ 2.25g/t Au from 136m to EOH (20MOAC041) (see MGV ASX announcement dated 5 June 2020, “Scout drilling defines large gold targets at Cue Evolution JV”). The Phase 2, 21,900m, aircore drill program to follow- up these targets on Lake Austin has commenced. Figure 10: Regional gravity image showing new Starlight ‘like’ analogue targets, Cue Project PAGE 11 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 REVIEW OF OPERATIONS Aircore Drilling – Phase 1, Lake Austin Aircore Drilling – Phase 2, Lake Austin “Evolution have been a great joint venture partner and we continue to work together to strive for discovery success beneath the clay cover of Lake Austin” Aircore Drilling – Lake Austin Other Projects Musgrave currently holds tenement applications in the central Musgrave province of South Australia. No field activity was completed by Musgrave on these projects during the period. PAGE 12 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 REVIEW OF OPERATIONS Table 1: Summary of JORC Resources and Reserves for the Cue Project Mineral Resources Gold Mineral Resources as at 30 June 2020 Deposit Moyagee Break of Day Lena Leviticus Numbers SUBTOTAL Eelya Hollandaire Rapier South SUBTOTAL Tuckabianna Jasper Queen Gilt Edge SUBTOTAL TOTAL Indicated Resources Inferred Resources Total Resources Tonnes ‘000s Au g/t oz. Au ‘000s Tonnes ‘000s Au g/t oz. Au ‘000s Tonnes ‘000s Au g/t oz. Au ‘000s 445 2,253 – – 2,697 473 473 – – – 3,170 7.7 1.7 – – 2.7 1.4 1.4 – – – 2.5 111 121 – – 232 21 171 21 – – – 253 423 2,053 42 278 2,796 45 2.2 216 175 96 271 3,282 6.54 3.1 6.0 2.5 3.6 1.1 12 1.9 2.6 3.1 2.8 3.4 89 83 8 22 323 2 171 13 15 9 24 360 868 4,305 42 278 5,493 518 2.15 689 175 96 271 6,453 7.2 2.3 6.00 2.46 3.1 1.35 12 1.55 2.60 3.06 2.8 3.0 199 325 8 22 554 22 12 34 15 9 24 613 Copper Mineral Resources as at 30 June 2020 (1) Deposit Hollandaire Copper Indicated Resources Grade % Tonnes ‘000s Tonnes Cu ‘000s Inferred Resources Grade % Tonnes ‘000s Tonnes Cu ‘000s Total Resources Grade % Tonnes ‘000s Tonnes Cu ‘000s 1,891 2.0 38 122 1.4 2 2,013 2.0 40 Silver Mineral Resources as at 30 June 2020 (1) Indicated Resources Grade g/t Tonnes ‘000s Deposit oz. Au ‘000s Inferred Resources Grade g/t Tonnes ‘000s oz. Au ‘000s Total Resources Grade g/t Tonnes ‘000s oz. Au ‘000s Hollandaire Silver Ore Reserves 1,925 6.3 390 728 4.7 110 2,653 5.9 500 Copper Ore Reserves as at 30 June 2020 (1) Deposit Hollandaire Copper Proven Reserves Grade % Tonnes ‘000s Tonnes Cu ‘000s Probable Reserves Grade % Tonnes ‘000s Tonnes Cu ‘000s Total Reserves Grade % Tonnes ‘000s Tonnes Cu ‘000s – – – 442 3.3 15 442 3.3 15 Silver Ore Reserves as at 30 June 2020 (1) Deposit Hollandaire Silver Proven Reserves Grade g/t Tonnes ‘000s oz. Au ‘000s Probable Reserves Grade g/t Tonnes ‘000s oz. Au ‘000s Total Reserves Grade g/t Tonnes ‘000s oz. Au ‘000s – – – 574 8.2 151 574 8.2 151 * Due to effects of rounding, the total may not represent the sum of all components. Musgrave holds a 20% interest in the base metal and silver rights stated above. (1) On 1 May 2020, Musgrave executed a joint venture agreement with Cyprium Australia Pty Ltd regarding non-gold rights over the northern Cue tenure including Hollandaire. Musgrave retains a 20% free carried interest in the non-gold rights and a 100% interest in the gold rights. PAGE 13 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 REVIEW OF OPERATIONS Notes to Table 1 The Break of Day and Lena Mineral Resources at Moyagee are reported in accordance with the 2012 Edition of the Australian Code of Reporting of Mineral Resources and Ore Reserves (JORC 2012). The remaining Mineral Resources and Ore Reserve estimates were first prepared and disclosed in accordance with the 2004 Edition of the Australian Code of Reporting of Mineral Resources and Ore Reserves (JORC 2004) and have not been updated since to comply with JORC 2012 on the basis that the information has not materially changed since it was last reported. For further details refer to Musgrave Minerals Ltd (MGV) ASX announcement 14 July 2017, “Resource Estimate Exceeds 350koz Gold”, 17 February 2020, “Lena Resource Update” and Silver Lake Resources Limited (SLR) ASX Announcement 26 August 2016, “Mineral Resources and Ore Reserves Update”. Mineral Resources and Ore Reserves The Information in this report that relates to Mineral Resources at Lena is based on information compiled by Mr Paul Payne, a Competent Person who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Payne is a full-time employee of Payne Geological Services. Mr Payne has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Payne consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report that relates to Mineral Resources at Break of Day is based on information compiled by Mr Aaron Meakin. Mr Meakin is a full-time employee of CSA Global Pty Ltd and is a Member of the Australasian Institute of Mining and Metallurgy. Mr Meakin has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Persons as defined in the 2012 edition of the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Mr Meakin consents to the disclosure of the information in this report in the form and context in which it appears. The information in this report that relates to the Hollandaire, Rapier South, Jasper Queen, Gilt edge, Leviticus and Numbers Mineral Resource and Ore Reserve Estimates is extracted from the report created by Silver Lake Resources Limited entitled “Mineral Resources and Ore Reserves Update”, 26 August 2016 and is available to view on Silver lake’s website (www.silverlakeresources.com.au) and the ASX (www.asx.com. au). The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and, in the case of estimates of Mineral Resources and Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement. Exploration Results The information in this presentation that relates to Exploration Results is based on information compiled and thoroughly reviewed by Mr Robert Waugh. Mr Waugh is a Fellow of the Australasian Institute of Mining and Metallurgy (FAusIMM) and a Member of the Australian Institute of Geoscientists (MAIG). Mr Waugh is Managing Director of Musgrave Minerals Ltd. Mr Waugh has sufficient industry experience to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Waugh consents to the inclusion in the report of the matters based on their information in the form and context in which it appears. Forward Looking Statements This document may contain certain forward-looking statements. Forward-looking statements include, but are not limited to statements concerning Musgrave Minerals Limited’s (Musgrave’s) current expectations, estimates and projections about the industry in which Musgrave operates, and beliefs and assumptions regarding Musgrave’s future performance. When used in this document, words such as “anticipate”, “could”, “plan”, “estimate”, “expects”, “seeks”, “intends”, “may”, “potential”, “should”, and similar expressions are forward-looking statements. Although Musgrave believes that its expectations reflected in these forward- looking statements are reasonable, such statements are subject to known and unknown risks, uncertainties and other factors, some of which are beyond the control of Musgrave and no assurance can be given that actual results will be consistent with these forward-looking statements. PAGE 14 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 TENEMENT SCHEDULE Tenement Schedule as at 18 September 2020 Project / Tenement Location Status Interest Cue Project Western Australia E20/606 E20/608 E20/616 E20/629 E20/630 E20/659 E20/698 E20/699 E20/700 E20/836 E21/129 E21/144 E21/177 E21/194 E21/200 E21/204 E21/207 E21/208 E58/335 E59/507 M20/225 M20/245 M20/277 M20/526 M21/106 M21/107 M58/224 M58/225 P20/2279 P21/0757 P58/1709 P59/1710 L20/57 P21/731 P21/732 P21/735 P21/736 P21/737 P21/739 P21/741 Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted 20% non-gold rights, 100% gold rights 20% non-gold rights, 100% gold rights 20% non-gold rights, 100% gold rights 20% non-gold rights, 100% gold rights 20% non-gold rights, 100% gold rights 20% non-gold rights, 100% gold rights 20% non-gold rights, 100% gold rights 20% non-gold rights, 100% gold rights 20% non-gold rights, 100% gold rights 20% non-gold rights, 100% gold rights MGV 100% (EVN earning 75%) MGV 100% (EVN earning 75%) MGV 100% (EVN earning 75%) MGV 100% (EVN earning 75%) MGV 100% (EVN earning 75%) MGV 100% (EVN earning 75%) MGV 100% (EVN earning 75%) MGV 100% (EVN earning 75%) MGV 100% MGV 100% (EVN earning 75%) 20% non-gold rights, 100% gold rights 20% non-gold rights, 100% gold rights 20% non-gold rights, 100% gold rights 20% non-gold rights, 100% gold rights Granted MGV 100% (EVN earning 75% over lake portion) Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted MGV 100% (EVN earning 75%) MGV 100% MGV 100% 20% non-gold rights, 100% gold rights 100% gold rights MGV 100% (EVN earning 75%) MGV 100% MGV 100% MGV Earning 100% (Mainland Option) MGV Earning 100% (Mainland Option) MGV Earning 100% (Mainland Option) MGV Earning 100% (Mainland Option) MGV Earning 100% (Mainland Option) MGV Earning 100% (Mainland Option) MGV Earning 100% (Mainland Option) PAGE 15 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 DIRECTORS’ REPORT Your Directors present their report on the consolidated entity consisting of Musgrave Minerals Limited (“the Company”) and its subsidiary (“the Group” or “the Consolidated Entity”) at the end of the year ended 30 June 2020. DIRECTORS The following persons were Directors of the Company during the whole of the financial year and up to the date of this report: • Mr Graham Ascough, Non-Executive Chairman • Mr Robert Waugh, Managing Director • Ms Kelly Ross, Non-Executive Director • Mr John Percival, Non-Executive Director PRINCIPAL ACTIVITIES During the year, the principal continuing activities of the Group consisted of: • • • • exploration of mineral tenements, both on a joint venture basis and by the Group in its own right, with the intent to progress to development in the near to mid-term; development and production studies on existing resources; continuing to seek extensions of areas held and to seek out new areas with mineral potential; and evaluating results received through surface sampling, geophysical surveys and drilling activities carried out during the year. FINANCIAL RESULTS The consolidated profit of the Group after providing for income tax for the year ended 30 June 2020 was $992,169 (2019: loss of $1,329,040). As at 30 June 2020, the Group had net assets of $29,108,808 (2019: $20,092,444) including cash and cash equivalents of $9,122,692 (2019: $3,543,732). DIVIDENDS No dividends have been paid or declared since the start of the financial year. No recommendation for the payment of a dividend has been made by the Directors. OPERATIONS AND FINANCIAL REVIEW Information on the operations of the Group and its prospects is set out in the “Review of Operations” section of this Report. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS Significant changes in the state of affairs of the PAGE 16 Group during the financial year were as follows: Exploration continued to be a major focus for the Company with exceptional drilling results at the Cue Project as discussed in the Review of Operations section of this report. Moving forward, the Company expects to commence feasibility studies and define a clear path to development. In September 2019 Musgrave announced that it had entered into an Earn-In and Joint Venture Exploration Agreement with Evolution Mining Limited over a select area of Lake Austin and surrounds (JV Area) on the Cue Project. The JV Area excludes all the known resources including Lena and Break of Day, Starlight and the Mainland option area. Evolution can earn a 75% interest in the JV Area by sole funding A$18 million on exploration over a five year term with a minimum commitment of A$4 million in the first two years. Musgrave will manage the JV during the initial period. On 4 May 2020, the Company completed a placement to corporate, institutional, professional and sophisticated investors of 57.1 million ordinary shares at an issue price of 10.5 cents per share raising $6,000,000 before costs. 0n 1 May 2020, the Company executed a Joint venture with Cyprium Australia Pty Ltd (“Cyprium”) regarding the non-gold rights over the northern tenements at the Cue Project in Western Australia’s Murchison region. Cyprium has earned an 80% interest in the non-gold rights. Musgrave retains a 20% free-carried interest to the completion of a definitive feasibility study on the non-gold rights and 100% of the gold rights. There were no other significant changes in the state of affairs of the Group during the financial year. EVENTS SINCE THE END OF THE FINANCIAL YEAR The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has not significantly impacted the entity up to 30 June 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided. There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 DIRECTORS’ REPORT significantly the operations, the results of those operations, or the state of affairs of the Group in future financial years. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS The Directors are not aware of any developments that might have a significant effect on the operations of the Group in subsequent financial years not already disclosed in this report. ENVIRONMENTAL REGULATION The Group is subject to significant environmental regulation in respect of its exploration activities. Tenements in Western Australia and South Australia are granted subject to adherence to environmental conditions with strict controls on clearing, including a prohibition on the use of mechanised equipment or development without the approval of the relevant Government agencies, and with rehabilitation required on completion of exploration activities. These regulations are controlled by the Department of Mines, Industry Regulation and Safety (Western Australia) and the Department of State Development (South Australia). Musgrave Minerals Limited conducts its exploration activities in an environmentally sensitive manner and the Group is not aware of any breach of statutory conditions or obligations. GREENHOUSE GAS AND ENERGY DATA REPORTING REQUIREMENTS The Directors have considered compliance with the National Greenhouse and Energy Reporting Act 2007 which requires entities to report annual greenhouse gas emissions and energy use. The Directors have assessed that there are no current reporting requirements for the year ended 30 June 2020. However, reporting requirements may change in the future. Information on Directors Graham Ascough, BSc, PGeo, MAusIMM (Non-Executive Chairman), Director since 26 May 2010 Experience and expertise Graham Ascough is a senior resources executive with more than 30 years of industry experience evaluating mineral projects and resources in Australia and overseas. He has had broad industry involvement ranging from playing a leading role in setting the strategic direction for significant country-wide exploration programs to working directly with mining and exploration companies. Mr Ascough is a geophysicist by training and was the Managing Director of ASX listed Mithril Resources Ltd from October 2006 until June 2012. Prior to joining Mithril in 2006, Mr Ascough was the Australian Manager of Nickel and PGM Exploration at the major Canadian resources house, Falconbridge Ltd (acquired by Xstrata Plc in 2006). He is a Member of the Australasian Institute of Mining and Metallurgy (“AusIMM”) and is a Professional Geoscientist of Ontario, Canada. Other current directorships PNX Metals Ltd (appointed 10 December 2012) Sunstone Metals Ltd (appointed 29 November 2013) Former directorships in last three years Mithril Resources Ltd (appointed 9 October 2006 – ceased 15 May 2019) Special responsibilities Chair of the Board Member of the Audit Committee Interests in shares and options Ordinary shares – Musgrave Minerals Limited Unlisted options – Musgrave Minerals Limited 1,841,172 3,000,000 PAGE 17 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 DIRECTORS’ REPORT Mr Robert Waugh MSc, BSc, FAusIMM, MAIG (Managing Director) Director since 6 March 2011 Experience and expertise Robert Waugh has over 30 years of experience in the resources sector and was a critical member of the WMC Resources Ltd (“WMC”) exploration team that discovered the Nebo-Babel nickel/copper/PGM deposit at West Musgrave in 2000. He was subsequently Project Manager of the team that defined the initial resource at Nebo-Babel. Mr Waugh has held senior exploration management roles in a number of companies including WMC and BHP Billiton Exploration Ltd. Mr Waugh has extensive exploration and mining experience in a range of commodities including gold, nickel, copper, uranium and PGMs. Mr Waugh has also been involved in a number of other mineral discoveries during his career including the recent gold discoveries at the Cue Project in Western Australia. Mr Waugh holds a Bachelor of Science degree majoring in geology from the University of Western Australia and a Master of Science in Mineral Economics from Curtin University and the Western Australian School of Mines. Mr Waugh is a Fellow of the AusIMM and a Member of the Australian Institute of Geoscientists. Other current directorships None Former directorships in last three years None Special responsibilities Managing Director Interests in shares and options Ordinary shares – Musgrave Minerals Limited Unlisted options – Musgrave Minerals Limited 3,300,000 6,500,000 Mrs Kelly Ross BBus, CPA, ACG (CS,CGP) (Non-Executive Director), Director since 26 May 2010 Experience and expertise Mrs Ross is a qualified accountant holding a Bachelor of Business (Accounting) and has the designation CPA from the Australian Society of Certified Practicing Accountants. Mrs Ross is a Chartered Secretary with over 30 years’ experience in accounting and administration in the mining industry. Mrs Ross was part of the team that floated Independence Group NL (“IGO”). IGO listed on the ASX in 2002 and Mrs Ross was Company Secretary and CFO for 10 years. Mrs Ross was a Director of IGO for 12 years from 2002 to 2014. Mrs Ross retired from the Board of IGO on 24 December 2014. Prior to IGO, Mrs Ross was a senior accountant at Resolute Ltd from 1987 to 2000 during which time Resolute became a gold producer in Ghana, Tanzania and at several mines in Western Australia. Mrs Ross was appointed a Director of Musgrave Minerals on 26 May 2010 and is the Chairman of the Audit Committee. Other current directorships Yandal Resources Ltd (appointed 6 April 2018) Former directorships in last three years None Special responsibilities Chair of the Audit Committee Interests in shares and options Ordinary shares – Musgrave Minerals Limited Unlisted options – Musgrave Minerals Limited 581,492 2,000,000 PAGE 18 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 DIRECTORS’ REPORT Mr John Percival (Non-Executive Director) Director since 26 May 2010 Experience and expertise John Percival has been involved in investment and merchant banking for over 25 years including 15 years as Investment Manager of Barclays Bank New Zealand Ltd. In addition, he has extensive experience in stockbroking, corporate finance and investment management. In 1995 Mr Percival was appointed to the Board of Goldsearch Limited and was an Executive Director from 2000 to 2014. In May 2014, Goldsearch changed direction and Mr Percival resigned his executive position. Other current directorships None Former directorships in last three years Zoono Group Limited (formerly Goldsearch Ltd) (resigned 26 April 2017) Special responsibilities Member of the Audit Committee Interests in shares and options Ordinary shares – Musgrave Minerals Limited Unlisted options – Musgrave Minerals Limited 894,559 2,300,000 COMPANY SECRETARY Ms Patricia (Trish) Farr, GradCertProfAcc, GradDipACG, GAICD FGIA FCG (CS, CGP) appointed 30 June 2015 Trish Farr is an experienced Chartered Secretary with over 20 years’ experience in the exploration and mining industry in the areas of corporate governance, compliance and administration. Ms Farr provides company secretarial services to several ASX listed and unlisted companies predominately in the resources and health sectors. Ms Farr is also a Director and the Company Secretary of Jindalee Resources Limited. Ms Farr is a fellow member of Chartered Secretaries & Administrators and the Governance Institute of Australia (formerly Chartered Secretaries Australia) and a graduate member of the Australian Institute of Company Directors. MEETINGS OF DIRECTORS The numbers of meetings of the Company’s Board of Directors and of each Board committee held during the year ended 30 June 2020, and the numbers of meetings attended by each Director were: Board of Directors Audit Committee A 11 11 11 11 B 11 11 11 11 A 2 B 2 n/a n/a 2 2 2 2 Graham Ascough Robert Waugh Kelly Ross John Percival A = Number of meetings attended. B = Number of meetings held during the time the Director held office or was a member of the committee during the year. RETIREMENT, ELECTION AND CONTINUATION IN OFFICE OF DIRECTORS Ms Kelly Ross, being the Director retiring by rotation who, being eligible, will offer herself for re- election at the 2020 Annual General Meeting. REMUNERATION REPORT (AUDITED) The Directors present the Musgrave Minerals Limited 2020 Remuneration Report, outlining key aspects of the Company’s remuneration policy and framework, and remuneration awarded this year. The report contains the following sections: a) Key management personnel covered in this report b) Remuneration governance and the use of remuneration consultants c) Executive remuneration policy and framework d) Relationship between remuneration and the Group’s performance e) Non-executive director remuneration policy f) Voting and comments made at the Company’s 2019 Annual General Meeting g) Details of remuneration h) Service agreements i) j) Details of share-based compensation and bonuses Equity instruments held by key management personnel k) Loans to key management personnel l) Other transactions with key management personnel. PAGE 19 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 DIRECTORS’ REPORT a) Key management personnel covered in this report Non-Executive and Executive Directors (see pages 17 to 19 for details about each director) Name Position Graham Ascough Non-Executive Chairman Robert Waugh Managing Director Kelly Ross Non-Executive Director John Percival Non-Executive Director b) Remuneration governance and the use of remuneration consultants The Company does not have a Remuneration Committee. Remuneration matters are handled by the full Board of the Company. In this respect the Board is responsible for: • • • • the over-arching executive remuneration framework; the operation of the incentive plans which apply to executive directors and senior executives (the executive team), including key performance indicators and performance hurdles; remuneration levels of executives; and non-executive director fees. The objective of the Board is to ensure that remuneration policies and structures are fair and competitive and aligned with the long-term interests of the Company. In addition, all matters of remuneration are handled in accordance with the Corporations Act 2001 requirements, especially with regard to related party transactions. That is, none of the Directors participate in any deliberations regarding their own remuneration or related issues. Independent external advice is sought from remuneration consultants when required, however no advice was sought during the year ended 30 June 2020. • • transparent and easily understood; and acceptable to shareholders. All executives receive consulting fees or a salary, part of which may be taken as superannuation, and from time to time, options. The Board reviews executive packages annually by reference to the executive’s performance and comparable information from industry sectors and other listed companies in similar industries. All remuneration paid to specified executives is valued at the cost to the Group and expensed. Options are valued using a Black-Scholes option pricing model. d) Relationship between remuneration and the Group’s performance Emoluments of Directors are set by reference to payments made by other companies of similar size and industry, and by reference to the skills and experience of Directors. Fees paid to Non- Executive Directors are not linked to the performance of the Group. This policy may change once the exploration phase is complete and the Group is generating revenue. At present the existing remuneration policy is not impacted by the Group’s performance including earnings and changes in shareholder wealth (e.g. changes in share price). The Board has not set short term performance indicators, such as movements in the Company’s share price, for the determination of Non-Executive Director emoluments as the Board believes this may encourage performance which is not in the long-term interests of the Company and its shareholders. The Board has structured its remuneration arrangements in such a way it believes is in the best interests of building shareholder wealth. The Board believes participation in the Company’s Employee Share Option Plan motivates and aligns key management and executives with the long-term interests of shareholders. c) Executive remuneration policy and framework In determining executive remuneration, the Board aims to ensure that remuneration practices are: • • competitive and reasonable, enabling the Company to attract and retain key talent; aligned to the Company’s strategic and business objectives and the creation of shareholder value; e) Non-executive director remuneration policy On appointment to the Board, all Non-Executive Directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms, including remuneration relevant to the office of Director. The Board policy is to remunerate Non- Executive Directors at commercial market rates for comparable companies for their time, PAGE 20 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 DIRECTORS’ REPORT commitment and responsibilities. Non-Executive Directors receive a Board fee but do not receive fees for chairing or participating on Board committees. Board members are allocated superannuation guarantee contributions as required by law, and do not receive any other retirement benefits. From time to time, some individuals may choose to sacrifice their salary or consulting fees to increase payments towards superannuation. The maximum annual aggregate Non-Executive Directors’ fee pool limit is $250,000 as disclosed in the Company’s Replacement Prospectus dated 8 March 2011. Fees for Non-Executive Directors are not linked to the performance of the Group. Non-Executive Directors’ remuneration may also include an incentive portion consisting of options, subject to approval by shareholders. f) Voting and comments made at the Company’s 2019 Annual General Meeting Musgrave Minerals Limited received more than 98% of “yes” votes on its remuneration report for the 2019 financial year. The Company did not receive any specific feedback at the Annual General Meeting or throughout the year on its remuneration practices. g) Details of remuneration The following table shows details of the remuneration received by the Group’s key management personnel for the current and previous financial year. Short-term employment benefits Post- employment benefits Share- based payments Salary & fees $ Bonus $ Non- monetary Benefit $ Super- annuation $ Options $ Total $ Options % Perf Related % 2020 Directors G Ascough R Waugh K Ross J Percival TOTALS 2019 Directors G Ascough R Waugh K Ross J Percival TOTALS 65,000 275,433 45,000 45,000 430,433 – – – – – 65,000 275,433 45,000 45,000 430,433 – 54,415 – – 54,415 h) Service agreements – – – – – – – – – – – 26,166 4,275 4,275 34,716 – 31,336 4,275 4,275 39,886 – 65,000 61,110 362,709 49,275 49,275 61,110 526,259 – – – 16.8 – – – – – – 75,878 140,878 512,939 99,860 99,860 328,803 853,537 151,755 50,585 50,585 53.9 29.6 50.7 50.7 – 10.6 – – On appointment to the Board, all Non-Executive Directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms of appointment, including compensation relevant to the office of Director. Remuneration and other terms of employment for other members of key management personnel are formalised in service agreements as summarised below. R Waugh, Managing Director Mr Waugh is remunerated pursuant to an Executive Services Agreement. Under the agreement the Company agrees to employ Mr Waugh as Managing Director of the Company with a base salary of $275,433 plus statutory superannuation. Either party may terminate the employment contract without cause by providing six months written notice or by making payment in lieu of notice (in the case of the Company), based on the annual salary component. Termination payments are generally not payable on PAGE 21 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 DIRECTORS’ REPORT resignation or dismissal for serious misconduct. In the instance of serious misconduct, the Company can terminate employment at any time. i) Details of share-based compensation and bonuses Options Options over ordinary shares in Musgrave Minerals Limited are granted under the Employee Share Option Plan (“ESOP”). Participation in the ESOP and any vesting criteria are at the Board’s discretion and no individual has a contractual right to participate in the scheme or to receive any guaranteed benefits. Any options issued to Directors of the Company are subject to shareholder approval. The 3,000,000 options issued to Mr Waugh in the 2020 financial year were approved by shareholders at the 2019 Annual General Meeting. The terms and conditions of each grant of options during the period affecting remuneration in the current or future reporting periods are set out below. Option series Issue date Vesting and exercise date Expiry date Exercise price % Vested Value per option at grant date U 21 Nov 2019 21 Nov 2019 21 Nov 2022 $0.1045 $0.0204 100% The fair value of options at grant date are independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. Further information on the fair value of share options and assumptions is set out in Note 23 to the financial statements. j) Equity instruments held by key management personnel The following tables detail the number of fully paid ordinary shares and options over ordinary shares in the Company that were held during the financial year by key management personnel of the Group, including their close family members and entities related to them. Options 2020 Directors Opening balance at 1 July Granted as remun- eration Options exercised Net change (other) Balance at 30 June Vested but not exercisable Vested and exercisable Vested during the year G Ascough 3,000,000 – R Waugh 6,100,000 3,000,000 K Ross 2,000,000 J Percival 2,000,000 – – – – – – (750,000) 2,250,000 (800,000) 8,300,000 (500,000) 1,500,000 (500,000) 1,500,000 TOTAL 13,100,000 3,000,000 – (2,550,000) 13,550,000 – 2,250,000 – 8,300,000 – 1,500,000 – 1,500,000 – 13,550,000 – – – – – During the year, no ordinary shares in the Company were provided to key management personnel as a result of the exercise of remuneration options. PAGE 22 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 DIRECTORS’ REPORT Shareholdings Opening balance at 1 July Granted as remun- eration Options exercised Net change (other) Balance at 30 June 2020 Directors G Ascough R Waugh K Ross J Percival TOTAL 1,091,172 1,717,172 181,492 694,559 3,684,395 – – – – – – – – – – – – – 200,000 200,000 1,091,172 1,717,172 181,492 894,559 3,884,395 k) Loans to key management personnel There were no loans to individuals or any key management personnel during the financial year or the previous financial year. l) Other transactions with key management personnel There were no other transactions with key management personnel during the financial year or the previous financial year. END OF REMUNERATION REPORT (AUDITED) SHARES UNDER OPTION Unissued ordinary shares of the Company under option at the date of this report are as follows: Date options issued Expiry date Issue price of shares Number under option 29 November 2017 29 November 2020 21 November 2018 16 November 2021 30 November 2018 16 November 2021 21 November 2019 21 November 2022 20 August 2020 20 August 2020 20 August 2023 20 August 2023 $0.0974 $0.1275 $0.1275 $0.1045 $0.932 $0.932 500,000 5,700,000 2,450,000 3,650,000 5,900,000 1,980,000 TOTAL 20,180,000 No option holder has any right under the options to participate in any other share issue of the Company or any other entity. SHARES ISSUED ON THE EXERCISE OF OPTIONS There were no other shares issued on the exercise of options during the year and up to the date of this report. CORPORATE GOVERNANCE STATEMENT The Company’s 2020 Corporate Governance Statement has been released as a separate document and is located on the Company’s website at http://www.musgraveminerals.com.au/corporate- governance. PROCEEDINGS ON 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 Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS During the financial year, the Company paid a premium to insure the Directors and Officers of the consolidated entity against any liability incurred as a Director or Officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits the disclosure of the nature of the liabilities covered or the amount of the premium paid. PAGE 23 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 DIRECTORS’ REPORT The Group has not entered into any agreement with its current auditors indemnifying them against claims by a third party arising from their position as auditor. NON-AUDIT SERVICES The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the Group are important. Details of the amounts paid or payable to the auditors BDO Audit (WA) Pty Ltd for audit and non- audit services provided during the year are set out in Note 18. During the year ended 30 June 2020 no fees were paid or were payable for non-audit services provided by the auditors of the consolidated entity (2019: $Nil). AUDITOR’S INDEPENDENCE DECLARATION A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on the following page. Signed in accordance with a resolution of the Directors. Graham Ascough Chairman Perth, 24 September 2020 PAGE 24 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 AUDITOR’S INDEPENDENCE DECLARATION Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au 38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 38 Station Street Australia Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia DECLARATION OF INDEPENDENCE BY GLYN O'BRIEN TO THE DIRECTORS OF MUSGRAVE MINERALS LIMITED As lead auditor of Musgrave Minerals Limited for the year ended 30 June 2020, I declare that, to the DECLARATION OF INDEPENDENCE BY GLYN O'BRIEN TO THE DIRECTORS OF MUSGRAVE MINERALS LIMITED best of my knowledge and belief, there have been: As lead auditor of Musgrave Minerals Limited for the year ended 30 June 2020, I declare that, to the 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in best of my knowledge and belief, there have been: relation to the audit; and 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in 2. No contraventions of any applicable code of professional conduct in relation to the audit. relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Musgrave Minerals Limited and the entity it controlled during the period. This declaration is in respect of Musgrave Minerals Limited and the entity it controlled during the period. Glyn O'Brien Director Glyn O'Brien Director BDO Audit (WA) Pty Ltd Perth, 24 September 2020 BDO Audit (WA) Pty Ltd Perth, 24 September 2020 BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent a firms. Liability limited by a scheme approved under Professional Standards Legislation. BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent a firms. Liability limited by a scheme approved under Professional Standards Legislation. PAGE 25 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2020 Revenue from continuing operations Other income Employee benefits expense Depreciation expense Impairment expense Finance costs Other expenses Change in fair value of derivate financial instruments Notes 3(a) 3(a) 3(b) 10 2 3(c) 9(a) CONSOLIDATED 2020 $ 52,911 320,674 (411,248) (118,465) (3,434) (30,378) 2019 $ 108,996 260,000 (676,034) (25,747) (336,589) – (205,891) (335,666) 1,388,000 (324,000) Profit / (loss) from continuing operations before income tax 992,169 (1,329,040) Income tax benefit 5 – – Profit / (loss) after income tax for the year attributable to the owners of Musgrave Minerals Limited 992,169 (1,329,040) Other comprehensive income / (loss) Items that will not be reclassified to profit or loss Change in fair value of financial assets at fair value through OCI 9(b) 561,352 (354,425) Other comprehensive income / (loss) for the year (net of tax) Total comprehensive profit / (loss) for the year attributable to the owners of Musgrave Minerals Limited 561,352 (354,425) 1,553,521 (1,683,465) Cents per share Cents per share Profit / (loss) per share attributable to the owners of Musgrave Minerals Limited Basic profit / (loss) per share Diluted profit / (loss) per share 17 17 0.24 0.23 (0.37) (0.37) The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. PAGE 26 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020 ASSETS Current Assets Cash and cash equivalents Trade and other receivables Other current assets Derivate financial instruments Total Current Assets Non–Current Assets CONSOLIDATED Notes 2020 $ 2019 $ 6 7 8 9(a) 9,122,692 3,543,732 273,652 10,475 – 133,758 21,211 131,000 9,406,819 3,829,701 Financial assets at fair value through other comprehensive income 9(b) 1,946,313 505,575 Property, plant and equipment Right of use assets Exploration and evaluation Total Non–Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Provisions Lease liabilities Total Current Liabilities Non–Current Liabilities Lease liabilities Total Non–Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulated losses TOTAL EQUITY 2 10 11 12 13 13 14 15 16 56,031 266,745 18,966,123 21,235,212 30,642,031 74,948 – 15,976,794 16,557,317 20,387,018 1,116,981 135,580 94,782 1,347,343 185,880 185,880 177,614 116,960 – 294,574 – – 1,533,223 294,574 29,108,808 20,092,444 52,004,639 44,592,770 1,570,637 1,128,652 (24,466,468) (25,628,978) 29,108,808 20,092,444 The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. PAGE 27 PAGE 27 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2020 ATTRIBUTABLE TO EQUITY HOLDERS OF THE ENTITY Financial Asset Reserve $ Accumulated Losses $ Options Reserve $ Issued Capital $ Total Equity $ At 1 July 2018 39,436,729 484,487 486,789 (24,321,810) 16,086,195 Total comprehensive loss for the year Other comprehensive loss Total comprehensive loss for the year (net of tax) Transactions with owners in their capacity as owners: – – – Issue of shares 5,500,000 Transaction costs of issuing shares Issue of options Transfer from share option reserve: – Due to expiry of options (343,959) – – 533,673 (21,872) – – – – – – (1,329,040) (1,329,040) (354,425) – (354,425) (354,425) (1,329,040) (1,683,465) – – – – – – – 5,500,000 (343,959) 533,673 21,872 – At 30 June 2019 44,592,770 996,288 132,364 (25,628,978) 20,092,444 At 1 July 2019 44,592,770 996,288 132,364 (25,628,978) 20,092,444 Total comprehensive profit for the year Other comprehensive income Total comprehensive profit for the year (net of tax) Transactions with owners in their capacity as owners: Issue of shares Transaction costs of issuing shares – – – 7,723,232 (396,461) – – – – – Issue of options (Note 23) – 136,072 Transfer from share option reserve: – Due to exercise of options 85,098 (85,098) – Due to expiry of options – (170,341) – 992,169 561,352 – 992,169 561,352 561,352 992,169 1,553,521 – – – – – – – – – 170,341 7,723,232 (396,461) 136,072 – – At 30 June 2020 52,004,639 876,921 693,716 (24,466,468) 29,108,808 The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. PAGE 28 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2020 CASH FLOWS FROM OPERATING ACTIVITIES Joint venture management fees Payments to suppliers and employees Interest received Interest paid Government grant received Net advances from joint venture partner CONSOLIDATED Notes 2020 $ 2019 $ 191,632 – (644,868) (743,881) 63,647 (30,378) 50,000 165,535 102,396 – – – NET CASH FLOWS USED IN OPERATING ACTIVITIES 24 (204,432) (641,485) NET CASH FLOWS USED IN INVESTING ACTIVITIES Payments for property, plant and equipment (7,689) (55,202) Payments for tenements Proceeds from sale of non–gold rights Payments for exploration activities Payments to acquire investments Proceeds from disposal of investments 10 3(a) 9 9 – – (125,000) 10,000 (2,097,362) (6,030,744) (400,000) 1,039,614 – – NET CASH FLOWS USED IN INVESTING ACTIVITIES (1,465,437) (6,200,946) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Proceeds from exercise of options Share issue costs Lease principal repayments 14(b) 14(b) 14(b) 7,500,000 5,500,000 223,232 – (396,461) (343,959) (77,942) – NET CASH FLOWS FROM FINANCING ACTIVITIES 7,248,829 5,156,041 Net increase / (decrease) in cash and cash equivalents 5,578,960 (1,686,390) Cash and cash equivalents at beginning of the year 3,543,732 5,230,122 CASH AND CASH EQUIVALENTS AT END OF THE YEAR 6 9,122,692 3,543,732 The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. PAGE 29 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 1 CORPORATE INFORMATION The consolidated financial report of Musgrave Minerals Limited for the year ended 30 June 2020 was authorised for issue in accordance with a resolution of the Directors on 24 September 2020. Musgrave Minerals Limited is a for profit company incorporated in Australia and limited by shares which are publicly traded on the Australian Securities Exchange. The nature of the operation and principal activities of the consolidated entity are described in the attached Directors’ Report. The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below and have been applied consistently to all periods presented in the consolidated financial statements and by all entities in the consolidated entity. 2 STATEMENT OF COMPLIANCE These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001. Compliance with IFRS The consolidated financial statements of Musgrave Minerals Limited also comply with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). New and amended accounting standards and interpretations adopted by the Group The following standard and interpretation relevant to the operations of the Group and effective from 1 July 2019 have been adopted. • • AASB 16 Leases; and AASB Interpretation 23 Uncertainty over Income Tax Treatments. The impact of the adoption of this standard and interpretation are as outlined below. AASB 16 Leases AASB 16 Leases requires lessees to account for all leases under a single on-balance sheet model in a similar way to finance leases under AASB 117 Leases. The standard includes two recognition exemptions for lessees i.e. leases of ’low-value’ assets and short-term leases (i.e. leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e. the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e. the right-of-use asset or ROU asset). Lessees will separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset. Lessees remeasure the lease liability upon the occurrence of certain events (e.g. a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. AASB 16 became effective for the Company for the accounting period beginning 1 July 2019. The Company has chosen the modified retrospective approach to the application of AASB 16 and has consequently not restated the comparative information. The Company leases its corporate office, its core yard and IT equipment and these have been recognised as right-of-use-assets with a corresponding lease liability. For leases of ‘low-value’ assets and short-term leases the Company has opted to recognise the lease expense on a straight-line basis as incurred. Impact of adoption of AASB 16 Leases As at 1 July 2019 the Company recognised right-of-use assets with a net book value of $198,620 and corresponding lease liabilities of $198,620. After accounting for new leases taken out during the reporting period, depreciation and lease principal payments the balances as at 30 June 2020 were right-of-use assets with a net book value of $266,745 and lease liabilities of $280,622. PAGE 30 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 2 STATEMENT OF COMPLIANCE CONTINUED The impact on the statement of profit or loss (increase / (decrease)) for the year is: Expense Tenancy and operating Depreciation expense Finance costs Net impact on profit for the period $ Notes 108,320 (91,859) (30,378) (13,914) Rent expense on previously recognised operating lease Depreciation of lease asset recognised under AASB 16 Interest on lease recognised under AASB 16 There is no material impact on other comprehensive income and the basic and diluted earnings per share. The following is a reconciliation of total operating lease commitments at 30 June 2019 to the lease liabilities recognised at 1 July 2019: Total operating lease commitments disclosed at 30 June 2019 Minor adjustments Operating lease liabilities before discounting Discounted using incremental borrowing rate Reasonably certain extension options Total lease liabilities recognised under AASB16 at 1 July 2019 $ 103,259 375 103,634 (8,225) 103,211 198,620 AASB Interpretation 23 Uncertainty over Income Tax Treatments This Interpretation clarifies the application of the recognition and measurement criteria in AASB 112 Income Taxes when there is uncertainty over income tax treatments. The Interpretation addresses (a) whether an entity considers uncertain tax treatments separately; (b) the assumptions an entity makes about the examination of tax treatments by taxation authorities; (c) how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and (d) how an entity considers changes in facts and circumstances. The adoption of this Interpretation has had no impact on the current or previous year and as such there have been no adjustments to the opening balance of accumulated losses. New accounting standards and interpretations The following new and amended accounting standards and interpretations relevant to the operations of the Group have been published but are not mandatory for the current financial year. The Group has decided against early adoption of these standards and has not yet determined the potential impact on the financial statements from the adoption of these standards and interpretations. PAGE 31 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 2 STATEMENT OF COMPLIANCE CONTINUED The key new standards which may impact the Group in future years are detailed below: New or revised requirement AASB 2018-6: Amendments to Australian Accounting Standards – Definition of a Business The Standard amends the definition of a business in AASB 3 Business Combinations. The amendments clarify the minimum requirements for a business, remove the assessment of whether market participants are capable of replacing missing elements, add guidance to help entities assess whether an acquired process is substantive, narrow the definitions of a business and of outputs, and introduce an optional fair value concentration test. Application date of standard Application date for Group 1 Jan 2020 1 Jul 2020 AASB 1018-7: Amendments to Australian Accounting Standards – Definition of Material 1 Jan 2020 1 Jul 2020 This Standard amends AASB 101 Presentation of Financial Statements and AAS 108 Accounting Policies, Changes in Accounting Estimates and Errors to align the definition of ‘material’ across the standards and to clarify certain aspects of the definition. The amendments clarify that materiality will depend on the nature or magnitude of information. An entity will need to assess whether the information, either individually or in combination with other information, is material in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. a) Basis of measurement Historical cost convention These consolidated financial statements have been prepared under the historical cost convention, except where stated. Critical accounting estimates The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed where appropriate. b) Going concern These consolidated financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. c) Principles of consolidation Subsidiaries The consolidated financial statements incorporate the assets and liabilities of the Company’s subsidiary at 30 June 2020 and the results of its subsidiary for the year then ended. The Company and its subsidiary together are referred to in this financial report as the Group or the consolidated entity. Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its investment with the entity and has the ability to affect those returns through its power to direct the activities of the entity. The acquisition method of accounting is used to account for business combinations by the Group. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. PAGE 32 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 2 STATEMENT OF COMPLIANCE CONTINUED Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated Statement of Profit or Loss and Other Comprehensive Income, consolidated statement of financial position and the consolidated statement of changes in equity respectively. d) Critical accounting judgements and key sources of estimation uncertainty The application of accounting policies requires the use of judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. e) Functional and presentation currency The consolidated financial statements are presented in Australian dollars, which is the Group’s functional and presentational currency. f) Leases Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss as incurred over the period of the lease. Leases in which a significant portion of the risks and rewards of ownership are transferred to the Group as lessee are classified as finance leases. At the commencement date of a lease, the Group recognises a liability to make lease payments (i.e. the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e. the right-of-use asset). The Group separately recognises the interest expense on the lease liability and the depreciation expense on the right-of-use asset. g) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. PAGE 33 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 3 REVENUE AND EXPENSES a) Revenue and other income Revenue from continuing operations Interest revenue Other Income Joint venture management fees Government grants Option fee and shares - Cyprium Metals Limited (i) Other income Total other income Total revenue and other income CONSOLIDATED 2020 $ 2019 $ 52,911 108,996 191,632 117,500 – 11,542 320,674 373,585 – – 260,000 – 200,000 368,996 (i) In February 2019, the Company executed a Binding Term Sheet with Cyprium Australia Pty Ltd (“Cyprium”) regarding an option, earn-in and joint venture on the non-gold rights over the northern tenements at the Cue Project in Western Australia’s Murchison region. Cyprium made an initial payment of $10,000 for an exclusive 90-day option period and on 31 May 2019 exercised the option to earn an 80% interest by the payment to the Company of $250,000 worth of shares in ARC Exploration Limited (subsequently renamed Cyprium Metals Limited ASX:CYM). Revenue is recognised at an amount that reflects the consideration to which the Group expects to be entitled to in exchange for transferring services to a customer. Revenue and expenses are recognised on an accruals basis. Interest income is recognised on a time proportion basis using the effective interest method. b) Employee benefits expense Wages, salaries, directors’ fees and other remuneration expenses Superannuation contributions Transfer to / (from) annual leave provision Transfer to / (from) long service leave provision Share-based payments expense (Note 23) Transfer to capitalised exploration expenditure Total employee benefits expense CONSOLIDATED 2020 $ 1,204,600 102,640 (2,350) 20,970 136,072 2019 $ 1,382,360 125,149 (10,290) 18,300 533,673 (1,050,684) (1,373,158) 411,248 676,034 PAGE 34 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 3 REVENUE AND EXPENSES CONTINUED c) Other expenses Secretarial, professional and consultancy costs Occupancy costs Share register maintenance ASX / ASIC Promotion, advertising and sponsorship Employer related on-costs Other expenses Transfer to capitalised exploration expenditure Total other expenses CONSOLIDATED 2020 $ 109,655 4,980 15,079 61,249 88,749 15,487 123,423 (212,731) 205,891 2019 $ 113,335 97,831 18,030 50,789 56,843 53,748 177,356 (232,266) 335,666 4 SEGMENT INFORMATION The Group operates in one geographical segment, being Australia and in one operating category, being mineral exploration. Therefore, information reported to the chief operating decision maker (the Board of Musgrave Minerals Limited) for the purposes of resource allocation and performance assessment is focused on mineral exploration within Australia. The Board has considered the requirements of AASB 8: Operating Segments and the internal reports that are reviewed by the chief operation decision maker in allocating resources and have concluded at this time that there are no separately identifiable segments. 5 INCOME TAX CONSOLIDATED 2020 $ 2019 $ Statement of Profit or Loss and Other Comprehensive Income Current income tax: – Current income tax benefit at a rate of 27.5% (2019: 27.5%) – – Deferred income tax: – Relating to origination and reversal of temporary differences (1,070,889) (1,336,722) – Deferred tax liability offset by deferred tax asset losses – Temporary difference not recognised in the current period 768,825 302,064 1,746,832 (410,110) Income tax expense / (benefit) reported in the Consolidated Statement of Profit or Loss and Other Comprehensive Income A reconciliation of income tax expense / (benefit) applicable to accounting profit / (loss) before income tax at the statutory income tax rate to income tax expense / (benefit) at the Company’s effective income tax is as follows: Accounting profit / (loss) from continuing operations before income tax At the statutory income tax rate of 27.5% (2019: 27.5%) Add: – Immediate write–off of capital expenditure – Expenditures not allowable / income assessable – Other deductible items – Tax losses not recognised due to not meeting recognition criteria – – 992,169 272,846 (1,329,040) (365,486) (823,009) 414,809 (633,471) 768,825 – (1,631,367) 390,477 (140,456) 1,746,832 – PAGE 35 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 5 INCOME TAX CONTINUED The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax Recognised on the Statement of Financial Position, deferred income tax at the end of the reporting period relates to the following: (2020: 27.5%, 2019: 27.5%) Deferred income tax liabilities: – Capitalised expenditure deductible for tax purposes – Trade and other receivables – Derivative financial instruments – Financial assets at fair value through other comprehensive income Deferred income tax assets: – Trade and other payables – Employee benefits – Capital raising costs – Net lease liability CONSOLIDATED 2020 $ 2019 $ 4,851,925 11,949 – 336,740 4,001,553 13,750 24,750 36,400 5,200,614 4,076,453 (21,883) (37,284) (181,295) (3,828) (4,895) (32,164) (155,445) – – Tax losses available to offset deferred tax liability (4,956,324) (3,883,949) Net deferred tax asset / (liability) – – The Company and its 100% owned controlled entity have formed a tax consolidated group. The head entity of the tax consolidated group is Musgrave Minerals Limited. The tax consolidated group has potential revenue tax losses of $33,571,476 (2019: $30,775,748). Musgrave Minerals Limited is considered a base rate entity for income tax purposes and is therefore subject to income tax at a rate of 27.5% (2019: 27.5%). The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise benefits. The utilisation of tax losses is dependent on the Group satisfying the continuity of ownership test or the same business test at the time the tax losses are applied against taxable income. PAGE 36 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 6 CASH AND CASH EQUIVALENTS Cash at bank and on hand Short–term deposits CONSOLIDATED 2020 $ 1,896,367 7,226,325 9,122,692 2019 $ 417,407 3,126,325 3,543,732 Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, and other short–term, highly liquid investments with maturities of three months or less. The weighted average interest rate for the year was 1.21% (2019: 2.18%). The Group’s exposure to interest rate risk is set out in Note 22. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of cash and cash equivalents mentioned above. 7 TRADE AND OTHER RECEIVABLES Current GST receivable Other CONSOLIDATED 2020 $ 174,722 98,930 273,652 2019 $ 65,989 67,769 133,758 Trade and other receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date. Trade and other receivables are recognised at amortised cost using the effective interest rate method, less any allowance for expected credit losses. The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. For trade and other receivables, the Group applies the simplified approach permitted by AASB 9 to determine any allowances for expected credit losses, which requires expected lifetime losses to be recognised from initial recognition of the receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience. The amounts held in trade and other receivables do not contain impaired assets and are not past due. Based on the credit history of these trade and other receivables, it is expected that the amounts will be received when due. The Group’s financial risk management objectives and policies are set out in Note 22. Due to the short–term nature of these receivables their carrying value is assumed to approximate their fair value. 8 OTHER CURRENT ASSETS Accrued interest CONSOLIDATED 2020 $ 10,475 10,475 2019 $ 21,211 21,211 PAGE 37 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 9 FINANCIAL ASSETS a) Derivative financial instruments Current Opening balance Change in fair value Disposal Closing balance b) Financial assets at fair value through other comprehensive income Non–Current Opening balance Acquisition Change in fair value Disposal Closing balance CONSOLIDATED 2020 $ 131,000 1,388,000 (1,519,000) – 2019 $ 455,000 (324,000) – 131,000 CONSOLIDATED 2020 $ 505,575 1,919,000 561,352 (1,039,614) 1,946,313 2019 $ 610,000 250,000 (354,425) – 505,575 In February 2017, the Company entered into a Tenement Sale Agreement with Legend Mining Limited (Legend) in respect of the Group’s non–core tenements in the Fraser Range area of Western Australia. Under the terms of the Agreement, the Company transferred to Legend 100% of its interests in tenements E28/2404 and E28/2405 and as consideration for the sale received 10,000,000 fully paid ordinary shares in Legend and 10,000,000 unlisted options exercisable at $0.04 exercisable by 30 March 2021. In April 2020, the Company sold 7,500,000 of the shares it held in Legend and exercised all of the 10,000,000 unlisted options in Legend at $0.04 per share. Financial assets are recognised and derecognised on settlement date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the time–frame established by the market concerned. They are initially measured at fair value, net of transaction costs, except for those financial assets classified as fair value through profit or loss, which are initially measured at fair value. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. The Group classifies its financial assets as either financial assets at fair value though profit or loss (“FVPL”), fair value though other comprehensive income (“FVOCI”) or at amortised cost. The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. For investments in equity instruments, the classification depends on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at FVPL or FVOCI. Financial assets at FVPL For assets measured at FVPL, gains and losses will be recorded in profit or loss. The Group’s derivative financial instruments are recognised at FVPL. Assets in this category are subsequently measured at fair value. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists. Refer to Note 22 for additional details. Financial assets at OCI For assets measured at FVOCI, gains and losses will be recorded in other comprehensive income. There is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the Group’s right to receive payments is established. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value. The Group has elected to measure its listed equities at FVOCI. Assets in this category are subsequently measured at fair value. The fair values of quoted investments are based on current bid prices in an active market. Refer to Note 22 for additional details. PAGE 38 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 10 EXPLORATION AND EVALUATION Opening balance Exploration expenditure incurred during the year Mainland option fee (i) Impairment expense Closing balance CONSOLIDATED 2020 $ 2019 $ 15,976,794 2,992,763 – (3,434) 10,256,138 5,932,245 125,000 (336,589) 18,966,123 15,976,794 (i) In March 2019 the Company entered into an Option Agreement (“Agreement”) to acquire the non– alluvial gold rights to the Mainland Project for an initial payment of $125,000. Exploration and evaluation expenditure, including the costs of acquiring licences and permits, are capitalised as exploration and evaluation assets on an area of interest basis. Costs incurred before the Company has obtained the legal rights to explore an area are recognised in the Statement of Profit or Loss and Other Comprehensive Income. Exploration and evaluation assets are only recognised if the rights to the area of interest are current and either: a) b) the expenditures are expected to be recouped through successful development and exploitation or from sale of the area of interest; or activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical feasibility and commercial viability, and facts and circumstances suggest that the carrying amount exceeds the recoverable amount. For the purposes of impairment testing, exploration and evaluation assets are allocated to cash–generating units to which the exploration activity relates. The cash generating unit shall not be larger than the area of interest. Once the technical feasibility and commercial viability of the extraction of minerals in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mineral property and development assets within property, plant and equipment. When an area of interest is abandoned or the Directors decide that it is not commercial, any accumulated costs in respect of that area are written off in the financial period the decision is made. Significant estimate and judgement There is some subjectivity involved in the carry forward of capitalised exploration and evaluation expenditure or, where appropriate, the write off to the Statement of Profit or Loss and Other Comprehensive Income, however management give due consideration to areas of interest on a regular basis and are confident that decisions to either write off or carry forward such expenditure fairly reflect the prevailing situation. PAGE 39 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 11 TRADE AND OTHER PAYABLES Trade creditors and accruals Amounts due to joint venture partner Other payables CONSOLIDATED 2020 $ 965,975 151,006 – 1,116,981 2019 $ 63,508 – 114,106 177,614 These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Trade creditors are unsecured, non–interest bearing and are normally settled on 30–day terms. The Group’s financial risk management objectives and policies are set out in Note 22. Due to the short–term nature of these payables their carrying value is assumed to approximate their fair value. 12 PROVISIONS Short–term Short–term Annual leave Long service leave Short–term obligations CONSOLIDATED 2020 $ 33,890 101,690 135,580 2019 $ 36,240 80,720 116,960 Liabilities for wages and salaries, including non–monetary benefits and annual leave expected to be settled within 12 months, are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is recognised in the provision for employee benefits. All other short–term employee benefit obligations are presented as payables. The obligations are presented as current liabilities in the Statement of Financial Position of the Group. Long–term obligations The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end of the period in which the employees render the related service is recognised as a non– current provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period. 13 LEASE LIABILITIES Current Lease liabilities Non–current Lease liabilities PAGE 40 CONSOLIDATED 2020 $ 94,782 94,782 185,880 185,880 280,662 2019 $ – – – – – MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 13 LEASE LIABILITIES CONTINUED The Company has leases for its corporate office, its core yard and IT equipment. The Company has elected not to recognize a lease liability for ‘low-value’ and short-term leases. Refer also to Note 2 AASB 16 Leases. Future minimum lease payments as at 30 June 2020 were as follows: Within one year One to two years Two to five years $ $ $ 118,615 (23,833) 94,782 121,363 (13,778) 107,585 – – – – – – 81,727 (3,432) 78,295 – – – Total $ 321,705 (41,043) 280,662 – – – 30 June 2020 Lease payments Finance charges Net present values 30 June 2019 Lease payments Finance charges Net present values 14 CONTRIBUTED EQUITY a) Share capital Ordinary shares fully paid b) Movements in ordinary shares on issue Balance at 1 July 2018 Placement – 19 December 2018 Share issue costs Balance at 30 June 2019 Placement – 9 October 2019 Placement – 4 May 2020 Options exercised – various Share issue costs Balance at 30 June 2020 CONSOLIDATED 2020 $ 2019 $ 52,004,639 44,592,770 CONSOLIDATED Number 326,999,457 59,782,609 – 386,782,066 18,587,361 57,142,858 2,230,000 – $ 39,436,729 5,500,000 (343,959) 44,592,770 1,500,000 6,000,000 308,330 (396,461) 464,742,285 52,004,639 Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Ordinary shares have the right to receive dividends as declared, and in the event of winding up the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company. PAGE 41 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 14 CONTRIBUTED EQUITY CONTINUED c) Movements in options on issue Opening balance Options granted Options exercised Options expired / lapsed Balance at the end of the financial year 15 RESERVES Share option reserve Opening balance Issue of director and employee options (Note 23) Exercise of director and employee options Expiry of options Balance at the end of the financial year CONSOLIDATED 2020 Number 19,800,000 6,680,000 (2,230,000) (2,600,000) 21,650,000 2019 Number 9,900,000 10,550,000 – (650,000) 19,800,000 CONSOLIDATED 2020 $ 996,288 136,072 (85,098) (170,341) 876,921 2019 $ 484,487 533,673 – (21,872) 996,288 The option reserve is used to recognise the fair value of options issued to Directors, employees and contractors. Financial asset reserve Opening balance Financial assets at fair value through other comprehensive income (Note 9(b)) Balance at the end of the financial year Total Reserves CONSOLIDATED 2020 $ 2019 $ 132,364 486,789 561,352 693,716 1,570,637 (354,425) 132,364 1,128,652 The financial asset reserve is used to recognise the fair value movement on financial assets at fair value through other comprehensive income. 16 ACCUMULATED LOSSES Opening balance Net profit / (loss) attributable to members Transfer from share option reserve Balance at the end of the financial year CONSOLIDATED 2020 $ 2019 $ (25,628,978) (24,321,810) 992,169 170,341 (1,329,040) 21,872 (24,466,468) (25,628,978) PAGE 42 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 17 EARNINGS PER SHARE Basic profit / (loss) loss per share Diluted profit / (loss) loss per share The following reflects the income and share data used in the calculations of basic and diluted loss per share: Profit / (loss) used in calculating basic and diluted earnings per share 2020 Cents 0.24 0.23 2019 Cents (0.37) (0.37) 2020 $ 2019 $ 992,169 (1,329,040) 2020 Number 2019 Number Weighted average number of ordinary shares used in calculating basic and diluted profit / (loss) per share Weighted average number of ordinary shares used in calculating basic and diluted profit / (loss) per share 409,344,645 358,610,535 430,994,645 n/a Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to owners of the Group, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. 18 AUDITOR’S REMUNERATION Audit services BDO Audit (WA) Pty Ltd CONSOLIDATED 2020 $ 2019 $ – Audit and review of the financial reports 30,000 15,000 Grant Thornton Audit Pty Ltd – Audit and review of the financial reports Total remuneration – 30,000 11,670 26,670 PAGE 43 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 19 CONTINGENT ASSETS AND LIABILITIES Contingent liabilities The Group had contingent liabilities in respect of: Future royalty payments Musgrave holds a 100% interest in the key tenure hosting gold resources at Cue including the Break of Day/Starlight and Lena deposits and other prospects. Some of the Cue tenements are subject to third party royalty payments on future gold production including the mining licence hosting the Break of Day/Starlight and Lena gold deposits. Future consideration and royalty payments In March 2019, the Company entered into an Option Agreement (“Agreement”) to acquire the non–alluvial gold rights to the Mainland Project which is located within the boundaries of the Company’s Cue Gold Project. Musgrave paid $125,000 to execute the option to acquire 100% interest in the tenements (excluding the vendors’ interest in alluvial gold). A further $100,000 was paid in August 2020 and an additional $300,000 is to be paid as milestone payments in Musgrave shares or cash (at the Company’s discretion) before the fourth anniversary of the Agreement. The vendor will be entitled to a 1% gross royalty on any non–alluvial gold produced by the Company from the tenements. Contingent assets The Group had contingent assets in respect of: Future royalty payments In January 2014, the Group entered into a Mining Farm–in and Joint Venture Agreement (“Agreement”) with Menninnie Metals Pty Ltd. In August 2015, the parties agreed to terminate the Agreement (“Termination Agreement”). As part of the Termination Agreement the Group retains a 1% Net Smelter Return Royalty on all ores, concentrates or other primary, intermediate or final product of any minerals produced from two of the tenements. Deferred consideration Cyprium Australia Pty Ltd (“Cyprium”) has earned an 80% interest in the non–gold rights over the northern tenements (“Tenements”) of the Company’s Cue Project. Musgrave retains 20% of the non–gold rights and is free carried to the completion of a definitive feasibility study and retains 100% of the gold rights. Should Cyprium delineate 80,000 tonnes of contained copper over the Tenements, $200,000 in cash or the equivalent value of Cyprium shares (at Cyprium’s election) will be due to the Company. Upon a Decision to Mine, $300,000 in cash or the equivalent value of Cyprium shares (at Cyprium’s election) will be due to the Company. There are no other material contingent assets or liabilities as at 30 June 2020. 20 EVENTS OCCURRING AFTER THE REPORTING PERIOD The impact of the Coronavirus (COVID–19) pandemic is ongoing and while it has not significantly impacted the entity up to 30 June 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided. There have been no other events subsequent to reporting date which are sufficiently material to warrant disclosure. 21 COMMITMENTS In order to maintain an interest in the exploration tenements in which the Group is involved, the Group is committed to meeting the conditions under which the tenements were granted. The timing and amount of exploration expenditure commitments and obligations of the Group are subject to the minimum expenditure commitments required as per the Mining Act 1978 (Western Australia) and the Mining Act 1971 (South Australia), and may vary significantly from the forecast based upon the results of the work performed which will determine the prospectivity of the relevant area of interest. Currently, the minimum expenditure commitments for the granted tenements is $1,009,380 (2019: $992,300) per annum. Of this amount $829,680 will be met by the Group’s joint venture partners as part of their earn–in obligations. PAGE 44 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 22 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES Financial risk management Overview The Group has exposure to the following risks from their use of financial instruments: • • • • • Interest rate risk Credit risk Foreign currency risk Commodity risk Liquidity risk • Market risk This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Group’s principal financial instruments are tabled below. Financial assets Current Cash and cash equivalents Trade and other receivables Derivative financial instruments Non–Current CONSOLIDATED 2020 $ 2019 $ 9,122,692 273,652 – 9,396,344 3,543,732 133,758 131,000 3,808,490 Financial assets at fair value through other comprehensive income (“FVOCI”) 1,946,313 505,575 Financial liabilities Current Trade and other payables Lease liabilities Non–Current Lease liabilities Interest rate risk 1,946,313 505,575 1,116,981 94,782 1,211,763 185,880 185,880 177,614 – 177,614 – – Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest rates. Interest rate risk arises from fluctuations in interest bearing financial assets and liabilities that the Group uses. Interest bearing assets comprise cash and cash equivalents which are considered to be short–term liquid assets. It is the Group’s policy to settle trade payables within the credit terms allowed and therefore not incur interest on overdue balances. PAGE 45 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 22 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED The following table set out the carrying amount, by maturity, of the financial instruments that are exposed to interest rate risk: Floating interest rate $ Fixed interest rate maturing in 1 year or less $ Over 1 to 5 years $ More than 5 years $ Non- interest bearing $ Total $ Consolidated – 2020 Financial assets Cash and cash equivalents 1,896,067 7,226,325 Trade and other receivables – – Weighted average interest rate 0.57% 1.43% 1,896,067 7,226,325 Financial liabilities Trade and other payables Lease liabilities Weighted average interest rate Consolidated – 2019 Financial assets – – – – – – – – Cash and cash equivalents 417,107 3,126,325 Trade and other receivables – – Weighted average interest rate 1.25% 2.32% 417,107 3,126,325 Financial liabilities Trade and other payables Weighted average interest rate – – – – – – Sensitivity analysis for interest rate exposure – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 300 9,122,692 273,652 273,652 273,952 9,396,344 – – 1,116,981 1,116,981 280,662 280,662 1,397,643 1,397,643 – – 300 3,543,732 133,758 133,758 134,058 3,677,490 – – 177,614 177,614 – 177,614 177,614 – A change of 100 basis points in interest rates at the reporting date would have increased / (decreased) equity and profit or loss by the amounts shown below: Impact on profit / (loss) and equity Increase of 100 basis points Decrease of 100 basis points Credit risk 2020 $ 43,629 (43,629) 2019 $ 50,055 (50,055) Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and investment securities. The Group trades only with recognised, creditworthy third parties. It is the Group policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. The maximum exposure to credit risk is the carrying value of the receivable, net of any provision for expected credit loss. With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, the Group’s exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. This risk is minimised by reviewing term deposit accounts from time to time with approved banks of a sufficient credit rating which is –AA and above. PAGE 46 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 22 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED Exposure to credit risk The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk is tabled below. Cash and cash equivalents Trade and other receivables Foreign currency risk CONSOLIDATED 2020 $ 9,122,692 273,652 9,396,344 2019 $ 3,543,732 133,758 3,677,490 The Group’s exposure to foreign currency risk is minimal at this stage of its operations. Commodity price risk The Group’s exposure to commodity price risk is minimal at this stage of its operations. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group’s objective is to maintain a balance between continuity of funding and flexibility. The following are the contractual maturities of financial liabilities: Consolidated – 2020 Trade and other payables Lease liabilities Consolidated – 2019 Trade and other payables Market risk Price risk Less than 6 months $ Total Contractual cash flows $ Carrying amount $ 1,116,981 45,620 1,162,601 177,614 177,614 1,116,981 280,662 1,397,643 177,614 177,614 1,116,981 280,662 1,397,643 177,614 177,614 The Group’s exposure to equity securities price risk arises from investments held by the Group and classified in the Statement of Financial Position as either derivative financial instruments, or financial assets at FVOCI. Sensitivity analysis for price risk A change of 10% in the price of securities held at reporting date on the Group’s equity and/or profit or loss by is shown below: Impact on profit / (loss) and equity Increase of 10% Decrease of 10% Fair value of financial assets and liabilities 2020 $ 194,631 (194,631) 2019 $ 63,657 (63,657) The fair value of cash and cash equivalents and non–interest bearing financial assets and financial liabilities of the Group is equal to their carrying value. PAGE 47 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 22 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED Fair value measurement of financial instruments Financial assets and financial liabilities measured at fair value in the Consolidated Statement of Financial Position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows: • • • Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3: unobservable inputs for the asset or liability. The following table shows the levels within the hierarchy of financial assets and liabilities measured at fair value on a recurring basis at 30 June 2020 and 30 June 2019: Level 2 $ Level 3 $ Level 1 $ – 1,946,313 1,946,313 – – – – 131,000 505,575 505,575 – 131,000 Total $ – 1,946,313 1,946,313 131,000 505,575 636,575 – – – – – – 30 June 2020 Derivative financial instruments Financial assets at FVOCI 30 June 2019 Derivative financial instruments Financial assets at FVOCI Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The management of the Group’s capital is performed by the Board. The capital structure of the Group consists of net debt (trade and other payables, provisions and lease liabilities detailed in Notes 11, 12 and 13 offset by cash and bank balances) and equity of the Group (comprising contributed equity and reserves, offset by accumulated losses detailed in Notes 14, 15 and 16). The Group is not subject to any externally imposed capital requirements. None of the Group’s entities are subject to externally imposed capital requirements. PAGE 48 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 23 SHARE–BASED PAYMENTS Employee Share Option Plan The Group has an Employee Share Option Plan (“ESOP”) for executives and employees of the Group. In accordance with the provisions of the ESOP, as approved by shareholders at a previous Annual General Meeting, executives and employees may be granted options at the discretion of the Directors. Each share option converts into one ordinary share of Musgrave Minerals Limited on exercise. No amounts are paid or are payable by the recipient on receipt of the option. The options carry neither rights of dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. Options issued to Directors are subject to approval by shareholders. The following share–based payment arrangements were in existence during the reporting period: Option series Number Issue date Expiry date Vesting date Exercise price Fair value at grant date M (1) O (2) P Q R (3) S (4) T (5) U (6) 500,000 22 Apr 2016 22 Apr 2021 Immediate 2,550,000 4 Nov 2016 3 Nov 2019 Immediate 800,000 4 Nov 2016 3 Nov 2021 Immediate 3,250,000 29 Nov 2017 29 Nov 2020 Immediate 2,250,000 29 Nov 2017 29 Nov 2020 Immediate 7,500,000 21 Nov 2018 16 Nov 2021 Immediate 3,050,000 30 Nov 2018 16 Nov 2021 Immediate 6,680,000 21 Nov 2019 21 Nov 2022 Immediate $0.045 $0.167 $0.195 $0.097 $0.097 $0.1275 $0.1275 $0.1045 $0.0194 $0.0659 $0.0628 $0.0436 $0.0436 $0.0506 $0.0506 $0.0203 (1) These options were exercised during the financial year. (2) These options expired during the financial year. (3) 430,000 of these options were exercised and 50,000 of these options lapsed during the financial year. (4) 600,000 of these options were exercised during the financial year. (5) 400,000 of these options were exercised during the financial year. (6) 300,000 of these options were exercised during the financial year. Fair value of share options granted during the year The fair value of share options at grant date is determined using a Black–Scholes option pricing model that takes into account the exercise price, the term of the option, the share price at grant date, the expected price volatility of the underlying share and the risk–free rate for the term of the option. The fair value of share options issued during the year was $136,072 of which $61,110 relate to key management personnel (2019: $533,673 and $328,803 respectively). The model inputs for options granted during the year ended 30 June 2020 are as follows: Inputs Number Exercise price Issue date Expiry date Share price at grant date Expected price volatility Risk–free interest rate Expected dividend yield Issue U 6,680,000 $0.1045 21 Nov 2019 21 Nov 2022 $0.07 61% 0.72% 0% PAGE 49 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 23 SHARE–BASED PAYMENTS CONTINUED Movements in share options during the year Movement in the number of share options held by Directors, employees and consultants: 2020 Number of options Weighted average exercise price $ 2019 Number of options Outstanding at the beginning of the year Granted and vested during the year Exercised during the year Expired / lapsed during the year Outstanding at the end of the year Exercisable at the end of the year 19,800,000 0.125 9,900,000 6,680,000 (2,230,000) (2,600,000) 21,650,000 21,650,000 0.105 0.100 0.166 0.116 0.116 10,550,000 – (650,000) 19,800,000 19,800,000 Weighted average exercise price $ 0.122 0.128 – 0.121 0.125 0.125 The weighted average remaining contractual life of share options outstanding at the end of the year was 1.45 years (2019: 1.84 years). Share options outstanding at the end of the year Share options issued and outstanding at the end of the year have the following exercise prices: Expiry date 3 November 2019 29 November 2020 22 April 2021 3 November 2021 16 November 2021 21 November 2022 Totals Exercise price $ 0.1671 0.0974 0.045 0.195 0.1275 0.1045 2020 Number – 5,020,000 – 800,000 9,450,000 6,380,000 21,650,000 2019 Number 2,550,000 5,500,000 500,000 800,000 10,450,000 – 19,800,000 Significant estimates and judgement The Group measures the cost of equity–settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a Black– Scholes option pricing model. PAGE 50 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 24 RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES Cash flows from operating activities Profit / (loss) for the year Non–cash flows in profit / (loss): – Other income – Depreciation – Impairment expense – Share based remuneration – Change in fair value of derivative financial instruments (1,388,000) Changes in assets and liabilities – Decrease / (Increase) in trade and other receivables – Decrease / (Increase) in other current assets – Increase / (Decrease) in trade and other payables – Increase / (Decrease) in employee entitlements Net cash used in operating activities Non–cash investing and financing activities Additions to the right of use assets (Note 2) Exercise of Legend options (Note 9) CONSOLIDATED 2020 $ 2019 $ 992,169 (1,329,040) 50,000 118,465 3,434 136,072 (120,140) 10,736 (25,788) 18,620 (204,432) (250,000) 25,747 336,589 533,673 324,000 (7,251) (6,600) (276,613) 8,010 (641,485) CONSOLIDATED 2020 $ 198,620 1,519,000 1,717,620 2019 $ – – – 25 RELATED PARTY DISCLOSURE a) Parent entity Class Country of incorporation Investment at cost Musgrave Minerals Limited Ordinary Australia b) Subsidiaries 2020 $ – 2019 $ – Class Country of incorporation Investment at cost Musgrave Exploration Pty Ltd Ordinary Australia 2020 $ 100 2019 $ 100 PAGE 51 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 25 RELATED PARTY DISCLOSURE CONTINUED c) Key management personnel compensation Short–term employee benefits Post–employment benefits Bonus payments Share–based payments 2020 $ 430,433 34,716 – 61,110 526,259 2019 $ 430,433 39,886 54,415 328,803 853,537 Detailed remuneration disclosures are provided in the Remuneration Report. 26 SUBSIDIARIES Details of the Company’s subsidiary are as follows: Subsidiary Principal activity Country of incorporation Proportion of ownership Musgrave Exploration Pty Ltd Exploration Australia 27 PARENT ENTITY DISCLOSURE Financial Performance Profit / (loss) for the year Other comprehensive income Total comprehensive profit / (loss) Financial Position ASSETS Current assets Non–Current assets TOTAL ASSETS LIABILITIES Current liabilities Non–Current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulated losses TOTAL EQUITY 2020 100% 2020 $ 2019 100% 2019 $ 992,169 561,352 1,553,521 (1,329,040) (354,425) (1,683,465) 9,406,819 21,235,212 30,642,031 1,347,343 185,880 1,533,223 3,829,701 16,557,317 20,387,018 294,574 – 294,574 29,108,808 20,092,444 52,004,639 1,570,637 44,592,770 1,128,652 (24,466,468) (25,628,978) 29,108,808 20,092,444 No guarantees have been entered into by Musgrave Minerals Limited in relation to the debts of its subsidiary. Musgrave Minerals Limited had no expenditure commitments as at 30 June 2020 other than the commitments as disclosed in Note 21. PAGE 52 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 DIRECTORS’ DECLARATION The Directors of Musgrave Minerals Limited declare that: 1) in the Directors’ opinion, the financial statements and notes set out on pages 26 to 52 and the Remuneration Report in the Director’s Report are in accordance with the Corporations Act 2001, including: a) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance, for the financial year ended on that date; and b) complying with Australian Accounting Standards (including the Australian Accounting Interpretations), Corporations Regulations 2001 and mandatory professional reporting requirements. the financial statements also comply with International Financial Reporting Standards as disclosed in Note 2; and there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they become due and payable. 2) 3) The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 by the Managing Director and Chief Financial Officer for the financial year ended 30 June 2020. Signed in accordance with a resolution of the Directors. Mr Graham Ascough Chairman Perth, Western Australia 24 September 2020 PAGE 53 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 INDEPENDENT AUDITOR’S REPORT Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au 38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia INDEPENDENT AUDITOR'S REPORT To the members of Musgrave Minerals Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Musgrave Minerals Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial performance for the year ended on that date; and (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent a firms. Liability limited by a scheme approved under Professional Standards Legislation. PAGE 54 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 INDEPENDENT AUDITOR’S REPORT Recoverability of exploration and evaluation expenditure Key audit matter How the matter was addressed in our audit As disclosed in Note 10 to the Financial Report, the carrying value of capitalised exploration and evaluation expenditure represents a significant asset of the Group. Refer to Note 10 of the Financial Report for a description of the accounting policy and significant judgements applied to capitalised exploration and evaluation expenditure. In accordance with AASB 6 Exploration for and Evaluation of Mineral Resources (AASB 6), the recoverability of exploration and evaluation expenditure requires significant judgment by management in determining whether there are any facts or circumstances that exist to suggest that the carrying amount of this asset may exceed its recoverable amount. As a result, this is considered a key audit matter. Our procedures included, but were not limited to: • • • • • Obtaining a schedule of the areas of interest held by the Group and assessing whether the rights to tenure of those areas of interest remained current at balance date; Considering the status of the ongoing exploration programmes in the respective areas of interest by holding discussions with management, and reviewing the Group’s exploration budgets, ASX announcements and directors’ minutes; Considering whether any such areas of interest had reached a stage where a reasonable assessment of economically recoverable reserves existed; Considering whether any facts or circumstances existed to suggest impairment testing was required; and Assessing the adequacy of the related disclosures in Note 10 to the Financial Report. Other information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2020, 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. PAGE 55 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 INDEPENDENT AUDITOR’S REPORT Responsibilities of the directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 14 to 18 of the directors’ report for the year ended 30 June 2020. In our opinion, the Remuneration Report of Musgrave Minerals Limited, for the year ended 30 June 2020, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit (WA) Pty Ltd Glyn O'Brien Director Perth, 24 September 2020 PAGE 56 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 ADDITIONAL INFORMATION The following additional information not shown elsewhere in this report is required by the ASX Listing Rules and is current as at 18 September 2020. Securities Quotation has been granted for 474,092,285 ordinary shares of the Company on the Australian Securities Exchange. Quoted Securities ASX Code MGV Unquoted Securities ASX Code MGVAB MGVAB MGVAB MGVAB MGVAB Number of Holders 4,571 Number of Holders 1 8 4 18 11 Security Description Ordinary Fully Paid Security Description Options expiring 29/11/2020 Exercisable at $0.0974 Total Securities 474,092,285 Total Securities 500,000 Options expiring 16/11/2021 8,150,000 Exercisable at $0.1275 Options expiring 21/11/2022 3,650,000 Exercisable at $0.1045 Options expiring 20/08/2023 7,880,000 Exercisable at $0.932 Options expiring 16/11/2021 10,450,000 Exercisable at $0.1275 One holder Mr Robert Waugh and Mrs Sara Waughholds 6,500,000 unlisted options (equivalent to 32% of total unlisted options). Voting Rights The voting rights attached to each class of security are as follows: • • Ordinary Fully Paid shares – one vote per share held. Options – no voting rights are attached to unexercised options. Distribution schedule Spread of Holdings - Ordinary Shares (ASX Code: MGV) 1 1,001 5,001 10,001 - - - - 1,000 5,000 10,000 100,000 100,001 - and over TOTAL Substantial Shareholding Holders 375 1,083 744 1,853 516 4,571 Units 214,461 3,145,600 6,148,343 70,336,694 394,247,187 474,092,285 Percentage 0.05 0.66 1.30 14.84 83.16 100% The Company has received the following notices of substantial holding: • Bank of Nova Scotia in relation to 37,000,000 ordinary shares • Westminex Group in relation to 29,387,961 ordinary shares PAGE 57 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 ADDITIONAL INFORMATION Unmarketable Parcel There are 259 Shareholders holding less than a marketable parcel of fully paid ordinary shares (a minimum parcel $500 shares, being 885 shares using a market value of $0.565). Restricted Securities There are currently 18,587,361 fully paid ordinary shares held by Evolution Mining Ltd subject to 12 month voluntary escrow provisions. The escrowed shares will be released from voluntary escrow on 9 October 2020. Buyback No on-market share buy-back is current. Top Holders The names of the twenty largest holders of quoted securities are listed below: Rank Name Units held % of Units 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 78,932,783 16.65% WESTMINEX PTY LTD JETOSEA PTY LTD EVOLUTION MINING LIMITED CITICORP NOMINEES PTY LIMITED BUZI BEAR PTY LTD J P MORGAN NOMINEES AUSTRALIA PTY LIMITED EQUITY TRUSTEES LIMITED MR STACEY RADFORD BNP PARIBAS NOMINEES PTY LTD JAYLEAF HOLDINGS PTY LTD SOUDURE S/F PTY LTD MR ROBERT SCOTT WAUGH + MRS SARA RUTH WAUGH THE A SHARP FAMILY PTY LTD MR JULIAN VINCENT LAWS OLGEN PTY LTD 34,142,858 20,957,322 18,587,361 18,364,445 14,000,000 10,299,670 6,358,559 5,300,000 5,213,449 4,000,000 3,400,000 3,300,000 3,290,000 2,561,000 2,500,000 MR ROGER DOUGLAS STABLES + MRS KAREN DOROTHY STABLES 2,240,259 PACIFIC CAPITAL SECURITIES PTY LTD NELSON ENTERPRISES PTY LTD JIM WILSON PTY LTD 2,109,492 2,060,000 2,000,000 7.20% 4.42% 3.92% 3.87% 2.95% 2.17% 1.34% 1.12% 1.10% 0.84% 0.72% 0.70% 0.69% 0.54% 0.53% 0.47% 0.44% 0.43% 0.42% PAGE 58 MUSGRAVE MINERALS LTD ANNUAL REPORT 2020 CORPORATE DIRECTORY DIRECTORS Graham Ascough Non-Executive Chairman Robert Waugh Managing Director Kelly Ross Non-Executive Director John Percival Non-Executive Director COMPANY SECRETARY Patricia (Trish) Farr REGISTERED OFFICE & PRINCIPAL PLACE OF BUSINESS Ground Floor, 5 Ord Street West Perth, WA 6005 Telephone: Facsimile: Email: Web: AUDITOR +61 (8) 9324 1061 +61 (8) 9324 1014 info@musgraveminerals.com.au www.musgraveminerals.com.au BDO Audit (WA) Pty Ltd 38 Station Street Subiaco, WA 6008 LEGAL ADVISORS O’Loughlins Lawyers Level 2, 99 Frome Street Adelaide, SA 5000 SHARE REGISTRY Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace Perth, WA 6000 Telephone: Facsimile: +61 (8) 9323 2000 +61 (8) 9323 2033 SECURITIES EXCHANGE LISTING The Company is listed on the Australian Securities Exchange Ltd (“ASX”) Home Exchange: Perth, Western Australia ASX Code: MGV ABN 12 143 890 671 Gound Floor, 5 Ord Street West Perth WA 6005 Telephone: +61 (8) 9324 1061 Facsimile: +61 (8) 9324 1014 Email: Web: info@musgraveminerals.com.au www.musgraveminerals.com.au A A N N N N U U A A L L R R E E P P O O R R T T 2 2 0 0 1 2 0 9