Annual Report 2021 Our Mission To generate superior returns for our shareholders, while providing positive benefits for our stakeholders, through operational effectiveness, exploration and active portfolio management. FY21 SNAPShOt FY21 Snapshot Financial Performance FY21 LTIFR 40% Revenue increase to $2,761M in FY21 2.5 2.0 1.5 1.0 0.5 0 Cash Earnings* increased 10% $648M $221M FY21 Dividends * Cash Earnings is underlying EBITDA less interest, tax and sustaining capital 4 Increase in Cashflow from FY20 Operations to $1,077M 52% Environmental & Social Responsibility Doubled total Group economic value add in FY21 $3.4B 2050 Net Zero ambition for Scope 1-2 GHG emissions by 2050 ZERO Heritage related infringements or human rights violations detected in our supply chain Materially adverse Community incidents FY21 SNAPShOt Safety Snapshot 0.9 2.1 2.0 1.6 0.5 0.5 0.9 FY21 TRIFR 10.0 9.1 5.6 6.4 3.3 6.2 5.6 3.3 8.0 6.0 4.0 2.0 0 FY19 FY20 FY21 FY19 FY20 FY21 Northern Star Industry average FY21 LTIFR of 0.9 includes 100% of KCGM and Saracen safety statistics from 1 July 2020 – 30 June 2021. FY21 TRIFR of 5.6 includes 100% of KCGM and Saracen safety statistics from 1 July 2020 – 30 June 2021. FY20 & FY21 Industry means the DMIRS Safety Performance in the Western Australian Mineral Industry – Accident and Injury Statistics 2018-19 and 2019-20 Metalliferous total. FY20 LTIFR and FY20 TRIFR include 50% of KCGM safety statistics from 1 January 2020 (date on which Northern Star acquired financial benefit of 50% of KCGM). FY19 Industry means the DMIRS Safety Performance in the Western Australian Mineral Industry - Accident and Injury Statistics 2017-18 Underground Metalliferous. Inorganic Growth 5 ‘Golden Mile’ 100% Owned for the first time in its 125-year history Measured & Indicated Resources 14% Increase since FY20 38.7Moz 2019 2020 2021 Resources & Reserves 1 2 3 3 large scale production centres in world class locations 21Moz 8% Increase in Group Reserves Successful merger with Saracen +56Moz Group Resources increase of 15% as a result of merger Increase to 1.6Moz in Group Production from FY19 90% * FY20/21 Industry means the DMIRS Safety Performance in the Western Australian Mineral Industry – Accident and Injury Statistics 2019-20 Metalliferous total. * FY19 Industry means the DMIRS Safety Performance in the Western Australian Mineral Industry - Accident and Injury Statistics 2017-18 Underground Metalliferous. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 LEttER FROM MANAGING DIRECtOR & CEO AND ChAIRMAN LEttER FROM MANAGING DIRECtOR & CEO AND ChAIRMAN Letter from the Managing Director & CEO and Chairman Dear shareholder, The FY21 year saw the successful merger of Northern Star with Saracen Mineral Holdings Limited to form the world’s sixth-largest gold mining company. As a result, Northern Star became the sole owner of the iconic Super Pit and Mt Charlotte underground mine in Kalgoorlie, and welcomed two new operations into our portfolio - Thunderbox and Carosue Dam in Western Australia, augmenting our existing operations in Western Australia and at Pogo in Alaska. 6 Net profit after tax for the year increased 300 percent to $1.032bn. Under accounting rules, this result was affected by substantial significant items resulting from the merger, as described on pages 26 to 28 of this report. Underlying net profit after tax increased 28 percent to $372m. Cash Earnings (which we define as Underlying EBITDA less net interest, tax and sustaining capital) increased from $588m to $648m. The Board considers this the best measure of the Company’s financial performance going forward, given the post-merger accounting effects of the merger, as also described on p28. The Directors determined to pay a final, fully- franked dividend of 9.5 cents per share, bringing the full year dividend to 19 cents, an 11 percent increase on the full year 2020 dividend (excluding the special dividend paid that year). The 2021 dividend is in line with a new dividend policy adopted by the Board; namely, to pay out 20-30 percent of Cash Earnings, as defined above, each year. Northern Star’s Mission is to generate superior returns for our shareholders, while providing positive benefits for our stakeholders, through operational effectiveness, exploration and active portfolio management. We do this by caring for and rewarding the people that comprise our Company and providing a safe and fulfilling work environment for them. Our decisions are guided by the Northern Star STARR Core Values of Safety, Teamwork, Accountability, Respect and Results. We engage fairly with our Suppliers, we demonstrate respect for the Indigenous Peoples upon whose lands we are privileged to work on, we minimise our footprint on the environment wherever possible, and we support the communities in which we operate. Northern Star has a strong history of improving its key financial metrics on a year-on-year basis, and this trend continued in FY21. Our objective of delivering superior earnings for our shareholders is achieved by value-creating strategies, including: • • • • • Reliable delivery of production and cost guidance, with a continuing focus on lowering costs Discipline in the efficient use of capital, balancing re-investment and returns to shareholders Sustainable discovery and mine life extension Active portfolio management Sustainable employee, environmental, social and governance performance. The Company’s strong operational and financial performance during FY21 resulted in: • • • • A very strong balance sheet at 30 June 2021: $1.14bn liquidity including $338m in undrawn revolving facilities and $799m in cash and bullion $662M corporate bank debt The achievement of production guidance and record revenues supported by a positive A$ gold price The achievement of costs guidance against a backdrop of COVID-19 related management and inflationary pressures • Significant cashflow of $1,077M from operating activities which, with our strong balance sheet, provides the platform to launch our organic growth strategy to 2Moz production by FY26. At the same time, the overall safety performance of the Group remains better than industry standard, with a 12-month TRIFR of 5.6, an outstanding result which all 6,000 employees and contractors are proud to achieve. Tragically, this performance was marred by the death of one of our workers at the Carosue Dam Operations in July 2020. We convey our deepest sympathies to his family, co-workers and friends. The merger with Saracen was followed by a major re-organisation of our management and Board structure to position the Company for future success. We acknowledge the contribution of former longstanding Directors Peter O’Connor, Shirley In’t Veld and Executive Chair, Bill Beament, who developed Northern Star from a junior gold producer to the major gold miner that it is today. We also acknowledge the contributions of Raleigh Finlayson who played a similar foundational and transformative role in Saracen, retiring as Managing Director of Northern Star in July 2021. We are delighted that Raleigh will rejoin the Board as a Non-Executive Director in April next year. We also acknowledge the contributions of Anthony Kiernan to Saracen and throughout the merger process, who will retire and not stand for re-election at the Annual General Meeting in November 2021. The cornerstone of our strong outlook is our sustained exploration investment which has generated continued organic reserve growth. Northern Star at 30 June has 21Moz in Reserves (up 8%) and 56.5Moz in Resources (up 15%), exclusively in world class locations and close to existing production infrastructure. These Resources and Reserves will underpin growth in production to 2Moz per annum by FY26. Our production guidance for FY22 is set at 1.55Moz – 1.65Moz at an all-in sustaining cost (AISC) of $1,475 - $1,575/oz. In addition, we look forward to demonstrating in our 2021 Sustainability Report (to be released in March 2022) the pathways to achieving our net zero ambition for scope 1-2 greenhouse gas emissions by 2050. We recognise the commitment of all of our dedicated workforce, but in particular our people at the Pogo Operations in Alaska, maintaining continuity in operations throughout the COVID-19 pandemic Somay Ahmadi and Pedro Acevedo at the KCGM processing plant, Kalgoorlie operations. 7 whilst protecting the health of team and community and achieving FY21 production guidance of 210Koz. We are pleased to share the FY21 results with you in this Annual Report. We acknowledge the support of our fellow Directors and our exceptional leaders, staff and business partners whose efforts have enabled this continuing high performance by your Company. Stuart Tonkin Managing Director & CEO Michael Chaney Chairman NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 IN thIS REPORt In this Report Our Mission FY21 Snapshot Letter from our MD & Chairman Summary of Financial Outcomes STARR Core Values Where We Operate Operations Report Resources & Reserves Risk Management Julius Drake-Brockman, Open Pit Manager at Porphyry, Carosue Dam, Kalgoorlie operations. Environmental, Social & Governance Directors’ Report Remuneration Report Financial Report 2 4 6 10 11 12 14 34 42 46 68 84 130 9 Forward Looking Statements Northern Star Resources Limited has prepared this Report based on information available to it. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this Report. To the maximum extent permitted by law, none of Northern Star Resources Limited, its directors, employees or agents, advisers, nor any other person accepts any liability, including, without limitation, any liability arising from fault or negligence on the part of any of them or any other person, for any loss arising from the use of this Report or its contents or otherwise arising in connection with it. Corporate Information 200 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 SuMMARY OF FINANCIAL OutCOMES StARR CORE VALuES 10 Summary of Financial Outcomes Cash Earnings* increased 10% to $648M, reflecting the cash-generating strength of the business. FY21 guidance achieved On the back of the successful merger with Saracen Mineral Holdings Limited which was implemented on 12 February 2021, the financial year ended 30 June 2021 was a record production and earnings year for the Company with both full year production and all-in sustaining costs (AISC) per ounce meeting FY21 guidance. Record earnings Cash Earnings increased 10% to $648M, reflecting the cash-generating strength of the business. Record statutory and underlying earnings were recorded in FY21 with Net Profit After Tax of $1,033 million (FY20: $258 million) and Underlying Net Profit After Tax of $372 million (FY20: $291 million). Margin focus Gold revenue increased 40 percent to $2.8 billion primarily driven by the 3 percent increase in average realised gold price per ounce of $2,273/oz and a 33 percent increase in gold sold (excluding pre- production ounces). Cost of sales increased 51 percent to $2.2 billion (2020: $1.5 billion) driven by higher activity across all operations translating to higher mining, processing, and operational employee costs. Cost remains a key focus for the business and has been a key element of the Company’s strategy to unlock value. Northern Star has an excellent history of realising total cost reductions and best in class operational productivity. Strong operational cash generation As a result of the strong production and gold price realised during the year, FY21 Underlying EBITDA, which takes into account the specific charges and costs incurred during the year associated with the merger with Saracen, was up 47 percent to $1,159 million (FY20: $791 million). Similarly, operating cash flow was up 52 percent from the prior year to $1,077 million (FY20 $710 million). Clear organic growth pathway $548 million of sustaining and growth capital (excluding exploration) was invested into mine operations during FY21 which, along with the Company’s robust balance sheet and available liquidity, supports the Company’s organic growth strategy to 2Moz production by FY26. At 30 June 2021, the Company has cash and bullion of $799 million and corporate bank debt of $662 million. Robust returns to shareholders A new dividend policy has been announced based on Cash Earnings. A final fully-franked dividend of 9.5 cents per share to shareholders has been approved, taking the full year payout to 19.0 cents per share. “Gold revenue increased 40 percent to $2.8 billion primarily driven by the 3 percent increase in average realised gold price per ounce of $2,273/oz and a 33 percent increase in gold sold (excluding pre-production ounces).” * Cash Earnings is Underlying EBITDA less net interest, tax and sustaining capital . MORGAN BALL, CHIEF FINANCIAL OFICER StARR Core Values Our Core Values are integral to the working lives of all our workers and operations. Safety It matters and starts with you Results We deliver on our promises teamwork Together we can 11 Respect To get it you must give it Accountability The responsibility lies with you NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 WhERE WE OPERAtE WhERE WE OPERAtE Where We Operate Our portfolio of high-quality, high-margin mining operations are located in world class jurisdictions. Figure 1 North American Operations Pogo Production Centre • Pogo 12 A l a s k a Fairbanks Delta Junction Anchorage Figure 2 Australian Operations tanami Project DARWIN Yandal Production Centre 1. Jundee 2. Bronzewing 3. Thunderbox Paulsens Operations Kununurra Halls Creek N o r t h e r n Te r r i t o r y Nanutarra Newman We s t e r n A u s t r a l i a Alice Springs 1 2 3 Wiluna Leinster 4 2 5 3 6 1 Kalgoorlie/Boulder Kambalda Coolgardie PERTH 13 Kalgoorlie Production Centre 1. Carosue Dam 2. Kanowna Belle 3. KCGM 4. Kundana 5. East Kundana JV (51%) 6. South Kalgoorlie JUNEAU Northern Star would like to acknowledge Doyon Limited, whose traditional lands surround our Pogo Operation in Alaska, USA. Northern Star would like to acknowledge and pay our respects to Traditional Owner groups whose land we are privileged to work on, and whose input and guidance we seek and value within the operation of our business. We acknowledge their strong and special physical and cultural connections to their ancestral lands. • Whadjuk Noongar • Walpiri and Yapa • The Wiluna Martu • Puutu Kunti Kurrama • Kultju • Tjiwarl • Maduwongga • Marlinyu Ghoorlie • Tjurabalan and Pinikura • Jurruru • Yinhawongka • Nyalpa • Kakarra Part A NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 Operations Report OPERAtIONS REPORt OPERAtIONS REPORt Operations Review Northern Star owns and operates three world class gold production centres: Kalgoorlie, Yandal and Pogo, located exclusively in world class locations. Our assets have upside from an extensive organic growth pipeline. Northern Star continues to invest in building its asset base through strategic acquisitions and continuing to invest in exploration to unlock value from the gold endowment across our highly prospective ground located exclusively in low sovereign-risk jurisdictions of Australia and North America. 16 FY21 Operations It was another year of record production for Northern Star following the successful merger with Saracen in February 2021, with performance delivered by the West Australian production centres of Yandal and Kalgoorlie (including KCGM) and our Pogo Operation located in Alaska, USA. Delivery of synergies from the merger between Northern Star and Saracen in H2 of FY21 resulted in both savings and improved productivities at numerous levels. The strategic merger started the process of unlocking synergies and opportunities across the portfolio while still delivering ounces and cost guidances. It was a credit to the operational teams to achieve these results in addition to the successful implementation of our transformative merger. In FY21*, a total of 1.6 million ounces of gold was sold at an average gold price of A$2,277 per ounce (FY20: 900,388oz at A$2,208/oz). All-in sustaining costs for FY21 were A$1,483 per ounce (FY20: A$1,496/oz). Both production and AISC were within guidance for FY21. Overall, 25.5 million tonnes of ore was milled at an average head grade of 2.2gpt for 1.6 million ounces of gold recovered. Unprocessed ore stocks available for mill feed at the end of FY21 contained 3.2 million ounces of gold, including gold in circuit at the end of FY21 totalling 72 thousand ounces. These items are reflected in the FY21 financial statements as ore stockpile and gold in circuit at lower of cost and net realisable value. FY21 also saw exceptional exploration results, with Group Resources increasing 15% to 56Moz and Reserves increasing 8% to 21Moz over the 9-month period to 31 March 2021. This expanded inventory will underpin the Company’s announced strategy to grow production to 2Moz per annum by FY26. Our two development assets, the Tanami and Paulsens projects, continued with exploration activity throughout the year. table 1 Mine Operations Review Annualised Metrics* Total Material Mined (tonnes) Total Material Milled (tonnes) Head Grade (gpt) Recovery (%) Gold Recovered (Oz) Gold Sold - Pre- Production (Oz) Gold Sold – Production (Oz) Jundee Thunderbox KCGM Kalgoorlie (ex KCGM) Carosue Dam Pogo Total 2,493,606 1,503,584 8,190,822 2,922,623 3,611,254 849,892 19,571,781 2,715,941 2,928,409 12,971,624 2,873,351 3,152,305 848,205 25,489,835 3.6 90 1.6 94 1.4 83 3.1 90 2.5 93 8.6 89 2.2 89 285,908 140,306 478,438 256,970 234,136 209,647 1,605,405 - 55,779 32,493 - 21,014 - 109,286 286,676 88,211 439,596 256,657 211,262 204,041 1,486,443 Gold Sold (Oz) 286,676 143,990 472,089 256,657 232,276 204,041 1,595,729 All-in Sustaining Cost (A$/Oz)^ 1,278 924 1,385 1,942 1,311 1,851 1,483 Pogo Production Centre A Pogo Operations +8Moz Gold Camp Fairbanks Steese National Conservation Area Pogo North Pole Delta Junction 17 Figure 1 Northern Star's mining operations in world class locations Denali National Park and Preserve A D E B C Lake Clarke National Park and Preserve A Pogo Production Centre B Yandal Production Centre C Kalgoorlie Production Centre D Tanami Project E Paulsens Operations ANCHORAGE Production Pogo delivered another strong full year performance. Gold sold at Pogo from FY21 operations totalled 204,041 ounces at an AISC of US$1,387 per ounce (FY20: 173,036oz at AISC US$1,402/oz). Record horizontal advance and record diamond drill metres were achieved in Q4 FY21, and a milestone record of 92 thousand tonnes of ore was processed in the month of June 2021. Pogo Resources grew 3% to 6.9Moz for the nine months ended 31 March 2021. Although COVID-19 impacted Pogo productivity in * The metrics in this table have been prepared including Saracen acquired assets, Thunderbox, Carosue Dam and an additional 50% interest in KCGM to increase Northern Star’s ownership to 100% as if they were part of the Northern Star Resources Group from 1 July 2020. Contribution to NST earnings is from 12 February 2021. FY20 comparative reflects pre-merger assets only. H1 FY21, the availability of vaccines and significantly lower COVID-19 rates in Alaska reduced operational disruptions by Q4 FY21. Exploration Underground drilling continued with a focus on Resource definition and conversion across most ore systems (Liese, South Pogo, Fun Zone) in the underground mining areas. Surface exploration drilling activity concentrated on Resource definition drilling programs across the central portion of the Goodpaster discovery zone and the Central Gap prospect. ^ Pogo all-in sustaining cost has been presented in AUD which is the Group’s presentation currency. The AISC in United States Dollars was US$1,387 for the financial year. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 OPERAtIONS REPORt Kalgoorlie Production Centre C Kalgoorlie Operations KCGM Operations +19Moz Gold Camp +80Moz Gold Camp • Kanowna Belle • Kundana • East Kundana JV (51%) • South Kalgoorlie Operations Carosue Dam Operations +5.8Moz Gold Camp Lake Rebecca Carosue Dam Kanowna Belle KALGOORLIE KCGM Kundana East Kundana JV (51%) Mount Burges Coolgardie South Kalgoorlie Operations 18 KCGM Operations FY21 marked the consolidation of Kalgoorlie’s Golden Mile under one owner for the first time in its 125-year history, as a result of the Northern Star and Saracen merger. The revitalisation of this asset continued with the first full year of ownership. A great example was the step change improvement in the open pit movements which increased to 60Mt for FY21. This was achieved with the investment in multiple working areas, structurally lowering costs and improving productivity. Mount Charlotte underground mine near doubled the underground reserves with only 9 months of drilling. A new underground portal and drill platform was commenced in Q4 to setup a platform to commence drilling the significant potential of the world class mineralised system at depth. The process plant also completed a major de-risking project by modernising the Fimiston mill control system which took the plant down for a planned 2 week shutdown. KCGM continues to have unrivalled potential and is already a cornerstone long life asset in the portfolio. Production KCGM total gold sold in FY21 (100% interest) was 472,089 ounces at an AISC of A$1,385 per ounce (FY20: 115,825oz at AISC A$1,427/oz; 50% interest). Record gold production under Northern Star ownership of 139,264 ounces was achieved Kambalda Lake Lefroy in Q4 FY21 (at an AISC of A$1,296/oz), up 18% on the previous record in Q2 FY21. KCGM Reserves increased by 2Moz to 11.6Moz and Resources by 7Moz to 26Moz in the 9 months to 31 March 2021. Exploration Exploration activity across the KCGM Operations is expanding as part of a multi-year growth program announced since the merger. Beneath the surface mining operations at Fimiston South, Brownhill and Morrisons we undertook significant surface resource definition programs and established new underground access in the Fimiston North area. This led to the commencement of an initial phase of underground drilling beneath the existing open pit and northwards towards the Croesus area. Underground resource definition drilling at Mount Charlotte is increasing with programs targeting the Hidden Secret, Kal East and Mt Ferrum areas completed. In-mine exploration drilling from the Sam Pearce decline into the Unit 6 and Duke areas returned encouraging results. Surface exploration drilling programs were successful at the Little Wonder and Mt Percy areas and the regional exploration south of the KCGM mine area, at Jacks Reward and Shea prospects, highlighted significant potential within the Boulder- Lefroy Fault corridor. (excludes KCGM and Carosue Dam) (FY20: 3,052,606t). Total gold sold in FY21 was 256,657 ounces at an AISC of A$1,942 per ounce (FY20: 317,248oz at AISC A$1,564/oz). Exploration – Kanowna Belle Exploration at Kanowna Belle outlined new areas of resource growth in the upper levels of the mine and extensions to the Velvet area. Regional exploration of surrounding areas continued during FY21 with drilling programs focused on the near mine environment east of Kanowna Belle. Exploration continued within the Acra Joint Venture (NST: 75%). Exploration – EKJV* During FY21, in-mine exploration within the East Kundana Joint Venture (EKJV) (NST: 51%) was focused on the definition of new areas of mineralisation in the hanging wall of the main RHP mining complex. Surface exploration defined initial open pit resources and shallow mineralisation at Hornet and Golden Hind prospects. Exploration – Kundana* Extensional mine exploration within Northern Star’s 100% owned Kundana tenements outlined the extensions to the Moonbeam, Pope John, Xmas and Strzelecki resource areas. Exploration drilling from the Moonbean mine infrastructure was successful and targeted potential extensions to the Barkers trend south of the existing mining infrastructure. Exploration – South Kalgoorlie Operations Underground and surface diamond drilling continued to define new resource extensions within the northern portion of the mine. Surface drilling at the adjacent Mutooroo West area intersected significant new mineralisation for which we are now progressing the development of new underground drilling platforms. Regional exploration within the South Kalgoorlie tenement package is generating early success with potential discoveries at Tindals and SBS in the Coolgardie region. Along the Zuleika Shear Zone and the Butterfly - Enigma trends we continued our exploration drilling programs to test the mineralised trends. Exploration – Carbine* Along the existing Carbine - Phantom trend our surface exploration drilling achieved further success in parallel structures and at Anthill our resource definition drilling defined an initial Ore Reserve and identified potential mineralisation. In FY21 we expanded the regional exploration of the Carbine and Carnage exploration tenure and have recorded strong results from the first drilling program at Blister Dam. 19 Carosue Dam Operations Previously a Saracen core asset, acquired as part of the merger, Carosue Dam supplements Northern Star’s existing Kalgoorlie Operations. Production The Carosue Dam Operations produced a total 3,611,254 tonnes of material in FY21, up 51% on FY20 (FY20: 2,395,000). Total 232,276 ounces of gold sold in FY21 at an AISC of A$1,311 per ounce (FY20: 203,28oz at AISC $1,263/oz). Underground operations delivered to plan with record production while the open pit operations recommenced. The Carosue Dam mill expansion project was commissioned in Q2 of FY21 and delivered a record quarterly throughput of 956kt in Q4 FY21 well above the upgraded nameplate design. Exploration In-mine exploration within Karari and Whirling Dervish focused on extending the main mineralised areas within the mining complex. Resource definition drilling of the Million Dollar deposit was completed allowing for commencement of mining operations. Regional exploration of the Carosue Dam trend continued with programs completed at Osman, Spectre and Jebena prospects. At Karari South, Spectre and Scaramanga we commenced Initial drilling of targets generated from the 3D seismic program. Further north, we were successful with regional exploration drilling at Porphyry and Moody’s Reward and recorded encouraging early results with the initial drilling programs at the Memphis prospect. Kalgoorlie Operations Production Kalgoorlie Operations delivered production of 2,922,623 tonnes in FY21 from Kanowna Belle, Kundana, East Kundana Joint Venture (NST: 51%) and South Kalgoorlie (SKO) underground operations * As announced to ASX, the sale of Northern Star's EKJV, Kundana and Carbine assets completed on 18 August 2021 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 OPERAtIONS REPORt OPERAtIONS REPORt Yandal Production Centre B Jundee Meekatharra Wiluna Bronzewing Wanjarri Nature Reserve Leinster Thunderbox Lennora Jundee Operations +13.5Moz Gold Camp Bronzewing Operations +3.6Moz Gold Camp thunderbox Operations +5.4Moz Gold Camp 20 During FY21, the Thunderbox Operations were added to the Northern Star Yandal Operations portfolio as a result of the merger with Saracen. Production Jundee Development advance was especially strong in FY21, with a new monthly record for jumbo advance of +2,000 metres in March 2021 and record quarterly development advances achieved in Q4 FY21. Jundee and Bronzewing (combined) produced 2,493,606 tonnes in FY21 (FY20: 3,464,189t). Total gold sold was 286,676 ounces at an AISC of A$1,278 per ounce (FY20: 294,279oz at AISC A$1,095/oz). Thunderbox’s FY21 production was 1,503,584 tonnes (FY20: 3,984kt) with 143,990 ounces of gold sold at an AISC of A$924 per ounce (FY20: 184,538oz at AISC $731/oz). Exploration – Jundee Operations In FY21, the Mineral Resource was increased by successful resource extension drilling within surface and underground areas. We maintained high levels of exploration drilling across the Jundee Mine area with a focus on the growth of new mineralised areas at Invicta, Deakin, Cardassian, Lyons South, Hampton and Hughes trends. Long term exploration continued with a program of deep exploration drill holes into the Atlantis trend and the commencement of surface exploration drilling into the McLarty and the Cook-Keating areas. Underground development to provide a range of new drilling platforms across the Jundee Mine is in progress as part of a renewed exploration focus into sections of the mine corridor. Exploration – Bronzewing Operations Resource and Reserve definition drilling at Julius was completed which allowed us to finalise the mine plan and develop the new open pit mining operation where pre-production activities commenced late in FY21. The Orelia Resource and Reserve models are being updated after a significant resource definition and extension drilling program was completed which defined further growth at depth and along strike from the existing Orelia resource area. Significant regional exploration programs at the Corboys, Dragon-Venus and Bill's Find projects achieved strong results. Drilling at Corboys has defined a significant Resource upgrade within the central area of the 20 kilometre long trend. Reconnaissance programs continue to test numerous significant new drilling targets which will be the focus of exploration and Resource definition drilling in the coming years. Exploration – thunderbox Operations Significant Resource definition and extension drilling programs were completed at Otto Bore, Bannockburn and Wonder North. Regional exploration concentrated on the Bundarra area screening new targets along extensions to the Wonder Shear zone. tanami Project D tanami Project +5Moz Gold Camp Halls Creek Fitzroy Crossing Gibson Desert North Tanami Alice Springs Central tanami (NSt 40%) We continued our regional exploration programs across the project which highlighted that the region is relatively under-explored. As a result, we are undertaking collaborative programs with CSIRO to better understand the stratigraphy, geochemistry and gold paragenesis of the Tanami region. Western tanami (NSt 100%) Across the Western Tanami project tenure we completed regional airborne and ground Karratha Indian Ocean geophysical programs to refine our exploration targets. tanami Regional (NSt 100%) To complement our existing activities at the Central Tanami Joint Venture, Northern Star holds a substantial land position in the surrounding Tanami region. In FY21 the focus was on completing reconnaissance aircore drilling programs across new anomalies defined in the Stubbins area. 21 E Paulsens +3Moz Gold Camp Onslow Fortescue Cane River Conservation Park Nanutarra Paulsens Paulsens Operations At Paulsens, FY21 efforts focused on completing regional geophysical and geochemical sampling programs and evaluating the remaining underground Ore Reserve potential. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 “This year we achieved some outstanding results which are a credit to all our teams and business partners; however the most exciting thing that we achieved in FY21 is the strong operational platform and a clear pathway to create further value through increased production and lower costs.” LUKE CREAGH, CHIEF OPERATING OFFICER - POGO AND NSMS A clear pathway to increasing production and lowering costs. Super Pit, KCGM, Kalgoorlie operations. OPERAtIONS REPORt OPERAtIONS REPORt Financial Review Record Underlying Net Profit After Tax and strong balance sheet supports growth. Overview FY21 performance was generated from the Jundee, Kalgoorlie Operations, KCGM (50% interest) and Pogo Operations for the full year ending 30 June 2021. Following the implementation of the merger with Saracen Mineral Holdings Limited on 12 February 2021, performance was also generated from Thunderbox, Carosue Dam and KCGM on a 100% interest basis. table 1 Financial Reporting Metrics** Jundee Thunder- KCGM box Kal. Ops Carosue Dam Pogo Exp- loration Other ~ Total table 2 Financial Overview FY21 FY20 Change $ Change (%) Revenue EBITDA 1 A$M 2,760.5 1,971.7 788.8 A$M 2,268.0 717.1 1,550.9 Underlying EBITDA 1 A$M 1,159.2 790.8 368.4 Cash Earnings1 A$M 647.9 587.7 60.2 40 216 47 10 Net Profit After Tax 1 A$M 1,032.5 258.3 774.2 300 Underlying Net Profit After Tax 2 A$M 371.6 291.0 80.6 Cash flow from Operating Activities A$M 1,076.8 710.4 366.4 Cash flow used in Investing Activities A$M (257.1) (1,670.3) 1,413.2 28 52 85 Sustaining Capital A$M (356.3) (156.7) (199.6) (127) Gold Sold - Production (Oz) (c) 286,676 19,766 321,377 256,657 94,429 204,041 Revenue (A$M) 660.1 42.2 731.0 590.1 202.5 474.7 280.6 42.2 465.0 356.9 116.3 275.1 - - - - 1,182,946 Growth Capital A$M (191.3) (129.6) (61.7) 59.9 (a) 2,760.5 Exploration A$M (145.5) (76.4) (69.1) (48) (90) 25 (4.2) 1,531.9 Acquisition of Assets & Businesses A$M 390.6 (1315.6) 1,706.2 130 24 Cost of Sales (Ex- D&A) (A$M) Depreciation & Amortisation (A$M) 93.5 7.7 220.4 129.4 105.4 95.4 4.9 3.3 660.0 Impairment (A$M) 0.2 Acquisition & Integration Costs (A$M) - Segment EBITDA (A$M) (d) 379.5 - - - 436.6 - - - - - - - 108.8 - 545.6 - 231.8 231.8 266.0 233.2 86.2 199.6 (10.9) NA 1,153.6 Underlying EBITDA (A$M) (d) 379.5 10.0 306.0 233.2 110.2 199.6 (10.9) (68.4) (b) 1,159.2 ** The metrics in this table have been prepared on a financial reporting basis, incorporating the effects of the merger with Saracen Minerals Holdings Limited from 12 February 2021. ~ Other contains amounts not allocated to segments, including corporate activities. (a) Other revenue is the non-cash unwind of the acquired out-of-the-money hedge book contract on merger that has not been allocated to operations. The liability unwinds to revenue as the out-of-the-money hedges are delivered. (b) Includes: corporate costs, excluding exploration segment EBITDA and corporate, technical services and projects depreciation and amortisation. (c) Gold Sold – Production excludes gold sales from assets not currently determined to be in commercial production (operating in the manner as intended by management as defined by Accounting Standards). During the financial year (on a statutory reporting basis) 56koz of pre-production sales were capitalised to Mine Properties offset against the related growth capital. Total development receipts capitalised to Mine Properties during the financial year were $120 million. (d) Segment and Underlying EBITDA are non-GAAP measures and have been reconciled in note 2 of the financial statements and below, respectively. Net Investment Proceeds / (Payments) A$M 30.4 (2.6) 33.0 1,269 Other A$M 15.0 10.6 4.4 Free Cash Flow 3 A$M 819.7 (959.9) 1,779.6 Underlying Free Cash Flow 4 A$M 358.5 365.4 (6.9) Cash and bullion A$M 799.0 748.0 51.0 Corporate Bank Debt & Secured Asset Financing 5 A$M 746.2 761.5 (15.3) Net Cash/(Debt) 6 A$M 52.8 (13.5) 66.3 Basic Earnings Per Share Cents 114.7 Dividends per share7 Cents 19.0 37.3 17.0 77.4 2.0 42 185 (2) 7 2 491 208 12 1. Net Profit After Tax is statutory profit (NPAT). EBITDA, Underling EBITDA and Cash Earnings are non-GAAP measures and have been reconciled to NPAT in the table below 2. Underlying Net Profit (Underlying NPAT) is a non-GAAP measure and a reconciliation between statutory NPAT and Underlying NPAT has been included below 3. Free Cash Flow is calculated as operating cash flow less investing cash flow as outlined in the Group’s Cash Flow Statement 4. A reconciliation between free cash flow and underlying free cash flow has been included below 5. Excludes accrued interest and net of unamortised upfront transaction costs 6. Net debt is calculated as Cash and Bullion less Corporate Bank Debt & Secured Asset Financing 7. This excludes the Special Dividend of 10 cents per share paid during FY21 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 OPERAtIONS REPORt OPERAtIONS REPORt Profit The results and commentary below relate to the statutory FY21 results of the Group and include production and commercial metrics of the acquired operations of Saracen from the merger. The Group reported a profit after tax of $1,032.5 million for the 12 months ending 30 June 2021, a 300 percent increase from the prior year (2020: $258.3 million). As outlined below in Table 4, when normalising for the effects of the merger and other one-off charges, underlying net profit after tax for the year ended 30 June 2021 was $371.6 million, an increase of 28 percent over the prior year (2020: 291.0 million). Gold revenue increased 40 percent to $2.8 billion (2020: $2.0 billion) primarily driven by the 3 percent increase in average realised gold price per ounce (2021: $2,273/oz; 2020: $2,208/oz) and a 33 percent increase in gold sold (production ounces) (2021: 1,182,946 ounces; 2020: 886,543 ounces). Production from the operations was mixed with Jundee and Kalgoorlie Operations recording lower gold sold offset by KCGM and Pogo where production grew in FY21. However, the main driver for the higher production in FY21 was the inclusion of Thunderbox, Carosue Dam and the additional 50% of KCGM which was recorded as revenue from 12 February 2021. Cost of sales increased 51 percent to $2.2 billion (2020: $1.5 billion) driven by higher activity across all operations translating to higher mining, processing and operational employee costs and an increase in non-cash depreciation and amortisation charges and inventory expenses which were incurred from the higher asset values recognised on the balance sheet of NST as part of the merger. Acquisition and integration related costs were higher with the recognition of stamp duty in respect of the merger, which is estimated to be payable in FY22. Non-cash impairments of $545.6 million (2020: $28.3 million) were recognised primarily in respect of exploration properties and mineralised waste stockpiles at KCGM Operations. A $1,919.2 million non-cash gain in respect of the fair value remeasurement of the Company's pre- merger 50% stake in KCGM was recognised at merger implementation date. As a result of the merger with Saracen during FY21, treatment under Australian Accounting Standards has resulted in a number of significant adjustments to the financial accounts. Further to this, we have calculated Cash Earnings for the financial year. This is defined as underlying EBITDA less net interest, tax and sustaining capital. Northern Star believes that this metric provides shareholders with a clearer understanding of the Company’s strong cash-generating performance both during the year and on an ongoing basis. 26 table 3 Net Profit After Tax to EBITDA, Underlying EBITDA and Cash Earnings Reconciliation Net Profit After Tax Tax Depreciation & Amortisation Interest Income Finance Costs EBITDA Financial Instrument Fair Value Adjustments Impairment Charges Pre-tax gain on remeasurement of KCGM (NST 50% share) Acquisition & Integration Costs Merger fair value uplift on run-of-mine stockpiles and gold-in- circuit8 Delivery of Saracen non-cash hedge book9 Underlying EBITDA Tax & Net Interest Paid Sustaining Capital Cash Earnings FY21 FY20 1,032.5 258.3 551.4 660.0 (4.3) 28.4 2,268.0 18.9 545.6 (1,919.2) 231.8 74.0 (59.9) 86.3 354.8 (4.2) 21.9 717.1 0.5 28.3 - 44.9 - - 1,159.2 790.8 (155.0) (46.4) (356.3) (156.7) 647.9 587.7 A$M A$M A$M A$M A$M A$M A$M A$M A$M A$M A$M A$M A$M A$M A$M A$M 27 The Group reported a profit after tax of $1,032.5 million for the 12 months ending 30 June 2021, a 300 percent increase from the prior year (2020: $258.3 million). 8. Run-of-mine (ROM) stockpiles and gold-in-circuit inventory at the time of the merger was required to be remeasured to fair value, resulting in a non-cash increase of A$74 million. This adjustment represents the non-cash amount expensed in FY21 on sale of the contained gold. 9. The mark-to-market position on Saracen’s hedge book was required to be recognised as a liability as part of the merger accounting. As the gold in those hedge contracts is delivered the liability is unwound and recorded as a non-cash increase to revenue. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 table 4 Net Profit After Tax to Underlying Net Profit After Tax Reconciliation OPERAtIONS REPORt OPERAtIONS REPORt FY21 FY20 A$M 1,032.5 258.3 Net Profit After Tax Add: Acquisition & Integration Costs Impairment Charges Financial Instrument Fair Value Adjustments Losses taken up on Associates Finance Transaction Costs Merger Fair Value uplift on Run-of-Mine Stockpiles and Gold-in- Circuit 8 Less: A$M A$M A$M A$M A$M A$M 231.8 545.6 18.9 1.5 3.9 74.0 Pre-Tax Gain on remeasurement of KCGM (NST 50% share) A$M (1,919.2) Tax Adjustments: Tax Effect on Adjustments Permanent Tax Differences on Merger 10 Echo Tax Losses Underlying Net Profit After Tax A$M A$M A$M A$M 313.1 69.5 - 371.6 45.0 28.3 0.5 3.6 - - - (23.2) - (21.5) 291.0 28 29 The above underlying net profit after tax has not been adjusted to reflect certain increased non-cash costs arising from acquisition accounting from the merger with Saracen Minerals Holdings Limited (Saracen). Due to the requirement to recognise the Saracen assets and liabilities at fair value and also remeasure Northern Star’s existing (50%) interest in KCGM (on obtaining 100% control) to fair value, there has been a significant increase in the net assets of the Group. Saracen’s net assets immediately prior to the merger were approximately $1.7 billion. This compares to the value of the shares issued on merger date, which is required to be used as the deemed consideration for the deal, of approximately $5.1 billion. Consequently, Saracen’s net asset value increased by approximately $3.4 billion, when compared to its previously reported net assets. Further, Accounting Standards require Northern Star to remeasure its existing 50% interest in KCGM further increasing net assets by ~$1.3 billion (pre-tax gain on remeasurement of ~$1.9 billion, outlined in table above, less the applicable non-cash tax effect of ~$0.6 billion). As outlined above, the approximate increase in net assets of the combined Group, when compared to the previously reported net assets of the Group prior to the merger, was ~$4.8 billion (excluding transaction costs). A significant proportion of this increase has been allocated to inventory, mine properties and property, plant and equipment. This increase in value is non-cash and has arisen due to the issue of ~422.5 million shares at the agreed ratio as part of the merger (0.3763 new Northern Star Shares for every 1 Saracen share held on the record date) and the other non-cash revaluation of Northern Star’s existing 50% interest in KCGM. This significant increase in asset carrying values will subsequently be expensed in the income statement and will increase future non-cash charges to net profit. These future charges will increase costs of goods sold (via expensing of revalued inventory on processing and selling gold produced), amortisation (mine properties) and depreciation (property, plant and equipment) charges. Consequently, it is expected over time that there will be an increased spread between Net Profit After Tax and the Group’s operating cash flow generation. For this reason, the Board believe that Cash Earnings (as defined) represents the most appropriate measure of Company performance going forward. 10. A proportion of stamp duty attributed to KCGM is non-deductible for tax purposes, which results in a permanent tax difference that increases the current year’s effective tax rate (income tax expense divided by profit before income tax per profit and loss) Cale Pike, Apprentice Heavy Duty Fitter, Kanowna Belle, Kalgoorlie operations. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 OPERAtIONS REPORt OPERAtIONS REPORt Balance sheet The increase in current assets as at 30 June 2021 to $1.8 billion was driven by the recognition and fair value uplift of the stockpiles at the acquired assets expected to be processed within 12 months. With the sale of EKJV (51%), Kundana and Carbine operations to Evolution Mining Limited, completing on 18 August 2021, the book value of the associated assets and liabilities have been reclassified and presented within current assets/liabilities held for sale at 30 June 2021. Non-current assets increased by $6.7 billion primarily resulting from the merger, whereby $7.3 billion of value was recognised on balance sheet with the majority allocated within the classes of Property, Plant and Equipment ($0.6 billion), Mine Properties ($5.6 billion including the remeasurement of NST’s pre-merger share of table 5 Non-cash impacts from the merger KCGM) and Exploration and evaluation assets ($0.2 billion). Current liabilities were $771.6 million at 30 June 2021 (30 June 2020: 638.2 million) principally due to the higher trade and other payables consistent with the increased size of the business post-merger and recognition of the stamp duty estimate payable resulting from the merger which is recognised in Provisions. The Group’s corporate bank debt was refinanced during the year resulting in the full amount being reclassified to non-current Borrowings, and there was an increase in non-current Provisions, principally in relation to closure liabilities being recognised and deferred tax liabilities recognised as part of the merger. Incremental Impact Earnings impact in future years 30 Estimated future Group increase in depreciation and amortisation compared to these charges by the two standalone companies prior to the merger ~$200- 250/oz 11 Ongoing paid as a percentage of revenue during the year until the tax return is finalised after the financial year-end). FY20 tax payments were lower due to temporary differences relating to the vesting of FY17 Performance Rights being deductible. Stamp duty on both NST and Saracen's respective 50 percent acquisitions of KCGM was paid during the year. Payments for property, plant and equipment increased $99.6 million with a full year of investment at KCGM and contribution to merger operations. Investment in exploration increased over the year with the enlarged merged business and acquisition of the Kurnalpi project during the year. Payments for mine properties increased 85% from prior year to $351.3 million with a full year of investment at KCGM and operations acquired on merger. The Company acquired $402.5 million in cash on the merger with Saracen. Cash flows from financing activities highlight the refinancing of the Group’s debt facilities during the year and the repayment of $325 million. Dividends paid to the Company’s shareholders during the year ($310.5 million) included the FY20 interim dividend ($55.5 million) paid on 16 July 2020 that was previously deferred due to COVID-19 uncertainty in March 2020. table 6 Free Cash Flow Free Cash Flow Mergers and acquisitions 13 Net (sale)/purchase of Investments Movement in bullion awaiting settlement & finished goods Working capital movement Payments for equipment financing & leases for operating assets FY21 819.7 (318.1) (30.4) (48.2) 16.4 (80.9) 358.5 FY20 (959.9) 1,322.3 2.6 26.9 36.7 (63.2) 365.4 31 Increase in non-cash value of KCGM Marginal Stockpiles per ounce, excluding cash rehandle, processing and royalty charges on their future processing ~$260/oz12 Ongoing Underlying Free Cash Flow The table above includes an estimate of the increases in the above-mentioned charges, when compared to the aggregate charges to earnings that would have previously arisen by the two merged companies on a separate basis. No adjustments have been made to Underlying NPAT, EBITDA, Adjusted EBITDA or Cash Earnings for the items outlined in the above table. The amounts shown in this table are pre-tax and, due to the revaluation of these amounts for tax purposes, it is expected that there will be a corresponding reduction in future cash tax payments. Cash flow Cash flows include contributions from the Saracen business from 12 February 2021. Cash flows from operating activities for the 12 months ended 30 June 2021 were $1,076.8 million, being 52 percent higher than the previous financial year driven principally by increased revenues from higher gold sold on the back of the expanded business post-merger and a 3 percent increase in realised gold price per ounce received for the year. Income taxes paid were higher for the year (2021: $140.9 million; 2020: $41.3 million) consistent with stronger revenues post-merger (monthly tax instalments are 11. Estimate makes assumptions about the blend of production from different mining areas that have differing depreciation and amortisation rates and the future production activities may differ proportionately to this estimate. Further depreciation and amortisation rates are reviewed annually and are subject to the estimation uncertainties outlined in Note 8(d) of the financial statements. 12. These non-cash charges will affect profit and loss at the time the related gold recovered is sold. Consequently, the timing and amount of these charges in future periods depends on when these stockpiles are processed and sold. Carrying value per estimated ounce of contained gold (~616Moz at 1.03gpt) on the KCGM Marginal Stockpiles at 30 June 2021 was $1,013/oz. FY22 Production & Costs Guidance The following guidance was announced to the ASX on 22 July 2021 table 7 FY22 Production and Costs Guidance Site Kalgoorlie Yandal Pogo Group Production AISC/Oz (Koz) (A$) 900 - 950 1,500 - 1,600 430 - 450 1,375 - 1,475 220 - 250 1,700 - 1,800 1,550 - 1,650 1,475 - 1,575 13. Mergers and acquisitions includes: 30 June 2021- Saracen cash obtained on Merger ($402.5 million) less acquisitions of assets during the period ($11.9 million) and merger and acquisition related costs paid ($72.5). 30 June 2020 – merger and acquisition related costs paid (6.7 million), acquisition of assets ($177.7 million) and payments for acquisition of businesses net of cash acquired ($1,137.9 million) NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 Continuing to increase our reserves and resources. Exploration drilling at Pogo Operations. Resources & Reserves RESOuRCES & RESERVES RESOuRCES & RESERVES Mineral Resources MINERAL RESOURCES AS AT 31 MARCH 2021 MINERAL RESOURCES AS AT 31 MARCH 2021 MEASURED INDICATED INFERRED TOTAL RESOURCES MEASURED INDICATED INFERRED TOTAL RESOURCES Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces NST ATTRIBUTABLE INCLUSIVE OF RESERVE (000’s) (gpt) (000’s) (000’s) (gpt) (000’s) (000’s) (gpt) (000’s) (000’s) (gpt) (000’s) NST ATTRIBUTABLE INCLUSIVE OF RESERVE (000’s) (gpt) (000’s) (000’s) (gpt) (000’s) (000’s) (gpt) (000’s) (000’s) (gpt) (000’s) 44 5,441 1.3 234 3,489 1.2 131 10,220 1.2 409 Surface - - - - - - - - - - - - SKO GOLD PROJECT 39,046 3.2 3,963 12,469 2.6 1,025 51,634 3.0 4,992 Underground 1,932 2.8 174 11,681 2.9 1,085 9,148 2.9 860 22,761 2.9 2,119 Surface 1,290 Underground 119 597 - 1.1 1.2 1.3 - 5 21 6 - - - - - - - - - - - - 597 1.3 - - 21 6 2,007 1.2 75 44,488 2.9 4,197 15,957 2.3 1,156 62,452 2.7 5,428 Stockpiles Jubilee ROM stocks Gold in Circuit Sub-Total SKO - - 38 3.6 - - - 4 1 - - - - - - - - - - - - - - - - - - - - 38 3.6 - - - 4 1 1,970 2.8 180 11,681 2.9 1,085 9,148 2.9 860 22,799 2.9 2,125 Surface 2,800 2.6 237 17,116 1.9 1,045 5,310 1.5 263 25,226 1.9 1,545 CAROSUE DAM GOLD PROJECT Underground - - - - - - - - - - - - Surface 3,123 1.5 149 24,270 1.6 1,278 9,670 1.4 429 37,062 1.6 1,856 2,800 2.6 237 17,116 1.9 1,045 5,310 1.5 263 25,226 1.9 1,545 Underground 6,522 2.9 602 13,968 2.6 1,184 6,583 2.9 546 27,074 2.8 2,332 JUNDEE GOLD PROJECT Stockpiles Gold in Circuit Sub-Total Jundee BRONZEWING PROJECT Sub-Total Bronzewing THUNDERBOX Stockpiles Gold in Circuit - - - 354 12.0 136 354 12.0 136 PAULSENS PROJECT Surface 1,795 Underground 5,503 1,664 - 1.3 2.1 1.4 - 77 28,104 1.7 1,538 2,752 1.6 365 11,606 2.1 802 2,381 2.4 41 4 - - - - - - - - - - 140 180 - - 32,651 1.7 1,755 19,490 2.2 1,347 1,664 1.4 - - 41 4 Sub-Total Thunderbox 8,961 1.7 483 39,710 1.8 2,340 5,133 1.9 321 53,805 1.8 3,144 CONSOLIDATED YANDAL OPERATIONS Total Yandal Operations POGO PROJECT 13,769 1.8 799 101,314 2.3 7,582 26,401 2.1 1,740 141,483 2.2 10,121 36 Stockpiles Gold in Circuit Sub-Total Pogo KCGM Stockpiles Gold in Circuit Sub-Total KCGM KANOWNA GOLD PROJECT Surface Underground Surface Underground - - - - - - - - - - - - - - - - - 7 7 - - 12,864 9.5 3,949 9,679 9.0 2,814 22,543 9.3 6,764 - - - - - - - - - - - - - - - - - 7 12,864 9.5 3,949 10,033 9.1 2,951 22,897 9.4 6,907 206,004 1.8 12,110 103,458 1.4 4,715 309,462 1.7 16,825 40,757 2.0 2,603 51,316 2.4 3,878 92,073 2.2 6,481 124,669 0.7 2,964 - - 29 - - - - - - - - - - - - 124,669 0.7 2,941 - - 29 Stockpiles Gold in Circuit Underground 3,424 147 - 3.1 2.1 - 10 7 - - - - - - - - - - - - 147 2.1 - - 10 7 Sub-Total Kanowna 3,572 3.1 360 14,171 2.6 1,204 12,216 2.3 901 29,958 2.6 2,464 KUNDANA GOLD PROJECT Stockpiles RHP Gold in Circuit Surface - - Underground 541 4.2 49 3.3 - - - 73 5 1 - - - - - - - - - 4,074 4.4 571 3,267 3.8 403 7,882 4.1 1,047 - - - - - - - - - - - - 49 3.1 - - 5 1 Sub-Total Kundana Gold 590 4.2 80 4,074 4.4 571 3,267 3.8 403 7,931 4.1 1,053 EAST KUNDANA JOINT VENTURE Surface 1 9.3 0 125 5.3 21 26 3.7 3 153 5.1 25 Underground 1,071 6.3 218 2,751 5.2 464 2,032 4.5 292 5,854 5.2 974 Stockpiles RHP Stockpiles Raleigh Stockpiles GEM (100%) Gold in Circuit 43 3.0 0 5 - 1.7 3.9 - 4 0 1 - - - - - - - - - - - - - - - - - - - - - - - - - 43 3.0 0 5 - 1.7 3.9 - 4 0 1 - Sub-Total East Kundana JV 1,121 6.2 223 2,876 5.2 485 2,058 4.5 295 6,056 5.2 1,003 Stockpiles Gold in Circuit Sub-Total Carosue Dam CARBINE PROJECT Surface Underground Sub-Total Carbine CONSOLIDATED KALGOORLIE OPS 3,212 2.0 - - 81 7 - - - - - - - - - - - - 3,212 2.0 - - 81 7 12,857 2.0 838 38,238 2.0 2,463 16,253 2.0 975 67,348 2.0 4,275 - - - - - - - - - 2,136 1.8 753 3.7 2,889 2.3 123 90 213 537 1.5 1,334 3.4 1,871 2.9 26 148 174 2,673 1.7 149 2,087 3.5 238 4,760 2.5 387 Total Kalgoorlie Operations 145,276 1.0 4,673 320,691 2.0 20,733 199,587 1.9 12,201 665,553 1.8 37,606 Stockpiles Gold in Circuit Sub-Total Paulsens ASHBURTON PROJECT Stockpiles Sub-Total Ashburton Surface - - Underground 341 5.8 11 - 1.6 - - 64 1 0 129 3.1 88 5.6 - - - - 13 16 - - 1,766 1.9 106 1,895 2.0 43 6.6 - - - - 9 - - 473 5.8 11 - 1.6 - 119 89 1 0 37 353 5.7 65 217 4.1 29 1,809 2.0 115 2,379 2.7 209 Surface - - - - - - - - - 98 1.6 - - 98 1.6 5 - 5 444 1.2 - - 444 1.2 17 - 17 542 1.3 - - 542 1.3 22 - 22 WESTERN TANAMI PROJECT Surface/Underground 107 7.8 Stockpiles Sub-Total Western Tanami 375 1.4 482 2.8 27 17 44 1,079 6.0 208 1,449 5.8 271 2,635 6.0 506 - - - - - - 375 1.4 17 1,079 6.0 208 1,449 5.8 271 3,010 5.4 523 NORTHERN STAR TOTAL 162,941 1.1 5,832 440,693 2.3 32,907 244,565 2.3 17,748 848,199 2.1 56,486 Note: 1. Mineral Resources are inclusive of Ore Reserves. 2. Mineral Resources are reported at various gold price guidelines: a. A$2,250/oz Au - All Australian assets except Ashburton; b. A$1,850/oz Au - Ashburton; US$1,500/oz Au - USA assets. 3. Rounding may result in apparent summation differences between tonnes, grade and contained metal content. 4. Numbers are 100 % NST attributable. Competent Persons: 1. Michael Mulroney 2. Daniel Howe 3. Brook Ekers 125,166 0.7 2,993 246,762 1.9 14,713 154,774 1.7 8,593 526,702 1.6 26,299 CENTRAL TANAMI PROJECT JV Surface 1 1.4 0 1,065 2.5 86 3,756 1.5 176 4,823 1.7 262 Stockpiles 560 0.7 13 - - - - - - 560 0.7 13 Surface/Underground 2,502 2.9 232 4,430 2.8 400 4,842 2.9 453 11,774 2.9 1,085 344 13,106 2.7 1,118 8,459 2.7 725 24,989 2.7 2,186 Sub-Total Central Tanami JV 3,062 2.5 245 4,430 2.8 400 4,842 2.9 453 12,334 2.8 1,097 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 RESOuRCES & RESERVES RESOuRCES & RESERVES Ore Reserves ORE RESERVES AS AT 31 MARCH 2021 ORE RESERVES AS AT 31 MARCH 2021 NST ATTRIBUTABLE RESERVE (000’s) (gpt) (000’s) (000’s) (gpt) (000’s) (000’s) (gpt) (000’s) NST ATTRIBUTABLE RESERVE (000’s) (gpt) (000’s) (000’s) (gpt) (000’s) (000’s) (gpt) (000’s) PROVED PROBABLE TOTAL RESERVE Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces PROVED PROBABLE TOTAL RESERVE Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces JUNDEE GOLD PROJECT Stockpiles Gold in Circuit Sub-Total Jundee BRONZEWING PROJECT Stockpiles Gold in Circuit Sub-Total Bronzewing THUNDERBOX PROJECT Surface 1,290 Underground 119 597 - 2,007 1.1 1.2 1.1 - 1.2 44 5 21 6 75 998 14,126 - - 1.3 4.0 - - 43 2,288 1,824 14,245 - - 597 - 1.2 4.0 1.1 - 87 1,829 21 6 15,124 3.8 1,867 17,131 3.5 1,942 Surface 3,600 2.0 234 11,891 1.5 557 15,491 1.6 791 Underground - - - - - - - - - - - - - - - - - - - - - - - - - - - 3,600 2.0 234 11,891 1.5 557 15,491 1.6 791 SKO GOLD PROJECT Stockpiles Gold in Circuit Sub-Total SKO CAROSUE DAM PROJECT Stockpiles Gold in Circuit Sub-Total Carosue Dam CARBINE PROJECT 1,471 3,636 1,445 - 6,552 1.1 1.9 0.8 - 1.5 54 219 37 4 19,605 7,983 - - 1.5 1.9 - - 957 485 - - 21,076 11,619 1,445 - 314 27,588 1.6 1,442 34,140 1.5 1.9 0.8 - 1.6 1,011 704 37 4 1,756 Stockpiles Sub-Total Carbine CONSOLIDATED KALGOORLIE OPS Surface Underground - 177 38 - 215 Surface 1,323 Underground Surface Underground - 734 - 2,056 - - - - - 4.0 3.1 - 4.0 1.3 - 1.5 - 1.5 - - - - - 23 4 1 28 56 - 34 7 97 - - - - - 2,254 - - - 3.4 - - - 248 - - - 2,431 38 - 2,254 3.4 248 2,469 15,948 10,782 - - 1.4 3.0 - - 734 17,271 1,023 10,782 - - 734 - - 3.5 3.6 - 3.5 1.4 3.0 1.5 - - 270 4 1 276 790 1,023 34 7 26,731 2.0 1,757 28,787 2.0 1,855 1,241 2.0 - - - - 1,241 2.0 78 - - 78 1,241 2.0 - - - - 1,241 2.0 78 - - 78 12,159 1.6 622 54,603 2.2 3,866 66,762 2.1 4,489 PAULSENS PROJECT Total Kalgoorlie Operations 130,676 1 3,479 183,222 2 11,484 313,899 1 14,963 Surface Underground Stockpiles Gold in Circuit Sub-Total Thunderbox CONSOLIDATED YANDAL OPERATIONS Total Yandal Operations POGO GOLD PROJECT 38 Surface Underground Stockpiles Gold in Circuit Sub-Total Pogo KCGM Stockpiles Gold in Circuit Sub-Total KCGM KANOWNA GOLD PROJECT Stockpiles Gold in Circuit Sub-Total Kanowna KUNDANA GOLD PROJECT Stockpiles Gold in Circuit Sub-Total Kundana Gold EAST KUNDANA JOINT VENTURE Surface Underground Stockpiles RHP Stockpiles Raleigh Stockpiles GEM (100%) Gold in Circuit Sub-Total East Kundana JV Surface Underground - 106 124,669 - Surface Underground Surface Underground - - - - - - - - - - - 2.1 0.7 - - - - 7 7 - 7 2,941 29 - 5,852 - - 5,852 131,932 13,561 - - - 7.9 - - 8 1.8 2.1 - - - - 1,491 5,852 - - - - 1,491 5,852 7,697 131,932 912 13,667 - - 124,669 - - 7.9 - - 8 1.8 2.1 0.7 - - 1,491 - 7 1,498 7,697 919 2,941 29 125,272 0.7 3,000 145,493 1.8 8,609 270,766 1.3 11,609 4 2,131 147 - 2,282 - 147 49 - 195 - 607 43 0 5 - 656 2.1 3.0 2.1 - 3.0 - 5.1 3.1 - 4.8 - 4.9 3.0 1.7 3.9 - 4.8 0 206 10 7 830 4,265 - - 2.6 2.6 - - 69 353 - - 834 6,396 147 - 223 5,095 2.6 422 7,377 - 24 5 1 30 - 96 4 0 1 - - 1,336 - - - 4.3 - - - 184 - - - 1,483 49 - 1,336 4.3 184 1,531 124 949 - - - - 3.9 5.5 - - - - 16 169 - - - - 124 1,555 43 0 5 - 101 1,073 5.4 185 1,729 2.6 2.7 2.1 - 2.7 - 4.4 3.1 - 4.4 3.9 5.3 3.0 1.7 3.9 - 5.1 69 559 10 7 645 - 208 5 1 214 16 265 4 0 1 - 286 39 Surface Underground Stockpiles Gold in Circuit Sub-Total Paulsens ASHBURTON PROJECT Surface Stockpiles Sub-Total Ashburton CENTRAL TANAMI PROJECT JV Underground Underground Stockpiles Sub-Total Central Tanami JV WESTERN TANAMI PROJECT Stockpiles Sub-Total Western Tanami - 186 11 - 197 - - - - - - - - - - 5.1 1.6 - 4.9 - - - - - - - - - - 31 1 - 31 - - - - - - - - - - 84 - - - 4.0 - - 84 4.0 - - - - - - - - - - - - - - - - - - - 11 - - 11 - - - - - - - - - - 269 11 - 281 - - - - - - - - - - 4.8 1.6 - 4.6 - - - - - - - - - - 41 1 - 42 - - - - - - - - - NORTHERN STAR TOTAL 143,033 0.9 4,139 243,761 2.2 16,852 386,794 1.7 20,992 Note: 1. Ore Reserves are reported at various gold price guidelines: a. A$1,750/oz Au - All Australian assets except Bronzewing; b. A$1,850/oz Au - Bronzewing; US$1,350/oz Au - USA assets. 2. Rounding may result in apparent summation differences between tonnes, grade and contained metal content. 3. Ounces are estimates of metal contained in the Ore Reserve and do not include allowances for processing losses. 4. Numbers are 100 % NST attributable. Competent Persons: 1. Jeff Brown 2. Stephen King Ibrahim Omari 3. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 A maintenance employee inspects the conveyor belt at the Carosue Dam processing plant, Kalgoorlie operations. 40 RESOuRCES & RESERVES Resources and Reserves As at 31 March 2021, Northern Star’s Consolidated Group Mineral Resource Estimate (inclusive of Ore Reserves) was 848.2 million tonnes at 2.1 grams per tonne gold for 56.5 million ounces (refer Table 1) and the Consolidated Group Ore Reserve Estimate is 386.8 million tonnes at 1.7 grams per tonne gold for 21.0 million ounces (refer Table 2). Reported in ASX release “Resources, Reserves and Exploration Update” on 3 May 2021 which is also found on Northern Star’s website (https://www.nsrltd.com/investor-and- media/asx-announcements/2021/may/resources,-reserves-and-exploration- update). The Mineral Resource inventory growth stems from Northern Star’s exploration success at its Jundee, Pogo and KCGM Operations portfolio and the merger with Saracen and after mining depletion of 1.1 million ounces. Group Mineral Resources increased significantly by 7.5 million ounces gold from 49.0 million ounces gold as at 30 June 2020 to the current 56.5 million ounces gold Measured, Indicated and Inferred Mineral Resource, after mining depletion of 1.1 million ounces. Group Proved and Probable Ore Reserve increased by 2.0 million ounces gold from 19.0 million ounces gold as at 30 June 2020 to the current 21.0 million ounces gold Proven and Probable Reserve at 31 March 2021, after mining depletion of 1.1 million ounces. Northern Star is not aware of any other new information or data that materially affects the information contained in the Annual Mineral Resource and Ore Reserve statement 31 March 2021 other than changes due to normal mining depletion during the three month period ended 30 June 2021. Mineral Resource and Ore Reserve governance and internal controls Northern Star ensures that the Mineral Resource and Ore Reserve estimates quoted are subject to governance arrangements and internal controls activated at a site level and at the corporate level. Internal and external reviews of Mineral Resource and Ore Reserve estimation procedures and results are carried out through a technical review team that is comprised of highly competent and qualified professionals. These reviews have not identified any material issues. The Company has finalised its governance framework in relation to the Mineral Resource and Ore Reserve estimates in line with the expansion of its business. Northern Star reports its Mineral Resources and Ore Reserves on an annual basis in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) 2012 Edition. Mineral Resources are quoted inclusive of Ore Reserves. Competent Persons named by Northern Star are Members or Fellows of the Australasian Institute of Mining and Metallurgy and/or the Australian Institute of Geoscientists and qualify as Competent Persons as defined in the JORC Code. Competent Persons Statements The information in this announcement that relates to Mineral Resource estimations, exploration results, data quality and geological interpretations for the Company’s Jundee (including Julius Project), Pogo, Paulsens and Kalgoorlie Operations (excluding the KCGM Operations) is based on, and fairly represents, information compiled by Michael Mulroney, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy and a full-time employee of Northern Star Resources Limited. Mr Mulroney has sufficient experience that is relevant to the styles of mineralisation and type of deposits under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Mulroney consents to the inclusion in this announcement of the matters based on this information in the form and context in which it appears. The information in this announcement that relates to Mineral Resource estimations, exploration results, data quality and geological interpretations for the Company’s Carosue Dam, Thunderbox and KCGM Operations is based on, and fairly represents, information compiled by Daniel Howe, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy and a full-time employee of Northern Star Resources Limited. Mr Howe has sufficient experience that is relevant to the styles of mineralisation and type of deposits under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Howe consents to the inclusion in this announcement of the matters based on this information in the form and context in which it appears. The information in this announcement that relates to Ore Reserve estimations for the Company’s Jundee (including Julius Project), Pogo, Paulsens and Kalgoorlie Operations (excluding the KCGM Open Pit and Carosue Dam Operations) is based on, and fairly represents, information compiled by Jeff Brown, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy and a full-time employee of Northern Star Resources Limited. Mr Brown has sufficient experience which 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 Brown consents to the inclusion in this announcement of the matters based on this information in the form and context in which it appears. The information in this announcement that relates to Ore Reserve estimations for the Company’s Carosue Dam and Thunderbox Operations is based on, and fairly represents, information compiled by Stephen King, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy and a full-time employee of Northern Star Resources Limited. Mr King has sufficient experience which 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 King consents to the inclusion in this announcement of the matters based on this information in the form and context in which it appears. The information in this announcement that relates to Ore Reserve estimations for the Company’s KCGM Open Pit Operations is based on, and fairly represents, information compiled by Ibrahim Omari, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy and a full-time employee of Northern Star Resources Limited. Mr Omari has sufficient experience which 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 Omari consents to the inclusion in this announcement of the matters based on this information in the form and context in which it appears. The information in this announcement that relates to Mineral Resource estimations, data quality, geological interpretations and potential for eventual economic extraction for the Groundrush deposit at the Central Tanami Gold Project is based on, and fairly represents, information compiled by Brook Ekers a Competent Person who is a Member of the Australian Institute of Geoscientists and a full-time employee of Northern Star Resources Limited. Mr. Ekers has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Ekers consents to the inclusion in this announcement of the matters based on this information in the form and context in which it appears. The information in this announcement that relates to the Central and Western Tanami Gold Projects is extracted from the Tanami Gold NL ASX announcement entitled “Quarterly Report for the Period Ending 31 March 2014” released on 1 May 2014 and is available to view on www.tanami.com.au. The Company confirms that it is not aware of any further new information or data that materially affects the information included in the original market announcement entitled “Quarterly Report for the Period Ending 31 March 2014” released on 1 May 2014 and, in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. To the extent disclosed above, 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. The information in this announcement that relates to the Bronzewing Project (excluding the Julius Project) is extracted from the Echo Resources Ltd announcement entitled “Yandal Gold Project BFS & Growth Strategy” released on 23 April 2019 and is available to view on www.asx.com.au. The Company confirms that it is not aware of any further new information or data that materially affects the information included in the original market announcement entitled “Yandal Gold Project BFS & Growth Strategy” released on 23 April 2019 and, in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. To the extent disclosed above, 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. The information in this announcement that relates to the Mt Clement Project is extracted from the Artemis Resources Limited announcement entitled “Substantial Resource Increase at Mt Clement Gold & Silver Project” released on ASX Announcement dated 26 July 2011 and is available to view on www.artemisresources.com.au. The Company confirms that it is not aware of any further new information or data that materially affects the information included in the original market announcement entitled “Substantial Resource Increase at Mt Clement Gold & Silver Project” released on ASX Announcement dated 26 July 2011 and, in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. To the extent disclosed above, 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. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 Risk Management RISK MANAGEMENt Figure 1 Top 10 Company Risks Risk Level Low Medium High 44 Risk Management “The Exploration & Growth Committee provides significant risk management, in reviewing and assessing risks associated with major capital projects and business development initiatives, and ensuring that appropriate risk mitigation measures have been implemented in such projects.” JOHN RICHARDS, CHAIR OF THE EXPLORATION & GROWTH COMMITTEE Risk is part of operating a business, and Northern Star is committed to the adequate identification, monitoring and management of material risks presented by our operational and corporate activities. A positive culture is fundamental to effective risk management in the Company. Our Code of Conduct instils values which promote a positive culture, requiring transparency, honesty, integrity, ethical behaviour and accountability. The Independent Board members, who possess the required values and a suitable mix of skills and diversity of life experience, are at the apex of our risk management framework. Senior management is responsible for reinforcing and modelling the appropriate behaviours and judgements required to maintain effective risk management and risk awareness. At the quarterly meetings of the Audit and Risk Committee, information about emerging and existing risks is presented by management and the internal audit function, involving debate on operational risk management across all sites and in corporate activity. This risk management framework enables the Board to identify further areas to mitigate risks and continuously monitor and improve risk management and internal controls. Examples of this risk management framework in action include crisis management and business continuity training drills; comprehensive insurance to transfer risk to external insurers; a rigorous annual budgeting system based on up to date Reserves and Resources information; appropriate due diligence and advisory expertise for acquisitions and divestments, and the new Exploration and Growth Committee provides a forum for technically based scrutiny of management decisions on capital allocation for organic and inorganic growth initiatives in pursuit of the Board’s role in approving and monitoring performance of the Company’s strategy. The quarterly risk review process identifies, assesses and prioritises risks, and as part of that process, identifies risk mitigation actions to be implemented and monitored at all sites, using the risk assessment matrix tool. This ensures the Board receives the most up to date information about the Company, enabling them to make strategic decisions regarding risks which affect the Company now, but also those which have potential to impact our success in the future. Post-merger, we also focused on assessing our new Group risk profile and making changes to our corporate risk register as a result of our expanded operations and Company footprint. Figure 1 is a summary of the Company’s top 10 ranked risks from the Group corporate risk register as at the Report date, and Figure 2 shows the key environmental1 and social2 risks outside of the top 10 ranked risks to which the Company has a material exposure, that are likely to affect Northern Star’s financial condition or operating performance, as disclosed in accordance with Recommendation 7.4 in the ASX Corporate Governance Council Principles & Recommendations (4th edition). “Material exposure” means a real possibility that the risk in question could materially impact the Company’s ability to create or preserve value for shareholders over the short, medium or longer term. Northern Star’s understanding of climate change related risks is continually improving with dedicated bi-annual climate change related risk assessments as part of our risk management process aligned with the Task force on Climate-Related Financial Disclosures (TCFD) recommendations, to better identify and manage risks relating to climate change. These include transitional risks and physical risks. Results of these climate change risk assessments are submitted to both the ESS Committee and the Audit & Risk Committee ensuring Board oversight of the risks and direction on key measures to be implemented to reduce these risks, such as identifying greenhouse gas emissions targets and conducting region-wide water allocation studies. Further information is detailed in our latest Sustainability Report available on our website at www.nsrltd.com/sustainability/. r o g n i t u l l o p f o s k s i r s e d u c n l i t i , l e p m a x e r o F . s n o i t a d n e m m o c e R d n a s e p c n i r P l i l i c n u o C e c n a n r e v o G e t a r o p r o C X S A e h t n i d e n fi e d s A . 1 . e g a t i r e h l i a r u t l u c s ' n o g e r a g n n e t a e r h t i r o e r e h p s o m t a e h t n i s l e v e l i n o b r a c o t g n d d a , t n e m n o r i v n e e h t g n d a r g e d i Risk Risk # Inherent risk rating Residual risk rating Key control measures examples 1 2 3 4 5 6 Loss of skilled Personnel Safety Under-performance against shareholder expectations Pandemic or Epidemic virus or infectious disease Market risk Loss of social licence to operate 7 Exploration 8 9 10 Geology Mining Operations Not managing stakeholder expectations in relation to sustainablity • Competitive remuneration and benefits framework • Ongoing training and mentoring programmes • Group Safety Management system • Regular audit and review processes • Clear communication of investment hurdles and corporate strategies • Ongoing assessment of operations against guidance • Operability levels matrix responding to situational level • Maintaining close contact and relationships with supply chain • Treasury Risk Management Policy addressing parameters for managing market risk exposures • Maintain access to liquidity through banking facilities • Ability to alter/flex operations to suit prevailing macro-economic climate • Inclusion and engagement with local communities, Governments and other key stakeholders • Environmental, Social & Safety Committee driving ESR plan and sustainability reporting • Team competence • Sufficient budget provided to support exploration pipeline • Exploration & Growth Committee scrutiny • LOM review and reserve and resource updates • Continued sustained exploration pipeline • Mine planning and operational procedures, including reconciliation and grade control plans • Operational flexiblility • Disclosure of emissions reductions ambition and pathways • KMP ESG KPIs aligned to emissions reductions Figure 2 Key Environmental and Social Risks Risk Risk # Inherent risk rating Residual risk rating Key control measures examples 15 Significant breach of Operating Licence Conditions 17 Cybersecurity 21 Climate Change • Continued compliance and monitoring of compliance with management systems and regulations • External independent annual/bi-annual tails dam audit (Operating procedure and geo-technical) at all sites • Management of wet tailings storage • TSF construction reports submitted to relevant authorities • Management of underground operations to reduce waste water • Weekly inspections of recycle tailings pond • Offsite disaster recovery for all ICT systems • Implementation of a security operations centre off-site • Implemented advanced cybersecurity measures • Cyber security training for all employees • Water balance model and water usage forecasting • Implementation of the TCFD Recommendations . i c m e d n a p h t i i w d e t a c o s s a s k s i r d n a y t i n u m m o c l a c o l e h t g n m r a h i , s r e i l p p u s l r o s e e y o p m e g n i t a e r t s i m , k s i r y r e v a l s n r e d o m , l e p m a x e r o F . 2 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 Environmental, Social, & Governance hEALth & SAFEtY hEALth & SAFEtY health and Safety Safety is our number one priority. Group health, safety and wellbeing continues to be a whole-of-Company focus as we develop and implement plans that lead the way in areas of safety leadership, technology, systems, and the practical application of processes, to mitigate and remove hazards and safety risks at our operations. In FY21 as a result of the merger with Saracen, Northern Star’s safety team confidently rose to the challenge of integrating the safety processes and systems of the Thunderbox Operations, the Carosue Dam Operations, and a 100% interest in the KCGM Operations into Northern Star’s safety processes and systems. afety S It matters and starts with you eamwork T Together we can ccountability A The responsibility lies with you espect R To get it you must give it esults R We deliver on our promises Safety Pre-empting new legislation yet to be enacted in Western Australia (the Work Health and Safety Act 2020, and Work Health and Safety Regulations), Northern Star’s workforce is focussing on: • critical hazard and risk identification, and • management tools, in face-to-face externally facilitated workshops on site which are aimed at: - - - strengthening workers’ understanding, empowering decision making in relation to hazard and risk identification, and exposure to risk.; and providing an additional platform for the site teams to discuss and qualitatively assess critical risks to Northern Star’s operations. Group health, safety and wellbeing continues to be a whole of Company focus to mitigate and remove hazards and safety risks at our operations. _ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 48 Safety Snapshot 49 FY21 LTIFR 0.9 2.1 FY21 TRIFR 10.0 9.1 5.6 2.5 2.0 1.5 1.0 0.5 0 1.6 0.5 0.5 2.0 0.9 3.3 8.0 6.0 4.0 2.0 0 6.4 3.3 6.2 5.6 FY19 FY20 FY21 FY19 FY20 FY21 Northern Star Industry average FY21 LTIFR of 0.9 includes 100% of KCGM and Saracen safety statistics from 1 July 2020 – 30 June 2021. FY19 Industry means the DMIRS Safety Performance in the Western Australian Mineral Industry - Accident and Injury Statistics 2017-18 Underground Metalliferous. FY21 TRIFR of 5.6 includes 100% of KCGM and Saracen safety statistics from 1 July 2020 – 30 June 2021. The pre-merger Northern Star TRIFR was 4.2 at 30 June 2021. as a consequence of the merger with Saracen the group TRIFR was 5.6 at 30 June 2021. FY20 LTIFR and FY20 TRIFR include 50% of KCGM safety statistics from 1 January 2020 (date on which Northern Star acquired financial benefit of 50% of KCGM). FY20 & FY21 Industry means the DMIRS Safety Performance in the Western Australian Mineral Industry – Accident and Injury Statistics 2018-19 and 2019-20 Metalliferous total. There was one fatality in FY21 on 13 July 2020 at the Carosue Dam Operations, under previous Saracen ownership (prior to their merger with Northern Star on 12 February 2021). Tobi Freeman, Senior Metallurgist at Thunderbox, Yandal operations. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 hEALth & SAFEtY hEALth & SAFEtY 50 Case Study: Work Health and Safety Act (WHS Act)– Face-to-Face in the Goldfields There is no doubt that the WHS Act and associated changes are generating conversation at all levels of the mining industry. This State- based harmonisation with National work health and safety legislation has been anticipated for several years. The absence of a final draft of the Work Health and Safety Regulations is contributing to confusion amongst workers generally in Western Australia, with questions being asked by employees at all levels of the Company around what the new legislation will mean for different roles. Northern Star’s Health and Safety Department took the lead in educating our workforce about the changes under the WHS Act and the consequences, with a series of site-based face-to-face workshops across our Western Australian operations. This practical legal guidance was delivered by a specialist workplace safety lawyer to a broad range of employees, to upskill them in preparation for the standards required under the new legislation. In collaboration, we developed legal training materials to educate our workforce and onsite Contractors, including scrutiny of real case studies of serious incidents in the mining industry. The assessment and demonstration of potential legal outcomes was invaluable as a method to focus the minds of the workforce on the hazards and risks presented, what should have occurred and been actioned by whom to mitigate the risk or avert the incident, as well as understanding the legal liability implications of safety incidents and near misses for Northern Star. Over 70 workshops have been delivered to approximately 750 Northern Star personnel including the Board of Directors, the Executive and senior leadership team, our Safety and Health Representatives, and the workforce more broadly on site. The level of active participation and debate during these ~70 separate workshops demonstrated an excellent level of engagement in relation to safety and related topics on site. In addition, the feedback loop has provided an invaluable perspective on: • • opportunities and recommendations from the workforce for improvement, and the areas for further focus in the coming year, to continue our development of Safety education and training for our workforce. This built on legal safety workshops conducted at Pogo in 2019 by our US specialist workplace safety lawyer. Educating our workforce Jundee personnel undergo onsite training, Yandal Operations 51 Northern Star’s Health and Safety Department took the lead in educating our workforce about the changes under the WHS Act and the consequences, with a series of site-based face-to-face workshops across our Western Australian operations. •••••••••••••••••••••••••••••••• •••••••••••••••••••••••••••••••• •••••••••••••••••••••••••••••••• NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 hEALth & SAFEtY hEALth & SAFEtY hAZIDaR Programme In FY21 we launched a reward-based programme ‘HAZIDaR’ across Group sites to encourage and incentivise employees: • to be more aware of hazards through established programs such as HAZID and the Strive for Five at pre-start meetings; and Figure 1 How HAZIDaR works • to identify opportunities to rectify hazards using the Hierarchy of Control (HoC). HAZIDaR results are encouraging, with employees already suggesting innovative changes for a safer working environment. training Northern Star is constantly investigating opportunities to integrate more technology into training systems. In FY21 we explored the use of simulator technologies and virtual reality capabilities in our training and development programmes, allowing us to assess our operators and provide targeted development opportunities. In FY22, in partnership with Kalgoorlie Central TAFE, we will be launching a more structured internal training framework which is aligned with Australian Qualifications and Training Framework (AQTF). This will enable Northern Star to utilise our own training packages, providing employees with nationally accredited training and professional development, whilst strengthening the safety leadership team within Northern Star. Everyone in the workplace • HAZID completed prior to commencing any tasks; focus on Rectification Pre-Start Meeting • Open Hazards discussed • Good & Robust Hazards discussed (even if closed out) • Crew discussion of any key learnings or innovative solutions: these are also escalated to Dept Manager for nomination • $50 to be given out by Manager for each excellent HAZIDaR 52 53 Supervisor / Manager • Sign off on all HAZIDaR • Unrectified Hazards recorded on Hazard Board • Higher level & rectified Hazards also added to Hazard Board • Total number of Hazards identified & total number rectified recorded in INX Jake Benstead and Matthew McDonald of the Fimiston Maintenance team, KCGM, Kalgoorlie Operations. health As part of Northern Star’s commitment to the health and wellbeing of our employees we offer a range of health and wellbeing services across all operations. Our EAP providers, site-based programmes and clinical-level occupational health nurses support workers in relation to diet and nutrition, mental health, physical strength and conditioning, as well as general fitness for work. We understand the support which is required for employees to maintain mental health and physical conditioning. Reflecting on FY21, we are grateful for the learnings and opportunities identified that have further strengthened the Company health and safety system. This has, in turn, provided Northern Star with the platform to increase our support for the local communities which our operations form part of. Systems Post-merger, it has been Northern Star’s priority to ensure that Saracen safety systems are migrated into Northern Star’s internal management system, INX, so that systems are consistent across the whole Northern Star Group. This is a significant undertaking which is therefore being completed in two phases. Migration involves creating a centralised location of data and further educating the workforce on reporting and recording incidents, capturing recordable hours, co-ordinating flights and accommodation, and managing our training requirements to ensure a consistent approach is used. Phase one has been completed, with the historical data from Saracen and Northern Star being reviewed, adjusted to achieve alignment with Northern Star classifications, combined and collated into the INX modules “InControl”, “InTuition” and “InFlight”. We are now in phase two, aligning and integrating the safety system of the KCGM Operations into our centralised Northern Star system. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 PEOPLE & CuLtuRE PEOPLE & CuLtuRE 54 People & Culture Our STARR Core Values continue to underpin how our people work together and provide a solid foundation for everything we do. Throughout FY21 Northern Star has grown in the areas of people engagement, delivery, training and development, and support. Building on our work in previous years, we have continued to actively use data analytics and technology to better understand our employees’ experience and support our employees and their families. Since 2012 Northern Star has offered eligible employees the opportunity to become shareholders in the Company through the $1000 Employee Share Plan. In FY21, the scheme was offered to new employees who joined with us as part of the merger with Saracen. We are pleased that now 93% of eligible employees have chosen to become shareholders in Northern Star, investing in the Company’s future growth and aligned with our other shareholders. Development In FY20 we developed a customised leadership development programme, which we continued to deliver to all of our sites in FY21. The programme focusses on increasing our leaders’ self-awareness and strategies to coach and develop their people and teams. With COVID-19 related travel restrictions still in place during FY21, we worked with our Pogo workforce remotely to deliver the leadership development programme via an interactive online format, to ensure their development was not compromised. Growing our senior leaders’ capability to lead and develop our people is key to the future success of the Company. As part of their leadership development, an internationally recognised programme, Dare to Lead ™ is being facilitated across all of our sites through online modules and one-on-one coaching. This will be further complemented by additional profiling, coaching, education, networking and leadership activities planned for FY22. Paid Parental Leave As part of our commitment to a diverse and inclusive workplace and harmonising our employee benefits, in August 2021 Northern Star announced a harmonised Australian paid parental leave benefit. The maximum benefit provides 20 weeks’ paid leave, additional return to work payments, and superannuation and long service leave top up. This level of benefits positions Northern Star with industry leaders in Australia, making us an atttractive employer. The benefit increases with service and therefore provides an important retention tool in this period of high people demand. The application in our US operations is currently being reviewed in line with applicable legislation and benchmarks, and will be finalised in FY22. Culture Our STARR Core Values are at the heart of our culture. They guide our decisions and behaviours; Safety, Teamwork, Accountability, Respect and Results are all integral to how Northern Star operates. As part of the merger, we continue to embed the STARR Core Values across all sites to ensure that they are understood and adopted by all employees. Northern Star uses annual culture surveys to gain an understanding of our people and their experiences as Northern Star employees. Pre-merger, our second culture survey was completed in December 2020 by all Northern Star sites, measuring the STARR Core Values, engagement and wellbeing. With an employee participation rate of 82%, the survey results help us to celebrate what we are doing well, and identify opportunities for improvement. After completion, results were delivered to each site by site leaders. Site teams created actions to respond to areas identified for improvement. In FY22, we will conduct a survey to capture the data of the expanded Group employees and additional sites to create a new baseline for data across the whole Northern Star Group and allow us to track future progress more accurately. 55 L to R: Angelo Villanueva, Cleo Leunig and Kalum Rogers, Carosue Dam's Metallurgical team, Kalgoorlie operations. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 PEOPLE & CuLtuRE 57 Mental health & Wellness T he mental and physical health and wellbeing of our employees is our priority. Our demonstrated strengths during the COVID-19 pandemic are: Northern Star’s culture of Teamwork, the organic support networks embedded throughout our workforce, and our increased use of technology to better connect employees. We have continued to leverage off these in FY21. Northern Star’s Mental Health First Aid Programme continues to expand to ensure our frontline supervisors and management are equipped through the 12 hour programme to provide on-the-ground, early intervention support and referral to their colleagues who are experiencing mental health challenges. In FY22, COVID-19 restrictions allowing, we look forward to re-offering the programme to people in our near mine communities. Northern Star’s Contractors make up 42% of our workforce and we are committed to offering opportunities to improve and strengthen their knowledge, mental and physical health and wellbeing. Northern Star encourages Contractors to engage and utilise the Group programmes offered across our sites, including the social activities and services and access to our EAP Hotline whilst on site. In FY21, our Contractors also participated in our WHS Act legislation training and played a critical role in our F1 Business Improvement Programme, which involved employees and Contractors working side by side to solve challenges and create innovative solutions for our operations. In FY22, we will continue to offer training and development opportunities to support a meaningful, constructive and collaborative relationship with our Contractors. With a focus on minimising psychosocial harm, we continue to build on valuable relationships with our EAP providers, gaining important insights from de-identified data to understand trends and help us target interventions to support our workforce, both employees and site Contractors. Marie-Clare Parks, Exploration Geology Technician at Thunderbox, Yandal operations. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 PEOPLE & CuLtuRE PEOPLE & CuLtuRE Culture & Capability Our People in Numbers Figure 1 Key elements that underpin our culture and capability • GoldStarr Wellness & Benefits Hub • Second opinion Best Doctors service • FaceTime Exercise Physiologists • Mindfulness & Workout Programs • Industry Leading Mental Health Programs • 300 internationally accredited Mental Health First Aider Attract & Retain • World class Assets • Diverse Portfolio • Growth Trajectory • Huge Intellectual Capital • Employee Engagement Specialist • Culture Checkpoint Survey • Cloud based Communications Platform Wellness Develop 58 • Agile, fast feedback culture • Succession development KMP • Digital Performance Dashboards • Cross-Asset, Cross-Discipline Development Program high Performance Gender Balance Figure 2 Gender composition of the workforce in Australia (% females) • Graduate Program • Customised Capability Framework • Emerging Leaders Program • 360 Degree Feedback Senior Leaders • 1-on-1 Coaching . 0 2 0 2 h c r a M 1 3 a t a d A E G W d e h s i l b u p t s a l KMP (excluding CEO) Directors Other Executives / General Managers 4.8% Senior Managers Other Managers Non-Managers 13.6% 15.4% 15.3% 18.5% 18.0% 30.8% 25.0% 33.3% 29.9% 25.4% 24.3% Key Northern Star Comparison group* s i p u o r G n o s i r a p m o C * 1 2 0 2 t s u g u A t a s A ^ l t a s a s e e y o p m e + 0 0 0 1 h t i i i i w s e n a p m o C g n n M e r O d o G A E G W l Employees who are shareholders Female participation Apprentices/trainees and Graduates 80% 24% 8% total employees^ total Contractors across Group sites 3,383 2,524 59 Culture Survey Engagement 76% Positive +1% Wellbeing 75% Positive +4% Respect 71% Positive +2% teamwork 70% Positive +4% Participation rate: 82%. Sites surveyed: Pogo, Kalgoorlie Operation, Jundee, Bronzewing, Corporate NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 SuStAINABILItY SuStAINABILItY Sustainability Northern Star regularly identifies and updates the range of sustainability issues which we consider are likely to affect the financial condition or operating performance of Northern Star. Northern Star’s Mission To generate superior returns for our shareholders, while providing positive benefits for our stakeholders, through operational effectiveness, exploration and active portfolio management. The image below reflects the SASB financial materiality map for Northern Star, based on our industry. 60 Employees STARR Core Values Physical and mental wellbeing Inclusion, diversity, fair processes Competitive pay and benefits Environment Energy use and GHG emissions reduction focus Water security and efficient use Hazardous material and waste management Rehabilitation and closure In FY21 we undertook an ESG perception study involving direct discussion by an external consultant with institutional investors representing one third of the Company’s register, both before and after the merger. This allowed us to explore whether there were any unforeseen or unexpected common themes of interest in relation to the sustainability of our operations across our institutional shareholders, as well as identify opportunities to meet stakeholders’ general expectations from an ESG perspective in relation to future operational decisions and ESG disclosures. For instance, the study informed us on how some investors are formally pricing carbon and taking into account water use when assessing relative valuation whilst other investors focus more on potential controversies and reputational risk areas in the communities in which we operate, and human rights violations risks. We think it is important that our workforce have the opportunity to fully understand the sustainability issues for Northern Star’s business, and we aim to increase the level of information and education extended to our workforce in this area, for example in offering presentations on our TCFD journey to date. This level of communication is particularly important following the merger to ensure that all employees have the opportunity to understand and appreciate how Northern Star is increasing its operational resilience and enhancing its business continuity for future value creation for shareholders. To allow employees’ added involvement in relation to sustainability issues for Northern Star, we facilitated several externally facilitated ESG Figure 1 Voluntary Alignments Native flora at Thunderbox, Yandal operations. Focus Group discussions with voluntary employee participants across most sites. This provided valuable insights on what is important to our workforce allowing us to recalibrate the information provided to employees and included in decision making. Annually, an employee representative is appointed to attend ESS Committee meetings, to increase employee engagement in the Committee’s discussions and recommendations to the Board. We continue our climate change related risk assessment work aligned to the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) and support continued action on the UN Sustainable Development Goals (SDGs). 61 Social Governance Support local economic development Social and community support Increase local employment and procurement Free Prior and Informed Consent principles Prudent financial and operational management Corporate governance and ethics Risk management framework Supply chain integrity Governance Strategy Risk Metrics & targets We understand and appreciate that disclosing our sustainability performance is a critical part of gaining and maintaining stakeholder trust. In FY21, we established a dedicated ESG engagement team reporting direct to the Executive, and we strengthened our resources to improve the range, quality and integrity of data on sustainability issues. This includes the use of Nasdaq’s OneReport unified platform for responding to sustainability questions raised by external stakeholders allowing us to more efficiently participate in reporting such as CDP, GRI and S&P Dow Jones. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 SuStAINABILItY SuStAINABILItY Climate Change Figure 2 Net Zero ambition for Scope 1-2 GHG Emissions by 2050 Our current focus is to ensure operational resilience to climate change related risks and setting clear greenhouse gas emissions reduction targets. Focussing our efforts on first modifying the source of electricity at our operations provides the greatest opportunity for change in our emissions profile. 2021 2030 Existing Technology 2040 Innovation path Indicative Scope 1-2 way (t C O2-e) Renewable Energy - Wind Renewable Energy - Wind & Solar Electrified Fleet Battery /Electrified Fleet Hydrogen Fleet Gas,/Propane, Coal, Diesel Gas, Diesel 62 Grid, Gas, Diesel Grid Greening Renewable Energy - Wind & Solar Electrified/ Hydrogen Fleet Key Kalgoorlie Yandal Pogo Carbon Capture Offsets In FY21 our Board embraced a shift in focus to mitigating climate change related risks. Northern Star adopted a Climate Change Policy (nsrltd.com/ about/corporategovernance) announcing Net Zero ambition for scope 1-2 greenhouse gas emissions by 2050. Detailed planning for our Paris-aligned1 emissions reduction roadmap is underway to be disclosed in our 2021 Sustainability Report for release in March 2022. Detailed planning for our Paris-aligned emissions reduction roadmap is underway to be disclosed in our 2021 Sustainability Report. 1. Paris-aligned refers to ‘The Paris Agreement’ the legally binding international treaty on climate change which was adopted by 196 Parties at the 21st session of the United Nations Conference of the Parties, in Paris on 12 December 2015, and entered into force on 4 November 2016. Figure 3 Northern Star Scope 1 & 2 Emissions by Source (t CO2-e) 3% Haulage & LV Transport - On Road (Diesel, ULP) 25% Mine Fleet transport - Off Road (Diesel) 2% Other (Grease, Acetylene, Lubricants, LPG) 70% Electricity - Purchase & Generated (Grid, Gas, Diesel) Yvonne Hynes, Senior Environmental & Social Responsibility Advisor at Kanowna Belle, Kalgoorlie Operations. Northern Star’s Sustainability Report Northern Star publishes a standalone annual Sustainability Report on our ESG performance on a calendar year basis. Our 2020 Sustainability Report released on 11 February 2021 contains detailed ESG data, case studies and other disclosures aligned to SASB, TCFD and the UN SDGs. Sustainability Report 2020 View our most recent Sustainability Report Visit: nsrltd.com/ sustainability NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 SuStAINABILItY SuStAINABILItY heritage related infringements or human rights violations detected in our supply chain Materially adverse Community incidents Local Community Engagement Northern Star acknowledges that our activities impact the local communities near our operations, and that those impacts, both negative and positive, are critical to maintaining our social licence to operate. Our Mission commits us to providing positive benefits for our stakeholders through operational effectiveness, exploration and active portfolio management. By way of example of one of the communities we are integrated in, Northern Star’s acquisition of 100% of KCGM in FY21, the Company’s commitment to working with the communities in Kalgoorlie-Boulder can be summarised as follows: 1. Ensuring that our operations are mutually beneficial by investing in our majority residential workforce and supporting local businesses and community groups. 2. 3. Being responsive to those impacted by our operations by engaging with near-mine communities in a timely and respectful manner, and by responding to complaints promptly. Listening to communities so that we understand the issues that matter most to them. 4. Understanding our impacts through impact assessments of major projects, and the ongoing monitoring of the social, economic and environmental impacts of our operations. 5. Holding ourselves to account by making publicly-available the results of quarterly Kalgoorlie-Boulder Community Pulse surveys by independent external consultant VoconiqTM on KCGM’s social performance and environmental monitoring, at: https:// voconiqlocalvoices.com/results-kcgm/. 65 KCGM External Relations Advisors examine a Marsdenia australis fruit with Kym Eckert from the Kalgoorlie-Boulder Urban Landcare Group, Kalgoorlie. Economic Value Add The economic value that Northern Star returns to society has seen year-on-year growth, and totals $ 3.4B for FY21. The figure below provides a breakdown of those economic contributions, including State and Federal taxes and charges, employee and supplier spend, community investments, donations and sponsorship, and dividends paid to shareholders in the year to 30 June 2021. Figure 4 FY21 Total Economic Value Add2 $4M Community Investments $348M Tax, Stamp Duty & WA Gov Royalties 64 total Economic Value Add $3.4B $353M Dividends Paid to shareholders $2,165M Goods & Services Payments $493M Total Employee Costs Modern Slavery Northern Star condemns all human rights abuses, including modern slavery practices in all its forms. Modern slavery is a business risk for every industry and sector, which has severe consequences for victims. We recognise our role in protecting the human rights of all people involved in, or impacted by, our business practices. We take meaningful steps to identify and address our modern slavery risks and maintain responsible and transparent supply chains. In February 2021, Northern Star published its first mandatory Modern Slavery Statement under the Modern Slavery Act 2018 (Cth) covering FY20. An update on steps taken by us in H1 FY21 appeared in our 2020 Sustainability Report. Please refer to our FY21 Modern Slavery Statement released together with this Report for detailed disclosures on how we are addressing modern slavery. View our FY21 Modern Slavery Statement. Visit: nsrltd.com/about/ corporate-governance 24 August 2021 nsrltd.com | Northern Star Resources Limited Modern Slavery Statement covering financial year ended 30 June 2021 2. This figure includes all Northern Star Group entities as at 30 June 2021 for full year FY21, i.e. 100% Saracen and 100% KCGM, notwithstanding the merger implementation date of 12 February 2021 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 SuStAINABILItY SuStAINABILItY Indigenous Peoples Indigenous Peoples remain important long-term stakeholders and partners of Northern Star. We acknowledge that Indigenous Peoples often maintain special physical and cultural connections to, and identification with, the lands on which we conduct our business activities. Cultural knowledge created through this connection with the natural environment can be of value to our Company and brings different perspectives for us to consider within project planning and development practices. Through this understanding, we strive to develop and maintain respectful, long-term and mutually beneficial relationships with all Indigenous Peoples who are our stakeholders. Critical to these relationships is an awareness that Indigenous Peoples in many regions across the world have been historically disadvantaged by economic, social and political systems. In some regions this disadvantage remains. In response to this understanding, we commit to the 2013 International Council on Mining and Metals (ICMM) Position Statement on Indigenous Peoples and Mining. Specific to the ICMM Position Statement, we continue to adopt the Free, Prior and Informed Consent (FPIC) approach to our engagement with Indigenous Peoples, as defined by the United Nations. Figure 5 Free, Prior and Informed Consent approach Governance Northern Star is committed to consistently demonstrating the highest standards of corporate governance. The Company’s current corporate governance practices are set out in the FY21 Corporate Governance Statement released together with this Report and found on Northern Star's website at http://www.nsrltd. com/about/ corporate-governance/. Northern Star is committed to consistently demonstrating the highest standards of corporate governance. _ - - - - - - - - - - - - - - - - - - - - - - Kristen Anderson, Martu Ranger at Jundee, Yandal operations 66 Free Free from manipulation or coercion Consent Reached through customary decision- making processes Prior Occurs in advance of any activity associated with the decision being made and allows adequate time for traditional decision- making processes Informed Facilitate the sharing of objective, accurate, and easily understandable information NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 Directors’ Report DIRECtORS' REPORt DIRECtORS' REPORt Directors’ Report Your Directors present their report on the consolidated entity consisting of Northern Star and the entities it controlled at the end of, or during, FY21. Current Directors (as at the Report Date) Michael Chaney AO Chairman Stuart Tonkin Managing Director & CEO Raleigh Finlayson Executive Director Overview of Board changes On the merger implementation date of 12 February 2021, the Board was reconstituted with the addition of Raleigh Finlayson as Managing Director, Anthony Kiernan as Lead Independent Director, and Sally Langer and John Richards as Non-Executive Directors, all from the Saracen Board of Directors. Peter O’Connor retired from the Board on 12 February 2021. Subsequently on 30 June 2021 Shirley In’t Veld retired as Non- Executive Director, and Bill Beament, retired as Executive Chair on 1 July 2021. On 1 July 2021 Michael Chaney joined the Board as Chairman. On 22 July 2021 Raleigh Finlayson retired as Managing Director, and Stuart Tonkin joined the Board as Managing Director & CEO. 70 Anthony Kiernan AM Lead Independent Director Mary Hackett Non-Executive Director John Fitzgerald Non-Executive Director On 23 August 2021, the Company announced that Sharon Warburton will join the Board on 1 September 2021. 71 John Richards Non-Executive Director Nick Cernotta Non-Executive Director Sally Langer Non-Executive Director Incoming Director Former Directors Figure 1 Board statistics effective 1 September 2021 (includes incoming Director) Gender Independence Age Sharon Warburton Non-Executive Director, (commencing 1 September 2021) Female 30% Non- Independent 20% 70+ 20% 60-69 10% 40-49 40% Bill Beament Executive Chair (resigned 1 July 2021) Shirley In’t Veld Non-Executive Director (resigned 30 June 2021) Peter O’Connor Non-Executive Director (resigned 12 February 2021) Male 70% Independent 80% 50-59 30% NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 DIRECtORS' REPORt DIRECtORS' REPORt 72 Biographies of current Directors Michael Chaney AO BSc, MBA, Hon. LLD W.Aust, FAICD Independent Chairman Term of office: Director since 1 July 2021 Mr Chaney AO was appointed Chairman on 1 July 2021. He is currently Chairman of Wesfarmers Limited and was previously Chairman of Woodside Petroleum Limited (retired April 2018) and National Australia Bank (retired December 2015); a former Director of BHP Limited (retired October 2005) and Managing Director of Wesfarmers from 1992 to 2005. Mr Chaney holds Bachelor of Science and Master of Business Administration degrees from The University of Western Australia and worked for eight years as a petroleum geologist in Australia and the USA. He completed the Advanced Management Program at Harvard Business School in 1992 and has also been awarded an Honorary Doctorate of Laws from The University of Western Australia. He is former Chancellor of The University of Western Australia (retired December 2017) and former Governor of the Forrest Research Foundation (resigned December 2020). Michael is currently Chair of the National School Resourcing Board, a Director of the Centre for Independent Studies and a member of the Gresham Resources Royalties Fund Investment Committee. Board skills matrix: Executive Leadership, Finance / Commerce / Accounting, Capital Markets, Previous Board Experience, and Strategy Stuart tonkin BEng (Hons) Managing Director & CEO (Chief Executive Officer for FY21 ) Term of office: Director since 22 July 2021 Mr Tonkin is a mining engineer with more than 20 years’ experience working in the underground hard-rock mining industry. He was appointed Chief Executive Officer of Northern Star in November 2016 and had been the Company’s Chief Operating Officer since 2013. Prior to joining Northern Star, he was Chief Operating Officer for mining contractor Barminco, and a Non-Executive Director of African Underground Mining Services Ghana. He has extensive experience in the production of gold, copper, zinc and nickel and has held senior operational positions with Oxiana and Newmont in Western Australia. Mr Tonkin is currently a Director of the Gold Industry Group, a not-for-profit, member-based industry association. Board skills matrix: Executive Leadership, HSE, Major Projects/Construction, Technical skills in Resources, Industry Knowledge, Commodities exposure, Risk management & Compliance, Mergers and Acquisitions. Raleigh Finlayson AdMineSurvey, Bsc (Mine & Engineering Surveying), GradDipMinEng, GradCertAppFin Executive Director (Managing Director from 12 February 2021 to 22 July 2021) Term of office: Director since 12 February 2021 Mr Raleigh Finlayson is a mining engineer with over 20 years’ of technical and operational experience in the mining industry in multiple disciplines including both underground and open pit operations. Mr Finlayson commenced with Northern Star as Managing Director following the merger. During his 13-year tenure at Saracen, Mr Finlayson was responsible for the acquisition and subsequent development of Saracen’s second operating mine, the Thunderbox project for $23M and the purchase of 50% of the KCGM Super Pit for $1.1B in 2019. growing from a market cap from $53M in 2008 to $6.0B in 2021 before merging with Northern Star. Prior to Saracen Mr Finlayson was Underground Manager for Panoramic Resources and various mining engineering roles with OceanaGold and Gold Fields. Mr Finlayson studied at the Western Australian School of Mines holds a First Class Mine Managers Certificate. He served for 5 years on the WA School of Mines Alumni Council. Board skills matrix: Executive Leadership, Capital Markets, Technical skills in Resources, Industry Knowledge, Risk Management & Compliance, Strategy, Mergers and Acquisitions Anthony Kiernan AM LLB Lead Independent Director since 12 February 2021 Term of office: Director since 12 February 2021 Mr Anthony Kiernan is a former solicitor with extensive experience, particularly in the management and operation of listed public companies in the resource sector through exploration, development and production. Mr Kiernan has a strong understanding of the capital markets and the business of value creation. Mr Kiernan is currently Chairman of Pilbara Minerals Ltd and was previously Chairman of Venturex Resources Limited and Saracen Mineral Holdings Limited. Board skills matrix: Capital Markets, Previous Board Experience John Fitzgerald CA, Fellow FINSIA, GAICD Independent Non-Executive Director (Lead Independent Director until 12 February 2021) Term of office: Director since November 2012 Mr Fitzgerald has over 25 years’ resource financing experience and has provided project finance and corporate advisory services to a large number of companies in the resource sector. He has previously held senior positions at NM Rothschild & Sons, Investec Bank Australia, Commonwealth Bank, HSBC Precious Metals and Optimum Capital. Mr Fitzgerald is a Chartered Accountant, a Fellow of the Financial Services Institute of Australasia and a graduate member of the Australian Institute of Company Directors. Board skills matrix: Finance / Commerce / Accounting, Capital Markets, Commodities exposure, Previous Board Experience, Risk Management & Compliance Mary hackett B.Eng-Mech, FIEAUST, GAICD Independent Non-Executive Director Term of office: Director since July 2019 Ms Hackett has an extensive career in the resource sector, spanning more than 30 years, with senior executive roles in Brown & Root, Woodside, and General Electric. Her most recent executive role was Vice President of General Electric Oil & Gas for Australasia. A fellow of Engineers Australia, Ms Hackett holds a degree in Mechanical Engineering from University College Galway, Ireland. Board skills matrix: Executive Leadership, ESG / Legal / Regulatory / Policy, HSE, Major Projects / Construction, Risk Management & Compliance, Strategy, Mergers and Acquisitions Nicholas Cernotta B.Eng-Mining Independent Non-Executive Director Term of office: Director since July 2019 Mr Cernotta is a mining engineer having held senior operational and executive roles in Australia and overseas for over 30 years. He has considerable experience in the management and operation of large resource projects, with a track record for improving safety performance, managing costs and improving operational efficiencies, across multiple commodities and international jurisdictions. Most recently Mr Cernotta served as Director of Operations at Fortescue Metals Group, and was previously Director of Operations for Barrick (Australia Pacific) Pty Ltd. Board skills matrix: Executive Leadership, HR / Workplace Relations, HSE, Major Projects / Construction, Technical skills in Resources, Commodities exposure, Risk Management & Compliance, Strategy John Richards BEcon (Hons) Independent Non-Executive Director Term of office: Director since 12 February 2021 Mr Richards is an economist with more than 35 years’ experience in the resources industry. He has held strategy and business development positions across several mining companies and has worked extensively in the investment banking and private equity industries. He has been involved in a wide range of mining M&A transactions on a global scale. Previous experience has included Group Executive – Strategy & Business Development at Normandy Mining Ltd, Head of Mining & Metals Advisory (Australia) at Standard Bank, Managing Director at Buka Minerals Ltd and Operating Partner at Global Natural Resources Investments (GNRI). Board skills matrix: Finance / Commerce / Accounting, International Growth, Industry Knowledge, Commodities exposure, Strategy, Mergers and Acquisitions Sally Langer BCom, CA, GAICD Independent Non-Executive Director Term of office: Director since 12 February 2021 Ms Langer has more than 25 years’ experience in professional services across a variety of sectors, including substantial experience in the resources sector, where she has advised both ASX-listed and private boards on talent, organisational design, succession planning and leadership. Ms Langer has also been responsible for management functions including strategy, business development, budgeting and human resources. Originally qualified as an accountant with Arthur Andersen, Ms Langer spent time in their insolvency, corporate finance and management consulting practices before transitioning into Executive Search initially with Michael Page and subsequently Derwent Executive, where for 13 years she led Derwent’s national Mining Practice based in Western Australia. Board Skills matrix: Executive Leadership, HR/ Workplace Relations, Finance / Commerce / Accounting 73 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 The Carosue Dam processing plant at sunrise, Kalgoorlie Operations. DIRECtORS' REPORt Biography of incoming Director Biographies of former Directors Sharon Warburton CA, BBus, GAICD Independent Non-Executive Director (commencing 1 September 2021) Ms Warburton is a Chartered Accountant with experience in the construction, mining and infrastructure sectors, holding senior executive positions at Rio Tinto, Brookfield Multiplex, Aldar Properties PJSC, Multiplex and Citigroup. Ms Warburton is a non-executive director of Gold Road Resources Limited (retiring from that role on 30 September 2021), Worley Limited, Wesfarmers Limited and Blackmores Limited and a part-time member of the Takeovers Panel. She is also on the board of not-for-profit organisation, Perth Children’s Hospital Foundation and a non-executive Director of Karlka Nyiyaparli Aboriginal Corporation RNTBC. She was formerly the Co-Deputy Chair of Fortescue Metals Group Limited, Chairman of the Australian Government's Northern Australia Infrastructure Facility and a non-executive director of NEXTDC Limited. Ms Warburton holds a Bachelor of Business (Accounting and Business Law) from Curtin University. She is a Fellow of Chartered Accountants Australia and New Zealand, the Australian Institute of Building and the Australian Institute of Company Directors. She was awarded WA Telstra Business Woman of the Year in 2014 and was a finalist for The Australian Financial Review’s Westpac 100 Women of Influence in 2015. Board skills matrix: Executive Leadership, Finance/Commerce/Accounting, Major Projects/ Construction, International Growth, Capital Markets, Industry Knowledge, Commodities exposure, Previous Board Experience, Risk management & Compliance, Strategy, Mergers and Acquisitions 74 Bill Beament B.Eng-Mining (Hons), MAICD Executive Chair in FY21 Mr Beament is a mining engineer with more than 20 years’ experience in the resource sector. Previously he held several senior management positions, including General Manager of Operations for Barminco Limited with overall responsibility for 12 mine sites across Western Australia, and General Manager of the Eloise Copper Mine in Queensland. Shirley In’t Veld B.Com LLB (Hons) Independent Non-Executive Director in FY21 Ms In’t Veld was the CEO of Verve Energy, a WA utility, for five years. Prior to this Ms In’t Veld held a number of senior commercial, legal and marketing positions with Alcoa, WMC Resources Ltd, Bond Corporation and BankWest, including Managing Director of Alcoa of Australia Rolled Products based in Geelong. Peter O’Connor MA, Economics and Political Science; Barrister-at Law Independent Non-Executive Director in FY21 until 12 February 2021 Mr O’Connor has extensive global experience in the funds management industry, both public and private companies in developed and emerging economies. He was co-founder, Director and Deputy Chairman of IMS Selection Management Ltd which had $10 billion under management or advice from 1998 to 2008. Following the sale of IMS to BNP Paribas in 2008, he was Deputy Chairman of FundQuest UK Ltd with $10 billion under management, and FundQuest globally had $35 billion of assets under management from 2008 to 2010. Mr O’Connor was the Lead Director and then Chairman of TSX-listed Neo Material Technologies from 1993 to 2012. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 DIRECtORS' REPORt DIRECtORS' REPORt Directors Directors during FY21 The following persons were on the Board of Directors during the financial year ended 30 June 2021: Directors for full year FY21 Bill Beament Executive Chair John Fitzgerald Non-Executive Director Shirley In’t Veld Non-Executive Director Mary Hackett Non-Executive Director Nick Cernotta Non-Executive Director Directors for part year FY21 Peter O’Connor Non-Executive Director Raleigh Finlayson Managing Director Anthony Kiernan AM Lead Independent Director John Richards Non-Executive Director Sally Langer Non-Executive Director 76 Treescape, Carosue Dam, Kalgoorlie Operations Former Directors The following persons have resigned from the Board of Directors: Peter O’Connor resigned as a Non-Executive Director on 12 February 2021 Shirley In’t Veld resigned as a Non-Executive Director on 30 June 2021 Bill Beament resigned as Executive Chair on 1 July 2021 New Directors since FY21 Since the end of FY21, the following persons have been appointed to the Board of Directors: Michael Chaney Chairman on 1 July 2021 Stuart Tonkin Managing Director & CEO on 22 July 2021 Sharon Warburton is commencing as a Non-Executive Director on 1 September 2021. Company Secretary Hilary Macdonald LLB (Hons), FGIA, was the Company Secretary (in addition to her role as General Counsel) for full year FY21. Ms Macdonald is a corporate and resources lawyer with 30 years’ experience in the UK and Australia with particular focus on corporations compliance and governance. table 1 Directorships in listed companies held by members of the Board over the past 3 years Director Entity Appointment Bill Beament Managing Director of Venturex Resources Limited Jul 2021 to present John Fitzgerald Director of Danakali Limited Chair of Medallion Metals Limited Executive Chair of Turaco Gold Ltd Shirley In’t Veld Director of APA Group Director of Alumina Limited Director of Venturex Resources Ltd Mary Hackett Director of Strike Energy Limited Nick Cernotta Director of Pilbara Minerals Ltd Chair of Panoramic Resources Limited Director of New Century Resources Ltd Peter O’Connor Chair of Boss Energy Ltd Anthony Kiernan Chairman of Pilbara Minerals Ltd Chairman of Venturex Resources Ltd Chairman of Redbank Copper John Richards Director of Sandfire Resources Limited Director of Sheffield Resources Ltd Director of Adriatic Metals Plc Sally Langer Director of Sandfire Resources Limited Director of MMA Offshore Limited Feb 2015 to present Jan 2019 to present July 2021 to present Mar 2018 to present Aug 2020 to present July 2021 to present Oct 2020 to present Feb 2017 to present May 2018 to present Mar 2019 to present Jan 2020 to present July 2016 to present July 2010 to Mar 2021 April 2021 to present Jan 2021 to present Aug 2019 to present Nov 2019 to Jul 2020 Jul 2020 to present May 2021 to present 77 Michael Chaney Chairman Wesfarmers Limited Nov 2015 to present Raleigh Finlayson None applicable Stuart Tonkin None applicable MSCI ESG Ratings Northern Star’s MSCI Ratings Report for 2021 which measures resilience to long term ESG risk puts Northern Star in the top quartile for corporate governance and corporate behaviour. Northern Star was upgraded from an A to a AA rating in FY21 on the basis of enhanced assessment of governance practices and lower water risk exposure. MSCI ESG RATINGS AA CCC B BB BBB A AA AAA NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 DIRECtORS' REPORt DIRECtORS' REPORt Board Committees Following the merger with Saracen implemented on 12 February 2021, the Board resolved to create a new Exploration & Growth (E&G) Committee, chaired by independent Non-Executive Director, John Richards. The function of the E&G Committee is to assist the Board in its oversight of management’s decisions on capital expenditure allocation for exploration, organic and inorganic growth initiatives. Its key aim is to ensure competing capital expenditure priorities across the Company are guided by the following principles: • maximising shareholder value, in accordance with the Company’s mission; • • take into account various stakeholder interests, in accordance with our Mission; and consistency with the Company’s overarching corporate strategy and fiscal framework. table 2 Committee membership and Director attendance 1 at meetings held during FY21 Director Board Audit & Risk Environmental Social & Safety Exploration & Growth Nomination Remuneration Non- Executive Directors2 Bill Beament Chair 15 of 17 - Member 4 of 4 John Fitzgerald Shirley In’t Veld Member 17 of 17 Chair 4 of 4 Member 14 of 17 Member 3 of 3 - - Mary Hackett Member 16 of 17 Member 4 of 4 Chair 4 of 4 Nick Cernotta Raleigh Finlayson John Richards Anthony Kiernan Sally Langer Member 17 of 17 Member 3 of 3 Member 7 of 7 - Member 7 of 7 Member 1 of 1 Member 7 of 7 - Member 7 of 7 Member 1 of 1 Peter O’Connor Member 10 of 10 - - - - Member 2 of 2 - Member 2 of 2 Member 2 of 2 - Member 2 of 2 - Member 2 of 2 - Chair 2 of 2 - - - Member 3 of 3 Member 3 of 3 Member 3 of 3 Member 3 of 3 Member 3 of 3 - Member 3 of 3 Chair 3 of 3 Member 3 of 3 - - - Member 13 of 14 - - Chair 14 of 14 - - Member 6 of 6 Member 7 of 7 Member 6 of 7 Chair 4 of 4 Member 3 of 4 Member 4 of 4 Member 4 of 4 - Member 1 of 1 Member 0 of 0 Member 1 of 1 Member 4 of 4 78 table 3 Committee composition and membership for FY223 Director Audit & Risk Environmental Social & Safety Exploration & Growth Remuneration Nomination Chair Members John Fitzgerald Mary Hackett John Richards Nick Cernotta Michael Chaney Mary Hackett John Richards Sally Langer Sally Langer Anthony Kiernan Nick Cernotta Michael Chaney John Fitzgerald Sally Langer Anthony Kiernan John Fitzgerald Mary Hackett Nick Cernotta John Richards Sally Langer Anthony Kiernan 1. The number of meetings held during the time the Director held office, or was a member of the Committee, during FY21 at which the Director was eligible to attend (i.e. excludes any meetings at which the Director was excluded for example due to a conflict of interest, or which the Director attended but in an invitee/observer capacity only). A dash indicates the Director was not a member of that Committee at any time during FY21. Note higher than usual total Board meetings is due to several special Board meetings held in connection with the merger. 2. During FY21 meetings of the Non-Executive Directors were held separately to the full Board meetings without the Executive Chair, CEO or Managing Director in attendance. A higher than usual number of NED meetings were held due to discussions around KMP remuneration and the merger. 3. Sharon Warburton will be appointed to Committees once commenced on 1 September 2021. Board evaluation In addition to the annual performance evaluation of each individual Director conducted by the Executive Chair, in FY21 the Board again undertook a comprehensive evaluation conducted by external governance specialists at Nasdaq Corporate Solutions. The objective of the evaluation was to: • provide the Board with an unbiased, greater understanding of its functioning and performance; In addition to the effectiveness of the Board, the evaluation also covered the sub-committees of the Board – the Audit and Risk Committee, the Remuneration Committee, the Environmental, Social & Safety Committee, the Nomination Committee and the Exploration & Growth Committee. Separate evaluation reports were created for each sub- committee, for discussion at sub-committee level. The areas of assessment included: • highlight areas of strength and opportunities for • Mission and Values improvement; • encourage positive relationships among Board members, and • improve the Board’s overall performance and effectiveness. Effective corporate governance advances the Company’s culture of continuous improvement. Nasdaq anonymously gathered and assessed Directors’ individual responses to questions crafted by governance specialists in conjunction with the Company Secretary, aligned with Northern Star’s business and governance goals. The web- based Q&A accommodated insightful, more comprehensive contributions where Directors wished to expand on their responses, and delivered an actionable report of aggregated and anonymous individual responses and comments. There was subsequent opportunity for discussion on any outlier results and patterns in the responses. • Ethics and Accountability • Board Composition and Culture • Board Meetings and Administration • Strategy and Performance Measures • Board’s Relationship to Management • Risk Monitoring and Crisis Control • Succession Planning and Human Resources • shareholder and stakeholder Involvement, both generally and specific to the mining industry. Various areas were identified in the evaluation report for focus and action by the Board. 79 The Board will address these action points during FY22 and in subsequent years. The Board intends to repeat the evaluation in FY22. Alex Boceski, Purchasing Officer, Corporate office, Perth. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 DIRECtORS' REPORt DIRECtORS' REPORt Board skills matrix The Company first devised a Board skills matrix in 2018, for each Director to self-assess their hard skills and experience considered relevant to Northern Star and soft skills considered desirable for effective Directors generally. An assessment of the composition of the Board is undertaken in relation to the Board skills matrix annually, to identify any potential gaps and ensure there is an appropriate balance of skills, experience, expertise and diversity on the Board. The review of the Board skills matrix during FY21 following the merger and reconstitution of the Board resulted in: • • the addition of four new skills – International Growth; Industry Knowledge; M&A experience; and Industry & Political; and changes to the descriptors of some of the skills, to ensure the skills in the matrix remained suitable for the Company post-merger. The below includes Sharon Warburton. Executive Leadership Evaluating the performance of senior management, overseeing strategic human capital planning, industrial relations, organisational change management programmes and sustainable success in business at a senior level. Finance / Commerce / Accounting Financial accounting and reporting, internal financial and risk controls, corporate finance and, restructuring corporate transactions (eg: JVs, listings etc). Understanding of the sensitivity to cash flow and value of key variables. ESG, Legal / Regulatory, Policy Experience in integrating environmental, social and governance (ESG) principles into company decision-making, expertise in sustainability initiatives, working in a legal and/or regulatory role or organisation, and identifying key ESG issues and developing appropriate policy parameters. hR / Workplace Relations Board Remuneration Committee membership or, succession planning, remuneration and talent management (including incentive programs, superannuation etc), the legislative and contractual framework governing remuneration and, the legislative framework workplace relations. 80 Key Board Rating Per Skill 5 Expert skills & experience Capital Markets Experience in equity raising, debt raising and investor engagement. 4 Extensive skills / experience 3 Sufficient skills / experience 2 Somewhat skilled / experienced 1 Basic skills / experience 0 Priority to seek new skills/ experience technical skills in Resources Advanced technical understanding of geology, mining engineering or processing. Industry Knowledge Understanding of the international mining industry and a company's competitive position in that industry. Commodities exposure Executive expertise in commodities, mining or resources sectors. Previous Board Experience Serving on Boards of varying size and composition, in varying industries and for a range of organisations. An awareness of global practices and benchmarking and, some international experience. Risk Management & Compliance Applying broad based risk management frameworks in various regulatory or business environment, identifying key risks to an organisation related to key areas of operations, monitoring risk and compliance. Strategy Identifying and critically assessing strategic opportunities and threats to the organisation and, developing and implementing successful strategies in context to an organisation's policies and business objectives. Mergers and Acquisitions The identification, assessment and integration of mergers, acquisitions, JVs and similar transactions. 81 hSE Workplace health and safety and environmental, implementing health, safety and wellbeing strategies, proactive identification and mitigation of health, safety and environmental risks. It & Innovation Executive knowledge and experience in the management of information technology including but not limited to IT strategies and networks, data storage, data security, cyber security. Major Projects / Construction Contract negotiations, project management, projects involving large-scale outlays and projects with long-term investment horizons. International Growth Experience in building businesses outside the domestic (Australian) market, including as an offshoot of a domestically managed business. Board Dynamics Constructively challenge and contribute to Board discussions and communicate effectively with management and other Directors. Build consensus, negotiate and achieve stakeholder support for Board decisions. Issues Management Constructively manage major issues, provide leadership around solutions and contribute to a communications strategy with stakeholders. Ethics & Integrity Model correct behaviours as a Director and, contine to self educate on legal responsibility, maintain Board confidentiality, declare conflicts etc. Industry & Political Experience in industry groups and government and political relationships. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 DIRECtORS' REPORt DIRECtORS' REPORt Principal activities In FY21 the principal activities of the Group were: • exploration, development, mining and processing of gold deposits and sale of refined gold derived from the Kalgoorlie (including KCGM) and Yandal Operations in Western Australia and the Pogo Operations in Alaska; and • exploration in relation to gold deposits in Western Australia, the Northern Territory and Alaska. Dividends paid table 4 Dividends paid in FY21 Interim ordinary dividend for FY20 of 7.5 cents per fully paid Share paid on 16 July 2020 4 FY21 $’000 $55,503 FY20 $’000 n/a Final ordinary dividend for FY20 of 9.5 cents (FY19: 7.5 cents) per fully paid Share paid on 30 September 2020 $70,377 $48,670 Special dividend of 10 cents per fully paid Share paid on 30 September 2020 $74,080 - Interim ordinary dividend for FY21 of 9.5 cents (FY20: 7.5 cents) per fully paid Share paid on 30 March 2021 $110,513 $55,459 Total $310,473 $104,129 82 Dividends recommended Events since the end of FY21 but not yet paid Since the end of FY21, the Directors have recommended the payment of a fully-franked final ordinary dividend of $111 million (9.5 cents per fully paid Share; FY20: 9.5 cents), to be paid on 29 September 2021 out of retained earnings at 30 June 2021. Review of operations Information on the operations and financial position of the Group and its business strategies and prospects is set out in the Operations Report section of this Annual Report. Significant changes in the state of affairs A significant change in the state of affairs of the Group during FY21 was the Company’s merger with Saracen Mineral Holdings Limited. The merger was announced on 6 October 2020 and implementation occurred on 12 February 2021. For further details of the merger refer to note 12 of the financial statements. Since the end of FY21, the Company sold its Kundana Assets to Evolution Mining Limited. The sale was announced on 22 July 2021 and completion occurred on 18 August 2021. For further details of the sale of the Kundana assets refer to note 14 of the financial statements. On 2 August 2021, Northern Star entered into a contract with GR Engineering Services Ltd in relation to the Thunderbox 6Mtpa expansion project for a contract sum of $101 million. No other matter or circumstance has arisen since 30 June 2021 that has significantly affected the Group’s operations, results or state of affairs, or may do so in future years. Likely developments and expected results of operations There are no likely developments to disclose in the Group’s operations in future financial years. 4. The FY20 interim dividend payment date was originally 30 March 2020. It was deferred on 26 March 2020 as a cash preservation initiative to ensure the Company was in the strongest possible financial position to respond to the COVID-19 pandemic and subsequent global financial impact. The interim dividend was paid subsequent to the FY20 balance date, on 16 July 2020 (i.e. during FY21). Performance in relation to environmental regulation The Group’s exploration, mining and processing operations are subject to Commonwealth of Australia, Western Australian, Northern Territory, State of Alaska and Federal US legislation which regulates the environmental aspects of the Group’s activities, including discharges to the air, surface water and groundwater, and the storage and use of hazardous materials. The Group is not aware of any material breach of environmental legislation and regulations applicable to the Company’s operations during FY21. The Group continues to comply with environmental regulations in all material respects. Insurance of officers and indemnities During FY21 the Company has paid a premium to insure the Directors and Officers of the Company and its controlled entities. Details of the premium are subject to a confidentiality clause under the contract of insurance. The liabilities insured are costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the Directors and Officers in their capacity as officers of entities in the Group, to the extent permitted by the Corporations Act. In addition, similar liabilities are insured for Officers holding the position of nominee Director for the Company in other entities. The Group is not aware of any material breach of environmental legislation and regulations applicable to the Company’s operations during FY21. The Group continues to comply with environmental regulations in all material respects. Proceedings on behalf of the Company 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. 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 Group are important. Details of the amounts paid or payable to the Auditor (Deloitte Touche Tohmatsu) for the audit and non- audit services provided during FY21 are disclosed in note 21 to the financial statements. The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for Auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the Auditor (review of the 2020 Sustainability Report disclosures) did not compromise the Auditor independence requirements of the Corporations Act 2001 because none of the services undermine the general principles relating to Auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. Auditor independence declaration A copy of the Auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 128. Rounding The Company is of a kind referred to ASIC Legislative Instrument 2016/191, relating to the “rounding off” of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with the instrument to the nearest hundred thousand dollars, or in certain cases, the nearest dollar. Corporate Governance Statement Northern Star and the Board are committed to consistently demonstrating the highest standards of corporate governance. In addition to this Annual Report, a description of the Company’s current corporate governance practices is set out in the Corporate Governance Statement (http://www. nsrltd.com/about/corporate-governance/). Northern Star has elected to publish the 2021 Tax Corporate Governance Statement on a voluntary basis as a part of our commitment to tax transparency. The report includes information recommended to be disclosed under the Australian voluntary Tax Transparency Code (TTC). The report can be found on the Company website under Corporate Governance - Rules and Special Reports. This report is made in accordance with a Resolution of Directors dated 24 August 2021. Michael Chaney Chairman 24 August 2021 83 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 Remuneration Report REMuNERAtION REPORt REMuNERAtION REPORt Letter from the Chair of the Remuneration Committee Dear shareholder, On behalf of the Board of Directors of Northern Star Resources Limited, I am pleased to provide you with the Remuneration Report for the year ended 30 June 2021. 86 The Remuneration Committee oversees Northern Star’s remuneration approach on behalf of the Board. The key tenets of its approach to remuneration are to ensure that it supports the Company’s strategy, is undertaken inside a clear and transparent framework and aligns with the drivers of long-term shareholder value. However, the Committee is also cognisant of the need to maintain flexibility to address specific circumstances that may arise within the Company or within the industry in which we operate. The executive remuneration framework is designed to reward, retain and attract capable quality executives, maintain a focus on both near term and long-term goals and support an effective and socially acceptable culture. Since the last Annual Report to shareholders Northern Star has experienced major growth as a result of the merger with Saracen Mineral Holdings in February this year and is now one of the top 50 listed companies on the Australian Securities Exchange. The last year has also been characterised by a continuation of the challenges associated with the global COVID-19 pandemic, including the ongoing restricted labour supply and hard borders constraining people movements, both in and out of Western Australia, and in and out of the US, where our Pogo operations are located. 2020/21 Remuneration Outcomes Short term incentives awarded to the KMP ranged from 45.5% to 71% of maximum, as detailed on pages 100 and 102. Long term incentives awarded in FY21 are detailed on p104. Through the merger and coping with the pandemic we continued to make our employees’ job security a priority, with zero redundancies and a focus on acknowledging and aligning our best talent, as we designed the new organisation and a remuneration structure appropriate for the enlarged company. Organisational changes included the retirement of Executive Chair Bill Beament on 1 July 2021; in July this year the retirement of Managing Director Raleigh Finlayson and the appointment of Stuart Tonkin to that position; and a number of new appointments to senior roles in the larger company. In designing a new remuneration structure the Committee engaged an independent remuneration consultant to assist with the provision of executive remuneration benchmarking information. One of the Board’s major concerns in this review was the need to retain key executives following the merger, particularly given the current environment in the mining industry of high demand for talent. After considering the benchmarking data, the Board agreed to maintain the Company’s broad remuneration framework, with adjustments made to fixed remuneration from 1 July 2021 but the majority of KMP remuneration continuing to be at risk. Details of the remuneration arrangements for KMP for the 2021/22 financial year are described on pages 106 to 111 of this report. Historically the vesting period in the Company’s long term incentives has been three years. The Board has resolved to increase the vesting period to four years, commencing with the 2022 LTI grant, in order to increase management’s focus on long term shareholder wealth creation. Given the past practice of making annual 3-year awards, one effect of this change is to leave a vesting gap in FY24 which, if the vesting period were not being extended, would not occur. In order to compensate for this, an additional one-off, 3-year LTI award will be made this year, at the level of 75% of the annual 4-year LTI. For example, for the 4-year award, 200% of FAR will apply for the Managing Director and CEO, and for the 3-year LTI award, 150% of FAR will apply. This one-off award thus does not represent any ‘doubling up’ of remuneration; but rather reduces by 50% of FAR the award that would have been received by the KMP in year 3 in the absence of this change. This year’s LTI plan includes for the first time KPIs related to environmental, social and governance factors in addition to shareholder return metrics, as detailed on page 110. Board and Committee Fees Board fees were reviewed considering the size and nature of the Company post-merger, utilising benchmarking data provided by an independent remuneration consultant. Details of the fees applying from 1 July 2021 are provided on page 111 of this report. The Remuneration Committee and Board believe that the remuneration framework with the outlined changes is appropriate and that the FY21 remuneration outcomes are fair and reflect the performance of the executives and organisation over the year. The Board will continue to monitor the remuneration framework, provide ongoing updates, and continue direct dialogue with shareholders to ensure the effective alignment between performance and reward is maintained. Response to the “First Strike” at the 2020 Annual General Meeting We believe we have addressed the concerns raised by investors in relation to which a “first strike” was received by the Company at the 2020 AGM, with a 25.12% vote against the FY20 Remuneration Report. The concerns raised by investors were: • • 150,000 time tested restricted shares were issued to the Chief Operating Officer during FY20. These restricted shares vested on 1 July 2021; the employee remains employed by the Company. In FY21, no time tested restricted shares were granted to KMP, and none are proposed to be granted to KMP in FY22. The 300% of FAR which former Executive Chair, Bill Beament, had as a 3-year maximum LTI. The incoming MD & CEO, Stuart Tonkin, will have an ongoing maximum four-year LTI of 200% of FAR. Native flora at Thunderbox, Yandal operations. • • • The lack of disclosure about the treatment of Bill Beament’s FY20 LTI and FY21 LTI Performance Rights, given that he was to step down as an executive on 30 June 2021. No decision had been made at the time of the 2020 Annual Report or the 2020 AGM. The decision was recommended by the post-merger re-constituted Remuneration Committee in February 2021, approved by the new Board and is disclosed on page 105 in this Remuneration Report. In addition, this Report discloses that no payments were made to Bill Beament upon his departure from the Company on 1 July 2021 other than payment of the 4-month balance of his contractual notice period, and statutory accrued entitlements. The Remuneration Committee engaged remuneration consultants and ensured rigour was applied in benchmarking deliberations, with the result that the Board is confident the FY22 remuneration structure is entirely appropriate for the Company, in order to reward and retain Northern Star’s high performing team. On behalf of the Board, I invite you to review the full report and thank you for your ongoing support of Northern Star. 87 Nick Cernotta Remuneration Committee Chair 24 August 2021 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt transparency in reporting Key Management Personnel Remuneration Easy to access information and transparency in remuneration reporting is important to Northern Star and its shareholders. This Remuneration Report includes the following voluntary and statutory disclosures: 1. Details of the Key Management Personnel 2. Remuneration Governance 3. Financial Performance over the Past 5 Years 4. Executive KMP Remuneration Policy and Link to Performance 5. FY21 Executive KMP Remuneration Mix 6. Fixed annual remuneration (FAR) 7. Short Term Incentives – Performance Against FY21 STI Targets 8. Long Term Incentive 9. Vesting of Long Term Incentives during FY21 10. Vesting of FY20 Restricted Shares held by Chief Operating Officer under 88 Retention Share Plan 11. Treatment of unvested FY20 and FY21 LTI Performance Rights held by Bill Beament (Executive Chair, employment ended 1 July 2021) 12. FY22 Executive KMP remuneration changes 13. FY22 Executive KMP remuneration mix 14. FY22 Short Term Incentive 15. FY22 Long Term Incentive 16. FY21 and FY22 Non-Executive Directors’ Remuneration 17. Allocation methodology for grant of FY21 STI & LTI Performance Rights 18. Allocation methodology for grant of FY21 NED Share Rights 19. Securities held by the KMP during FY21 20. Contractual Arrangements with Executive KMP 21. Transactions with KMP and previous disclosure of “Related party” transactions with Bill Beament 22. Summary of Company’s FY20 Share Plan 23. Summary of Company's FY20 NED Share Plan 24. Auditor's Independence Declaration 89 90 91 94 95 97 97 103 105 105 105 106 106 107 109 111 118 119 120 122 123 124 126 128 1. Details of the Key Management Personnel The following Executives and Non-Executive Directors (NEDs) were the Key Management Personnel (KMP) for FY21. Former Executives and NEDs who were KMP for part of FY20 or FY21 are also covered by this Report, where required. Movement since 30 June 2021 to the date of this Report is also included. table 1 Key Management Personnel during FY21 and movement after 30 June 2021 KMP Role Executives Appointment Date Ceased Date Bill Beament Executive Chair 20 August 2007 1 July 2021 Raleigh Finlayson 1 Managing Director/Executive Director 12 February 2021 Stuart Tonkin 2 Chief Executive Officer/Managing Director 29 October 2016 Date of change of role - 22 July 2021 Date of commencement as MD & CEO – 22 July 2021 Morgan Ball Chief Financial Officer 12 February 2021 Luke Creagh Chief Operating Officer – Yandal and Pogo 1 November 2018 Simon Jessop Chief Operating Officer – Kalgoorlie operations 12 February 2021 Hilary Macdonald Ryan Gurner 3 General Counsel & Company Secretary 23 February 2018 Chief Financial Officer/Executive General Manager Finance 16 October 2018 - - - - Date of cessation as CFO and commencement as EGM Finance - 12 February 2021 89 Non-Executive Directors Michael Chaney Chairman 1 July 2021 - Anthony Kiernan Lead Independent Director 12 February 2021 Expected date of cessation - 18 November 2021 John Fitzgerald Lead Independent Director and Non- Executive Director 30 November 2012 Date of cessation as Lead Independent Director - 12 February 2021 Peter O’Connor Non-Executive Director 21 May 2012 12 February 2021 Shirley In’t Veld Non-Executive Director 1 September 2016 30 June 2021 Mary Hackett Non-Executive Director Nick Cernotta Non-Executive Director John Richards Non-Executive Director Sally Langer Non-Executive Director 1 July 2019 1 July 2019 12 February 2021 12 February 2021 Sharon Warburton Non-Executive Director 1 September 2021 - - - - - 1. Mr Finlayson moved to the position of Executive Director for a period of 2 months commencing 22 July 2021, having announced his intention to resign as a Director with effect on 30 September 2021 2. Mr Tonkin was appointed Managing Director on 22 July 2021 3. Mr Gurner has stepped down from the role of CFO effective the date of the merger 12 February 2021 but has remained with the Company. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt 2. Remuneration Governance Until the merger, the Remuneration Committee comprised three independent non-executive Directors, Nick Cernotta (Chair), John Fitzgerald (Lead Independent Director) and Peter O’Connor. Following the merger, the Remuneration Committee comprised four independent non-executive Directors, Nick Cernotta (Chair), Anthony Kiernan (Lead Independent Director), John Fitzgerald and Sally Langer. The Managing Director & CEO and other Directors are invited to attend all, or part of the Committee meetings as required but have no vote on matters before the Committee. The Committee meets several times a year to review and make recommendations to the Board in accordance with the Remuneration Committee Charter to ensure that KMP remuneration remains aligned to business needs and performance. A copy of the Charter is available under the Corporate Governance section of the Company’s website available at www.nsrltd.com. The role of the Remuneration Committee is to review and make recommendations to the Board in relation to KMP and other executives in respect of: • • • Remuneration and incentive policy including structures, practices, and quantum; Determining the eligibility, award and vesting of Short Term Incentives (STI) and Long Term Incentives (LTI) Non-Executive Director individual remuneration, and the aggregate pool for approval by shareholders (as required); • Disclosure of remuneration in the Company’s public materials including ASX filings and the Annual Report • Superannuation arrangements; and • Overseeing remuneration by gender and other diversity measures. The Board and the Remuneration Committee use remuneration consultants’ advice and recommendations from time to time. The Remuneration Committee observes the following protocols: • • • Remuneration consultants are engaged by and report directly to the Remuneration Committee; The Committee must, in deciding whether to approve the engagement, have regard to any potential conflicts of interest including factors that may influence independence such as previous and future work performed by the adviser. and any relationships that exist between any executive KMP and the consultant, and Communication between the remuneration consultants and Executive KMP is restricted to minimise the risk of undue influence on the remuneration consultant. The Board makes its decisions after it considers the recommendations from the Remuneration Committee and advice from remuneration consultants. No remuneration recommendations (within the meaning of the Corporations Act 2001) were sought or provided during FY21. 90 The Board makes its decisions after it considers the recommendations from the Remuneration Committee and advice from remuneration consultants. XXXXXX XXXXXX XXXX XXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXX XX XXX XX XXX XX X 3. Financial Performance Over the Past 5 Years Northern Star has a strong history of improving its key financial metrics on a year-on-year basis and this trend continued in FY21. From a financial perspective, the Company’s key short term incentive performance measures in FY21 were: • • • Production growth (and associated revenue generation); Cost management; and Free cashflow. The Company’s strong operational and financial performance during FY21 resulted in: • • • The achievement of production guidance and record revenues supported by a positive A$ gold price; The achievement of cost guidance against a backdrop of COVID-19 related management and inflationary pressures; and Free cashflow that support a strong post- merger balance sheet position. The charts below illustrate some of the Company’s FY21 key financial achievements: Figure 1 Underlying NPAT 4 400 350 300 250 200 150 100 50 0 2 7 3 1 9 2 5 1 2 2 1 2 9 7 1 Figure 3 Revenue ($m) 7 1 Y F 8 1 Y F 9 1 Y F 0 2 Y F 1 2 Y F 3,000 3,000 2,500 2,500 2,000 2,000 1,500 1,500 1,000 1,000 500 500 0 0 1 1 6 6 7 7 , , 2 2 2 2 7 7 9 9 , , 1 1 1 1 0 0 4 4 , , 1 1 9 9 1 1 Y Y F F 0 0 2 2 Y Y F F 1 1 2 2 Y Y F F 9 9 6 6 8 8 7 7 1 1 Y Y F F 4 4 6 6 9 9 8 8 1 1 Y Y F F Figure 4 Underlying EBITDA ($m)4 1,400 1,200 1,000 800 600 400 200 0 9 5 1 , 1 1 9 7 0 2 Y F 1 2 Y F 1 6 4 7 1 Y F 3 4 4 8 1 Y F 0 8 4 9 1 Y F 91 Figure 2 Cashflow from Operations ($m) 1,200 1,000 800 600 400 200 0 7 7 0 , 1 0 1 7 0 2 Y F 1 2 Y F 9 5 3 7 1 Y F 3 5 3 8 1 Y F 9 7 3 9 1 Y F Figure 5 Gold Sold (Moz) 5 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0 9 2 7 , 5 9 5 , 1 1 2 Y F , 0 8 5 0 4 8 9 1 Y F , 8 8 3 0 0 9 0 2 Y F , 5 1 5 6 2 5 7 1 Y F 0 1 1 , 0 7 5 8 1 Y F 4. See Operations Report / Financial Review on page 24 for details of reconciliation to Underlying NPAT and Underlying EBITDA. 5. Gold Sold on an annualised basis. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt Figure 6 Dividends (cents per Share) approved Figure 7 NST Share price performance over 5 years to August 2021 e r a h s / s t n e c 40 35 30 25 20 15 10 5 0 2.5 FY12 2.5 1 FY13 2.5 1 FY14 10 9.5 7.5 9.5 9.5 3 6 3 7.5 6 5 4.5 3 2 4 3 18 16 14 12 10 8 6 4 2 0 FY15 FY16 FY17 FY18 FY19 FY20 FY21 6 1 / 8 / 1 6 1 / 0 1 / 1 6 1 / 2 1 / 1 7 1 / 2 / 1 7 1 / 4 / 1 7 1 / 6 / 1 7 1 / 8 / 1 7 1 / 0 1 / 1 7 1 / 2 1 / 1 8 1 / 2 / 1 8 1 / 4 / 1 8 1 / 6 / 1 8 1 / 8 / 1 8 1 / 0 1 / 1 8 1 / 2 1 / 1 9 1 / 2 / 1 9 1 / 4 / 1 9 1 / 6 / 1 9 1 / 8 / 1 9 1 / 0 1 / 1 9 1 / 2 1 / 1 0 2 / 2 / 1 0 2 / 4 / 1 0 2 / 6 / 1 0 2 / 8 / 1 0 2 / 0 1 / 1 0 2 / 2 1 / 1 1 2 / 2 / 1 1 2 / 4 / 1 1 2 / 6 / 1 1 2 / 8 / 1 Interim Final Special NST 5 Years 92 93 Ben Goldbloom, Troy Irvin and Alan Thom from the Business Development and Investor Relations teams, Corporate Office, Subiaco, Western Australia. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt 4. KMP Remuneration Policy and Link to Performance 5. FY21 Executive KMP Remuneration Mix The table below outlines the remuneration policy framework which applied in FY21. Key FAR STI LTI Our remuneration policy is designed to support our Mission. Our objective is clear: to develop a responsible Company that is attractive to global investors. Our KMP remuneration policy and practices underpin our business objectives, which include: Results Deliver on our promises Returns target superior financial performance Responsibility Positive legacy from business activity • Reliable delivery of production and cost guidance • Capital discipline balancing re-investment and returns to shareholders • Sustainable employee, Environmental, Social and Governance performance • Active portfolio management, • Sustainable discovery and lowering costs mine life extension table 2 Our Remuneration Policy Remuneration policy objective Remuneration practices aligned with policy objective 94 Retain an experienced, cohesive, proven, high performance, multi-disciplinary team to deliver the Company’s strategic objectives • Provide remuneration that is internally fair and benchmarked against appropriate peer group on a regular basis. • Ensure remuneration is competitive with the gold industry labour market and other competition for our people. • Provide total remuneration opportunities to retain proven and experienced KMP who are global company poaching targets. Align KMP interests with the interests of shareholders • A significant proportion of remuneration is at risk, performance-based and delivered in Shares, aligning Executive KMP reward with increased value for shareholders. • Performance metrics measured against stretch targets that reward for longer term value, consistent with our business strategy. • Minimum holding condition policy applies to KMP requiring a minimum level of Share and vested Performance Rights ownership as follows: - Managing Director & CEO: - COO, CFO, GC & Co Sec: - Non-Executive Directors: 100% of FAR6 50% of FAR 100% NED base fee Focus on safety • Safety performance metrics (employee and contractors) building in year on year improvements, to measure performance over different time horizons for sound risk management and to ensure outcomes focus on the longer term. Focus on sustained costs and production performance • STI including: - Challenging annual production targets; - Deliver on competitive production costs. Focus on our people and create a desirable Company culture • Provide targeted strategic incentives from the top down, to promote improvements in organisational culture, to attract and retain a diverse and inclusive workforce in line with the STARR Core Values7. • Focus and facilitate the development and retention of our people to ensure a sustainable pipeline of diverse talent within the business. 6. 7. FAR means fixed annual remuneration comprising base salary plus superannuation capped at $25,000 per annum Our STARR Core Values are: Safety, Teamwork, Accountability, Respect, Results. Executive remuneration has a fixed component (base salary plus superannuation capped at $25,000 per annum) and a component that varies with performance (STI and LTI). The remuneration mix is weighted towards the variable component and is awarded in cash and Performance Rights for STI (with right to elect to take 100% in Performance Rights), to reward for achievement of strategic objectives aligned with shareholders’ interests. Figure 8 FY21 Remuneration Mix for Northern Star Executive KMP (pre-merger) Bill Beament 19% 23% Stuart Tonkin 24% 29% 58% 48% Luke Creagh 31% Ryan Gurner Hilary Macdonald 34% 38% 38% 31% 34% Maximum opportunity - FY21 Northern Star STI: BB ST & LC STI = 120% of FAR, RG & HM STI = 90% of FAR FY21 Northern Star LTI: BB LTI = 300% of FAR, ST LTI = 200% of FAR, LC & RG LTI = 100% of FAR, HM LTI = 75% of FAR Figure 9 FY21 Remuneration Mix for Saracen Executive KMP (pre-merger) Raleigh Finlayson Morgan Ball Simon Jessop 33% 36% 36% 33% 27% 27% Key FAR STI LTI 31% 34% 28% 33% 36% 36% 95 Maximum opportunity - RF FY21 Saracen STI & LTI = 100% of FAR. MB & SJ FY21 Saracen STI = 75% of FAR, LTI = 100% of FAR Figure 10 FY21 Remuneration Mix for ex-Saracen Northern Star Executive KMP from 12 Feb 2021 Raleigh Finlayson Morgan Ball Simon Jessop 38% 37% 38% 23% 26% 25% 38% 37% 38% Key FAR STI LTI Maximum opportunity - RF FY21 Northern Star STI = 100%, LTI = 200% of FAR. MB & SJ FY21 Northern Star STI = 75% of FAR, LTI = 100% of FAR The following sections 6-8 of this Report provide more information about: • • FAR (and the reasons for the changes to FAR); STI and LTI KPIs (and the reasons for changes made to the KPIs between FY20, FY21 and FY22), and • measurement of performance against the FY21 STI (for both Saracen and NST pre-merger). NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt 6. Fixed annual remuneration (FAR) • Cash salary with superannuation capped at $25,000 per annum • Benchmarked against ASX100 and mining industry peers for comparable roles and responsibilities • Periodic remuneration reviews conducted as appropriate 7. Short term Incentives – Performance Against FY21 StI targets Under the agreed terms of the merger, it was decided that the respective short term incentive schemes for pre-merger Northern Star KMP and pre-merger Saracen KMP would continue to operate for the balance of FY21 after the merger implementation date of 12 February 2021. The tables below set out performance against the KPIs applicable to both the Northern Star and Saracen FY21 STI granted to the Executive KMP. The total FY21 STI achievement for the Executive KMP (including Saracen pre-merger KMP) ranged from 45.5% to 71%8. (a) FY21 StI for Northern Star pre-merger Executive KMP • STI opportunity is calculated as a percentage of FAR • Maximum STI opportunity was 120% of FAR for the Executive Chair, and from 90% to 120% of FAR for the other Executive KMP - efficient use of capital and operational expenditure is key to maintaining control over costs; and Strategic measures – These are nominated by the Board for Executive KMP according to role performed, and assessed on an individual basis with a view to targeting specific areas for improvement or focus in the operations, the achievement of which are above and beyond business as usual requirements of the role 97 96 Darren Pike, Light Vehicle Maintenance Fitter, Kanowna Belle, Kalgoorlie operations. • • • • 80% of the STI is weighted towards companywide performance metrics with 20% weighted toward individual strategic measures STI is measured over a one year performance period (1 July 2020 to 30 June 2021) The STI is settled 50% in cash and 50% in Performance Rights. KMP can elect at the time of offer to have the STI settled 100% in Performance Rights. The following Company wide performance metrics, which are aligned with our Mission, were chosen: - Focus on Safety – Total Recordable Injury Frequency Rate (TRFIR) – this is a measure of how many restricted work injuries (RWIs)9 and lost time injuries (LTIs)10 occur per million hours worked by our employees and contractors. The safety of our employees is key to our success and in sustaining long term operational performance - Production Performance – Our production is directly related to the financial returns we generate for our shareholders - Financial Management – disciplined and A summary of the FY20 Share Plan under which the FY21 STI Performance Rights were granted is provided at page 124. Table 3 sets out the Companywide performance metrics (80% of the FY21 STI), relative weightings and performance outcome for the FY21 Northern Star pre-merger STI. The outcome of the Northern Star pre-merger Executive KMP against the FY21 STI Individual performance metrics (20% of the FY21 STI) are provided in Table 4. The total FY21 STI achievement for the pre-merger Northern Star Executive KMP ranged from 58.5% to 71%. The STI comprises 50% cash and 50% Performance Rights, with the ability to elect at offer to take the cash component in Performance Rights in lieu of cash, as shown in Table 5. Total Northern Star pre-merger FY21 STI Company and Individual KPI final outcome, percentage and number of rights and cash is provided to pre-merger Executive KMP is shown in Table 5. 8. For all Saracen KMP, the overall quantum of STI available was reduced by 20% in light of the tragic fatality which occurred in July 2020 at Saracen’s Carosue Dam operations. 9. RWI is a work injury that results in the injured person being unable to fully perform their ordinary occupation any time after the day or shift on which the injury occurred regardless of whether they are rostered to work, or where alternative/light duties are performed or hours restricted. 10. LTI is a work injury that results in an absence from work for at least one full day or shift any time after the day or shift on which the injury occurred. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt table 3 FY21 STI Company KPI performance measures and outcomes (80% of STI) Company KPIs Focus on safety (20%) Location Weighting Measure Metric Outcome % STI vested All 20% Total Recordable Injury Frequency Rate TRIFR ≥6.4 = 0% Threshold TRIFR <6.4 = 50% Target TRIFR <4.3 = 100% Stretch TRIFR <3.3 = 125% TRIFR 4.2 21% Production Performance (40%) Australia 30% Pogo 10% Gold Production within stated guidance Australia 15% Financial Management (20%) AISC within stated guidance 98 Pogo 5% 80% Threshold 760koz = 0% Target 840koz = 100% Stretch 860koz = 125% 779koz gold sold 8% Threshold 180koz = 0% Target 200koz = 100% Stretch 230koz = 125% 204koz gold sold 11% Threshold A$1,540/oz = 50% Target A$1,490/oz = 100% Stretch A$1,465/oz = 125% A$1,537 per ounce 8% Threshold US$1,400/oz = 50% Target US$1,300/oz = 100% Stretch US$1,250/oz = 125% US$1,357 per ounce 3% 51% Mt Charlotte headframe, KCGM, Kalgoorlie operations. table 4 FY21 STI pre-merger NST Individual KPI performance measures and outcomes (20% of STI) Individual KPIs Measure Weighting STI Outcome % STI vested Bill Beament (20%) Demonstrate improved retention of talent initiatives 20% 7.5% 7.5% Stuart Tonkin (20%) Luke Creagh (20%) Focus and facilitate a sustainable pipeline of talent within the business Culture Survey > 80% staff participation Culture Survey - Improved year on year average score for Engagement & STARR Core Value Elements Pogo - achieve over 65koz in Q3 or Q4 at under US$1,200/oz) Develop strategy & plan for Yandal to produce over 400koz by FY23 Culture Survey - Improved year on year average score for Engagement & STARR Core Value Elements Target annualised operational and corporate cost reductions of 2-3% of total spend ($20-$30/oz): 10% 5% 5% 10% 5% 5% 10% 0% 5% 0% 5% 5% 15% 10% 99 Ryan Gurner (20%) <$20M cost reduction = 0% $20M cost reduction = 50% $30M cost reduction = 100% (pro-rata >$20M-$30M) 20% 15% 15% Develop program of Board education by subject matter experts on risk and opportunities flowing from Nasdaq Board evaluation 10% 10% Develop and implement best practice legal document management system 10% 10% Hilary Macdonald (20%) TOTAL 20% 7.5% to 20% TOTAL STI (out of 100%) Company + Individual STI outcome 58.5% to 71% NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt table 5 Northern Star pre-merger FY21 STI final outcome, percentage and number of Performance Rights and cash (where no election was made to take STI in 100% Performance Rights) Name Performance Rights Awarded Company KPI % achieved Individual KPI % achieved Total STI % achieved12 (STRETCH 120%) (MAX 80%) (MAX 20%) Performance Rights vested Rights Cash STI paid Performance Rights lapsed11 % Performance Rights lapsed11 Bill Beament 123,951 Stuart Tonkin 106,244 Luke Creagh 26,561 (cash 50% election) Ryan Gurner 33,201 Hilary Macdonald 15,770 (cash 50% election) 51% 51% 51% 51% 51% 15% 10% 15% 7.5% 58.5% 60,426 66% 58,434 nil nil 63,525 51.3% 47,810 45.0% 61% 13,501 $183,000 13,060 49.2% 66% 18,260 nil 14,941 45.0% 20% 71% 9,330 $126,469 6,440 40.8% 100 (b) FY21 StI for Saracen pre-merger Executive KMP Under the agreed term of the merger, it was decided that the respective STI schemes for pre-merger Northern Star Executive KMP and pre-merger Saracen Executive KMP would continue to operate for the balance of FY21. Table 6 shows the pre-merger Saracen FY21 STI performance metrics, weightings, and outcomes for the pre-merger Saracen Executive KMP. StI Saracen pre-merger KMP Details of the STI for the pre-merger Saracen KMP are as follows: • STI opportunity is calculated as a percentage of FAR • Maximum STI opportunity is 100% of FAR for the MD and 75% for other KMP • For the MD, 50% of the STI is weighted towards companywide performance metrics and 50% weighted towards individual strategic measures. • For the other KMP, 75% of the STI is weighted towards companywide performance metrics and 25% weighted towards individual strategic measures. • Individual strategic measures were: - Raleigh Finlayson: Delivering Strategy 25% and Board Measures 25% - Simon Jessop: Board Measures 25% - Morgan Ball: Board Measures 25% • • STI is measured over a one year performance period (1 July 2020 to 30 June 2021) The STI is settled 100% in cash, calculated using the pre-merger FY21 FAR The total FY21 STI achievement for the pre-Merger Saracen Executive KMP ranged from 45.5% to 65.5%. Table 6 sets out the companywide performance measures and outcomes, and Table 7 the results of individual performance measures. 11. Based on Performance Rights awarded at maximum opportunity, shown in column 1. 12. This column shows the percentage of STI achieved with reference to the target, not stretch, number of Performance Rights. For example, Stuart Tonkin was originally granted the full stretch award of 106,244 Performance Rights. The number of Performance Rights to be granted without the stretch component would have been 88,536 Performance Rights. He achieved 66% STI KPI satisfaction, and therefore he received 58,434 vested Performance Rights (88,536 x 66% = 58,434). The number of Performance Rights shown as lapsed in the table above for Stuart Tonkin is therefore 106,244 – 58,434 = 47,810 lapsed Performance Rights. % STI vested 0% 12.5% 3% 15% 0.5% table 6 Pre-merger Saracen FY21 STI Company KPI performance measures and outcomes (50% of RF STI, 75% of MB & SJ STI) Company KPIs Focus on safety (40%) Weighting Measure Metric Outcome 20% Total Recordable Injury Frequency Rate Threshold TRIFR 12 maintained = 0% Target 10% reduction = 50% Stretch 20% reduction = 100% Nil award due to Carosue Dam operations Fatality in July 2020 pre-merger 20% Principal Hazard Management Threshold Revise Principal Hazards & implement across business = 0% Target Principal Hazard thinking well engrained in shop floor = 50% Stretch Develop Task observations with Principal Hazard focus against core production roles = 100% Threshold: zero penalties for ESG compliance = 0% 7.5% ESG incidents Target: Zero significant ESG breaches = 50% Stretch: Proactive improvement in ESG status = 100% ESG (10%) Principal Hazards implemented; embedded into day- to-day site thinking. Critical Control Gap work completed and incorporated into the Change Management Process Minor breaches but no penalties or significant breaches. Improved focus and improvement re ESG matters. Engagement with stakeholders and community. Improvement in Sustainability Score ISS sustainability score improved at December 2020 prior to merger 2.5% 101 Engagement and Sustainability Score AISC within stated guidance 2.5% 15% 15% Financial Management (15%) Production Performance (15%) Cash build (10%) 10% Threshold: Achieve guidance = 0% Target: Exceed guidance by 1.5% = 50% Stretch: Exceed guidance by 3% = 100% Exceeded guidance by 4.8% (A$1,276 per ounce) Gold Production within stated guidance Threshold: Achieve guidance (0%) Target: Exceed guidance by 2.5% (50%) Stretch Exceed guidance by 4% (100%) Exceeded guidance by 0.3% (627koz gold sold) Budgeted free cash flow before debt Threshold: Achieve budgeted free cashflow before debt = 0% Target: Exceed budgeted free cash flow before debt by 100% = 50% Stretch: Exceed budgeted free cash flow before debt by 200% = 100% Exceeded budgeted cash flow before debt by 354% 10% Future proofing (10%) 10% Operational and strategic planning Threshold: Deliver operational plan = 0% Target: Deliver on strategic plan = 5%; Stretch: Implement Future Proofing Plan = 10% TOTAL 100% Operational Plan achieved. Strategic Plan and implementation of future proofing on track at merger date: • Additional BCM’s moved at CDO & TBO • CDO Mill expansion 7.5% 51% NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt table 7 Pre-merger Saracen FY21 STI Individual KPI performance measures and outcomes 8. Long term Incentives Individual KPIs Measure SAR MD Other SAR KMP Weighting Outcome* Weighting Outcome* “Strategy” (RF -50% of STI) Delivering strategy 50% 40% - - “Board measures” (RF -of STI SJ -25% of STI MB- 25% of STI) • Excellent operating parameters - AISC, production delivery • Vastly improved KCGM performance on open pit and processing • Delivery of the merger on good terms and excellent due diligence • Exceptional corporate merger work including debt delivery and management of Saracen’s external legal and accounting teams. 50% 40% 100% 80% TOTAL 100% 80% 100% 80% 102 * The post-merger Board awarded full achievement of these short term incentive performance measures, and then exercised downward discretion as a result of the fatality at the Carosue Dam operations in July 2020, reducing the individual STI by 20%. The Saracen FY21 STI cash payments were calculated on the basis of pre-merger FAR. Saracen FY21 STI KMP Company and Individual STI final outcome, percentage and number of rights and cash is shown in Table 8. table 8 Pre-merger Saracen FY21 STI final outcome, percentage and cash Name Raleigh Finlayson Company KPI % STI Individual KPI % of FAR % achieved % STI % achieved % of FAR Total STI % as % of FAR Cash Paid % of STI forfeited 51% 50% 25.5% 80% 50% 40% 65.5% $556,750 34% Simon Jessop 51% 50% 25.5% 80% 25% 20% 45.5% $250,250 40% Morgan Ball 51% 50% 25.5% 80% 25% 20% 45.5% $238,875 40% The purpose of the Northern Star LTI is to focus the senior leadership team on drivers of shareholder value over a period of three years (this is changing to four years, for the FY22 annual grant onwards). Specific performance metrics have been selected that will reward both KMP and shareholders for strong and sustained long term performance. For the FY20 LTI grant the maximum opportunity was 300% of FAR for the Executive Chair, and between 75% and 100% of FAR for the other KMP. Table 9 below sets out the performance metrics applicable to the FY20 LTI granted to the Executive KMP to be measured following the end of the 3 year performance period, on 30 June 2022. table 9 Summary of FY20 LTI KPIs (performance period 1 July 2019 to 30 June 2022) KPIs Weighting Measure Metric Rationale for this KPI Financial – Return on Invested Capital (ROIC) (25%) 25% ROIC is calculated as 3 years’ NPAT divided by the average invested capital for the 3 year performance period Threshold <15% = 0% Target 15% = 50% Stretch ≥20% = 100% Pro rata vesting between 10% and 20% ROIC Financial – Relative Total shareholder Return (TSR) (50%) 50% Relative TSR measured against the VanEck Vectors Gold Miners ETF (GDX)13 Threshold18% than GDX = 100% Pro rata vesting for exceeding target Ore Reserves are maintained post- depletion over the three year performance period Ore Reserves grown by 10% per Share over the three year performance period Satisfied by the end of year 3 = 100% Satisfied by the end of year 3 = 100% TOTAL 100% The quantum of FY21 LTI granted to ex-Saracen KMP on joining Northern Star on 12 February 2021, Raleigh Finlayson, Morgan Ball and Simon Jessop, was reduced to 4/12 of the annual quantum on the basis of their only being a Northern Star KMP from 12 February 2021 to 30 June 2021 for FY21. 14. ROIC is calculated as: Average annual net profit after tax (NPAT) for the 3 year period (i.e. sum of NPAT divided by 3) Average capital employed over the vesting period (i.e. opening and closing capital employed divided by 2) where: capital employed is defined as equity plus debt 15. If the Company’s TSR performance is negative, but exceeds GDX, only 50% of this metric vests Kanowna Belle processing plant, Kalgoorlie operations. 9. Vesting of Long term Incentives during FY21 No Long Term Incentive Performance Rights held by KMP vested in FY21. This is because in FY17 the KMP received a grant of Long Term Incentive Performance Rights with a three year performance period, which vested in October 2019, and there were no grants of Long Term Incentive Performance Rights in FY18 or in FY19 to KMP. 10. Vesting of FY20 Restricted Shares held by Chief Operating Officer under Retention Share Plan The Restricted Shares granted to Chief Operating Officer Luke Creagh during FY20, as a retention tool in the face of a competitive offer of employment elsewhere, vested on 1 July 2021 as a result of satisfaction of the service condition to remain employed with the Company on 1 July 2021. Mr Creagh continues to remain employed by the Company. 11. treatment of unvested FY20 and FY21 LtI Performance Rights held by Bill Beament (Executive Chair, employment ended 1 July 2021) Bill Beament’s employment ended on 1 July 2021 as a result of Mr Beament’s decision to pursue other interests. The Board used its discretion to allow Mr Beament to keep the 388,367 unvested FY20 LTI Performance Rights granted to him in November 2019, given his critical contribution to the Company strategy up to 1 July, 2021 and the impact his leadership will have had on the Company’s performance up to the measurement date, 30 June 2022. The 388,367 unvested FY20 LTI Performance Rights retained by Mr Beament will be measured for performance as at 30 June 2022. The FY21 LTI Performance Rights granted to Mr Beament in November 2020, which are due to be measured at the end of the three year performance period on 30 June 2023, were reduced by two thirds, to reflect that Mr Beament will have performed an executive role with the Company for only one out of the three year performance period. The remainder of the Performance Rights granted in November 2020 remain subject to meeting the original performance measures and will be assessed as at 30 June 2023. Accordingly, the 309,878 FY21 Performance Rights held by Mr Beament as at 30 June 2021 have subsequently been reduced by 206,585 Performance Rights to 103,293. When Mr Beament left the Company’s employment on 1 July 2021, he received four months’ pay being the balance of his contractual notice period, contractual reimbursements of expenses incurred by Mr Beament for which the Company was responsible, and accrued statutory entitlements. No other payments were made to Mr Beament upon his departure. 105 REMuNERAtION REPORt REMuNERAtION REPORt 12. FY22 Executive KMP remuneration changes Figure 11 FY22 Remuneration Mix for Northern Star Executive KMP During FY21, the Remuneration Committee conducted a benchmarking review to ensure total remuneration packages for the Executive KMP (and other leaders) remain market competitive, to reward for delivery of strategic objectives and to assist with retention of a high-performing management team, for the benefit of shareholders. In addition, the Committee wished to ensure the additional KMP joining the Northern Star team from Saracen were appropriately and equitably positioned. Industry benchmarking analysis was undertaken by remuneration consultants against peer groups included the GDX Index companies, the ASX100 companies and mining industry peers. The Remuneration Committee’s changes to Executive KMP fixed and variable remuneration following the review are set out in Table 11 below. A high proportion of the overall remuneration is at risk, with a view to better incentivising the achievement of the Company’s strategy and further increasing alignment to shareholders’ interests. table 11 FY22 Changes to Executive KMP16 Fixed Remuneration17 FY22 Executive KMP 12 Stuart Tonkin Managing Director and CEO from 22 July 2021 FY21 FAR FY22 FAR $1,200,000 $1,700,000 106 Simon Jessop Chief Operating Officer $600,000 $875,000 Morgan Ball Chief Financial Officer $600,000 $750,000 Hilary Macdonald General Counsel & Company Secretary $475,000 $625,000 The KMP are subject to a Minimum Holding Condition Policy, requiring the Managing Director & CEO to maintain a minimum level of Shares or vested performance rights ownership of 100% of FAR and other Executive KMP of 50% of FAR. 13. FY22 Executive KMP17 remuneration mix Figure 5 illustrates that in relation to the Executive KMP for FY22, variable remuneration represents at least 71% of maximum remuneration opportunity, with the Managing Director & CEO’s variable remuneration comprising 82% of the maximum remuneration opportunity. The FY22 LTIs include a one-off 3-year award to compensate for a vesting gap in FY24 as a result of moving to 4-year vesting from this year, as detailed on pages 109 and 110. 16. For FY22, Luke Creagh, Chief Operating Officer and Raleigh Finlayson, Executive Director will not be included in the Company’s Executive KMP since they will no longer fall within the definition of Key Management Personnel under AASB 124 Related Party Disclosures. 17. Table 11 is a voluntary disclosure included in this Report to improve transparency around how Northern Star rewards Executive KMP and has not been prepared in accordance with Australian Accounting Standards. Stuart Tonkin 18% 18% 36% 27% Simon Jessop 27% 27% 27% 20% Morgan Ball Hilary Macdonald 30% 30% 23% 23% 30% 30% 17% 17% Key FAR STI LTI-1 LTI-2 Maximum opportunity: Stuart Tonkin FY22 STI = 100%, LTI = 200% of FAR (4yr performance period), plus second LTI of 150% of FAR (3yr performance period). Simon Jessop FY22 STI = 100% of FAR, LTI = 100% of FAR (4yr performance period), plus second LTI of 75% of FAR (3yr performance period). Morgan Ball & Hilary Macdonald FY22 STI = 75% of FAR, LTI = 100% of FAR (4yr performance period), plus second LTI of 75% of FAR (3yr performance period). 14. FY22 Short term Incentive The STI performance metrics have been slightly modified for FY22 with the removal of Individual KPIs. All KMP will be assessed on the same companywide performance measures. The maximum opportunity for the Managing Director & CEO is 100% of FAR, with the other KMP opportunities ranging from 75% to 100% of FAR. • STI opportunity is calculated as a percentage of FAR • Maximum STI opportunity is 100% of FAR for the Managing Director & CEO and the Chief Operating Officer, and the maximum STI opportunity is 75% for the other Executive KMP. • • • • 100% of the STI is weighted towards companywide performance metrics (with no individual strategic measures) STI is measured over a one year performance period (1 July 2021 to 30 June 2022) The STI is settled 50% in cash and 50% in Performance Rights. KMP can elect at the time of offer to have the STI settled 100% in Performance Rights. The following Companywide performance metrics which are aligned with our Vision and Mission were chosen: - Total Recordable Injury Frequency Rate (TRFIR) – this is a measure of how many restricted work injuries (RWIs) and lost time injuries (LTIs) occur per million hours worked by our employees and contractors. The safety of our employees is key to our success and in sustaining long term operational performance. - Employee Culture – a healthy constructive culture underpins and promotes employee engagement, feelings of job 107 satisfaction and retention, which together contribute significantly to the safety of our workplaces. - Nil community, heritage or environmental incidents – we act responsibly in our environmental and social business practices; we believe this supports the creation of strong economic returns for our shareholders, and shared value for our stakeholders - Production Performance – Our production is directly related to the financial returns we generate for our shareholders. - Financial Management – disciplined and efficient use of capital and operational expenditure is key to maintaining control over costs. A summary of the FY20 Share Plan under which the FY22 STI Performance Rights are granted is at page 124. Table 12 sets out the performance metrics and hurdles applicable to the FY22 STI granted to the Executive KMP, to be measured following the end of the 1-year performance period on 30 June 2022. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt table 12 FY22 STI KPIs (performance period 1 July 2021 to 30 June 2022) KPIs Weighting Measure Metric 20% Total Recordable Injury Frequency Rate18 Threshold TRIFR <5.6 (FY21) = 10% Target < 5.3 = 15% Stretch TRIFR <5.0 = 20% linear pro rata between these figures (no fatality gateway for vesting) 5% 5% 40% 30% Employee Culture Survey Benchmark Threshold Perform Culture Survey STARR+E > 65% employees = 5% (minimum participation rate required is 65% of all Northern Star group employees) Environmental & Social Nil materially adverse Community, Heritage or Environmental Incidents Gold Sales within stated guidance (pro-rata) AISC within stated guidance (pro-rata) Threshold: 1,550 koz = 0% Target: 1,600 koz = 50% Stretch: 1,650 koz = 100% Threshold: A$1,575/oz = 50% Target: A$1,525/oz = 75% Stretch: A$1,475/oz = 100% Employee Environment Social Governance (30%) Production Performance (40%) Financial Management (30%) 108 TOTAL 100% The Board retains discretion to adjust the STI payments Tiffany Collins, Resource Development Geologist at Thunderbox, Yandal operations. 18. The pre-merger Northern Star TRIFR was 4.2 at 30 June 2021. As a consequence of the merger with Saracen, the Group TRIFR was 5.6 at 30 June 2021. 15. FY22 Long term Incentive To better align the LTI with the interests of shareholders, the Board has increased the performance period of the LTI from three to four years taking effect from FY22 with measurement at 30 June 2025. To fill the vesting gap in the third year (30 June 2024) as a result of the increase in performance period, a decision was made to award a one-off LTI grant in FY22 with a three- year performance period (identified below as LTI-2) which will be measured at 30 June 2024 and is at 75% of the annual grant amount. It does not represent a doubling up of LTI incentives but this ensures that KMP will have a portion of LTI opportunity subject to vesting in each year. Given the reduction to 75% of the annual grant amount in year 3, this represents a diminution in the awards KMP would have received had the Board retained 3-year vesting. The performance metrics in the FY22 LTI grants have also been changed. The Return on Invested Capital has been replaced by two relative Total shareholder Return measures against a group of ASX and international gold peers with whom the Company may compete for inorganic growth activity and for human capital. The GDX index has been replaced by the S&P TSX Global Gold Index as an appropriate alternative peer group to the ASX/Internatinal gold peers mentioned above. The strategic mine life performance measures have been replaced with new ESG metrics relating to an absolute reduction in greenhouse gas emissions, indigenous business supply chain development, and water management. These measures were included following feedback from shareholders. Safety measures have been included in both the STI and LTI as this rewards consistent performance over the long term. • LTI opportunity is calculated as a percentage of FAR • Maximum LTI-1 opportunity is 200% of FAR for the Managing Director & CEO, and 100% for the other Executive KMP. • Maximum LTI-2 opportunity is 150% of FAR for the Managing Director & CEO, and 75% for the other Executive KMP. • • • • LTI-1 is measured over a four year performance period (1 July 2021 to 30 June 2025). This is an annual grant, and differs from the FY20 and FY21 LTI grants which were subject to a three year performance period. The rationale for extending the performance period for the annual LTI grant from three to four years is to further align the KMP with long term outcomes. LTI-2 is measured over a three year performance period (1 July 2021 to 30 June 2024). As described above, this LTI-2 grant is designed to fill the vesting gap created by moving from a three-year vesting scheme to a four-year scheme. The LTI is settled 100% in Performance Rights. A service condition requiring full time employment applies throughout the performance period for both LTI. A summary of the FY20 Share Plan under which the FY22 STI Performance Rights are granted is at pages 124 to 125. Table 13 sets out the KPIs applicable to the FY22 LTI granted to the Executive KMP (in the case of the Managing Director & CEO, subject to shareholder approval at Annual General Meeting on 18 November 2021). The KMP grants will occur following the Annual General Meeting. The provision of the two LTI grants for FY22 aligns all KMP with similar long term incentive opportunity and provides both retention and aligned awards for KMP. 109 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt table 13 FY22 LTI-1 KPIs – 4 and 3 year performance period 16. FY21 and FY22 Non-Executive Directors’ Remuneration KPIs Weighting LTI-1 (4yr) LTI-2 (3yr) Measure Metric Summary of Fees payable to Non-Executive Directors for FY21 and FY22 is provide in Table 14. table 14 Non-Executive Director FY21 and FY22 fees 110 35% 40% RTSR to peer group including Australian and international peers19 Gateway RTSR < 50th percentile = 0% vest Threshold RTSR = 50th percentile = 50% vest Target RTSR > 75th percentile = 100% vest Maximum RTSR between 50th and 75th percentile = 50% to 100% vest on a linear basis RTSR to be assessed in home currencies Relative Total shareholder Return Modifier: Where the Company TSR performance is negative at the end of the assessment period, and the Company TSR performance is equal to or exceeds S&P TSX Global Gold Index TSR performance, the number of Performance Rights which may vest is 50% of the number determined from the vesting scale above 35% 40% RTSR to the S&P TSX Global Gold Index (GGI) Gateway RTSR< Index 0% Threshold RTSR=Index – 50% Target RTSR>7.5% above the Index for the 3-year award and >10% for the 4-year award = 100% vest on a straight line basis Modifier: Where Company TSR performance is negative at the end of the performance period, and the Company TSR performance is equal to or exceeds S&P TSR Global Gold Index performance, the number of Performance Rights which may vest is 50% of the number determined from the vesting scale above. 10% 8% Reduce absolute carbon emissions ESG metrics 10% 6% LTI-1 Introduce Water conservation Project(s) LTI-2 Support Indigenous businesses 10% 6% A Reportable TRIFR (12 month moving average) Reduce absolute carbon equivalent emissions from existing fixed asset levels: • LTI-1 – by 100,000t (CO2 equivalent) by end of FY25 on a sustaining annualised basis • LTI-2 – by 50,000t (CO2 equivalent) by end of FY24 on a sustaining annualised basis • LTI-1 To reduce baseline usage on potable scheme water sources (KCGM) by 10%. • LTI-2 Establish sustaining Indigenous Business Supply contracts of $20Mpa by end of FY24 Prorated between: • LTI-1 – 5.0 (50%) and 4.8 (100%) • LTI-2 – 5.2 (50%) and 5.0 (100%) subject to a threshold gate of 10% below industry average for metalliferous mining (surface and underground and exploration), as reported by DMIRS for 2023-2024 for LTI- 1, and 2022-2023 for LTI-2 20 Service condition Board Discretion In addition to the KPIs described above, a service condition will apply – that is, subject to Board discretion, the employee must continue to be employed by the Company on a full time basis until 30 June 2025 for LTI-1 or 30 June 2024 for LTI-2. The Board retains discretion to adjust LTI outcome in the case of, but not limited to, a fatality TOTAL 100% 19. Peer group comprises Newcrest, Kirkland Lake, Agnico Eagle, Kinross, Goldfields, AngloGold Ashanti, B2 Gold, Endeavour, Evolution, Newmont, Barrick. 20. Company TRIFR at 30 June 2021 was 5.6 and the industry average was 6.2. FY21 FY22 Non-Executive Director fees (fixed annual remuneration payable in cash (inclusive of superannuation)) Chairman n/a $575,000 Other Non-Executive Directors $175,000 $190,000 21 Additional fees Lead Independent Director* Audit & Risk Committee Remuneration Committee Environmental, Social & Safety Committee Chair Member Chair Member Chair Member Exploration and Growth Committee Chair Nomination Committee Member Chairman Member $40,000 $60,000 $35,000 $20,000 $30,000 $15,000 $15,000 $7,500 n/a n/a nil nil $50,000 $25,000 $50,000 $25,000 $40,000 $20,000 $30,000 $15,000 nil nil 111 * The current Lead Independent Director, Anthony Kiernan, has announced his intention to retire with effect at the November 2021 Annual General Meeting. It is not intended that this role will continue beyond the Annual General Meeting in view of the Chairman’s appointment on 1 July in a non-executive capacity. All the Non-Executive Directors including the Chairman are subject to a Minimum Holding Condition Policy, requiring them to maintain a minimum level of security ownership of 100% of the NED base fee of $190,000. Statutory remuneration disclosures for Non- Executive Directors for the current and previous financial year are provided in Table 15, calculated with reference to the Corporations Act and Australian Accounting Standards, in Australian dollars. 21. The Non-Executive Directors can elect at the start of each financial year to receive a $50,000 portion of their NED base fee in NED Share Rights under the FY20 NED Share Plan, the terms of which are summarised at page 126 of this Report. Anthony Kiernan, John Richards and Sally Langer have each elected to take NED Share Rights in lieu of $50,000 of their NED base fee, subject to shareholder approval at the November 2021 AGM. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt table 15 Non-Executive Directors FY20 & FY21 remuneration Name Year Base Fee 26 Performance Rights Audit & Risk Committee ESS Committee Remuneration Committee Exploration & Growth Super- annuation Peter O’Connor22 John Fitzgerald Shirley In'tVeld 23 Mary Hackett Nicholas Cernotta Christopher Rowe24 Anthony Kiernan25 Sally Langer 25 John Richards25 TOTAL 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 $ 70,995 114,155 136,660 150,685 114,155 114,155 114,155 114,155 114,155 114,155 - 42,847 75,383 - 60,862 - 62,268 - 748,633 650,152 112 $ 34,035 42,578 54,715 42,578 54,715 42,578 54,715 42,578 54,715 42,578 - 15,933 - - - - - - 252,895 228,823 $ - 2,602 31,963 31,963 12,285 13,849 18,265 15,749 11,359 15,663 - - - - 7,296 - 7,116 - 88,284 79,826 22. Peter O'Connor resigned as a Non-Executive Director of the Company on 12 February 2021 on Implementation of the Merger with Saracen Minerals Holdings Limited. 23. Shirley In't Veld resigned as a Non-Executive Director of the Company on 30 June 2021 24. Christopher Rowe resigned as Non-Executive Director of the Company at the Annual General Meeting held on 14 November 2019'. 25. Anthony Kiernan, Sally Langer and John Richards joined the Board as Non-Executive Directors of the Company on 12 February 2021 on Implementation of the merger with Saracen Minerals Holdings Limited. 26. Base fee in this table includes the Lead Independent Director fee payable to John Fitzgerald until 12 February 2021 from which point Anthony Kiernan was appointed Lead Independent Director $ 4,131 6,849 - 976 - 976 13,699 11,747 - - - 1,952 2,630 - - - - - $ 8,262 11,736 13,699 14,821 - 1,952 - - 27,397 25,162 - 2,004 5,259 - 5,472 - - - 20,460 22,500 60,089 55,675 $ - - - - 6,178 - - - 5,153 - - - - - - - 10,675 - 22,006 - $ 7,922 12,857 17,321 18,852 12,599 12,439 22,881 13,457 15,016 14,723 - 4,400 7,911 - 6,995 - 7,495 - 115,461 76,728 Total $ 125,345 190,777 254,358 259,875 199,932 185,949 223,715 197,686 227,795 212,281 - 67,136 91,183 - 80,625 - 87,554 - 1,290,507 1,113,704 113 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt table 16 FY20 and FY21 Executive KMP Statutory Remuneration Disclosures Name & Role Year Fixed Remuneration Variable Total Remuneration 114 - Cash Salary Other Benefits32 Movement in leave provisions33 Post Employment Benefits34 $ $ $ $ Executive Bill Beament Executive Chair Raleigh Finlayson27 Managing Director Stuart Tonkin Chief Executive Officer 2021 2020 2021 2020 2021 2020 Luke Creagh Chief Operating Officer - Pogo & Yandal 2021 2020 Ryan Gurner28 Chief Financial Officer Hilary Macdonald General Counsel & Company Secretary Morgan Ball29 Chief Financial Officer 2021 2020 2021 2020 2021 2020 Simon Jessop30 Chief Operating Officer - Kalgoorlie operations 2021 2020 1,375,000 1,375,000 381,924 10,244 (51,743) 253,685 527,904 - 1,175,000 1,075,000 575,000 540,000 294,110 401,290 450,000 400,000 220,760 - 220,760 - 1,448 - 7,814 7,414 10,263 11,450 10,924 12,185 10,158 10,834 1,428 - 1,424 - 21,162 - 55,323 127,689 43,025 74,071 12,677 55,719 12,308 17,721 10,855 - 13,306 - 25,000 25,000 9,604 - 25,000 25,000 25,000 25,000 15,479 25,000 25,000 25,000 9,604 - 9,604 - TOTAL 2021 2020 4,838,534 3,791,290 425,383 52,127 116,913 528,885 144,291 125,000 This table represents remuneration for FY21 or part thereof during which a person was a KMP of Northern Star. 27. Appointed as Managing Director on 12 February 2021. Short-term 30. Appointed as Chief Operating Officer - Kalgoorlie operations on 12 incentive pro-rated for the period of service with NST from 12 February 2021 to 30 June 2021. February 2021. Short-term incentive pro-rated for the period of service with NST from 12 February 2021 to 30 June 2021. 28. Ceased as Chief Financial Officer on 12 February 2021. Remuneration pro- rated for the period from 1 July 2020 to 12 February 2021 31. Luke Creagh, Chief Operating Officer held 150,000 Restricted Shares that were subject to a holding lock until 1 July 2021 with a service condition. 29. Appointed as Chief Financial Officer on 12 February 2021. Short-term 32. Other Benefits include telephone allowance, salary continuance incentive pro-rated for the period of service with NST from 12 February 2021 to 30 June 2021. insurance, private health insurance, D&O Insurance and parking - as well as any termination payments incurred during FY21. STI Cash Payment STI Performance Rights LTI Performance Rights $ $ Total $ 756,534 490,329 1,689,525 1,004,302 4,176,240 3,158,560 - - 867,745 385,684 2,190,78931 271,297 167,897 62,680 138,551 97,505 - - - - 74,968 - 613,087 438,520 159,541 132,174 80,326 93,236 93,552 77,735 14,469 - 14,469 - 847,109 0% 2,743,969 2,059,307 3,186,618 1,147,217 581,413 734,579 856,038 628,795 348,085 - 354,864 - 4,121,516 1,307,495 2,739,937 1,745,967 13,094,336 7,728,458 Performance Related Remuneration35 % 59% 47% 34% 0% 54% 40% 17% 43% 43% 33% 42% 28% 30% 0% 31% 0% 43% 42% 115 $ - - 212,023 - - - 183,000 93,225 - 84,469 126,469 - 90,969 - 95,301 - 707,762 177,694 33. Recognised in accordance with the Company's long service leave policy. Refer to Note 8(g) to the Financial Statements for further details. NST assumed employee entitlements for Saracen employees on merger. Bill Beament's leave entitlements were paid out on termination. 34. Superannuation, which in FY21 is capped at $25,000 for each member of the Executive KMP 35. Performance related remuneration percentage calculation excludes COO retention rights held by Luke Creagh that had no performance conditions other than a service period to 30 June 2021. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt 117 Maintaining the dry stack tailings facility Keith Koval, Surface Operations Leading Hand, Pogo operations. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt 17. Allocation methodology for grant of FY21 StI & LtI Performance Rights 18. Allocation methodology for grant of FY21 NED Share Rights The quantum of LTI and STI Performance Rights which were granted to the Executive KMP in FY21 was determined by dividing a percentage of their respective FAR by the face value of Shares (20 day VWAP prior to 1 July 2020 which was $13.5537). The percentage is set by the Board according to the role performed and experience held by each of the Executive KMP. The maximum possible total value of the Performance Rights is the assessed fair value at the grant dates of the Performance Rights, calculated in accordance with Accounting Standards, multiplied by the number of Performance Rights granted. table 17 Fair value of vested FY21 STI Performance Rights 36 held by Executive KMP at 30 June 2021 Number of Rights Fair value per right ($) Fair value of rights total ($) Performance Achieved (%) Number Vested Number forfeited/ lapsed Bill Beament 123,951 $12.52 $1,551,867 58.5% 60,426 63,525 Raleigh Finlayson Nil n/a n/a n/a n/a n/a Stuart Tonkin 106,244 $14.85 $1,577,723 66.0% 58,434 47,810 The Non-Executive Directors can elect at the start of each financial year to receive a $50,000 portion of their NED base fee in NED Share Rights under the FY20 NED Share Plan (subject to shareholder approval), the terms of which are summarised at page 126 of this Report. The quantum of NED Share Rights which were granted to the Non-Executive Directors during FY21 as approved by shareholders at the November AGM was determined by dividing the amount of $50,000 for each Non-Executive Director by the face value of Shares (calculated as the 20 day VWAP up to and including 30 June 2020, which was $13.5537). The maximum possible total value of the NED Share Rights is the assessed fair value at the grant dates of the NED Share Rights, calculated in accordance with Accounting Standards, multiplied by the number of NED Share Rights granted. The only vesting condition of the FY21 NED Share Rights is that the individual remains a Non-Executive Director of the Company on 30 June 2021, with pro rata reduction if the directorship ends for any reason prior to 30 June 2021. table 19 Fair value of vested FY21 NED Share Rights held by the Non-Executive Directors at 30 June 2021 Number of Rights Fair value per right ($) Fair value of rights total ($) Service condition satisfied to 100% Number Vested Number forfeited/ lapsed Luke Creagh 26,561 $14.85 $394,431 61.0% 13,501 13,060 Peter O’Connor 38 2,309 $14.74 $34,035 Hilary Macdonald 15,770 $14.85 $234,185 71.0% 9,330 6,440 118 Morgan Ball Simon Jessop Nil Nil n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a table 18 Fair value of unvested FY21 LTI Performance Rights held by Executive KMP at 30 June 2021 37 Number of Rights Fair value per right ($) Fair value of rights total ($) Number Vested Bill Beament 103,293 $9.81 $1,013,304 Raleigh Finlayson 68,862 $10.36 $713,410 Stuart Tonkin Luke Creagh 177,073 44,268 Hilary Macdonald 26,284 Morgan Ball Simon Jessop 14,756 14,756 $11.95 $11.95 $11.95 $9.38 $9.38 $2,116,022 $529,003 $314,094 $138,411 $138,411 SAR KMP FY21 Performance Rights were pro rated for FY21 from 12 Feb 2021 Nil Nil Nil Nil Nil Nil Nil Number forfeited/ lapsed 206,585 Nil Nil Nil Nil Nil Nil 36. FY21 STI Performance Rights grant date was 30 October 2020; measurement date was 30 June 2021. 37. FY21 LTI Performance Rights grant date was 30 October 2020, except for Raleigh Finlayson, Morgan Ball and Simon Jessop whose LTIs were granted on 12 February 2021. Measurement date is 30 June 2023. John Fitzgerald Shirley In’t Veld Mary Hackett Nick Cernotta Anthony Kiernan Sally Langer John Richards 3,712 3,712 3,712 3,712 n/a n/a n/a $14.74 $54,715 $14.74 $54,715 $14.74 $54,715 $14.74 $54,715 n/a n/a n/a n/a n/a n/a 100% 100% 100% 100% 100% n/a n/a n/a 2,309 3,712 3,712 3,712 3,712 n/a n/a n/a Nil Nil Nil Nil Nil n/a n/a n/a 119 38. Held as at time of resignation. Total number of FY21 NED Share Rights reduced pro rata to reflect Mr O’Connor’s service period from 30 June 2020 up to the date of his resignation on 12 February 2021. Ross Wilkinson and Kratonga Ohuma at the Kanowna Belle tailings facility, Kalgoorlie Opertaions. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt 19. Securities held by the KMP during FY21 The following tables set out the Shares and Performance Rights held by the KMP at the start and end of financial year ended 30 June 2021. table 20 Shares held by the KMP 39 on 1 July 2020 and 30 June 2021 and changes Balance on 1 July 2020 Changes during FY21 Balance on 30 June 2021 Directors Converted from vested Performance Rights / NED Share Rights Acquired / sold on market (as applicable) Bill Beament 5,845,274 40 60,844 120 John Fitzgerald 63,198 Peter O’Connor 400,000 Shirley In’t Veld Mary Hackett Nick Cernotta Raleigh Finlayson41 Anthony Kiernan41 John Richards41 Sally Langer41 Executive KMP 53,198 15,405 - - - - - Stuart Tonkin 1,100,000 Simon Jessop41 - Luke Creagh 475,000 42 Ryan Gurner Morgan Ball41 Hilary Macdonald 5,555 - 11,111 - - 4,623 4,623 4,623 - - - - - - - - - - - - - - - 5,906,118 63,198 400,000 57,821 20,028 4,623 2,266,97844 2,266,978 33,754 10,558 2,210 33,754 10,558 2,210 236,516 45 (183,620) - 471,98045 236,516 291,380 5,555 471,980 121,525 110,41443 - TOTAL 7,968,741 185,127 2,763,376 10,917,244 39. Including their close family members and entities controlled by them. No 42. 150,000 of these were Restricted Shares during FY21, released from Shares are held nominally by any of the KMP. 40. 976,001 were at 30 June 2021 subject to holding lock until the loan associated with these former vested FY15 and FY16 performance shares was repaid. This loan was repaid in August 2021. 41. Was not a KMP on 1 July 2020. Shares acquired during FY21 were as a result of conversion of Saracen shares to Northern Star Shares as the Scheme consideration for the merger of the companies which was implemented on 12 February 2021. Under the Scheme Booklet for the merger, Raleigh Finlayson, Morgan Ball and Simon Jessop agreed to holding locks over a portion of their Northern Star shareholding acquired under the merger. These are detailed in the footnotes to this table. holding lock upon the service vesting condition being satisfied on 1 July 2021. Employee remains employed by the Company. 43. 58,750 are subject to holding lock until 17 October 2021. 44. 7,839 are subject to holding lock until 30 June 2021; 29,398 are subject to holding lock until 30 June 2022 and 42,333 are subject to holding lock until 30 June 2023. 45. 5,880 are subject to holding lock until 30 June 2021; 22,049 are subject to holding lock until 30 June 2022 and 31,750 are subject to holding lock until 30 June 2023. table 21 NED Share Rights held by the Non-Executive Directors on 1 July 2020 and on 30 June 2021 Non-Executive Directors – NED Share Rights Balance on 1 July 2020 Balance on 30 June 2021 John Fitzgerald Peter O’Connor Shirley In’t Veld Mary Hackett Nick Cernotta John Richards46 Anthony Kiernan46 Sally Langer 46 TOTAL 4,623 4,623 4,623 4,623 4,623 - - - 8,335 2,309 3,712 3,712 3,712 - - - 23,115 21,780 46. The Non-Executive Directors that commenced on 12 February 2021 following the merger with Saracen did not receive a grant of FY21 NED Share Rights. 121 table 22 Unvested Performance Rights held by the Executive KMP on 1 July 2020 and on 30 June 2021 Bill Beament Stuart Tonkin Raleigh Finlayson47 Luke Creagh Simon Jessop47 Morgan Ball 47 Ryan Gurner Hilary Macdonald TOTAL 47. Was not a KMP on 1 July 2020. Balance on 1 July 2020 Balance on 30 June 2021 535,622 291,668 - 81,959 - - 196,063 51,825 1,157,137 822,196 459,284 68,862 273,074 14,756 14,756 249,390 71,528 1,973,846 (75,000) 1,025,000 Executive KMP - Performance Rights NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt 20. Contractual Arrangements with Executive KMP The following contractual arrangements were in place with the Executive KMP for FY21. table 23 Contractual arrangements Element Executive Chair (1 July 2020 to 1 July 2021) Other Executive KMP Element Managing Director & CEO (From 22 July 2021) Other Executive KMP Contract Duration No fixed term, subject to termination with or without cause No fixed term, subject to termination with or without cause Contract Duration No fixed term, subject to termination with or without cause No fixed term, subject to termination with or without cause Notice Period for termination by the company 12 months Notice period for termination by the employee 3 months FAR $1,400,000 6 months 3 months $475,000 - $1,200,000 – refer to Table 11 FY21 STI Opportunity • 100% Performance Rights (if election is made) Or • 50% Performance Rights/ 50% cash FY21 LTI Opportunity 3 year annual grant Element 122 120% of FAR 90-120% of FAR 300% of FAR 75%-200% of FAR Managing Director (12 February 2021 to 22 July 2021) Other Executive KMP Contract Duration No fixed term, subject to termination with or without cause No fixed term, subject to termination with or without cause Notice Period for termination by the company 6 months Notice period for termination by the employee 3 months 6 months 3 months FAR $1,400,000 $475,000 - $1,200,000 – refer to Table 11 FY21 STI Opportunity • 100% Performance Rights (if election is made) ; Or • 50% Performance Rights/ 50% cash FY21 LTI Opportunity 3 year annual grant 100% of FAR (cash) 90-120% of FAR 200% of FAR 75%-200% of FAR Notice Period for termination by the company 6 months Notice period for termination by the employee 3 months 6 months 3 months FAR $1,700,000 $625,000 - $875,000 – refer to Table 11 FY22 STI Opportunity • 100% performance rights (if election is made) Or • 50% performance rights/50% cash FY22 LTI Opportunity 4 year annual grant - Performance Rights 3 year once off grant LTI-2- Performance Rights 100% of FAR 75-100% of FAR – refer to Section 14 123 200% of FAR 100% of FAR - refer to Section 15 150% of FAR 75% of FAR - refer to Section 15 21. transactions with KMP and previous disclosure of “Related party” transactions with Bill Beament The Company has in place policies and procedures which govern transactions involving KMPs and their related parties, and these policies and procedures restrict the involvement of the KMP or related party in the negotiation, awarding or direct management of the resultant contract. In the Company’s 2017 Annual Report, specifically Note 18 to the Consolidated Financial Statements, the Company reported that the beneficial minority interest of 23% held by Mr Beament in AUD Pty Ltd, the sole shareholder of Australian Underground Drilling Pty Ltd (AUD), being a supplier of goods and services to the Company, did not require reporting under the Accounting Standards. For the purposes of the FY21 Annual Report, the Company is of the same view, having applied the necessary criteria under the Australian Accounting Standards for FY21. Mr Beament retired from the Company and Board on 1 July 2021. The addition of Pogo, 100% of the KCGM operations, Carosue Dam operations and Thunderbox operations further increased the diversity and improved the risk mitigation strategy. Refer to note 19(c) in the annual financial report for more information. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt 22. Summary of Company’s FY20 Share Plan Below is a summary of the FY20 Share Plan approved by shareholders at the November 2020 AGM. The Company issues long term and short term incentives as Performance Rights under this Plan, using a face value allocation methodology. Incentivising the Company’s high-performing team is the essential link between senior management remuneration, the Company’s performance and delivery of long-term sustainable shareholder value. 1 Purpose The main objectives of the Plan are to create a stronger link between performance and longer-term remuneration outcomes for those who participate in the Plan (Participants) and allow Participants to share in the future growth and profitability of the Company. 2 Eligible Directors Broadly, any full or part-time employee (including an executive director) of the Company or a subsidiary (Group Employee) who has not given a notice of resignation or been given a notice of termination of employment is eligible. Non-Executive Directors are not eligible to participate. 3 Administration of the Plan The Plan is administered by the Remuneration Committee under the directions of the Board. The Board may delegate its powers and discretions, determine procedures for the administration of the Plan, and resolve questions of interpretation and disputes in relation to the Plan. 4 Invitations 124 The Board may issue Invitations to Eligible Employees to be granted Awards under the Plan. The terms and conditions in the Invitation will prevail to the extent of any inconsistency with the FY20 Share Plan rules. For Group Employees, the measurable objectives, the weighting amongst them and the performance periods during which time they are required to be met, are set by the Board annually in relation to the Executive KMP, and by the CEO annually in relation to other senior management employees, for the short term incentives and long term incentives for each year in which Awards are granted under the Plan. 5 6 7 8 9 Awards Awards consist of grants of Performance Rights or other conditional rights to be delivered a Share on the vesting of the Participant's Share Rights. No Transfer A Share Right may not be transferred without the prior written approval of the Board. Vesting Conditions Awards are subject to Vesting Conditions. Vesting Conditions are determined by the Board and described in the Invitation, and include performance conditions set by the Board. The Board may waive, replace or amend a Vesting Condition, for example, if the Board determines that the original performance measure is no longer appropriate, practical or applicable. Vesting of Awards Awards will vest if and when the Board determines that the Vesting Conditions are satisfied and the Participant is notified of this in writing. Delivery of Shares Following vesting of a Share Right, the Participant will be entitled to delivery of a Share upon exercising the Share Right. Awards that vest are normally exercisable up until the tenth anniversary of the date of grant of the Awards (although shorter periods will apply if the Participant ceases to be employed). The Board will determine how the Shares are to be delivered, which may be by issue of new Shares to, purchase and transfer to, or procuring Shares to be held for the benefit of (i.e. through the Company’s Employee Share Trust), the relevant Participant, or a combination of such methods of delivery. Alternatively, the Board may determine to settle in cash in lieu of delivering Shares. The cash payment would be based on the volume weighted average price of Shares in the 20 ASX trading days prior to the date of exercise. 10 Ranking of Shares Any Shares delivered to a Participant when an Award is exercised will rank equally with all other issued Shares. 11 Restricted Shares Invitations may specify that Shares delivered on vesting cannot be disposed of for a specified period following delivery. 12 Termination of employment The Invitation will specify the consequences of cessation of employment during a performance period, depending on the reasons, and subject to Board discretion. For example, where employment ends because of agreed mutual separation, the proportion of the unvested Share Rights which is the same as the proportion of the relevant performance period during which the Participant was employed, may or may not lapse according to Board discretion, and the balance of the Share Rights will lapse on cessation, unless the Board exercises discretion otherwise. 13 Malus and Clawback The Board may reduce unvested Awards, and clawback previously vested Awards from a Participant or former Participant within two years from the date of delivery of Shares (or receipt of cash paid in lieu of delivering Shares). The Board may exercise this power having regard to matters it considers relevant acting in good faith in the interests of the Company, such as instances of: • material financial misstatements; • significant negligence; • significant legal, regulatory and/or policy non-compliance; • significant harmful act by the individual; or • the Board holding the opinion that the Participant received or would receive a grossly unjustifiable benefit because of factors outside the Participant’s control. 14 No participation Share Rights do not entitle the holder to participate in a new issue of Shares or other securities, or the right to any dividends or distributions paid on Shares. 125 15 Control transactions If a control event occurs: a the proportion of the unvested Share Rights of each Participant which is the same as the proportion of the relevant performance period that has expired before the date of the control event (determined by the Board) will vest immediately (regardless of the status of the Vesting Conditions, without limiting the Board’s ability to exercise downward discretion if circumstances warrant this); and b the balance of the Share Rights will vest or lapse on that date, as the Board determines in its discretion. A "control event" includes: a takeover bid where the bidder has acquired a relevant interest in more than 50% of the Shares and either the Board has recommended the bid or the bid has become unconditional; court approval of a scheme of arrangement which will result in a person having a relevant interest in more than 50% of the Shares; or another event which the Board declares to be a control event. 16 Amendment The Board may amend the Plan. However, the Participant's consent is required for amendments to the Plan that reduce the rights of the Participant in respect of an Award that has already been granted (other than for legal reasons, correcting manifest errors/mistakes or tax reasons). 17 Operation The operation of the Plan is subject to the Company's Constitution, the Listing Rules, the Corporations Act and other applicable laws. 18 Board Discretion The Board retains absolute discretion to vary Awards or the application of the rules of the Plan, and to exercise or refrain from exercising any power or discretion under the FY20 Share Plan rules. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt 23. Summary of Company’s FY20 NED Share plan The non-executive Diectors may elect to receive $50,000 worth of NED Share Rights, reducing their fees by $50,000, subject to shareholder approval. Further information is provided in section 18. 1 2 3 Purpose The objective of the FY20 NED Share Plan is to provide the Non-Executive Directors (Participants) with some alignment with the interests of the Company’s shareholders. The Plan was approved by resolution of the shareholders on 14 November 2019. Eligible Directors Non-Executive Directors. Administration of the Plan The FY20 NED Share Plan will be administered under the directions of the Board. The Board may delegate its powers and discretions, determine procedures for the administration of the FY20 NED Share Plan, and resolve questions of interpretation and disputes in relation to the FY20 NED Share Plan. 4 Invitations The Board may issue Invitations to Non-Executive Directors to be granted Awards under the FY20 NED Share Plan. The terms and conditions in the Invitation will prevail to the extent of any inconsistency with the FY20 NED Share Plan rules. 126 5 6 7 8 Awards Awards will consist of grants of Share Rights or other conditional rights to be delivered a Share on the vesting of the Participant's Share Rights. Share Rights not transferable A Share Right may not be transferred without the prior written approval of the Board. Vesting of Awards Awards will vest on the last date of the financial year in which Awards are granted, and the Participant is notified of this in writing. Delivery of Shares Following vesting of a Share Right, the Participant will be entitled to delivery of a Share upon exercising the Share Plan Right. Awards that vest are normally exercisable up until the tenth anniversary of the date of grant of the Awards (although shorter periods will apply if the Participant ceases to be a Director for any reason). The Board will determine how the Shares are to be delivered, which may be by issue of new Shares to, purchase and transfer to, or procuring Shares to be held for the benefit of (i.e. through the Company’s Employee Share Trust), the relevant Participant, or a combination of such methods of delivery. Alternatively, the Board may determine to settle in cash in lieu of delivering Shares. The cash payment would be based on the volume weighted average price of Shares in the 20 ASX trading days prior to the date of exercise. 9 Ranking of Shares Invitations may specify that Shares delivered on vesting cannot be disposed of for a specified period following delivery. 10 Restricted Shares Any Shares delivered to a Participant when an Award is exercised will rank equally with all other issued Shares. 11 Non-Executive Director loss of office Pro rata reduction of Awards will apply based on the number of days in the relevant financial year during which the Non-Executive Director held office, regardless of the reason for leaving office (such as retirement, not being re- elected, being removed, death, incapacity, or total and permanent disability). 12 Malus and Clawback The Board may reduce unvested Awards, and clawback previously vested Awards from a Participant or former Participant within two years from the date of delivery of Shares (or receipt of cash paid in lieu of delivering Shares). The Board may exercise this power having regard to matters it considers relevant acting in good faith in the interests of the Company. The Board intends for this power to be exercised in instances of: • material financial misstatements by the Company; • significant negligence by the Company; • significant legal, regulatory and/or policy non-compliance by the Company; • significant harmful act by the individual; or • the Board holding the opinion that the Participant received or would receive a grossly unjustifiable benefit because of factors outside the Participant’s control. 13 14 No participation rights Share Rights do not entitle the holder to participate in a new issue of Shares or other securities, or the right to any dividends or distributions paid on Shares. Control transactions If a control event occurs: 127 a the proportion of the unvested Share Rights of each Participant which is the same as the proportion of the relevant financial year that has expired before the date of the control event (determined by the Board) will vest immediately (without limiting the Board’s ability to exercise downward discretion if circumstances warrant this); and b the balance of the Share Rights will vest or lapse on that date, as the Board determines in its discretion. A "control event" includes: a takeover bid where the bidder has acquired a relevant interest in more than 50% of the Shares and either the Board has recommended the bid or the bid has become unconditional; court approval of a scheme of arrangement which will result in a person having a relevant interest in more than 50% of the Shares; or another event which the Board declares to be a control event. The Board may amend the FY20 NED Share Plan. However, the Participant's consent is required for amendments to the FY20 NED Share Plan that reduce the rights of the Participant in respect of an Award that has already been granted (other than for legal reasons, correcting manifest errors/mistakes or tax reasons). 15 Amendment 16 Operation The operation of the FY20 NED Share Plan is subject to the Company's Constitution, the Listing Rules, the Corporations Act and other applicable laws. 17 Board Discretion The Board retains absolute discretion to vary Awards or the application of the rules of the FY20 NED Share Plan, and to exercise or refrain from exercising any power or discretion under the FY20 NED Share Plan rules. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 REMuNERAtION REPORt REMuNERAtION REPORt 24. Auditor's Independence Declaration Deloitte Touche Tohmatsu ABN 74 490 121 060 Tower 2, Brookfield Place 123 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia Tel: +61 8 9365 7000 Fax: +61 8 9365 7001 www.deloitte.com.au The Directors Northern Star Resources Limited Level 1, 388 Hay Street Subiaco WA 6008 24 August 2021 Dear Directors AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo NNoorrtthheerrnn SSttaarr RReessoouurrcceess LLiimmiitteedd In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Northern Star Resources Limited and its controlled entities. 128 As lead audit partner for the audit of the financial report of Northern Star Resources limited for the year ended 30 June 2021, I declare that to the best of my knowledge and belief, there have been no contraventions of: • The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and • Any applicable code of professional conduct in relation to the audit. Yours faithfully DDEELLOOIITTTTEE TTOOUUCCHHEE TTOOHHMMAATTSSUU DD KK AAnnddrreewwss Partner Chartered Accountants Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte organisation. Peter Ganza, General Manager - Thunderbox, Yandal operations 129 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 Financial Report FInancIal RepoRt FInancIal RepoRt In this Financial Report Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2021 1. Consolidated Statement of Profit or Loss and Other Comprehensive Income 2. Consolidated Statement of Financial Position 3. Consolidated Statement of Changes in Equity 4. Consolidated Statement of Cash Flows 5. Notes to the Consolidated Financial Statements 133 134 135 137 138 132 Notes 3 5(a) 5(b) 5(c) 5(d) 12 6 Revenue Cost of sales Other income and expense Space Corporate, technical services and projects Acquisition and integration costs Impairment of assets Finance costs Gain on remeasurement of existing interest in KCGM Profit before income tax Income tax expense Profit for the year Other comprehensive income (OCI) Items that may be reclassified to profit or loss Share of other comprehensive income of associates and joint ventures accounted for using the equity method Exchange differences on translation of foreign operations Gains on cash flow hedges Items that may not be reclassified to profit or loss Changes in the fair value of financial assets at fair value through OCI Income tax relating to these items Other comprehensive income for the year, net of tax 30 June 2021 $M 2,760.5 (2,183.7) 576.8 (7.8) (98.6) (231.8) (545.6) (28.4) 1,919.3 1,583.9 (551.4) 1,032.5 - (33.4) 0.4 26.1 1.9 (5.0) 30 June 2020 $M 1,971.7 (1,447.6) 524.1 (3.0) (81.3) (45.0) (28.3) (21.9) - 344.6 (86.3) 258.3 0.2 7.5 - (10.3) 2.1 (0.5) 133 Total comprehensive income for the year 1,027.5 257.8 Total comprehensive income for the year is attributable to: Owners of the Company 1,027.5 257.8 Cents Cents Earnings per share for profit attributable to the ordinary equity holders of the Company: Basic earnings per share Diluted earnings per share 22(a) 22(b) 114.7 114.3 37.3 37.2 The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Consolidated Statement of Financial Position As at 30 June 2021 30 June 2021 $M 30 June 2020 $M Notes ASSETS Current assets Cash and cash equivalents Trade and other receivables Inventories Current tax asset Assets classified as held for sale Total current assets Non-current assets Trade and other receivables Inventories Derivative financial instruments Financial assets at fair value through other comprehensive income Investments accounted for using the equity method Property, plant and equipment Right of use asset Exploration and evaluation assets Mine properties Intangible assets Assets classified as held for sale Total non-current assets Total assets 134 LIABILITIES Current liabilities Trade and other payables Borrowings Current tax liabilities Provisions Liabilities directly associated with assets classified as held for sale Total current liabilities Non-current liabilities Borrowings Provisions Deferred tax liabilities Total non-current liabilities Total liabilities Net assets EQUITY Share capital Reserves Retained earnings Total equity 7(b) 7(a) 8(f) 8(e) 14 7(a) 8(f) 8(a) 8(b) 8(c) 8(d) 8(c) 7(d) 7(c) 8(e) 8(g) 14 7(c) 8(g) 8(e) 9(a) 771.9 122.0 583.9 155.9 204.3 1,838.0 0.9 404.3 0.5 23.2 - 1,544.9 138.5 609.3 6,684.1 5.6 - 9,411.3 677.3 144.5 289.7 - - 1,111.5 4.3 314.8 0.9 13.3 8.0 789.4 44.9 479.0 1,018.5 9.5 17.4 2,700.0 11,249.3 3,811.5 296.5 86.5 - 323.3 65.3 771.6 801.6 772.3 925.3 2,499.2 155.6 361.3 12.0 109.3 - 638.2 449.8 448.1 131.6 1,029.5 3,270.8 1,667.7 7,978.5 2,143.8 6,435.1 14.9 1,528.5 1,323.9 13.4 806.4 7,978.5 2,143.8 Consolidated Statement of Changes in Equity For the year ended 30 June 2021 Financial assets at fair value through OCI $M Share based payments reserve $M Foreign currency translation reserve $M Retained earnings $M Total equity $M Notes Share capital $M Balance at 1 July 2019 473.7 (6.6) 38.5 10.2 596.9 1,112.6 Profit for the year Other comprehensive income Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs and tax Dividends provided for or paid Employee share and option plans - value of employee services Exercise of employee share awards Share plan loan repayment Tax Balance at 30 June 2020 9(a) 11(b) - - - 808.1 - 1.2 12.3 - 28.6 850.2 1,323.9 - (8.2) (8.2) - - - - - - - (14.8) - - - - - 6.6 (12.3) 0.1 (22.5) (28.1) 10.4 - 7.7 7.7 258.3 - 258.3 (0.5) 258.3 257.8 - - - - - - - 17.8 - (48.7) - - - - (48.7) 806.5 808.1 (48.7) 7.9 - 0.1 6.1 773.5 2,143.8 Financial assets at fair value through OCI $M Share based payments reserve $M Foreign currency translation reserve $M Cash flow hedge reserve $M Notes Share capital $M Retained earnings $M Total equity $M 135 Balance at 1 July 2020 1,323.9 (14.8) 10.4 17.8 Profit for the year Other comprehensive income Total comprehensive income for the year - - - - 28.0 28.0 - - - - (33.4) (33.4) - - 806.5 2,143.8 1,032.5 1,032.5 0.4 - (5.0) 0.4 1,032.5 1,027.5 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Consolidated Statement of Changes in Equity Financial assets at fair value through OCI $M Share based payments reserve $M Foreign currency translation reserve $M Cash flow hedge reserve $M Retained earnings $M Total equity $M Notes Share capital $M Transactions with owners in their capacity as owners: Issue of ordinary shares as consideration for a business combination, net of transaction costs and tax Dividends provided for or paid Employee share and option plans - value of employee services Exercise of employee share awards Share plan loan repayment Tax Balance at 30 June 2021 12 5,104.6 11(b) - 2.4 3.9 - 0.3 5,111.2 6,435.1 - - - - - - - - - 10.6 (3.9) 0.3 (0.5) 6.5 - - - - - - - - - - - - - - - 5,104.6 (310.5) (310.5) - - 13.0 - - - (310.5) 0.3 (0.2) 4,807.2 13.2 16.9 (15.6) 0.4 1,528.5 7,978.5 Nature and purpose of reserves: 136 Financial assets at FVOCI The Group has elected to recognise changes in the fair value of certain investments in equity securities in OCI. These changes are accumulated within the FVOCI reserve within equity as described at note Investments and other financial assets The Group transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised. Share based payments The share based payments reserve relates to shares, performance shares, performance rights and share options granted by the Company to its employees. Further information about share based payments to employees is set out in note 20. The increase in share based payment reserve and expense for services rendered by employees during the period is determined with reference to the grant date fair value of the applicable award. The tax benefit, where available, in respect of those awards is made with reference to the share price at the time the underlying shares are acquired or issued by the Group to satisfy those awards. Where the tax benefit available is in excess of the tax effect on the cumulative charge to profit and loss, the remaining credit is determined to relate to the equity issue and is included within the share based payment reserve. Amounts recorded in the share based payment reserve are reclassified to contributed equity on vesting of the performance rights. During FY21 $0.3 million (FY20: $28.6 million) was transferred from the share based payment reserve to contributed equity in relation to tax benefits on respective awards. Foreign currency translation Exchange differences arising on translation of the foreign controlled entities are recognised in other comprehensive income and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of. Cash flow hedge reserve The cash flow hedge reserve is used to recognise the effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges. Consolidated Statement of Cash Flows For the year ended 30 June 2021 Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Payment for merger and acquisition related costs Interest received Interest paid Income taxes paid Net cash inflow from operating activities Cash flows from investing activities Payments for property, plant and equipment Payments for exploration and evaluation Payments for mine properties Payments for investments Payments for acquisition of business and associated assets, net of cash acquired Payments for asset acquisitions, net of cash acquired Proceeds from sale of property, plant and equipment Proceeds from sale of financial assets at fair value through other comprehensive income Lease receipt Other Net cash outflow from investing activities Cash flows from financing activities Proceeds from/(payments for) issues of shares and other equity securities Proceeds from borrowings Repayments of equipment financing and leases Repayment of borrowings Dividends paid to Company's shareholders Net cash inflow/(outflow) from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial period Effects of exchange rate changes on cash and cash equivalents Assets included in a disposal group classified as held for sale Cash and cash equivalents at end of year 30 June 2021 $M 30 June 2020 $M Notes 2,726.0 (1,421.6) (72.6) 2.7 (16.8) (140.9) 1,076.8 (196.3) (145.5) (351.3) (0.9) 402.5 (11.9) 4.3 31.3 4.2 6.5 (257.1) (2.2) 658.0 (80.9) (983.0) (310.5) (718.6) 101.1 677.3 (3.3) (3.2) 771.9 1,939.7 (1,176.1) (6.7) 4.3 (9.4) (41.3) 710.5 (96.7) (76.4) (189.6) (2.6) (1,137.9) (177.7) 4.9 - 5.7 - (1,670.3) 803.1 693.6 (63.2) - (48.7) 1,384.8 425.0 266.1 (13.8) - 677.3 7(b) 12 11(b) 7(b) 137 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Contents of the notes to the consolidated financial statements 1 Critical estimates and judgements 1 2 3 4 5 6 7 8 9 Critical estimates and judgements Segment information How numbers are calculated Revenue Significant changes in the current reporting period Expenses Income tax expense Financial assets and financial liabilities Non-financial assets and liabilities Equity Risk 10 11 Financial risk management Capital management Group structure 12 13 14 15 Business combination Asset acquisition Assets classified as held for sale Interests in other entities Further Details 16 17 18 19 20 21 22 23 24 25 Contingent liabilities Commitments Events occurring after the reporting period Related party transactions Share-based payments Remuneration of auditors Earnings per share Deed of cross guarantee Parent entity financial information Summary of significant accounting policies 138 Page 139 139 143 143 144 144 147 148 153 164 165 165 169 170 170 176 176 177 179 179 179 179 179 180 183 184 185 186 188 (a) Critical accounting estimates and assumptions (i) Determination of mineral resources and ore reserves The Group reports its Mineral Resources and Ore Reserves in accordance with the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves - the JORC Code. The information on Mineral Resources and Ore Reserves is prepared by Competent Persons as defined by the JORC Code. There are numerous uncertainties inherent in estimating Mineral Resources and Ore Reserves. Assumptions that are valid at the time of estimation may change significantly when new information becomes available. Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of reserves and may, ultimately, result in the reserves being restated. Such changes may impact asset carrying values, depreciation and amortisation rates, deferred development costs and provisions for restoration. Other critical accounting judgements, estimates and assumptions are discussed in the following notes: Unit of production method of depreciation/amortisation Exploration and evaluation expenditure Business combination Mine rehabilitation provision Impairment of assets Life of component ratio for stripping asset Gold price forecast relating to hedgebook liability note 8(d) note 8(c) note 12 note 8(g) note 25(e) note 8(d) note 12(a) 2 Segment information The Group's Executive Committee consisting of the Executive Chairman, Chief Executive Officer, Chief Financial Officer, Chief Operating Officers and Chief Geological Officer examine the Group's performance and have identified seven reportable segments relating to the operations of the business: (a) Description of segments and principal activities The Group's reportable operating segments are: 1. Pogo, Alaska USA - Mining and processing of gold 2. Kalgoorlie Operations, WA Australia - Mining and processing of gold 3. KCGM, WA Australia - Mining and processing of gold 4. Jundee, WA Australia - Mining and processing of gold 5. Thunderbox, WA Australia - Mining and processing of gold 6. Carosue Dam, WA Australia - Mining and processing of gold 7. Exploration - Exploration and evaluation of gold mineralisation An operating segment is a component of the Group that engages in business activities from which it may earn revenues or incur expenses. On 12 February 2021, the Company implemented the Scheme of Arrangement (Scheme) in relation to the merger of the Company and Saracen Mineral Holdings Limited (Saracen). Refer to note 12 for further details. Following the completion of the transaction, and review by the Executive Committee, the Group now has seven operating segments (Kalgoorlie Operations, Jundee, Pogo, KCGM, Thunderbox, Carosue Dam and Exploration). As in the prior year, Kanowna Belle, East Kundana JV, Millennium and South Kalgoorlie is considered as one and has been presented as one reporting segment (Kalgoorlie Operations). The Exploration segment for the year ended 30 June 2021 includes Paulsens, Tanami and the Bronzewing project and, where related exploration assets are transferred to mine properties from the exploration segment in the future, these will be incorporated into the relevant operating segment. Exploration comprises all projects in the exploration and evaluation phase of the Group. These include the Group's regional prospects as well as ongoing exploration programmes at the Group’s respective sites. An analysis of segment revenues is presented in note 3. 139 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Segment Information Segment Information (b) Segment results The segment information for the year ended 30 June 2021 is as follows: Kalgoorlie Operations $M KCGM $M Carosue Dam $M Pogo $M Jundee $M $M Thunderbox $M Exploration $M Total $M (c) Segment EBITDA (continued) Interest income, finance charges, interest expense and acquisition costs are not allocated to the operating segments as this type of activity is driven by the corporate treasury function which manages the cash position of the Group. Segment EBITDA reconciles to profit before income tax for the year ended 30 June 2021 as follows: 2021 Segment net operating profit (loss) before income tax Depreciation and amortisation Impairment Finance costs Fair value loss on revaluation of financial assets Segment EBITDA (393.7) 102.2 (19.6) 102.8 284.4 (8.2) (142.3) (74.4) 220.4 436.6 2.7 129.4 - 1.6 105.4 - 0.4 95.4 - 1.4 93.5 0.2 1.4 - 266.0 - 233.2 - 86.2 - 199.6 - 379.5 7.7 - 0.5 - - 4.9 108.8 0.3 656.7 545.6 8.3 17.4 (10.9) 17.4 1,153.6 Total segment assets 5,397.0 216.2 1,454.7 592.0 278.5 1,365.0 762.1 10,065.5 Total segment liabilities (523.6) (150.5) (151.5) (179.9) (139.2) (148.6) (63.5) (1,356.8) (9,862.3) (1,389.4) Pogo's revenue is generated from production activities located in the United States of America (USA). Its non-current assets are also held in the USA. Total non-current assets for Pogo as at 30 June 2021 was $567.2 million (2020: $521.0 million). All other segments are Australian. (5,139.4) (1,216.4) (687.7) (298.9) (518.8) (611.7) 140 The Kalgoorlie Operations segment includes East Kundana JV and Millennium operations which are included in a disposal group classified as non-current assets held for sale as at 30 June 2021. Total net assets classified as held for sale in relation to these operations was $139.0 million. Refer to note 14 for further details. The segment information for the year ended 30 June 2020 is as follows: 2020 KCGM (50%) $M Kalgoorlie Operations $M Pogo $M Jundee Exploration $M $M Total $M Segment net operating profit (loss) before income tax Depreciation and amortisation Impairment Finance costs Segment EBITDA 36.8 29.9 - 1.2 67.9 157.4 132.4 - 2.6 292.4 10.9 73.5 - 2.7 87.1 297.5 112.0 - 2.2 411.7 (40.2) 3.3 28.3 0.5 (8.1) 462.4 351.1 28.3 9.2 850.9 Total segment assets 1,363.3 346.8 574.2 222.8 497.9 3,005.0 Total segment liabilities (227.6) (188.9) (166.2) (132.2) (46.5) (761.4) (1,203.6) (450.3) (495.1) (502.3) (443.3) (3,094.6) (c) Segment EBITDA Segment EBITDA is a non-IFRS measure, being earnings before interest, tax, depreciation and amortisation and is calculated as follows: profit before income tax plus depreciation, amortisation, impairment and finance costs, less interest income. Segment EBITDA Other income and expense Finance costs Depreciation Amortisation Unwind of hedgebook contract liability Corporate and technical services Acquisition costs Share based payments Impairment of assets Gain on revaluation of existing interest in KCGM Profit before income tax (d) Segment assets 30 June 2021 $M 1,153.6 (7.8) (28.4) (209.8) (450.3) 59.9 (62.2) (231.8) (13.0) (545.6) 1,919.3 1,583.9 30 June 2020 $M 850.9 (3.0) (21.9) (130.6) (224.2) - (90.3) - (8.0) (28.3) - 344.6 Segment assets are measured in the same way as in the financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset. Reportable segments' assets are reconciled to total assets as follows: Segment assets Unallocated: Financial assets at fair value through OCI Asset classified as held for sale Available-for-sale financial assets Investment in equity accounted associates Cash and cash equivalents Derivative financial instruments Trade and other receivables Current tax asset Property, plant and equipment Total assets as per the Consolidated Statement of Financial Position 141 30 June 2021 $M 30 June 2020 $M 10,065.5 3,005.0 - 204.3 23.2 - 718.3 0.5 73.0 155.9 8.6 11,249.3 13.4 17.4 - 8.0 643.1 0.8 114.3 - 9.5 3,811.5 Investments in equity securities (classified as financial assets at fair value through OCI) and in associates held by the Group are not considered to be segment assets as they are managed by the corporate treasury function. (e) Segment liabilities Reportable segments' liabilities are reconciled to total liabilities as follows: NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt (e) Segment liabilities (continued) Segment Information How numbers are calculated Segment liabilities Unallocated: Trade and other payables Borrowings Provisions Current tax liabilities Provisions - other Deferred tax (net) Derivative financial instruments Liabilities attributable to assets held for sale Total liabilities as per the Consolidated Statement of Financial Position 30 June 2021 $M 30 June 2020 $M (1,356.8) (761.4) (15.4) (659.2) (11.2) - (232.5) (925.3) (5.1) (65.3) (3,270.8) (4.0) (699.1) (59.6) (12.0) - (131.6) - - (1,667.7) 142 This section provides additional information about those individual line items in the financial statements that the Directors consider most relevant in the context of the operations of the entity, including: (a) accounting policies that are relevant for an understanding of the items recognised in the financial statements. These cover situations where the accounting standards either allow a choice or do not deal with a particular type of transaction (b) analysis and subtotals, including segment information (c) information about estimates and judgements made in relation to particular items. 3 Revenue Accounting Policy (i) Sale of goods The Group primarily generates revenue from the sale of gold and silver bullion. The Group delivers dore bars to refiners, who convert the product into investment grade bullion for a fee, which is subsequently sold either to the refinery or third parties (financial institutions). Revenue from the sale of these goods is recognised when control over the inventory has transferred to the customer. Control is generally considered to have passed when: • physical possession and inventory risk is transferred (including via a third-party transport provider arranged by the refinery): • payment terms for the sale of goods can be clearly identified through the sale of metal credits received or receivable for the transfer of control of the asset; • the Group can determine with sufficient accuracy the metal content of the goods delivered; and • the refiner has no practical ability to reject the product where it is within contractually specified limits. Where the economic inflows arise from other by-products, for example from the presence of other valuable metals, these amounts are credited to the costs of producing the primary products to the extent the amounts generated are not considered significant. 143 (ii) Sale of services Tolling revenue is recognised as the tolling services are performed. The number of units processed is considered to be the most direct measurement of value delivered to the customer under the contractual arrangements and therefore tolling revenue is earned per tonne of ore processed. The Group derives the following types of revenue: Sale of gold Sale of silver Toll treatment Total revenue 30 June 2021 $M 2,749.3 8.2 3.0 2,760.5 30 June 2020 $M 1,957.6 3.2 10.9 1,971.7 Sale of gold includes an amount of $59.9 million in relation to hedge book liability unwind, which has not been allocated to segments. (a) Segment revenue The total of revenue, broken down by operating segment, is shown in the following table. All revenue is from external customers. No revenues are generated by the Exploration operating segment. KCGM* $M 731.0 235.8 Pogo $M 474.7 388.2 2021 2020 Kalgoorlie Operations $M 590.2 704.2 Jundee $M 660.1 643.5 Carosue Dam Thunderbox $M 202.5 - $M 42.2 - Total $M 2,700.7 1,971.7 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt (a) Segment revenue (continued) (b) Corporate, technical services and projects Revenue * KCGM 50 percent interest from 3 Jan 2020 to 12 Feb 2021 at which point the Group obtained 100 percent control as part of the merger with Saracen Mineral Holdings Limited. Refer to note 12 for further details. 4 Significant changes in the current reporting period The financial position and performance of the Group was particularly affected by the following events and transactions during the reporting period: • Implementation of the scheme of arrangement (Scheme) in relation to the merger of Northern Star and Saracen Mineral Holdings Limited (Saracen). For details of the acquisition refer to note 12 of the financial statements. For a detailed discussion about the Group’s performance and financial position please refer to our operating and financial review on pages 16 to 31. 5 Expenses (a) Cost of sales Mining Processing Site services Employee benefit expenses Depreciation Amortisation Government and other royalty expense Change in inventories 144 30 June 2021 $M 480.8 392.0 75.2 405.5 202.8 449.0 62.5 115.9 2,183.7 30 June 2020 $M 395.9 276.8 50.7 305.9 124.9 222.9 41.9 28.6 1,447.6 Depreciation/amortisation method Items of property, plant and equipment and mine properties are depreciated/amortised over their useful lives. The Group uses the unit-of-production basis when depreciating/amortising mine specific assets which results in a depreciation/amortisation charge proportional to the depletion of the anticipated remaining life of mine which is referenced to the estimated economic reserve and resources of the property to which the assets relate. Each item’s economic life, which is assessed annually has due regard to both its physical life limitations and to present assessments of economically recoverable reserves and resources of the mine property at which it is located. Depreciation of non-mine specific property, plant and equipment is calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the shorter lease term as follows: Land and buildings Plant and equipment • • • Motor Vehicles • Office equipment 5 - 20 years 2 - 20 years 4 - 10 years 2 - 10 years Depreciation methods, useful lives and residual values are reviewed at each reporting date. Royalties Royalties under existing royalty regimes in Australia are payable on lodgement with the refining counterparty and are recognised as the sale occurs. Production Royalties in Alaska are based on taxable profit and are consequently treated as an income tax. Expenses 30 June 2021 $M 30 June 2020 $M 35.6 6.9 35.8 13.0 1.3 6.0 98.6 32.8 5.8 25.6 7.9 1.3 7.9 81.3 Administration and technical services Depreciation Employee benefit expenses Share based payments Amortisation Exploration projects Accounting policy Share-based compensation benefits are provided to employees via Option, Share and Performance Rights Plans as discussed in note 20. The fair value of shares and options granted under these Plans are recognised as a share based payments expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the shares or options granted, which includes any market performance conditions and the impact of any non-vesting conditions, but excludes the impact of any service and non-market performance vesting conditions. Non-market vesting conditions are included in assumptions about the number of shares and options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of shares and options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss with a corresponding adjustment to equity. (c) Impairment of assets Exploration and evaluation assets (note 8(c)) Inventory Property, plant and equipment 145 30 June 2021 $M 101.3 436.6 7.7 545.6 30 June 2020 $M 28.3 - - 28.3 Inventory writedown - KCGM mineralised waste As part of the accounting for the Merger with Saracen Minerals Holding Limited during the year, the Group obtained control of KCGM. As outlined in note 12, this required the Group to identify and measure the assets acquired at fair value, including the remeasurement of the Group’s existing 50 percent interest in the KCGM Joint Operations. The stockpile reserves of KCGM at acquisition included 105 million tonnes of mineralised waste grading 0.68gpt containing an estimated 2.3 million ounces of gold. These proved reserves were considered to have fair value to a willing buyer and have the potential to produce economic benefits through the potential to be processed and recover saleable gold. The initial fair value at acquisition date was determined with reference to an estimate of the stockpiles’ highest and best use and the most advantageous market from the perspective of market participants at the time of the acquisition (given the absence of a principal market for low grading stockpile reserves). The initial fair value ascribed to these stockpiles was $436 million. Subsequent to acquisition, the Group measures inventory at the lower of cost and net realisable value. Net realisable value is an entity specific value, whereas fair value is not entity specific, and these amounts may not equal. The Group’s post-merger strategy includes substantial investment in and development of the KCGM assets that improve expectations that new higher-grade material will be added to mine plans in future periods, alternate ore sources will become available over time and alternate regional processing strategies may be pursued that increase uncertainty surrounding whether and/or when mineralised waste may be processed. Accordingly, the Group has considered it appropriate to write this inventory down to nil at 30 June 2021. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt (c) Impairment of assets (continued) (a) Income tax expense (continued) Expenses This assessment involves judgement, including, but not limited to: expectations surrounding whether and/or when these stockpiles will be processed; the gold price environment in the future, which in turn may impact the economics of processing low grade material; the identification of new resources and conversion of resources to reserves and the development of KCGMs and other regional mine plans over time; changes in regional processing strategies over time, including any changes in available processing capacity. Future changes in circumstances surrounding whether and/or when this mineralised waste will be processed would need to be considered for reversal of impairment at any such time. (d) Finance costs Interest expense Provisions: unwinding of discount (note 8(g)) Finance charges 30 June 2021 $M 30 June 2020 $M 19.8 4.2 4.4 28.4 13.1 4.7 4.1 21.9 Provision - unwinding of discount The Group records the present value of the estimated cost of legal and constructive obligations to rehabilitate operating locations and decommission assets in the period in which the obligation is incurred. The unwinding of the effect of discounting the provision is recorded as a finance charge in profit or loss. 6 Income tax expense 146 The income tax expense 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 in the countries where the Company’s subsidiaries operate and generate taxable income. 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 is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. This note provides an analysis of the Group’s income tax expense, showing what amounts are recognised directly in equity and how the tax expense is affected by non-assessable and non-deductible items. It explains significant estimates made in relation to the Group's tax position. Current tax Current tax on profits for the year Other Adjustments for current tax of prior periods Total current tax Deferred income tax Decrease/(increase) in deferred tax assets (note 8(e)) Increase in deferred tax liabilities (note 8(e)) Total deferred tax expense/(benefit) Income tax expense (b) Numerical reconciliation of income tax expense to prima facie tax payable Profit from continuing operations before income tax expense Tax at the Australian tax rate of 30.0% (2020 - 30.0%) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Sale of investments Franking credit gross up Stamp duty and transaction costs on Saracen merger Recognition of deferred tax assets on acquired tax losses Adjustment for current tax of prior periods Non-deductible amounts Derecognition of deferred tax assets on investments accounted for using the equity method Subtotal Difference in overseas tax rates Income tax expense Income tax expense 30 June 2021 $M 30 June 2020 $M 6.1 2.0 3.2 11.3 (87.5) 627.6 540.1 551.4 30 June 2021 $M 1,583.9 475.2 2.2 (0.1) 69.5 - 3.2 2.3 - 552.3 (0.9) 551.4 58.8 - 0.5 59.3 (1.0) 28.0 27.0 86.3 30 June 2020 $M 344.6 103.4 - - - (21.5) 0.5 3.7 1.4 87.5 (1.2) 86.3 147 The tax rate for Australian Operations remains at 30%. The blended tax rate for Alaskan operations is 35.4%. The Alaskan operations are subject to the following taxes: Federal (21%) and State Income Taxes (9.4%), Alaska Mining Licence Tax (7%) and Alaska Production Royalty Tax (3%). The blended rate for Alaskan operations is not the sum of the aforementioned rates due to the inter-relationship of deductibility of these taxes in determining taxable income upon which the tax rates are levied. (2,135.3) (430.9) NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt (c) Amounts recognised directly in equity Income tax expense 30 June 2021 $M 30 June 2020 $M Aggregate current and deferred tax arising in the reporting year and not recognised in net profit or loss or other comprehensive income but directly debited or credited to equity: Deferred tax: Assets available for sale Deferred tax: financial assets at fair value through OCI Deferred tax: cost of share issue Deferred tax: share based payments 8(e) 8(e) 8(e) - 0.1 1.4 1.0 2.5 (2.1) - (5.0) (5.9) (13.0) 7 Financial assets and financial liabilities This note provides information about the Group's financial instruments, including: • • • • an overview of all financial instruments held by the Group specific information about each type of financial instrument accounting policies information about determining the fair value of the instruments, including judgements and estimation uncertainty involved. The Group holds the following financial instruments: 148 Assets at FVOCI $M Assets at FVPL $M Notes Financial assets at amortised cost $M Financial assets 2021 Cash and cash equivalents Trade and other receivables* Derivative financial instruments Financial assets at fair value through other comprehensive income 2020 Cash and cash equivalents Trade and other receivables* Derivative financial instruments Financial assets at fair value through other comprehensive income 7(b) 7(a) 7(b) 7(a) * Excluding prepayments and goods and services tax recoverable. - - - 23.2 23.2 - - - 13.3 13.3 - - 0.5 - 0.5 - - 0.8 - 0.8 771.9 42.1 - - 814.0 677.3 89.3 - - 766.6 Liabilities at amortised cost $M Notes Total $M 771.9 42.1 0.5 23.2 837.7 677.3 89.3 0.8 13.3 780.7 Total $M 2020 Trade and other payables** Borrowings ** Excluding payroll tax and other statutory liabilities. Financial assets and financial liabilities Liabilities at amortised cost $M 7(d) 7(c) 150.1 811.1 961.2 Total $M 150.1 811.1 961.2 The Group’s exposure to various risks associated with the financial instruments is discussed in note 10. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets mentioned above. (a) Trade and other receivables Accounting policy Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables Sundry debtors Goods and services tax recoverable Prepayments* Net finance lease receivables 30 June 2021 Non- current $M 30 June 2020 Non- current $M Total $M Current $M - - - 0.9 - 0.9 25.3 16.8 25.3 55.5 - 122.9 72.5 9.2 9.1 49.2 4.5 144.5 - - - 1.2 3.1 4.3 Current $M 25.3 16.8 25.3 54.6 - 122.0 Total $M 72.5 9.2 9.1 50.4 7.6 148.8 149 *Included within the current prepayments balance is a US$22.5 million payment made to Newmont as part of the 50 percent acquisition of KCGM. Refer to note 12 for further details of the acquisition. The payment was for a conditionally refundable option to acquire the Newmont power business which supplies power to KCGM. As a result of further discussions with Newmont, the Company allowed the option to lapse during the June 2020 quarter, however the amount remains conditionally refundable. This amount is still expected to be recovered within the next 12 months through conditions being met. (i) Classification as trade and other receivables If collection of the amounts is expected in one year or less they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are generally due for settlement within 30 days and therefore are all classified as current. (ii) Fair value of trade and other receivables As the majority of receivables are short term in nature, their carrying amount is assumed to be the same as their fair value. (b) Cash and cash equivalents Accounting policy Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 30 June 2021 $M 771.9 - 771.9 30 June 2020 $M 675.5 1.8 677.3 Financial liabilities 2021 Trade and other payables** Borrowings 7(d) 7(c) 289.0 888.1 1,177.1 289.0 888.1 1,177.1 Cash at bank and in hand Restricted cash NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Financial assets and financial liabilities Financial assets and financial liabilities (b) Cash and cash equivalents (continued) (i) Reconciliation to the statement of cash flows Reconciliation of profit after tax to net cash flow from operating activities: Profit for the year Adjustment for Depreciation and amortisation Fair value adjustment to financial assets Non-cash employee benefits expense - share-based payments Rehabilitation provision - unwinding of discount Net (gain)/ loss on sale of non-current assets Upfront debt transaction costs written off Impairment of assets during the period Unwind of hedgebook contract liability Share of losses of associates and joint ventures Amortisation of upfront debt transaction costs Gain on remeasurement of existing interest in KCGM Change in operating assets and liabilities: Increase in trade and other receivables (Increase)/decrease in inventories (Decrease)/increase in trade and other payables Increase in interest expense accrual Increase/(decrease) in income taxes payable (Decrease)/increase in deferred tax liabilities Increase in provisions Net cash inflow from operating activities 150 (c) Borrowings 30 June 2021 $M 1,032.5 660.0 16.0 13.0 4.2 2.9 - 545.6 (59.9) 1.5 5.2 (1,919.3) 37.4 126.8 201.9 - (95.4) 544.7 (40.3) 1,076.8 30 June 2020 $M 258.3 354.8 - 7.9 4.7 4.2 1.3 28.3 0.5 3.6 1.2 - (24.1) 23.1 (40.2) 2.5 - 45.1 39.3 710.5 Accounting policy Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date or there is an expectation the Group will repay amounts within the following 12 months. As at 30 June 2021, the entirety of the $658 million (net of capitalised borrowing costs) drawn on the revolving credit facility is classified within non-current bank loans as it is not expected that this amount will be repaid within 12 months ($500 million contractually repayable in June 2024 and the remainder in June 2025). As at the end of the prior year, the Group had classified $200 million of the fully drawn $300 million revolving credit facility within current bank loans as it was expected that this amount would be repaid within the following 12 months (contractually repayable on 31 December 2022). It was subsequently repaid on 6 July 2020. The remaining $100 million drawn on the revolving credit facility was repaid on 30 November 2020 and a $25 million term debt repayment was made in December 2020. 30 June 2021 Non- current $M 30 June 2020 Non- current $M Total $M Current $M 658.0 91.8 51.8 801.6 658.3 141.9 87.9 888.1 302.5 21.0 37.8 361.3 394.8 28.6 26.4 449.8 Current $M 0.3 50.1 36.1 86.5 Total $M 697.3 49.6 64.2 811.1 Bank loans Lease liabilities Secured asset financing Total secured borrowings (c) Borrowings (continued) Liabilities from financing activities reconciliation Borrowings Lease Liability Opening liabilities from financing activities Cash flows New leases Liabilities from financing activities at 30 June 2020 Opening liabilities from financing activities Cash flows New leases Non-current assets/liabilities held for sale Liabilities from financing activities at 30 June 2021 (i) Secured liabilities and assets pledged as security 30 June 2021 $M 30 June 2020 $M (658.3) (229.8) (888.1) Leases $M (48.4) 63.2 (128.6) (113.8) (113.8) (80.9) (53.1) 18.0 (229.8) (697.3) (113.8) (811.1) Total $M (48.4) (634.1) (128.6) (811.1) (811.1) (41.9) (53.1) 18.0 (888.1) Borrowings $M - (697.3) - (697.3) (697.3) 39.0 - - (658.3) Secured asset financing amounts are interest-bearing borrowings secured over Group owned plant and equipment. These liabilities are secured by assets classified as property, plant and equipment with a written down value of $69.0 million. 151 (ii) Leases As at 30 June 2021, the Group leased various assets under leases expiring within three to seven years. The interest rates are fixed and payable over a period of the lease term from the inception of the lease. These leases are effectively secured as the rights to the leased assets recognised in the financial statements revert to the lessor in the event of default. (iii) Fair value For the majority of the borrowings, the fair values are not materially different to their carrying amounts, since the interest payable on those borrowings is either close to current market rates or the borrowings are of a short-term nature. Refer above for differences as at year end. (iv) Financing arrangements As at the end of the report period, the Group had: • • • Revolving credit facility limit of $1 billion which is drawn to $662 million ($658 million net of capitalised finance costs) at 30 June 2021; $20 million contingent instrument facilities, drawn down by $8.8 million; and US$77 million contingent instrument facilities, drawn down by US$73.1 million. As at the end of the prior report period, the Group had: • • • • • • $400.0 million term loan, fully drawn; $300.0 million revolving credit facility, fully drawn; $7.0 million bank guarantee facility drawn down by $3.0 million; $5.0 million bank guarantee facility drawn down by $4.5 million; US$72.0 million bank guarantee and stand by letter of credit facility drawn down by US$71.9 million; and US$3.0 million bank guarantee and stand by letter of facility drawn down by US$1.5 million. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt (d) Trade and other payables (a) Property, plant and equipment (continued) Financial assets and financial liabilities Non-financial assets and liabilities Accounting policy These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 60 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. Trade payables Accruals Payroll tax and other statutory liabilities Other payables 30 June 2021 $M 30 June 2020 $M 37.8 192.5 7.5 58.7 296.5 47.0 86.8 5.5 16.3 155.6 The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term nature. 8 Non-financial assets and liabilities This note provides information about the Group's non-financial assets and liabilities, including: • specific information about the following non-financial assets and non-financial liabilities • • property, plant and equipment exploration and evaluation assets 152 • mine properties assets • • • tax balances inventories provisions accounting policies information about determining the fair value of the assets and liabilities, including judgements and estimation uncertainty involved. • • (a) Property, plant and equipment Accounting policy Property, plant and equipment is carried at historical cost less accumulated depreciation and impairment losses. Refer to note 25 for further information on accounting policies associated with impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred. At 30 June 2020 Cost or fair value Accumulated depreciation Net book amount Year ended 30 June 2020 Opening net book amount Additions Acquired as part of asset acquisition Exchange differences Acquired as part of business combination (note 12) Disposals Transfers Depreciation charge Closing net book amount At 30 June 2021 Cost or fair value Accumulated depreciation Net book amount Year ended 30 June 2021 Opening net book amount Additions Exchange differences Acquired as part of business combination (note 12) Disposals Gain on revaluation of existing interest in KCGM (note 12) Transfers Assets included in a disposal group classified as held for sale (note 14) Land & buildings $M Plant & equipment $M Motor Vehicles $M Office equipment $M Capital work in progress $M 70.1 (16.4) 53.7 919.4 (252.8) 666.6 42.0 - 3.6 0.7 8.5 - 4.1 (5.2) 53.7 419.9 - 14.9 6.1 182.0 (8.9) 144.5 (91.9) 666.6 17.1 (9.1) 8.0 5.6 - 0.2 - 1.0 (0.3) 4.7 (3.2) 8.0 12.8 (6.3) 6.5 6.2 - 0.3 0.1 0.8 - 1.2 (2.1) 6.5 Total $M 1,074.0 (284.6) 789.4 501.0 138.5 20.5 6.8 234.2 (9.2) - 54.6 - 54.6 27.3 138.5 1.5 (0.1) 41.9 - (154.5) - (102.4) 54.6 789.4 153 Land & buildings $M Plant & equipment $M Motor Vehicles $M Office equipment $M Capital work in progress $M 130.8 (23.1) 107.7 1,589.0 (318.1) 1,270.9 53.7 - (2.7) 47.9 - 7.7 11.8 666.6 1.8 (25.4) 465.7 (7.0) 86.9 263.4 24.0 (9.8) 14.2 8.0 - (0.2) 4.9 (0.4) 1.0 6.2 24.1 (8.2) 15.9 6.5 - (0.3) 8.0 (0.1) 1.6 3.8 136.2 - 136.2 54.6 264.6 (2.6) 106.1 - 1.5 (285.2) Total $M 1,904.1 (359.2) 1,544.9 789.4 266.4 (31.2) 632.6 (7.5) 98.7 - (1.0) (24.7) (1.2) (0.3) (2.8) (30.0) NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt (a) Property, plant and equipment (continued) (b) Right-of-use assets (continued) Non-financial assets and liabilities Non-financial assets and liabilities Land & buildings $M Plant & equipment $M Motor Vehicles $M Office equipment $M Capital work in progress $M Total $M The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses. Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under AASB 137. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories. Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease. The Group applies AASB 136 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the ‘Property, Plant and Equipment’ policy (as outlined in the financial report for the annual reporting period). Variable rents that do not depend on an index or rate are not included in the measurement the lease liability and the right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are included in profit or loss. As a practical expedient, AASB 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Group has not used this practical expedient. For a contracts that contain a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. Lease assets - amounts recognised in the Consolidated Statement of Financial Position The Consolidated Statement of Financial Position shows the following amounts relating to right-of-use assets: 155 Right-of-use assets Opening balance Adjustment for change in accounting policy Acquired as part of business combination (note 12) Gain on revaluation of existing interest in KCGM (note 12) Additions to right-of-use assets Depreciation Closing balance 30 June 2021 $M 44.9 - 103.9 1.2 29.0 (40.5) 138.5 30 June 2020 $M - 53.6 14.6 - 4.8 (28.1) 44.9 Depreciation charge Impairment loss Closing net book amount (b) Right-of-use assets Accounting policy (9.2) (0.5) 107.7 (149.3) (7.1) 1,270.9 (4.1) - 14.2 (3.2) (0.1) 15.9 - - (165.8) (7.7) 136.2 1,544.9 AASB 16 eliminates the distinction between operating and finance leases and brings all leases (other than short term and low value leases) on to the balance sheet. As a lessee, the Group recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. An assessment is made, at inception or when contract terms are changed, to determine whether the contract is, or contains, a lease. A contract is or contains a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. 154 The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: • fixed payments (including in-substance fixed payments), less any lease incentives receivable • variable lease payment that are based on an index or a rate • amounts expected to be payable by the lessee under residual value guarantees • the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and • payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever: • The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate. • The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which case the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used). • A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Non-financial assets and liabilities Non-financial assets and liabilities (c) Exploration and evaluation assets Accounting policy Exploration and evaluation assets include the costs of acquiring licences, costs associated with exploration and evaluation activity, and the fair value (at acquisition date) of exploration and evaluation assets acquired in a business combination. Exploration and evaluation expenditure is capitalised on an area of interest basis. Costs incurred before the Group 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 of the area of interest are current and either, the expenditures are expected to be recouped through successful development and exploitation 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. Once a development decision has been made, all past exploration and evaluation expenditure in respect of an area of interest that has been capitalised is transferred to mine properties where it is amortised over the life of the area of interest to which it relates on a unit-of-production basis. No amortisation is charged during the exploration and evaluation phase. The application of the above accounting policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular, the assessment of whether economic quantities of reserves will be found. Any such estimates and assumptions may change as new information becomes available, which may require adjustments to the carrying value of assets. Capitalised exploration and evaluation expenditure is assessed for impairment when an indicator of impairment exists, and capitalised assets are written off where required. 156 Opening balance at 1 July Expenditure for the period Acquired as part of asset acquisition (i) Acquired as part of business combination (note 12) Gain on remeasurement of existing interest in KCGM (note 12) Assets included in a disposal group classified as held for sale (note 14) Transfer to mine properties Impairment (ii) Exchange differences Closing balance 30 June 2021 $M 479.0 146.4 18.0 208.6 72.0 (28.1) (182.2) (101.3) (3.1) 609.3 30 June 2020 $M 266.0 80.1 208.6 - - (17.4) (30.2) (28.3) 0.2 479.0 (i) Asset acquisition On 17 June 2021, the Company completed the acquisition of the Kurnalpi Project from KalNorth Gold Mines Limited. During the prior year, the Company completed the takeover of Echo Resources Limited (ASX: EAR) via a combination of existing ownership interests, on-market acquisition and off-market acquisition. For details of the acquisition, refer to note 13. (ii) Impairment At each reporting date the Group undertakes an assessment of the carrying amount of its exploration and evaluation assets. During the year the Group identified indicators of impairment on certain exploration and evaluation assets under AASB 6 Exploration for and Evaluation of Mineral Resources. As a result of this review, an impairment loss of $101.3 million (2020: $28.3 million) has been recognised in the statement of profit or loss and other comprehensive income in relation to areas of interest where no future exploration and evaluation activities are expected. (d) Mine properties Accounting policy Mine properties includes aggregate expenditure in relation to mine construction, mine development, exploration and evaluation expenditure where a development decision has been made and acquired mineral interests. Expenditure incurred in constructing a mine by, or on behalf of, the Group is accumulated separately for each area of interest in which economically recoverable reserves and resources have been identified. This expenditure includes direct costs of construction, drilling costs and removal of overburden to gain access to the ore, borrowing costs capitalised during construction and an appropriate allocation of attributable overheads. Mine development represents expenditure in respect of exploration and evaluation, overburden removal based on underlying mining activities and related mining data and construction costs and development incurred by or on behalf of the Group previously accumulated and carried forward in relation to properties in which mining has now commenced. Such expenditure comprises direct costs and an appropriate allocation of directly related overhead expenditure. All expenditure incurred prior to commencement of production from each development property is carried forward to the extent to which recoupment out of future revenue from the sale of production, or from the sale of the property, is reasonably assured. When further development expenditure is incurred in respect of a mine property after commencement of commercial production, such expenditure is carried forward as part of the cost of the mine property only when future economic benefits are reasonably assured, otherwise the expenditure is classified as part of the cost of production and expensed as incurred. Such capitalised development expenditure is added to the total carrying value of mine development being amortised. Mine development costs (as transferred from exploration and evaluation and/or mines under construction) are amortised on a units-of-production basis over the life of mine to which they relate. In applying the units of production method, amortisation is calculated using the expected total contained ounces as determined by the life of mine plan specific to that mine property. For development expenditure undertaken during production, the amortisation rate is based on the ratio of total development expenditure (incurred and anticipated) over the expected total contained ounces as estimated by the relevant life of mine plan to achieve a consistent amortisation rate per ounce. The rate per ounce is typically updated annually as the life of mine plans are revised. Mineral interests comprise identifiable exploration and evaluation assets, mineral resources and ore reserves, which are acquired as part of a business combination or joint venture acquisition and are recognised at fair value at the date of acquisition. Where possible, mineral interests are attributable to specific areas of interest and are classified within mine properties. Production stripping expenditure Stripping (waste removal) costs are incurred both during the development phase and production phase of operations. Stripping costs incurred during the development phase are capitalised as mines under construction. Stripping costs incurred during the production phase are generally considered to create two benefits: • • the production of ore inventory in the period - accounted for as a part of the cost of producing those ore inventories; or improved access to the ore to be mined in the future - recognised under producing mines if the following criteria are met: • Future economic benefits (being improved access to the ore body) associated with the stripping activity are probable; • The component of the ore body for which access has been improved can be accurately identified; and • The costs associated with the stripping activity associated with that component can be reliably measured. The amount of stripping costs deferred is based on the life of component ratio which is obtained by dividing the amount of waste tonnes mined by the quantity of ore tonnes for each component of the mine. Stripping costs incurred in the period are deferred to the extent that the actual current period waste to ore ratio exceeds the life of component expected 'life of component' ratio. A component is defined as a specific volume of the ore body that is made more accessible by the stripping activity and is determined based on mine plans. An identified component of the ore body is typically a subset of the total ore body of the mine. Each mine may have several components, which are identified based on the mine plan. The deferred stripping asset is initially measured at cost, which is the accumulation of costs directly incurred to perform the stripping activity that improves access to the ore within an identified component, plus an allocation of directly attributable overhead costs. The deferred stripping asset is depreciated over the expected useful life of the identified component of the ore body that is made more accessible by the activity, on a units of production basis. 157 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Non-financial assets and liabilities Non-financial assets and liabilities (d) Mine properties (continued) Production stripping expenditure (continued) Expected total contained ounces as determined by the life of mine plan are used to determine the expected useful life of the identified component of the ore body. (e) Tax balances (continued) (ii) Deferred tax assets Opening balance at 1 July Expenditure for the period Changes in rehabilitation provision estimates Transfer from exploration and evaluation Acquired as part of business combination (note 12) Fair value uplift on remeasurement of interest in KCGM (note 12) Assets included in a disposal group classified as held for sale (note 14) Amortisation Exchange differences Closing balance Impairment 30 June 2021 $M 1,018.5 348.8 71.4 182.2 4,091.4 1,552.7 (121.0) (445.1) (14.8) 6,684.1 30 June 2020 $M 356.4 184.0 53.2 30.2 611.2 - - (219.5) 3.0 1,018.5 At each reporting date, the Group assesses whether there is any indication that an asset, or group of assets is impaired. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any) which is the amount by which the assets carrying value exceeds its recoverable amount. Where the asset does not generate cash in-flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit (CGU) to which the asset belongs. The recoverable amount is the higher of ‘fair value less costs of disposal’ (FVLCOD) and ‘value in use’. 158 Where an impairment loss subsequently reverses for assets other than goodwill, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or CGU) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately. Impairment testing requires assets to be grouped together into the smallest group that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash generating units. Depending on the location of the mine and processing strategy, as well as other external factors, the CGU may include more than one operating mine with a processing facility. There were no indications that an asset or CGU required impairment testing at 30 June 2021. (e) Tax balances (i) Current tax asset/(liability) Opening balance at 1 July Acquired balances Tax paid Current tax Adjustment for current tax on prior periods Closing balance 30 June 2021 $M 30 June 2020 $M (12.0) 29.8 140.9 (6.1) 3.2 155.9 6.3 - 41.3 (58.8) (0.8) (12.0) The balance comprises temporary differences attributable to: Acquired tax losses Employee benefits Provisions Accruals Financial assets at fair value through OCI Mine properties Inventories Other Other Share based payments Sub-total other Total deferred tax assets Set-off of deferred tax liabilities pursuant to set-off provisions Net deferred tax assets 30 June 2021 $M 30 June 2020 $M 20.6 26.0 175.6 5.8 1.3 1.5 56.1 286.9 8.3 4.3 12.6 26.5 14.2 98.6 3.2 1.2 - (13.0) 130.7 10.1 3.8 13.9 299.5 144.6 (299.5) - (144.6) - Employee benefits $M Provisions $M Inventories $M Mine Properties $M Other $M 47.1 (5.9) 2.8 40.6 159 Total $M 92.8 (6.1) 10.3 47.6 144.6 (6.1) 10.3 - 44.8 (21.9) 87.5 (1.9) 15.4 35.1 (1.9) 70.6 299.5 6.9 - 44.6 98.6 33.9 - 48.3 180.8 (7.1) - - (13.0) 69.1 - - 56.1 (2.8) - - - 1.5 - - 1.5 Movements At 1 July 2019 (Charged)/credited - to profit or loss - directly to equity - acquisition of subsidiary At 30 June 2020 Movements (Charged)/credited - to profit or loss - to other comprehensive income - acquisition of subsidiary At 30 June 2021 (iii) Deferred tax liabilities 8.2 3.0 - 3.0 14.2 4.9 - 6.9 26.0 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Non-financial assets and liabilities Non-financial assets and liabilities (e) Tax balances (continued) (iii) Deferred tax liabilities (continued) The balance comprises temporary differences attributable to: Property, plant and equipment Exploration and evaluation Mine properties Investments at fair value Other Set-off of deferred tax assets pursuant to set-off provisions Net deferred tax liabilities 30 June 2021 $M 30 June 2020 $M 137.1 87.4 995.1 0.1 5.1 1,224.8 (299.5) 925.3 49.5 69.5 157.2 - - 276.2 (144.6) 131.6 Offsetting within tax consolidated group Northern Star Resources Limited and its wholly-owned Australian subsidiaries, including those entities acquired as part of the merger with Saracen Mineral Holdings during the year, have applied Australia's tax consolidation legislation which means that the Australian entities are taxed as a single entity. Also, Northern Star Resources Limited’s US entities are regarded as a single taxpayer in the US for income tax purposes. For accounting purposes, deferred tax assets and deferred tax liabilities, relating to the same taxation authorities, have been offset in the consolidated financial statements. 160 Movements At 1 July 2019 Exploration and evaluation $M Mine properties $M Property, plant and equipment $M Other $M Total $M 59.3 65.4 30.6 2.9 158.2 Charged/(credited) - profit or loss - directly to equity - acquisition of subsidiary At 30 June 2020 Charged/(credited) - profit or loss - to other comprehensive income - acquisition of subsidiary At 30 June 2021 10.2 - - 69.5 (6.7) - 24.6 87.4 (7.8) - 99.6 157.2 541.9 - 296.0 995.0 18.9 - - 49.5 87.7 - - 137.2 (0.3) (2.6) - - 4.7 0.5 - 5.2 21.0 (2.6) 99.6 276.2 627.6 0.5 320.6 1,224.8 Recovery of deferred taxes Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets, including those arising from unutilised tax losses (where applicable), require management to assess the likelihood that the Group will comply with the relevant tax legislation and will generate sufficient taxable earnings in future years in order to recognise and utilise those deferred tax assets. Estimates of future taxable income are based on forecast cash flows from operations and existing tax laws in each jurisdiction. These assessments require the use of estimates and assumptions such as exchange rates, commodity prices and operating performance over the life of the assets. To the extent that cash flows and taxable income differ significantly from estimates, the ability of the Group to realise the deferred tax assets reported at the reporting date could be impacted. Additionally, future changes in tax laws in the jurisdictions in which the Group operates could limit the ability of the Group to obtain tax deductions in future years. (f) Inventories Accounting policy Gold bullion, gold in circuit and ore stockpiles are physically measured or estimated and valued at the lower of cost and net realisable value. Cost represents the weighted average cost and includes direct purchase costs and an appropriate portion of fixed and variable production overhead expenditure, including depreciation and amortisation, incurred in converting materials into finished goods. Materials and supplies are valued at the lower of cost and net realisable value. Any allowance for obsolescence is determined by reference to specific stock items identified. A regular and on-going review is undertaken to establish the extent of surplus items and an allowance is made for any potential loss on their disposal. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Ore stockpiles which are not expected to be processed in the 12 months after the reporting date are classified as non-current inventory. Where there is a reasonable expectation that the processing of these stockpiles will have a future economic benefit to the Group, these stockpiles are carried at the lower of cost and net realisable value. The non-current ore stockpiles represent the stockpiles that are not expected to be processed in the next 12 months. If there is significant uncertainty as to if and/or when the stockpiled ore will be processed by the Group, the ore is expensed as mined, or otherwise, where such indications arise. The determination of the current and non-current portion of ore stockpiles includes the use of estimates and judgements about when ore stockpile draw downs for processing will occur. These estimates and judgements are based on current forecasts and mine plans and expected developments, taking in to account operating history. The initial measurement of stockpile inventory acquired as part of business combinations (refer note 12) involves the use of significant estimates and judgements. The key assumptions employed in measuring this inventory included: forecast gold prices, processing costs, grade and thus contained metal, processing recoveries and timing of processing. The initial fair values allocated to ore stockpiles are subsequently considered their deemed cost, and any future adverse change in the significant estimates and judgements could result in a net realisable value below deemed cost. Current assets Consumable stores Ore stockpiles Gold in circuit Non-current assets Ore stockpiles (i) Amounts recognised in profit or loss 30 June 2021 $M 30 June 2020 $M 161 82.3 378.1 123.5 583.9 69.6 156.2 63.9 289.7 404.3 314.8 Write-downs of ore stockpiles to net realisable value amounted to $436.6 million (2020 - Nil). These were recognised as an expense during the year ended 30 June 2021 and included in 'impairment of assets' in profit or loss. Refer to note 5(c) for further detail surrounding the impairment of non-current inventory. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Non-financial assets and liabilities Non-financial assets and liabilities (g) Provisions Accounting policy Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Rehabilitation costs include the dismantling and removal of mining plant, equipment and building structures, waste removal and rehabilitation of the site in accordance with the requirements of the mining permits. Such costs are determined using estimates of future costs, current legal requirements and technology. Rehabilitation costs are recognised in full at present value as a non-current liability. An equivalent amount is capitalised as part of the cost of the asset when an obligation arises to decommission or restore a site to a certain condition after abandonment as a result of bringing the assets to its present location. The capitalised cost is amortised over the life of the project and the provision is accreted periodically as the discounting of the liability unwinds. The unwinding of the discount is recorded as a finance cost. Any changes in the estimates for the costs or other assumptions against the cost of relevant assets are accounted for on a prospective basis. In determining the costs of site restoration there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. 162 Employee entitlements Rehabilitation Other 30 June 2021 Non- current $M 30 June 2020 Non- current $M Total $M Current $M 3.0 769.3 - 772.3 92.3 772.3 231.0 1,095.6 57.0 2.1 50.2 109.3 1.7 446.4 - 448.1 Current $M 89.3 3.0 231.0 323.3 Total $M 58.7 448.5 50.2 557.4 (i) Information about individual provisions and significant estimates Rehabilitation provision The Group assesses its mine rehabilitation provision annually. Significant judgement is required in determining the provision for mine rehabilitation and closure as there are many factors that will affect the ultimate liability payable to rehabilitate the mine sites, including future disturbances caused by further development, changes in technology, changes in regulations, price increases, changes in timing of cash flows which are based on life of mine plans and changes in discount rates. When these factors change or become known in the future, such differences will impact the mine rehabilitation provision in the period in which the change becomes known. Long service leave The liability for long service leave and other long-term benefits is measured at the present value of the estimated future cash outflows to be made by the Group for those employees with greater than 5 years’ service up to the reporting date. Long-term benefits not expected to be settled within 12 months are discounted using the rates attaching to high quality corporate bonds at the reporting date, which most closely match the terms of maturity of the related liability. In determining the liability for these long-term employee benefits, consideration has been given to expected future increases in wage and salary rates, the Group’s experience with staff departures and periods of service. Related on-costs are also included in the liability. (ii) Movements in provisions Movements in each class of provision during the financial year, other than employee entitlements, are set out below: (g) Provisions (continued) (ii) Movements in provisions (continued) 2021 Carrying amount at start of year - liabilities attributable to assets held for sale Additional provisions recognised Amounts used - acquired through business combination (note 12) Unwinding of discount Fair value loss on remeasurement of existing interest in KCGM Exchange differences Carrying amount at end of year 2020 Carrying amount at start of year Additional provisions recognised Amounts used - acquired through asset acquisition (note 13) - acquired through business combination (note 12) Unwinding of discount Exchange differences Carrying amount at end of year Rehabilitation $M Other* $M 448.5 (26.8) 80.5 - 278.9 4.2 (4.0) (9.0) 772.3 Rehabilitation $M 219.6 53.2 - 20.7 148.5 4.7 1.8 448.5 50.2 (0.2) 227.6 (46.6) - - - - 231.0 Other $M 5.8 50.6 (6.2) - - - - 50.2 *Other provisions includes estimates of stamp duty payable on the completion of past transactions. The stamp duty provision at 30 June 2021 is $225.3 million (2020: $50.2 million) and includes estimates of stamp duty for the interests in KCGM and other previous acquisitions. 163 9 Equity Accounting policy Ordinary shares are classified as equity. They entitle the holder to participate in dividends and have no par value. 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. (a) Share capital 30 June 2021 Shares 30 June 2020 Shares 30 June 2021 $M 30 June 2020 $M Ordinary shares Fully paid Total share capital (i) Movements in ordinary shares: 1,163,686,519 1,163,686,519 740,151,041 740,151,041 6,435.1 6,435.1 Details Number of shares Opening balance 1 July 2019 Employee Share Plan issues Equity issue net of transaction costs and tax Issue of shares on vesting of options/performance rights (i) Balance 30 June 2020 639,592,634 102,258 91,110,949 9,345,200 740,151,041 1,323.9 1,323.9 Total $M 473.7 1.3 808.1 40.8 1,323.9 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt (a) Share capital (continued) (i) Movements in ordinary shares: (continued) Employee Share Plan issues Equity issue net of transaction costs and tax (note 12) Issue of shares on vesting of options/performance rights (i) Closing treasury shares (i) Balance 30 June 2021 Equity 2.4 5,104.6 4.2 6,435.1 - 6,435.1 244,000 422,480,346 811,132 1,163,686,519 (150,000) 1,163,536,519 (i) During the year, 439,817 FY18 Performance Rights granted in December 2017; 196,470 FY20 STI Performance Rights granted in November and December 2019; and 24,845 FY20 Share Rights granted in November 2019 vested after their respective performance periods. These had been awarded to Directors, Key Management Personnel and other senior employees. As a result, 661,132 fully paid ordinary shares were issued on vesting of the rights. Additionally, 150,000 shares were issued to the employee share trust in relation to the FY20 restricted share grant and which are unvested at 30 June 2021. 164 Risk This section of the notes discusses the Group’s exposure to various risks and shows how these could affect the Group’s financial position and performance. 10 Financial risk management This note explains the Group's exposure to financial risks and how these risks could affect the Group’s future financial performance. Current year profit and loss information has been included where relevant to add further context. Risk Market risk - foreign exchange Market risk – interest rate Market risk – security prices Market risk - commodity price risk Credit risk Exposure arising from Future commercial transactions Measurement of risk Cash flow forecasting Borrowings at variable rates Sensitivity analysis Investments in equity securities Sensitivity analysis Fluctuations in the prevailing market prices of gold Sensitivity analysis Cash and cash equivalents and trade and other receivables Aging analysis and credit ratings Liquidity risk Borrowings and other liabilities Rolling cash flow forecasts How the risk is managed Net-off foreign exchange exposures and natural hedge mechanisms Fixed interest rates over term of borrowings on plant and equipment and monitoring of variable rates on corporate bank debt Management of equity investments Gold hedging instruments Diversification of bank deposits and credit risk where appropriate Management of availability of committed borrowing facilities and maturity The Board has the overall responsibility for the establishment and oversight of the risk management framework. The Audit and Risk Management Committee is responsible for developing and monitoring risk management policies. The Committee reports regularly to the Board on its activities. 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 Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. 165 The Group’s Audit and Risk Management 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. (a) Market risk (i) Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US$. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the functional currency of the relevant entity. The carrying value of financial instruments that are held in a currency other than the entities functional currency are as follows (expressed in Australian dollars): Financial Assets - USD Cash and cash equivalents Trade receivables Derivative financial instruments 30 June 2021 $M 30 June 2020 $M 25.6 16.6 0.4 42.6 36.9 6.4 - 43.3 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Financial risk management Financial risk management (a) Market risk (continued) (i) Foreign exchange risk (continued) Financial Assets - EUR Cash and cash equivalents 30 June 2021 $M 30 June 2020 $M 2.9 - The sensitivity of profit or loss to changes in the exchange rates arises mainly from US dollar-denominated financial instruments. A 10 percent increase in the AUD/USD exchange rate would decrease post tax profit by $3.2 million while a 10 percent decrease in the AUD/USD exchange rate would increase post tax profit by $3.9 million. Foreign currency forwards The Group uses foreign currency forwards to hedge its exposure to foreign currency risk. The group has determined the fair value of the foreign currency forwards by calculating the present value of future cash flows based on observable forward exchange rates at the balance sheet date. As the forward contracts are used to hedge forecast transactions, the group designates the full change in fair value of the forward contract as the hedging instrument and recognises the gains or losses relating to the effective portion of the change in fair value of the entire forward contract in the cash flow hedge reserve within equity. (ii) Cash flow and fair value interest rate risk The Group is exposed to interest rate risk through its longer term borrowings comprising a $500 million facility maturing 3 years from financial close and $500 million facility maturing 4 years from financial close. The Group has drawn down $662 million from these facilities. The Group is exposed to the risk of future changes in market interest rates. Holding all other variables constant, the impact on FY2021 post tax profit of a 1 percent increase/ decrease in the rate of interest on the borrowings of the Group would be a decrease/increase of $19 million. 166 Borrowings related to the purchases of plant and equipment under finance lease arrangements have fixed interest rates over their term and therefore not subject to interest rate risk as defined in AASB 7. (iii) Price risk Exposure The Group is exposed to the risk of fluctuations in the prevailing market prices for the gold and silver currently produced from its operating mines. The Group manages a component of this risk through the use of gold forward contracts and options. These contracts are accounted for as sale contracts with revenue recognised once gold has been physically delivered into the contract. The physical gold delivery contracts are considered a contract to sell a non-financial item and therefore do not fall within the scope of AASB 9 Financial Instruments. The Group's contractual sales commitments are disclosed in note 17. The Group is also exposed to equity securities price risk arising from investments held by the Group and classified in the statement of financial position as financial assets at fair value through OCI and investments accounted for using the equity method. All of the Group's equity investments are publicly traded on the Australian Securities Exchange or TSX Venture Exchange. (b) Credit risk Credit risk refers to the risk that a counter party will default on its contractual obligation resulting in financial loss to the Group. Credit risk arises from cash and cash equivalents and credit exposures to gold sales counterparties and financial counterparties. (b) Credit risk (continued) (i) Risk management The Group has adopted the policy of dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. Cash is deposited only with institutions approved by the Board, typically with a current minimum credit rating of A (or equivalent) as determined by a reputable credit rating agency e.g. Standard & Poor’s. Permitted instruments by which the Group hedges gold price risk are entered into with financial counterparties with a minimum credit of A (or equivalent). The Group has established limits on aggregate funds on term deposit or invested in money markets to be placed with a single financial counterparty and monitors credit and counterparty risk using credit default swaps. The Group sells the majority of its unhedged gold and silver to counterparties with settlement terms of no more than 2 days. The counterparties have investment grade credit ratings and the exposures, as noted, are short dated. The Group does not have any other significant credit risk exposure to a single counterparty or any group of counterparties having similar characteristics. (ii) Credit quality The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates. Trade receivables Counterparties with external credit rating AA A Counterparties without external credit rating * Other Total trade receivables Cash at bank and short-term bank deposits AA A * Other - counterparties with no defaults in the past (iii) Impaired trade receivables 30 June 2021 $M 30 June 2020 $M 17.4 - 17.4 7.9 25.3 763.0 8.9 771.9 40.3 30.9 71.2 1.3 72.5 666.7 10.6 677.3 167 In determining the recoverability of trade and other receivables, the Group performs a risk analysis considering the type and age of the outstanding receivable and the creditworthiness of the counterparty. If appropriate, an impairment loss will be recognised in profit or loss. The Group does not have any impaired Trade and other receivables as at 30 June 2021 (2020: nil). No allowance for expected credit losses has been recognised as the duration of associated exposures is short and/or the probability of default is negligible. (c) Liquidity risk The Group manages liquidity risk by monitoring immediate and forecasted cash requirements and ensures adequate cash reserves are maintained to pay debts as and when due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. At the end of the reporting period, the Group held a short term on-demand cash balance of $771.9 million (2020: $675.4 million) that was available for managing liquidity risk. Management monitors rolling forecasts of the Group's available cash reserve (comprising the undrawn borrowing facilities below and cash and cash equivalents) on the basis of expected cash flows. The Group's liquidity management policy involves seeking to maintain cash resources of at least 30 days costs of goods sold plus net interest costs. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Financial risk management Capital Management (c) Liquidity risk (continued) (i) Financing arrangements The Group had access to the following undrawn borrowing facilities at the end of the reporting year: 30 June 2021 $M 30 June 2020 $M Floating rate - Expiring beyond one year (financing facility) 338.0 - The revolving credit facilities may be drawn at any time until maturity. As part of the debt refinancing following implementation of the scheme of arrangement with Saracen Mineral Holdings Ltd, the revolving credit facilities were increased to $1 billion with revised maturities of June 2023 ($500 million, fully drawn) and June 2024 ($500 million, drawn to $162 million). Refer to note 7(c) for full details of financing facilities available to the Group. (ii) Maturities of financial liabilities The tables below analyse the Group's financial liabilities into relevant maturity groupings based on their contractual maturities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. Contractual maturities of financial liabilities At 30 June 2021 Trade and other payables Lease liabilities Secured asset financing Borrowings Total non-derivatives At 30 June 2020 Trade and other payables Lease liabilities Borrowings Total non-derivatives Less than 6 months $M 6 - 12 months $M Between 1 and 2 years $M Between 2 and 5 years $M 296.5 28.5 20.3 5.8 351.1 155.7 38.8 32.6 227.1 - 24.4 17.0 5.7 47.1 - 29.5 82.7 112.2 - 53.1 36.8 11.5 101.4 - 34.3 164.5 198.8 - 37.1 14.7 673.7 725.5 - 6.8 458.3 465.1 Total contractual cash flows $M Over 5 years $M - 5.2 1.4 - 6.6 - 11.3 - 11.3 296.5 148.2 90.3 696.7 1,231.7 155.7 120.6 738.1 1,014.4 Carrying amount liabilities $M 296.5 141.9 87.9 658.3 1,184.6 155.7 113.8 697.3 966.8 The weighted average interest rate on lease liabilities was 3.78% (2020: 4.14%). Of the $458.3 million disclosed in the 2020 borrowings time band between 2 and 5 years, the Group has early repaid $200 million on 6 July 2020. 11 Capital management (a) Risk management The Group's objectives when managing capital are to: • safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and 168 (a) Risk management (continued) In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to Shareholders, return capital to Shareholders or issue new shares. Total capital is equity, as shown in the statement of financial position. The Group is not subject to any externally imposed capital requirements. (b) Dividends (i) Ordinary shares Interim ordinary dividend for FY20 of 7.5 cents per fully paid share, payment of which was postponed in March 2020 when the Company withdrew its FY20 guidance, and was paid on 16 July 2020 Final ordinary dividend for FY20 of 9.5 cents (FY19: 7.5 cents) per fully paid ordinary share paid on 30 September 2020 Special dividend of 10 cents per fully paid share paid on 30 September 2020 Interim ordinary dividend for FY21 of 9.5 cents (FY20: 7.5 cents) per fully paid ordinary share paid on 30 March 2021 30 June 2021 $M 30 June 2020 $M 55.5 70.4 74.1 110.5 310.5 310.5 - 48.7 - - 48.7 48.7 * On 26 March 2020, the Company announced implementing prudent financial measures designed to preserve the long-term value of the business following uncertainty arising due to the COVID-19 global pandemic. In light of this, the Company deferred the payment of its interim dividend due on 30 March 2020. In accordance with Accounting Standards, the Group has not recognised a provision for this interim dividend because the liability is not incurred until the fixed time for payment arrives. The interim dividend was subsequently paid on 16 July 2020. 169 (ii) Dividends not recognised at the end of the reporting period In addition to the above dividends, since year end the Directors have recommended the payment of a final dividend of 9.5 cents per fully paid ordinary share (2020 - 7.5 cents) as at 30 June 2021, fully franked based on tax paid at 30%. The aggregate amount of the proposed dividend expected to be paid on 29 September 2021 out of retained earnings at 30 June 2021, but not recognised as a liability at year end, is Not applicable as at 30 June 2021 - Special dividend for the year ended 30 June 2020 of 10 cents per fully paid ordinary share as at 30 June 2020, fully franked based on tax paid at 30%. The aggregate amount of the proposed dividend expected to be paid on 23 September 2020 out of retained earnings from 30 June 2020, but not recognised as a liability at year end, is Not applicable as at 30 June 2021 - Interim dividend for the half year ended 31 December 2019 of 7.5 cents per fully paid ordinary share as at 30 June 2020, fully franked based on tax paid at 30% 30 June 2021 $M 30 June 2020 $M 110.5 70.3 - - 74.0 55.5 • maintain an optimal capital structure to reduce the cost of capital and maximise returns to Shareholders and benefits for other stakeholders. (iii) Franking credits At balance date the value of franking credits available (at 30%) was $321.9 million (2020: $229.1 million). The balance of franking credits disclosed in the table above is as at 30 June 2021 and does not include the expected downward revision to the franking account balance on lodgement of the Group’s FY21 Australian tax return, during FY22, and the subsequent expected refund that will be received. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Group structure This section provides information which will help users understand how the Group structure affects the financial position and performance of the Group as a whole. In particular, there is information about: • • • changes to the structure that occurred during the year as a result of business combinations and the disposal of a discontinued operation interests in joint operations interests in associates. A list of significant subsidiaries is provided in note 15. 12 Business combination Accounting policy The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the: fair values of the assets transferred; liabilities incurred to the former owners of the acquired business; equity interests issued by the Group; fair value of any asset or liability resulting from a contingent consideration arrangement; and fair value of any pre-existing equity interest in the subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The application of acquisition accounting requires significant judgement and estimates to be made, which are discussed below. The Group engages independent third parties to assist with the determination of the fair value of assets acquired, liabilities assumed, non-controlling interest, if any, and goodwill, based on recognised business valuation methodologies. The income valuation method represents the present value of future cash flows over the life of the asset using: • financial forecasts, which rely on management’s estimates of reserve quantities and exploration potential, costs to produce and develop reserves, revenues, and operating expenses; • long-term growth rates; • appropriate discount rates; and • expected future capital requirements. 170 The market valuation method uses prices paid for a similar asset by other purchasers in the market, normalised for any differences between the assets. The cost valuation method is based on the replacement cost of a comparable asset at the time of the acquisition adjusted for depreciation and economic and functional obsolescence of the asset and estimates of residual values. The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. Acquisition-related costs are expensed as incurred. The excess of the consideration transferred and the amount of any non-controlling interest in the acquiree over the acquisition date fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase. If the initial accounting for the business combination is not complete by the end of the reporting period in which the acquisition occurs, an estimate will be recorded. Subsequent to the acquisition date, but not later than one year from the acquisition date, the Group will record any material adjustments to the initial estimate based on new information obtained that would have existed as of the date of the acquisition. Business combination (a) Saracen Mineral Holdings Limited (i) Summary of the acquisition On 12 February 2021, the Company implemented the scheme of arrangement (Scheme) in relation to the merger of the Company and Saracen Mineral Holdings Limited (Saracen). In accordance with the Scheme, all Saracen shares have been transferred to Northern Star, and eligible Saracen shareholders were issued the Scheme consideration of 0.3763 Northern Star shares for each Saracen share held on the Scheme record date. Consequently, 422,480,346 Northern Star shares were issued on that date. In addition to recognising the effects of acquiring Saracen’s assets and liabilities, the transaction also results in the Company obtaining control over Kalgoorlie Consolidated Gold Mines Pty Ltd (KCGM) in which it previously held a 50 percent joint operating interest. Details of the purchase consideration and the net identifiable assets acquired are as follows: Purchase consideration Ordinary shares issued* Net purchase consideration $M 5,107.2 5,107.2 * 422,480,346 ordinary shares were issued as consideration with a deemed fair value based on the 1-day volume weighted average share price on Implementation Date of $12.09 per share. The assets and liabilities recognised as a result of the acquisition are as follows: Cash and cash equivalents Trade and other receivables Income tax receivable Inventories - finished product Inventories - gold in circuit Inventories - ore stockpiles Inventories - supplies (net of provision) Inventories - ore stockpiles (non-current) Property, plant and equipment Mine properties Deferred exploration Right of use assets Investments Trade and other payables Employee Provisions Hedgebook contract liability Lease liabilities Borrowings Employee provisions (non-current) Derivative liability (non-current) Lease liabilities (non-current) Borrowings (non-current) Deferred tax liability Provision for rehabilitation Net identifiable assets acquired 171 Provisional Fair Value $M 402.5 12.6 29.8 5.5 58.0 230.4 34.9 442.4 632.6 4,091.4 208.6 103.9 0.7 (128.7) (22.5) (57.0) (26.3) (77.0) (1.6) (8.0) (89.8) (206.0) (250.3) (278.9) 5,107.2 As outlined in the Group’s Business Combination accounting policy above, the identification of assets and liabilities and associated fair value measurement as part of acquisition accounting is subject to significant judgement and estimation. The following key estimates and judgements were required as part of the acquisition accounting for Saracen: NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt (a) Saracen Mineral Holdings Limited (a) Saracen Mineral Holdings Limited Inventory - refer to note 5(c) for estimates and judgements involved in determining acquired inventory values. Remeasuring of the equity interest in the acquiree held by the acquirer before the business combination Business combination Business combination Property, plant and equipment - expert plant valuers were engaged to assist in determining the fair values for property, plant and equipment. The valuation of these assets involved use of, among other factors, published market data, current replacement/reproduction costs, residual values, inflation factors, useful life assumptions and site inspections to determine current wear and tear. Mine Properties - in a mining transaction the residual amount of purchase consideration after all the other assets and liabilities have been identified and re-measured to reflect acquisition date fair value is typically allocated to mine properties (excluding site rehabilitation). After this allocation, further analysis in the form of discounted cash flows and market implied resource multiples are used to ensure the fair value ascribed to mine properties is fair and reasonable. Discounted cash flow analysis requires estimation of the future amount and timing of cash flows. Estimates and judgement are required in selecting the inputs for such analysis including: total ore tonnes, grade, metal recoveries, gold prices, exchange rates, future mining, processing costs and capital costs and discount rates. Analysis and cross checks to market data using implied resource multiples also requires the use of judgement when selecting comparative companies and transactions with which to perform comparisons. Hedgebook contract liability - Assessment of the gold sales contracts relative to market rates is required at the date of acquisition. Where gold sales contracts are below market rates on a net basis (i.e. unfavourable), a contract liability is recognised based on the difference in the contracted gold sales price relative to the gold price for a forward contract with the same maturity date as at the date of acquisition. Provision for rehabilitation - refer to note 7 or estimates and judgements involved in determining provisions for rehabilitation. Deferred tax - the recognition of deferred tax liabilities is directly associated with the determination of both initial accounting values and the determination and allocation of tax bases on entry into the Group’s tax consolidated group. In Saracen's case, value attributed to the underlying tenement value is non-tax deductible due to those tenements held by the acquired entities being subject to the capital gains tax rules rather than the tax depreciation rules enacted in 2001. 172 Any changes in the determination of fair values for all assets and liabilities and allocation of value for tax purposes could give rise to changes in deferred tax balances. (ii) Acquired receivables The fair value of acquired trade receivables is $12.6 million. The gross contractual amount for trade receivables due is $12.6 million, of which none is expected to be uncollectible. (iii) Revenue and profit contribution The acquired business contributed revenues of $531.6 million and net profit of $6.1 million to the group for the period 12 February 2021 to 30 June 2021. This excludes the impact of the remeasurement of the Company's initial 50 percent interest in KCGM. If the acquisition had occurred on 1 July 2020, consolidated pro-forma revenue and net profit for the year ended 30 June 2021 would have been $1,275.9 million and $14.6 million respectively, based on an extrapolation of actual results since acquisition. Purchase consideration - cash inflow Inflow of cash on acquisition of subsidiary Cash balances acquired Net inflow of cash - Investing activities Acquisition-related costs $M 402.5 402.5 Acquisition related costs of $231.1 million are included in acquisition and integration in profit or loss. We note that fair values assigned to identifiable assets, liabilities and associated tax balances above are presented on a provisional basis. The Group may recognise an adjustment to these provisional values as a result of completing fair value accounting within 12 months following acquisition date. The acquistion of Saracen Mineral Holdings Limited resulted in the Company obtaining control over KCGM, in which it previously held a 50 percent joint operating interest. As a result, there is a requirement to remeasure the Company's pre-existing 50 percent interest in KCGM to fair value. This has resulted in a pre-tax gain of $1.92 billion recognised in the statement of profit or loss and other comprehensive income. The assets and liabilities relating to the remeasurement of the Company's pre-existing 50 percent interest in KCGM to fair value are as follows: Current Assets Inventories - gold in circuit Inventories - ore stockpiles Inventories - supplies (net of provision) Non-current assets Inventories - ore stockpiles Property, plant & equipment Mine properties Deferred exploration Right of use assets Current liabilities Lease liabilities Non-current liabilities Lease liabilities Rehabilitation provision Gain on remeasurement (pre-tax) Deferred tax liability Gain on remeasurement (post-tax) $M 17.3 75.6 (3.1) 101.8 98.7 1,552.7 72.0 1.2 (0.6) (0.3) 4.0 1,919.3 (575.8) 1,343.5 (b) Prior year acquisition - KCGM 50 percent interest (i) Summary of the acquisition 173 On 3 January 2020, Northern Star ("NST") completed the acquisition of all of the shares in Kalgoorlie Lake View Pty Ltd from Newmont Goldcorp Australia Pty Ltd ("Newmont"), which holds a 50 percent interest in Kalgoorlie Consolidated Gold Mines Pty Ltd (KCGM) and in the operations and assets managed by KCGM, including the Super Pit in Kalgoorlie, Western Australia. The Group's share in KCGM is accounted for as a Joint Operation with the Group's share of asset, liabilities, income and expenses consolidated into its accounts. The Group sells its own share of gold bullion from the joint venture. Total consideration paid in respect of the acquisition was US$775.0 million (A$1,127.8 million). As part of the acquisition, NST also acquired the following from Newmont related entities: • a separate parcel of nearby Kalgoorlie tenements; and • a US$25.0 million conditionally refundable option arrangement to acquire 100 percent of the equity in GMK Investments Pty Ltd, which holds the Newmont Power business and associated assets and a six month transactional services agreement for Newmont to provide key personnel on a secondment basis to assist with the effective transition of the KCGM Operations to NST. Refer to note 7(a) for further details around $US22.5 million prepayment to acquire Newmont's Power business. As at 30 June 2020, costs associated with transaction services were expensed within acquisition and integration costs. Details of the purchase consideration and the net identifiable assets acquired are as follows: Purchase consideration Consideration paid* Associated assets acquired** Net purchase consideration $M 1,164.2 (36.4) 1,127.8 * Includes $15.6 million of foreign exchange losses recognised as part of transaction consideration resulting from hedging the currency risk between the date of signing the share sale deed and the date of completion, being 3 January 2020. ** The associated assets acquired comprise the transitional services arrangement and a conditionally refundable option arrangement to acquire the Newmont power business which supplies power to KCGM. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Business combination Business combination (b) Prior year acquisition - KCGM 50 percent interest The assets and liabilities recognised as a result of the acquisition are as follows: Cash and cash equivalents Trade and other receivables Inventories - consumables stores Inventories - gold in circuit Inventories - ore stockpiles Property, plant & equipment Mine properties Right of use assets (IFRS 16) Trade and other payables Provision for rehabilitation Lease liabilities Employee provisions Deferred tax liability Net identifiable assets acquired Fair Value $M 10.7 8.7 20.9 26.4 466.3 234.3 611.2 14.6 (40.1) (148.5) (14.6) (10.1) (51.9) 1,127.8 (b) Prior year acquisition - KCGM 50 percent interest (iii) Revenue and profit contribution The acquired business contributed revenues of $235.8 million and net profit of $26.1 million to the Group for the period 3 January 2020 to 30 June 2020. If the acquisition had occurred on 1 July 2019, consolidated pro-forma revenue and net profit for the year ended 30 June 2020 would have been $471.6 million and $52.2 million respectively, based on an extrapolation of actual results since acquisition. Purchase consideration - cash outflow Outflow of cash to acquire subsidiary net of cash acquired Consideration Less: Cash balances acquired Less: Foreign exchange movement on cash Net outflow of cash - investing activities Acquisition-related costs $M 1,164.2 10.7 15.6 26.3 1,137.9 As outlined in the Group’s Business Combination accounting policy above, the identification of assets and liabilities and associated fair value measurement as part of acquisition accounting is subject to significant judgement and estimation. The following key estimates and judgements were required as part of the acquisition accounting for KCGM: Inventory - refer note 8(f) for estimates and judgements involved in determining acquired inventory values. Acquisition related costs of $43.9 million are included in acquisition and integration expense in profit or loss. 13 Asset acquisition On the 26 August 2019, Northern Star Resources Ltd ("Northern Star") and Echo Resources Limited ("Echo") entered into a Bid Implementation Agreement, in which Northern Star offered to acquire all of the issued and outstanding ordinary shares in Echo that it did not already own. Property, plant and equipment - expert plant valuers were engaged to assist in determining the fair values for property, plant and equipment. The valuation of these assets involved use of, among other factors, published market data, current replacement/reproduction costs, residual values, inflation factors, useful life assumptions and site inspections to determine current wear and tear. 174 On 14 October 2019, Northern Star acquired control of Echo through a combination of its pre-existing stake, acceptances of the Northern Star Offer and on-market acquisitions. The takeover was completed on 6 December 2019. The total consideration paid by Northern Star was $219.8 million. 175 Mine Properties - in a mining transaction the residual amount of purchase consideration after all the other assets and liabilities have been identified and re-measured to reflect acquisition date fair value is typically allocated to mine properties (excluding site rehabilitation). After this allocation, further analysis in the form of discounted cash flows and market implied resource multiples are used to ensure the fair value ascribed to mine properties is fair and reasonable. Discounted cash flow analysis requires estimation of the future amount and timing of cash flows. Estimates and judgement are required in selecting the inputs for such analysis including: total ore tonnes, grade, metal recoveries, gold prices, exchange rates, future mining, processing costs and capital costs and discount rates. Analysis and cross checks to market data using implied resource multiples also requires the use of judgement when selecting comparative companies and transactions with which to perform comparisons. Provision for rehabilitation - refer note 8(g) for estimates and judgements involved in determining provisions for rehabilitation. Deferred tax - the recognition of deferred tax liabilities is directly associated with the determination of both initial accounting values and the determination and allocation of tax bases on entry into the Group’s tax consolidated group. Value attributed to the underlying tenement value is non-tax deductible due to those tenements held by the acquired entities being subject to the capital gains tax rules rather than the tax depreciation rules enacted in 2001. Any changes in the determination of fair values for all assets and liabilities and allocation of value for tax purposes could give rise to changes in deferred tax balances. (ii) Acquired receivables The fair value of acquired trade receivables is $7.2 million. The gross contractual amount for trade receivables due is $7.2 million, of which none is expected to be uncollectible. The Group determined the transaction represented an asset acquisition, rather than a business combination, having determined the concentration test in AASB 3 Business Combinations was met. The concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. The determination of the fair values for such assets and thus both the concentration test and any subsequent asset acquisition accounting involves the use of significant estimates and judgements. The value paid for Echo was determined to be concentrated in the value of acquired exploration and evaluation assets. The estimates and judgements required the determination of the fair value of acquired plant and equipment, including the Bronzewing processing facility. External valuation experts were used to value this plant and equipment and the valuations were made with reference to, among other factors, their current condition and location, recent price estimates, independently published external construction price guides and experience from other projects. When an asset acquisition does not constitute a business combination, the assets and liabilities are assigned a carrying amount based on their relative fair values and no deferred tax will arise in relation to the acquired assets and assumed liabilities, as the initial recognition exemption for deferred tax under AASB 112 is applied. Post acquisition, when Echo subsequently joined Northern Star's Australian tax consolidated group (6 December 2019), under Accounting Standards, these tax losses were required to be recognised. Because the other tax effects of the transaction could not be recognised on obtaining control, due to the recognition exemption, this resulted in a non-cash credit to income tax expense (refer note 7). No goodwill arises on the acquisition and transactions costs of the acquisition are included in the capitalised cost of the asset. Purchase consideration Cash paid Acquisition costs Carrying value transferred on obtaining control $M 103.3 12.9 103.6 219.8 The opening carrying value of Echo on 1 July 2019 was $16.3 million; the Company paid cash of $88.4 million prior to obtaining control; and recognised losses of $1.1 million as an associate: resulting in a total associate carrying value of $103.6 million being transferred on obtaining control. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Cash and cash equivalents Trade and other receivables Property, plant and equipment Exploration and evaluation assets Trade and other payables Provisions - other Provision for rehabilitation Net identifiable assets acquired 14 Assets classified as held for sale (a) Description Asset acquisition Fair value $M 15.8 1.2 20.5 208.6 (5.1) (0.5) (20.7) 219.8 During Q4 of FY21, the Company began marketing the sale of it's Kundana Operations, its 51% interest in each of the East Kundana Production Joint Venture and the East Kundana Exploration Joint Venture, its 75% interest in the West Kundana Farmin Joint Venture, and the Carbine / Carnage gold project ('Kundana Assets"). As at 30 June 2021 the assets were available for immediate sale and the sale was considered highly probable within a 12 month period. The associated assets and liabilities were consequently presented as held for sale. Subsequently, on 22 July 2021 the Group announced that it has entered into a binding Share and Asset Sale Agreement with Evolution Mining Ltd (ASX: EVN) for the Kundana Assets for a purchase price of $400 million cash. The transaction completed on 18 August 2021. The disposal group contributed $281.8 million (2020: $376.3 million) of revenue and $39.9 million (2020: $61.6 million) profit after tax during FY21. Gold sales for the year relating to the disposal group were 122,495oz (2020: 171,007oz). (b) Assets and liabilities of disposal group classified as held for sale 176 The following assets and liabilities were reclassified as held for sale in relation to the sale of the Kundana Assets as at 30 June 2021: Assets classified as held for sale Cash and cash equivalents Trade and other receivables Inventories Property, plant and equipment Exploration and evaluation assets Mine properties Total assets of disposal group held for sale Liabilities directly associated with assets classified as held for sale Trade and other payables Provisions Borrowings Total liabilities of disposal group held for sale Net assets held for sale Net assets held for sale 30 June 2021 $M 3.2 5.9 16.1 30.0 28.1 121.0 204.3 (14.0) (33.3) (18.0) (65.3) 139.0 15 Interests in other entities (a) Material subsidiaries The Group’s principal subsidiaries at 30 June 2021 are set out below. Unless otherwise stated, they have share capital consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership interests held equals the voting rights held by the Group. The country of incorporation or registration is also their principal place of business. Name of entity Northern Star Mining Services Pty Ltd Northern Star (Kanowna) Pty Ltd Kundana Gold Pty Ltd Gilt-Edged Mining Pty Ltd EKJV Management Pty Ltd Kanowna Mines Pty Ltd GKL Properties Pty Ltd Northern Star (Tanami) Pty Ltd Northern Star (Western Tanami) Pty Ltd Northern Star (South Kalgoorlie) Pty Ltd Northern Star (HBJ) Pty Ltd Northern Star (Hampton Gold Mining Areas) Limited Northern Star (Holdings) Pty Ltd Northern Star (Alaska) Incorporated Northern Star (Alaska) LLC Northern Star (Pogo) LLC Northern Star (Pogo Two) LLC Stone Boy Inc. Northern Star (KLV) Pty Ltd Kalgoorlie Consolidated Gold Mines Pty Ltd Northern Star (Bronzewing) Pty Ltd Northern Star (Yandal Consolidated) Pty Ltd Northern Star (Echo Mining) Pty Ltd Northern Star (MKO) Pty Ltd Northern Star (Saracen Kalgoorlie) Pty Ltd Northern Star (Carosue Dam) Pty Ltd Northern Star (Thunderbox) Pty Ltd Northern Star (Saracen) Pty Ltd Northern Star (Saracen Goldfields) Pty Ltd Northern Star (Bundarra) Pty Ltd Northern Star (SR Mining) Pty Ltd Northern Star (Sinclair) Pty Ltd Northern Star (Talisman) Pty Ltd Country of incorporation Ownership interest held by the Group 2021 % 2020 % Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia England & Wales Australia United States of America United States of America United States of America United States of America United States of America Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 50.0 100.0 100.0 100.0 100.0 - - - - - - - - - 177 For information regarding entities party to a deed of cross guarantee refer to note 23. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt (b) Joint arrangements FMG JV Mt Clement JV East Kundana Production JV Kanowna West JV Kalbara JV West Kundana JV Zebina JV Acra JV Robertson JV Cheroona JV KCGM Sorrento JV Jundee JV Phantom Well JV Nexus JV AngloGold JV Interests in other entities Further details Principal Activities Exploration Exploration Exploration & Production Exploration Exploration Exploration Exploration Exploration Exploration Exploration Exploration & Production Exploration Exploration Exploration Exploration Exploration Ownership interest held 2020 % 66.73 20.00 51.00 89.95 71.39 75.50 80.00 75.00 40.00 30.00 50.00 70.00 70.00 - - - 2021 % 67.72 0 51.00 92.42 71.42 75.50 80.00 75.00 40.00 30.00 100 70.00 70.00 86.98 10.00 30.00 This section of the notes includes other information that must be disclosed to comply with the accounting standards and other pronouncements, but that is not immediately related to individual line items in the financial statements. 16 Contingent liabilities (a) Contingent liabilities The Group had no contingent liabilities at 30 June 2021. 17 Commitments (a) Capital commitments Significant capital expenditure contracted for at the end of the reporting year but not recognised as liabilities is as follows: Property, plant and equipment 30 June 2021 $M 30 June 2020 $M 266.5 38.1 The joint arrangements listed above are classified as joint operations and are not separate legal entities. They are contractual arrangements between participants for the sharing of costs and outputs and do not themselves generate revenue and profit. The joint operations are of the type where initially one party contributes tenements with the other party earning a specified percentage by funding exploration activities; thereafter the parties often share exploration and development costs and output in proportion to their ownership of joint venture assets. The joint operations are accounted for in accordance with the Group's accounting policy set out in note 25. 30 June 2021 capital commitments includes $153.6 million in relation to KCGM mining fleet upgrade and $23.3 million in relation to the Thunderbox mill expansion. (b) Gold delivery commitments Australian dollar gold delivery commitments as at 30 June 2021 were as follows: 178 Gold for physical delivery (Ounces) 502,570 299,000 Weighted average contracted sales price (A$/oz) 2,290 2,278 Value of committed sales (A$M) 1,150.9 618.2 179 Within one year Later than one year but not later than five years There were no US dollar gold delivery commitments as at 30 June 2021. 18 Events occurring after the reporting period Subsequent to the period ended 30 June 2021 the Company announced: • a final fully franked dividend of 9.5 cents per share to Shareholders on the record date of 7 September 2021, payable on 29 September 2021 • On 22 July 2021 the Group announced that it has entered into a binding Share and Asset Sale Agreement with Evolution Mining Ltd (ASX: EVN) for the sale of Northern Star’s Kundana Operations, its 51% interest in each of the East Kundana Production Joint Venture and the East Kundana Exploration Joint Venture, its 75% interest in the West Kundana Farmin Joint Venture, and the Carbine / Carnage gold project ("Kundana Assets") for a purchase price of $400 million cash (plus a working capital adjustment). Evolution offered employment contracts to and assumed liabilities for all of Northern Star’s transferring employees. The transaction completed on 18 August 2021 with Evolution taking economic ownership from 1 August 2021. As at 30 June 2021 the Kundana Assets had a net asset value of $139.0 million. Refer to note 14 for details and treatment of the transaction as at 30 June 2021. • On 2 August 2021, the Company entered into a contract with GR Engineering Services Limited (GNG) in relation to the Thunderbox 6Mtpa expansion project for a contract sum of $101 million. 19 Related party transactions (a) Subsidiaries Interests in subsidiaries are set out in note 15(a). NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Related party transactions Share-based payments (b) Key management personnel compensation Short-term employee benefits Employee entitlements Post-employment benefits Share-based payments 30 June 2021 $000 6,911.2 116.9 242.4 7,114.3 14,384.8 30 June 2020 $000 4,829.3 528.9 201.7 3,282.3 8,842.2 (c) Transactions with other related parties (i) Purchases from entities controlled by key management personnel The Company has in place policies and procedures which govern transactions involving KMPs and their related parties, and these policies and procedures restrict the involvement of the KMP or related party in the negotiation, awarding or direct management of the resultant contract. In the Company’s 2017 Annual Report, specifically Note 18 to the Consolidated Financial Statements, the Company reported that the beneficial minority interest of 23% held by Mr Beament in AUD Pty Ltd, the sole shareholder of Australian Underground Drilling Pty Ltd (AUD), being a supplier of goods and services to the Company, did not require reporting under the Accounting Standards. For the purposes of the FY21 Annual Report, the Company is of the same view, having applied the necessary criteria under the Australian Accounting Standards for FY21. Mr Beament retired from the Company and Board on 1 July 2021. AUD is a material supplier due to the aggregate total of fees paid, the nature of the services provided to the Company by the supplier, and the place the supplier has in the Company’s risk mitigation strategy, in seeking to maintain diversity amongst its suppliers where it is commercially feasible to do so, to ensure that there is no reliance by the Company on one supplier for a particular service across all the Company’s operations. The Independent Directors’ unanimous view on 30 June 2021 remained that the continuing contractual relationship between the Company and AUD was during FY21 more beneficial to the Company than terminating the contract would have been. The results of the multiple party tender processes have demonstrated that there was no comparable supplier with the capacity at the time of the tenders to provide the services for the same quality, productivity rates and price offered by AUD. Further, the selection of AUD was and remains consistent with the Company- wide risk mitigation strategy in striving for diversity in its supply chain, having regard to the other suppliers providing underground diamond drilling services to the Company’s other operations (in which Mr Beament has no shareholding or other basis for inferring a significant influence). The addition of Pogo,100% of the KCGM Operations, Carosue Dam Operations and Thunderbox Operations further increased the diversity and improved the risk mitigation strategy. The following transaction occurred with relates parties: Shirley In'tVeld: • is a board member of CSIRO. During the year, a revenue amount of $59,101 was paid to this business for consulting services provided at normal commercial rates (2020: $216,729). 20 Share-based payments (a) Employee Share Plan Under the Employee Share Plan, eligible employees may be granted up to $1,000 of fully paid ordinary shares in the Company annually for no cash consideration. The number of shares issued to participants in the scheme is the offer amount divided by the weighted average price at which the Company’s shares are traded on the ASX during the week up to and including the date of grant. The fair value of shares issued during the year was $9.90 (2020: $12.71) per share. 2021 2020 Number of shares issued under the plan to participating employees on 17 June 2021 (2020: 26 June) 244,000 102,258 180 (b) Performance Share Plan No performance shares were issued in the year ended 30 June 2021 (2020: Nil). Total performance shares on issue at 30 June 2021 is 1,091,001 (2020: 1,091,001), with a corresponding total non-recourse loan value of $801,295 (2020: $1,114,557). (c) Performance Rights, NED Share Rights and Restricted Shares Performance rights A performance right is a conditional right which, upon the satisfaction or waiver of the relevant vesting conditions, and, if required by the Company the exercise of that right, entitles its holder to receive one share. During the year, the Company issued 1,155,477 long term incentive (LTI) rights and 489,671 short term incentive (STI) rights to senior management, including key management personnel. The rights were issued under the FY20 share plan as refreshed at the Company's annual general meeting on 25 November 2020. During the year, 245,266 FY2021 LTI rights and 14,801 FY2021 STI rights were forfeited. The number of performance rights outstanding as at 30 June 2021 in relation to the FY2021 grant is 1,385,081. During the prior year, the Company issued 1,202,463 LTI rights (1,129,894 remain on issue at 30 June 2021) and 494,422 STI rights (nil on issue at 30 June 2021) to senior management, including key management personnel. The rights were issued under the FY20 share plan as approved at the Company's annual general meeting on 14 November 2020. Since grant date, 72,569 FY2020 LTI rights and 9,203 FY2020 STI rights were forfeited, while 196,470 FY2020 STI rights vested. NED Share Rights A NED share right is a conditional right to a fully paid ordinary share, where vesting is measured on 30 June in each financial year of issue, based on the length of time the NED was on the Board, with pro-rata reduction where the Director ceases to be a director before the end of the relevant financial year. During the year, the Company issued 18,560 NED share rights to Non-executive Directors. The NED share rights were issued under the FY20 NED share plan as approved at the Company's annual general meeting on 14 November 2020. During the year 1,403 NED share rights were forfeited. The number of NED share rights outstanding as at 30 June 2021 in relation to the FY2021 grant is 17,157. During the prior year, the Company issued 24,845 NED share rights to Non-executive Directors. The rights were issued under the FY20 NED share plan as approved at the Company's annual general meeting on 14 November 2020. All of the FY 2020 NED share rights have vested. 181 Restricted Shares Restricted shares are time-tested shares under holding lock with no performance conditions other than remaining employed by a certain date. No restricted shares were issued during the current year. During the prior year, 150,000 restricted shares (all of which remain on issue at 30 June 2021) were issued under the FY20 Retention Share Plan. For each of the above grants, the weighted average assessed fair value at grant date is as follows: LTI Performance Rights STI Performance Rights NED Share Rights Restricted Shares Weighted average fair value at grant date FY2021 grant $11.15 $14.26 $14.74 n/a FY2020 grant $7.04 $10.26 $9.21 $14.64 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt (c) Performance Rights, NED Share Rights and Restricted Shares (continued) (c) Performance Rights, NED Share Rights and Restricted Shares (continued) Share-based payments Share-based payments The fair value of LTI performance rights at grant date is independently determined using a Monte Carlo simulation model (market based vesting conditions) and a Black Scholes Model (non market vesting conditions) that takes into account the term of the performance rights, the impact of dilution (where material), the share price at grant date and expected volatility of the underlying share, the expected dividend yield, the risk-free rate for the term of the performance right and the correlations and volatilities of the peer group companies. The model inputs for LTI performance rights granted during the current and prior year included: FY21 LTI Rights - Grant 1 (a) Exercise price (b) Grant date (c) Commencement of performance period (d) Expiry date (e) Share price at grant date (f) Expected volatility of the company's shares (g) Expected volatility of the index (h) Expected dividend yield (i) Risk-free interest rate FY21 LTI Rights - Grant 2 (a) Exercise price (b) Grant date (c) Commencement of performance period (d) Expiry date (e) Share price at grant date (f) Expected volatility of the company's shares (g) Expected volatility of the index (h) Expected dividend yield (i) Risk-free interest rate Tranche A, C Nil 25/11/2020 1/07/2020 30/06/2023 $12.52 50% n/a 1.30% 0.13% Tranche A, C Nil 2/02/2021 12/02/2021 30/06/2023 $13.06 50% n/a 1.30% 0.11% Tranche B Nil 25/11/2020 1/07/2020 30/06/2023 $12.52 50% 35% 1.30% 0.13% Tranche B Nil 2/02/2021 12/02/2021 30/06/2023 $13.06 50% 35% 1.30% 0.11% Tranche D, F Nil 30/10/2020 1/07/2020 30/06/2023 $14.85 50% n/a 1.30% 0.13% Tranche D, F Nil 12/02/2021 12/02/2021 30/06/2023 $12.06 50% n/a 1.30% 0.11% Tranche E Nil 30/10/2020 1/07/2020 30/06/2023 $14.85 50% 35% 1.30% 0.13% Tranche E Nil 12/02/2021 12/02/2021 30/06/2023 $12.06 50% 35% 1.30% 0.11% 182 FY20 LTI Rights (a) Exercise price (b) Grant date (c) Commencement of performance period (d) Expiry date (e) Share price at grant date (f) Expected volatility of the company's shares (g) Expected dividend yield (h) Risk-free interest rate Tranche A, B, C Nil 14/11/2019 1/07/2019 30/06/2022 $9.21 40% 1.51% 0.74% Tranche D, E, F Nil 20/12/2019 1/07/2019 30/06/2022 $10.70 40% 1.51% 0.85% The fair value of STI performance rights, NED share rights and Restricted Shares at grant date is determined by reference to the share price on grant date. The valuation inputs for STI performance rights, NED share rights and Restricted Shares granted during the current and prior year included: (a) Exercise price (b) Grant date (c) Commencement of performance period (d) Expiry date (e) Share price at grant date FY21 STI Rights Tranche A Nil 25/11/20 1/7/20 30/6/21 $12.52 Tranche B Nil 30/10/20 1/7/20 30/6/21 $14.85 FY21 NED Share Rights Nil 13/07/2020 1/7/20 30/6/21 $14.74 (a) Exercise price (b) Grant date (c) Commencement of performance period (d) Expiry date (e) Share price at grant date FY20 STI Rights Tranche A Nil 14/11/2019 1/07/2019 30/06/2021 $9.21 Tranche B Nil 20/12/2019 1/07/2019 30/06/2021 $10.70 Restricted Shares Nil 25/05/2020 1/06/2020 30/06/2021 $14.64 FY20 NED Share Rights Nil 14/11/2019 1/07/2019 30/06/2020 $9.21 The expected volatility is based on the historic volatility over a period comparable to the remaining life of the performance rights. Total share based payments expense for the year ended 30 June 2021 was $13.0 million (2020: $7.9 million) 21 Remuneration of auditors During the year the following fees were paid or payable for services provided by the auditor of the parent entity, Northern Star Resources Limited, its related practices and non-related audit firms: (a) Deloitte Touche Tohmatsu (i) Audit and other assurance services Audit and other assurance services Subsidiaries & joint arrangements Group Total remuneration for audit and other assurance services (ii) Other services Statutory assurance services required by legislation to be provided by the auditor Consulting services Total remuneration for other services 2021 $000 23.6 748.3 771.9 57.8 - 57.8 2020 $000 33.1 548.2 581.3 53.9 31.5 85.4 183 Total remuneration of Deloitte Touche Tohmatsu 829.7 666.7 (b) Other auditors and their related network firms (i) Audit and other assurance services Audit and review of financial statements 5.0 77.0 Total auditors' remuneration 834.7 743.7 It is the Group's policy to employ Deloitte Touche Tohmatsu on assignments additional to their statutory audit duties where Deloitte Touche Tohmatsu expertise and experience with the Group are important. These assignments are principally tax advice and due diligence reporting on acquisitions, or where Deloitte Touche Tohmatsu is awarded assignments on a competitive basis. It is the Group's policy to seek competitive tenders for all major consulting projects. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt 22 Earnings per share Basic earnings per share is calculated by dividing: • the profit attributable to owners of the Company • by the weighted average numbers of ordinary shares outstanding during the financial year, excluding treasury shares. 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. (a) Basic earnings per share From continuing operations attributable to the ordinary equity holders of the company Total basic earnings per share attributable to the ordinary equity holders of the Company (b) Diluted earnings per share 184 From continuing operations attributable to the ordinary equity holders of the company Total diluted earnings per share attributable to the ordinary equity holders of the Company (c) Reconciliation of earnings used in calculating earnings per share 30 June 2021 Cents 30 June 2020 Cents 114.7 114.7 37.3 37.3 30 June 2021 Cents 30 June 2020 Cents 114.3 114.3 37.2 37.2 30 June 2021 $M 30 June 2020 $M Basic earnings per share Profit/(loss) attributable to the ordinary equity holders of the Company used in calculating basic earnings per share: From continuing operations 1,032.5 258.3 Diluted earnings per share Profit from continuing operations attributable to the ordinary equity holders of the Company Used in calculating basic earnings per share 1,032.5 258.3 (d) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share Earnings per share 2021 Number 2020 Number 900,489,284 692,635,283 Adjustments for calculation of diluted earnings per share: Rights Weighted average number of ordinary and potential ordinary shares used as the denominator in calculating diluted earnings per share 3,094,790 2,623,651 903,584,074 695,258,934 23 Deed of cross guarantee The Australian incorporated subsidiaries detailed in note 15 are each a party to a Deed of Cross Guarantee dated 14 May 2014, as varied (Deed), and have the benefit of ASIC relief from the requirements to prepare and lodge with ASIC audited financial reports in accordance with Part 2M.3 of the Corporations Act, pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 dated 17 December 2016 (Instrument). Under the Deed, each entity in the Group guarantees to each creditor payment in full of any debt in the event of winding up of any of the entities under certain provisions of the Corporations Act. In the event of a winding up of an entity under other provisions of the Corporations Act, the other entities in the Group will only be liable to make up any shortfall of funds if after six months any creditor has not been paid in full. The effect of the covenants given by the entities under the Deed is to make the Company Group akin to a single legal entity from a financial perspective. Closed Group: Northern Star Resources Limited; Northern Star (Kanowna) Pty Limited; • • • Gilt-Edged Mining Pty Limited; Kundana Gold Pty Limited; • Northern Star (HBJ) Pty Ltd; • Northern Star (Holdings) Pty Ltd; • Northern Star (South Kalgoorlie) Pty Ltd; • Northern Star Mining Services Pty Limited; • Northern Star (KLV) Pty Limited; • Northern Star (Saracen) Pty Ltd; • Northern Star (Saracen Kalgoorlie) Pty Ltd; • Northern Star (Carosue Dam) Pty Ltd; and • Northern Star (Thunderbox) Pty Ltd; • Extended Closed Group: • GKL Properties Pty Limited; • • • • • • • • • • • • • • EKJV Management Pty Limited; Kanowna Mines Pty Limited; Northern Star (Tanami) Pty Ltd; Northern Star (Western Tanami) Pty Limited; Northern Star (Bronzewing) Pty Ltd; Northern Star (Yandal Consolidated) Pty Ltd; Northern Star (Echo Mining) Pty Ltd; Northern Star (MKO) Pty Ltd; Northern Star (Saracen Goldfields) Pty Ltd; Northern Star (Bundarra) Pty Ltd; Northern Star (SR Mining) Pty Ltd; Northern Star (Sinclair) Pty Ltd; Northern Star (Talisman) Pty Ltd; and Kalgoorlie Consolidated Gold Mines Pty Ltd 185 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Deed of cross guarantee Parent entity financial information (e) Determining the parent entity financial information (continued) (ii) Tax consolidation legislation Northern Star Resources Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. The head entity, Northern Star Resources Limited, and the controlled entities in the tax consolidated Group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated Group continues to be a stand-alone taxpayer in its own right. In addition to its own current and deferred tax amounts, Northern Star Resources Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated Group. The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate Northern Star Resources Limited for any current tax payable assumed and are compensated by Northern Star Resources Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Northern Star Resources Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements. The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts receivable from or payable to other entities in the Group. Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities. 187 The above companies represent the ‘closed group’ and the 'extended closed group' for the purposes of instrument 2016/785, which represent the entities who are parties to the deed of cross guarantee and which are controlled by Northern Star Resources Limited. Note that since the balance date, a deed of revocation has been executed to remove the following entities from the closed group and extended closed group (as the case may be) effective 18 August 2021, as part of the completion of the sale of the Kundana assets to Evolution Mining Limited: Gilt-Edged Mining Pty Limited, Kundana Gold Pty Limited, and EKJV Management Pty Limited. With the exception of the amounts relating to Pogo's operations as disclosed at note 2, the consolidated statement of profit or loss and other comprehensive income and statement of financial position for the closed group is materially consistent with those of the consolidated entity. 24 Parent entity financial information (a) Summary financial information The individual financial statements for the parent entity, Northern Star Resources Limited, show the following aggregate amounts: Balance sheet Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Shareholders' equity Issued capital Reserves 186 Financial assets at fair value through OCI Cash flow hedges Share-based payments Share of other comprehensive income of associates and joint ventures accounted for using the equity method Retained earnings Profit for the year 30 June 2021 $M 30 June 2020 $M 445.6 7,121.2 7,566.8 (206.4) (1,081.6) (1,288.0) 766.3 1,974.7 2,741.1 (405.2) (746.2) (1,151.5) 6,436.1 1,323.9 11.2 0.4 15.6 0.1 (184.5) (144.2) (15.1) - 10.4 0.2 270.2 86.3 Total comprehensive income (172.1) 78.2 (b) Guarantees entered into by the parent entity Refer to note 23 for details of guarantees entered into by the parent entity in relation to the debts of its subsidiaries. (c) Contingent liabilities of the parent entity Refer to note 16 for details of contingent liabilities relating to the parent entity as at 30 June 2021 or 30 June 2020. (d) Contractual commitments for the acquisition of property, plant or equipment Refer to note 17 for commitments of the Group for the acquisition of property, plant and equipment as at 30 June 2021 or 30 June 2020. (e) Determining the parent entity financial information The financial information for the parent entity, Northern Star Resources Limited, has been prepared on the same basis as the consolidated financial statements, except as set out below. (i) Investments in subsidiaries, associates and joint venture entities Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial statements of Northern Star Resources Limited. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt 25 Summary of significant accounting policies This note provides a list of the significant accounting policies adopted in the preparation of these consolidated financial statements to the extent they have not already been disclosed in the other notes above. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the Group consisting of Northern Star Resources Limited and its subsidiaries. (a) Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Northern Star Resources Limited is a for-profit entity for the purpose of preparing the financial statements. (i) Compliance with IFRS Compliance with Australian Accounting Standards ensures that the financial statements and notes of the Company and the Group complies with international financial reporting standards (IFRS). (ii) Historical cost convention The financial statements have been prepared on a historical cost basis, except for the following: • financial assets at fair value through other comprehensive income, financial assets and liabilities (including derivative instruments); and (iii) New and amended standards adopted by the group The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. With the exception of AASB 2018-6 Amendments to Australian Accounting Standards - Definition of a Business, any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Refer to note for details of changes to accounting policies in the current financial year. Any significant impact of the accounting policies of the Group from the adoption of these Accounting Standards and Interpretations are disclosed below. Summary of significant accounting policies (b) Principles of consolidation (i) Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity where the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated. The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Northern Star Resources Limited ('Company' or 'parent entity') as at 30 June 2021 and the results of all subsidiaries for the year then ended. Northern Star Resources Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity. (ii) Joint arrangements Under AASB 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. Northern Star Resources Limited has only joint operations. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. Joint operations Northern Star Resources Limited Limited recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings. Details of the joint operation are set out in note 15(b). (iv) Accounting Standards issued but not yet effective (iii) Changes in ownership interests 188 The following changes in Accounting Standards have been issued but are not yet effective: AASB 16 Property, Plant and Equipment. A change to the treatment of proceeds which are received from selling gold recovered from a mine before that mine is considered capable of operating in the manner intended by management (i.e. pre-commercial production). Under the current guidelines, in respect of pre commercial production, revenue and the associated cost of sale is excluded from profit or loss (earnings) and are included in capital (balance sheet) and offset against the costs of developing the mine. The changes referred to above must be adopted by the Group from 1 July 2022, including the required restatement of comparatives for mines that were deemed in pre commercial production phase before 1 July 2021 (being the start of the earliest comparative period). The changes will require sales proceeds, along with their cost of sale, to be recognised in profit or loss (earnings). The cost of sale must be determined with respect to the accounting rules for measurement of inventory. This will require the Company to allocate some of the costs during the pre-commercial production phase to operating activities (producing saleable gold), whereas under the current guidelines all such costs have been treated as capital. As required by Accounting Standards, depreciation of mine properties will continue to only commence when an asset is placed into commercial production. Consequently, cost of sales expensed on sale of gold during a pre-commercial production phase will not include depreciation charges. The required changes outlined above are expected to increase revenues and bring forward the recognition of costs to the income statement (which may increase or decrease profit and loss depending on whether the revenues generated are greater than the costs of sale). Over the life of a mining project the net impact to profit and loss will be nil, however the proportional allocation of expenses between mining, processing and other costs and depreciation will alter due to the change in treatment outlined above. The impact of the changes outlined on the opening comparative amounts at 1 July 2021 for mines not in commercial production at that date have not yet been determined. The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of Northern Star Resources Limited. 189 When the Group ceases to consolidate or equity account for an investment because of a loss of control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. (c) Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in Australian dollar ($), which is Northern Star Resources Limited's functional and presentation currency. (d) Business combinations The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the • • • fair values of the assets transferred liabilities incurred to the former owners of the acquired business equity interests issued by the Group NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt (d) Business combinations (continued) (e) Impairment of assets (continued) Summary of significant accounting policies Summary of significant accounting policies • • fair value of any asset or liability resulting from a contingent consideration arrangement, and fair value of any pre-existing equity interest in the subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. Acquisition-related costs are expensed as incurred. The excess of the: • • • consideration transferred, amount of any non-controlling interest in the acquired entity, and acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss. If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss. The excess of the consideration transferred and the amount of any non-controlling interest in the acquiree over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase. (e) Impairment of assets At each reporting date, the Group reviews the carrying amounts of its tangible and other intangible assets to determine whether there is any indication that those assets might be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any) which is the amount by which the assets carrying value exceeds its recoverable amount. Where the asset does not generate cash in-flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit (CGU) to which the asset belongs. The recoverable amount is the higher of fair value less costs to sell (FVLCS) and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately. Where an impairment loss subsequently reverses for assets other than goodwill, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or CGU) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately. 190 Estimates of quantities of recoverable minerals, production levels, operating costs and capital requirements are sourced from out planning process, including the LOM plans, five-year plans, one-year budgets and CGU-specific studies. The determination of FVLCS for each CGU are considered to be Level 3 fair value measurements, as they are derived from valuation techniques that include inputs that are not based on observable market data. The Group considers the inputs and the valuation approach to be consistent with the approach taken by market participants. (f) Non-current assets (or disposal groups) held for sale and discontinued operations Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement. An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition. Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised. Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet. A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit or loss. The assets classified as held for sale as at 30 June 2021, as disclosed at note 14, do not represent a separate major line of business or geographical area of operations and therefore are not deemed to be a discontinued operation. 191 (g) Investments and other financial assets (i) Classification The Group classifies its financial assets in the following measurement categories: • • those to be measured subsequently at fair value (either through OCI or through profit or loss), and those to be measured 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 assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). The Group reclassifies debt investments when and only when its business model for managing those assets changes. (ii) Measurement At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt Summary of significant accounting policies (g) Investments and other financial assets (continued) (ii) Measurement (continued) Debt instruments Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments: • • • Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the consolidated statement of profit or loss. FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in the consolidated statement of profit or loss. FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises. Equity instruments 192 The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to 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. Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the consolidated statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value. (iii) Impairment From 1 July 2020, the Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. (h) Rounding of amounts The Company is of a kind referred to ASIC Legislative Instrument 2016/191, relating to the 'rounding off' of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with the instrument to the nearest thousand dollars, or in certain cases, the nearest dollar. (i) 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. 193 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 ABN: 43 092 832 892 Registered Office: Level 1, 388 Hay Street, Subiaco 6008, Western Australia PO Box 2008, Subiaco 6904, Western Australia Tel: +61 8 6188 2100 Fax: +61 8 6188 2111 Email: info@nsrltd.com Web: www.nsrltd.com DIRECTORS’ DECLARATION In the Directors' opinion: (a) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; (b) The financial statements and notes for the year ended 30 June 2021 set out on pages 133 to 192 (FY21 Financial Report) comply with the Corporations Act 2001 (Cth), the Corporations Regulations 2001, Australian Accounting Standards and international financial reporting standards, and other mandatory professional reporting requirements; (c) The FY21 Financial Report gives a true and fair view of the consolidated entity's financial position as at 30 June 2021 and of its performance for the year ended on that date; and (d) At the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identified in note 23 will be able to meet any obligations or liabilities to which they are, or may become, subject by the virtue of the deed of cross guarantee described in note 23. Note 25(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The Directors have been given the declarations by the Managing Director & Chief Executive Officer and the Chief Financial Officer required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of Directors. MICHAEL CHANEY Chairman Northern Star Resources Limited 24 August 2021 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt Deloitte Touche Tohmatsu ABN 74 490 121 060 Tower 2, Brookfield Place 123 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia Tel: +61 8 9365 7000 Fax: +61 8 9365 7001 www.deloitte.com.au Independent Auditor’s Report to the members of Northern Star Resources Limited RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt Opinion 194 We have audited the financial report of Northern Star Resources Limited (the “Company”) and its subsidiaries (the “Group”) which comprises the consolidated statement of financial position as at 30 June 2021,, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: • Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for the year then ended; and • Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & 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 for 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. KKeeyy AAuuddiitt MMaatttteerr HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt MMaatttteerr AAccqquuiissiittiioonn ooff SSaarraacceenn MMiinneerraall HHoollddiinnggss LLiimmiitteedd Effective 12 February 2021, the Group acquired 100% of the share capital of Saracen Mineral Holdings Limited. Significant judgement was required in assessing the appropriateness of the allocation of consideration transferred to certain identifiable assets acquired, and liabilities assumed, including: • • • • • non-current ore stockpiles which relies upon judgements in relation to ore volumes and grades, future processing costs, future gold price estimates and discount rate assumptions; property, plant and equipment which requires assessment of value allocation between certain asset classes, judgements relating to useful lives and assumed residual values; the provision for rehabilitation, which is dependent upon forecasted closure estimates, timing of future rehabilitation activity, inflation and discount rate assumptions; consideration of whether goodwill arises on the transaction; and the impact of the transaction on associated tax balances, including the deferred tax impact on reset cost bases. Our procedures, included but were not limited to: • • • • • • reviewing the scheme booklet to understand the nature of the merger and the implied consideration; obtaining a copy of management’s experts’ valuation report commissioned to determine the fair values of the assets and liabilities associated with the acquisition; assessing the independence, competence and objectivity of management’s experts; assessing in conjunction with internal valuations specialists the identification of assets acquired and liabilities assumed and the appropriateness of the methodologies and assumptions utilised by management and their experts in relation to the following: • Non-Current Ore Stocks; assessing the forecast gold price, future processing costs, ore grades and ore volumes, expected timing of processing, and discount rate assumptions applied as well as the overall methodology adopted to valuing inventory; Property, plant and equipment: assessing the methodologies applied in valuing assets and the resulting valuations adopted having regard to asset condition, age, useful life and life of mine; Rehabilitation Provision: agreeing rehabilitation cost estimates to underlying closure estimates and assessing the assumptions applied to determining the liability at acquisition. • • evaluating whether the transaction gave rise to goodwill on acquisition; and assessing the calculation of taxes payable and the recognition of deferred tax balances on the transaction with assistance from internal tax specialists. We also assessed the appropriateness of the disclosures included in Note 12 to the financial statements and the remeasurement on the existing 50% ownership of KCGM by Northern Star Resources. 195 Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte organisation. Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte organisation. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt AAccccoouunnttiinngg ffoorr mmiinnee pprrooppeerrttiieess As at 30 June 2021, the carrying value of mine properties amounts to $6,684.1 million as disclosed in Note 8(d). The carrying value has increased primarily due to $348.8 million of capital expenditure, $4,091.4 million of acquired mine properties and $1,552.7 million associated with the remeasurement of KCGM interest, offset by related amortisation expenses of $445.1 million. The accounting for underground mining operations includes a number of estimates and judgements, including: • • the allocation of mining costs between operating and capital expenditure; and determination of the units of production used to amortise mine properties. A key driver of the allocation of costs between operating and capital expenditure is the physical mining data associated with the different underground mining activities including the development of declines, lateral and vertical development, as well as capital non-sustaining costs. 196 For the allocation of mining costs our procedures included, but were not limited to: • • obtaining an understanding and testing of the key controls management has in place in relation to the capitalisation of underground mining expenditure and the production of physical underground mining data; and assessing the appropriateness of the allocation of costs between operating and capital expenditure based on the nature of the underlying activity, and recalculating the allocation based on the underlying physical data. For the Group’s unit of production amortisation calculations our procedures included, but were not limited to: • • • obtaining an understanding of the key controls management has in place in relation to the calculation of the unit of production amortisation rate; testing the mathematical accuracy of the rates applied; and agreeing the inputs to source documentation, including: - the allocation of contained ounces to the specific mine properties; the contained ounces to the applicable reserves statement; and the anticipated development expenditure to life of mine models. These were assessed for reasonableness compared to historical development expenditure for the respective operations. - - RReehhaabbiilliittaattiioonn pprroovviissiioonn As at 30 June 2021 a rehabilitation provision of $772.3 million has been recognised as disclosed in Note 8(g). Judgement is required in the determination of the rehabilitation provision, including: • • assumptions relating to the manner in which rehabilitation will be undertaken; and scope and quantum of costs, and timing of the rehabilitation activities. We also assessed the appropriateness of the disclosures included in Note 8(d) to the financial statements. Our procedures included, but were not limited to: • • • • obtaining an understanding of the key controls management has in place to estimate the rehabilitation provision; agreeing rehabilitation cost estimates to underlying support, including where applicable reports from external experts; assessing the independence, competence and objectivity of experts used by management; confirming the closure and related rehabilitation dates are consistent with the latest estimates of life of mines; • • comparing the inflation and discount rates to available market information; and testing the mathematical accuracy of the rehabilitation provision. We also assessed the appropriateness of the disclosures included in Note 8(g) to the financial statements. Our procedures included, but were not limited to: • • • assessed the measurement requirements of the mineralised waste stockpiles in accordance with relevant accounting standards; enquired with relevant operational personnel and management with respect to the current and future life of mine plans in light of recently announced reserve and resources upgrades; and assessed management’s determination of the net realisable value of the mineralised waste stockpiles with reference to the future processing expectations as a consequence of the above. We also assessed the appropriateness of the disclosures included in Note 5(c) to the financial statements. 197 WWrriittee ddoowwnn ooff KKCCGGMM mmiinneerraalliisseedd wwaassttee ssttoocckkppiilleess As at 30 June 2021 an expense of $436.6 million has been recognised in relation to the mineralised waste stockpiles at KCGM which had initially been recognised as an asset at fair value on the acquisition of Saracen Mineral Holdings Limited as dis- closed in Note 5(c). At 30 June 2021 this inventory is required to be measured at the lower of cost and net realisable value in accordance with AASB 102 Inventories. Judgement was required in determining the net realisable value of this mineralised waste at year end. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2021, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 FInancIal RepoRt FInancIal RepoRt RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 85 to 127 of the Directors’ Report for the year ended 30 June 2021. In our opinion, the Remuneration Report of Northern Star Resources Limited, for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. DDEELLOOIITTTTEE TTOOUUCCHHEE TTOOHHMMAATTSSUU DD KK AAnnddrreewwss Partner Chartered Accountants Perth, 24 August 2021 199 198 Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group’s audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 Corporate Information CORPORAtE INFORMAtION CORPORAtE INFORMAtION Shareholder Information table 1 Top 20 holders of ordinary shares at 20 August 2021 # Name Share % Issued capital HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 508,249,039 43.65 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 202 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED CITICORP NOMINEES PTY LIMITED NATIONAL NOMINEES LIMITED BNP PARIBAS NOMS PTY LTD 187,522,646 91,103,499 41,367,553 30,610,771 CITICORP NOMINEES PTY LIMITED 20,288,387 WROXBY PTY LIMITED BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD 11,705,278 10,578,715 BNP PARIBAS NOMINEES PTY LTD 10,357,719 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM 9,190,176 6,042,517 PACIFIC CUSTODIANS PTY LIMITED NST EMPLOYEE SUB REGISTER 3,765,456 BNP PARIBAS NOMINEES PTY LTD 3,470,811 MR WILLIAM JAMES BEAMENT 2,559,325 NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT> 2,370,841 MR WILLIAM JAMES BEAMENT NATIONAL NOMINEES LIMITED MS KAREN MARIE BAILEY AMP LIFE LIMITED 16.11 7.83 3.55 2.63 1.74 1.01 0.91 0.89 0.79 0.52 0.32 0.30 0.22 0.20 0.20 0.16 0.15 0.14 0.13 2,320,792 1,901,406 1,699,778 1,619,836 1,500,000 948,224,545 81.44 216,027,555 18.56 1,164,252,100 100 20 MR HENDRICUS PETRUS INDRISIE Total Top 20 holders Balance of register Total register table 2 Distribution of ordinary shares at 20 August 2021 Holding Shares % Shares Holders % Holders 1-1,000 11,587,250 1,001-5,000 40,476,236 5,001-10,000 25,386,099 10,001-100,000 72,402,481 100,001 and over 1,014,400,034 1.00 3.48 2.18 6.22 87.13 Total 1,164,252,100 100.00 27,737 16,656 3,460 2,965 243 51,061 54.32 32.62 6.78 5.81 0.47 100.00 There were 1,728 holders of less than a marketable parcel of $500 based at closing market price at 20 August 2021. table 3 Substantial holders at 30 July 2021 # Name 1 2 3 BlackRock Inc VanEck Inc State Street Corporation* table 4 Restricted securities at 20 August 2021 Class Shares 1 Shares 2 Shares3 Shares4 Shares 5 Shares 6 Number 69,992 62,868 241,868 115,000 278,503 Share 153,950,310 65,884,182 63,184,815 % Issues capital 13.2 5.7 5.4 Date escrow period ends 24 May 2022 26 June 2023 18 June 2024 Upon repayment in full of the limited recourse loan 27,440 on 30 June 2021 102,895 on 30 June 2022 148,168 on 30 June 2023 35,000 5 July 2023 203 table 5 Unquoted equity securities at 20 August 2021 Class Unvested Performance Rights issued under the FY20 Share Plan (NSTAA) Number7 2,040,105 Unvested Share rights issued under the FY20 NED Share Plan (NSTAC) 14,3288 Holders 83 3 Voting rights The voting rights attaching to each class of equity securities are set out below: Ordinary shares: On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Performance Rights: No voting rights. NED Share Rights: No voting rights. On-market buy-back There is no current on-market buy-back of the Company’s equity securities. Dividend Reinvestment Plan The Company announced a Dividend Reinvestment Plan on ASX on 27 May 2021. * As of 24 August 2021 State Street Corporation is no longer a substantial shareholder. 1. Shares issued under the Employee Share Plan Rules No.3 (approved in June 2017) on 24 May 2019. 2. Shares issued under the Employee Share Plan Rules No.3 (approved in June 2017) on 26 June 2020. 3. Shares issued under the Employee Share Plan Rules No.3 (approved in June 2017) on 18 June 2021. 4. Shares issued under the Performance Share Plan Rules on 20 November 2013 (115,000). 5. Shares issued to Saracen employees as part of the Scheme of Arrangement on 12 February 2021 subject to holding lock. 6. Share issued under the FY20 Retention Share Plan on 12 July 2021. 7. Number of unissued ordinary shares under the Performance Rights or Share Rights. No person holds 20% or more of these securities. 8. FY22 NED Share rights issued to John Fitzgerald, Nick Cernotta and Mary Hackett; Equivalent to be issued to other Non-Executive Directors following shareholder approval at the 2021 AGM. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 CORPORAtE INFORMAtION CORPORAtE INFORMAtION Glossary ASX Australian Securities Exchange ASX Corporate Governance Principles and Recommendations Principles and Recommendations (4th edition) of the ASX Corporate Governance Council on the corporate governance practices to be adopted by ASX listed entities and which are designed to promote investor confidence and to assist listed entities to meet shareholder expectations Au The chemical symbol for gold Auditor The auditor of the Company duly appointed under the Corporations Act 2001 Australian Accounting Standards Australian Accounting Standards are developed, issued and maintained by the Australian Accounting Standards Board, an Australian Government agency under the Australian Securities and Investments Commission Act 2001 (Cth) B or bn Billion Board Board of Directors Cash Earnings Underlying EBITDA less net interest, tax and sustaining capital CEO Chief Executive Officer Company Northern Star Resources Limited ABN 43 092 832 892 Contractors Externally employed contracted workers engaged by the Company to support operations Corporations Act Corporations Act 2001 (Cth) Director A director of the Company duly appointed under the Corporations Act EAP Employee assistance providers(s) employees Total number of employees of the Group including permanent, fixed term and part-time. Does not include Contractors EPS Earnings per Share ESG Environmental, Social & Governance ESR Environment & Social Responsibility ESS Environmental, Social & Safety FY20 Financial year ended 30 June 2020 Incident means the partial or whole damage or destruction of an area of cultural or heritage significance without Traditional Owner consent and/or required legal or regulatory approvals International Financial Reporting Standards (IFRS) A single set of accounting standards, developed and maintained by the IASB with the intention of those standards being capable of being applied on a globally consistent basis Indicated Mineral Resource As defined in the JORC Code Inferred Mineral Resource As defined in the JORC Code JORC Code Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves 2012 Edition, prepared by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia FY21 Financial year ending 30 June 2021 K or k Thousand FY22 Financial year ending 30 June 2022 gpt Grams per tonne Group Northern Star Resources Limited and all of its wholly owned subsidiaries as at 30 June 2021. KCGM KCGM means Kalgoorlie Consolidated Gold Mines Pty Ltd, a wholly owned subsidiary of the Company, which operates the Super Pit and Mt Charlotte underground operations in Kalgoorlie, Western Australia. 204 Share Fully paid ordinary share in Northern Star Resources Limited shareholder A shareholder of Northern Star Resources Limited stakeholders An individual, group or organisation that is impacted by the Company, or has an impact on the Company. Examples of stakeholders are investors, employees, suppliers and local communities Suppliers External companies engaged by Northern Star to supply goods to the operations tCFD Task Force on Climate-related Financial Disclosures tRIFR Total recordable injury frequency rate, calculated according to the number of recordable work - related injuries or illness for each one million hours worked underlying EBItDA Net profit after tax, before interest, tax depreciation and amoritisation adjusted for specific items $ Australian dollars, unless the context says otherwise. All A$ to $US currency conversions used in this Annual Report are at $0.70 Key Management Personnel or KMP Defined in the Australian Accounting Standards as those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity koz Thousand ounces LtIFR Lost Time Injury Frequency Rate; calculated based on the number of lost time injuries occurring in a workplace per 1 million hours worked M or m Million MD Managing Director Measured Mineral Resource As defined in the JORC Code merger The merger of Saracen Mineral Holdings Limited ABN 52 009 215 347 and all of its wholly owned subsidiaries with Northern Star by way of Scheme of Arrangement implemented on 12 February 2021 Mineral Resource or Resource As defined in the JORC Code NPAt Net profit after tax Northern Star Northern Star Resources Limited ABN 43 092 832 892 NSMS Northern Star Mining Services Pty Ltd, a wholly owned subsidiary of the Company, dedicated to underground mining operations NSt Northern Star Resources Limited ABN 43 092 832 892 Officer An officer of the Company defined under the Corporations Act Ore Reserve or Reserve As defined in the JORC Code Performance Rights Performance Rights are rights to receive Shares in the future if certain performance hurdles are met Probable Ore Reserve As defined in the JORC Code Proved Ore Reserve As defined in the JORC Code Quarter or Q Financial year quarter, commencing either 1 July, 1 October, I January or 1 April Restricted Share A Share subject to Share trading restrictions SAR Saracen Mineral Holdings Limited ABN 52 009 215 347 SASB Sustainability Accounting Standards Board Saracen Saracen Mineral Holdings Limited ABN 52 009 215 347 and all of its wholly owned subsidiaries, as acquired by Northern Star by way of Scheme of Arrangement implemented on 12 February 2021 205 NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 CORPORAtE INFORMAtION Corporate Information Northern Star Resources Limited ABN: 43 092 832 892 Directors Current Directors Michael Chaney AO Chairman Anthony Kiernan AM Lead Independent Director (until 18 November 2021) John Fitzgerald Mary Hackett Nick Cernotta Sally Langer John Richards Raleigh Finlayson Stuart Tonkin Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Executive Director Managing Director & CEO Incoming Director Sharon Warburton Non-Executive Director (from 1 September 2021) Former Directors (during FY21) Bill Beament Shirley In’t Veld Peter O’Connor Executive Chair (Resigned 1 July 2021) Non-Executive Director (Resigned 30 June 2021) Non-Executive Director (Resigned 12 February 2021) Company Secretary 206 Hilary Macdonald General Counsel & Company Secretary Registered Office & Principal Place of Business Level 1, 388 Hay Street Subiaco WA 6008 Australia Telephone: +61 8 6188 2100 Facsimile: +61 8 6188 2111 Website: www.nsrltd.com Email: info@nsrltd.com Share Registry Link Market Services Limited Level 12, QV1 Building 250 St Georges Terrace Perth WA 6000 Australia Telephone: +61 1300 554 474 Website: www.linkmarketservices.com.au Auditors Deloitte Touche Tohmatsu Brookfield Place, Tower 2 123 St Georges Terrace Perth WA 6000 Australia Registration & Listing Incorporated in Western Australia on 12 May 2000 Quoted on the Official List of the Australian Securities Exchange (ASX: NST) Securities Exchange ASX Limited Level 40, Central Park, 152-158 St Georges Terrace Perth WA 6000 Australia ASX Code NST Chris Armstrong, Projects Superintendent, Carosue Dam, Kalgoorlie operations. NORTHERN STAR RESOURCES LIMITED ANNUAL REPORT 2021 nsrltd.com nsrltd.com