Peak Resources Limited
Annual Report 2022

Plain-text annual report

RARE EARTHS LIMITED ACN 112 546 700 20 22ANNUAL REPORT Contents 01. Who We Are 02. Message from the Executive Chairman and Chief Executive Officer 03. Review of Operations 04. Sustainability 05. Annual Financial Report Directors’ Report Auditor’s Independence Declaration Independent Auditor’s Report Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Cash Flows Consolidated Statement of Changes in Equity Notes to the Financial Statements Directors’ Declaration 06. ASX Additional Information 07. Tenement Schedule & Reserves and Resources 08. Corporate Directory 2 6 10 18 28 29 49 50 55 56 57 58 59 89 90 92 96 2022 ANNUAL REPORT 1 01. Who We Are Peak Rare Earths Limited (the “Company” or “Peak”) is focused on delivering its world-class Ngualla Rare Earth Project (“Ngualla Project”) in Tanzania, which is one of the largest, highest grade Neodymium and Praseodymium (“NdPr”) rare earth deposits in the world. It is located approximately 147km from the city of Mbeya in southern Tanzania and on the edge of the East African Rift Valley. The Ngualla deposit contains Ore Reserves of 18.5Mt grading at 4.80% Rare Earth Oxide (“REO”) for 887kt REO and Mineral Resources of 214.4Mt grading 2.15% REO for 4.61Mt REO1. RWANDA BURUNDI KENYA AFRICA Tanzania Dodoma Ngualla Project TANZANIA DR CONGO Mbeya ZAMBIA Pemba Zanzibar Dar es Salaam Mafia Indian Ocean The Ngualla Project entails the construction of a mine, mill, beneficiation plant, community projects and associated infrastructure. The Concentrate produced from the Ngualla Project is to initially be sold to third-party refineries and is amenable to the extraction of Neodymium-Praseodymium Oxide (“NdPr Oxide”) and other Rare Earths products. NdPr Oxide is a critical component of high-strength permanent magnets, which are used in the production of electric vehicles and wind turbines. The demand outlook for NdPr Oxide is strong and closely aligned to global trends around decarbonisation, the electrification of transport and renewable energy generation. Significant milestones were achieved at the Ngualla Project during 2022 which support the future development of the project. 2 PEAK RARE EARTHS Who We Are 01. NGUALLA PROJECT OVERVIEW1 Location: Geology: Ore Reserves: Mineral Resources: Life of mine: Mining: ROM throughput: Annual production: Tanzania (~1,000km west of Dar es Salaam and ~150km from Mbeya) Weathered carbonatite with a high-grade bastnasite-rich zone, low in acid consuming elements and radionuclides 18.5Mt grading 4.80% REO for 887kt REO 214.4Mt grading 2.15% REO for 4.61Mt REO 20+ years (covering only Ore Reserves) Open Pit with low strip ratio of 1.77x 800ktpa dry ore 37.2ktpa of concentrate (45% TREO grade) Environmental Certificate: Received March 2017 Special Mining Licence: SML application approved by Tanzanian Cabinet and to be formally granted upon finalisation of Framework Agreement SEG/Heavy: 1.5% Lanthanum: 0.4% Cerium: 1.6% Lanthanum: 30.1% SEG/Heavy: 2.9% NdPr: 22.3% Ngualla concentrate volume2 Cerium: 44.2% Ngualla concentrate value3 NdPr: 96.6% 1 Information relating to financial forecasts, production targets, infrastructure, project execution, cost estimating, metallurgical test work, exploration results, Mineral Resource estimates, Ore Reserve estimates and studies are taken from the Company’s ASX announcements dated 22 February 2016, 2 March 2017, 12 April 2017, 28 August 2017, 12 October 2017, 25 August 2021 and 28 October 2021. The ASX announcements are available to view on /https://www.peakresources.com.au/asx-announcements/. The Company advises that it is undertaking a Bankable Feasibility Study Update and negotiating an Economic Framework Agreement with the Government of Tanzania, and the outcome of one or both, may confirm new information or data that materially affects the information included in the relevant announcement. 2 Based on Life-Of-Mine composition of Ngualla concentrate. 3 Based on YTD average prices (Asian Metal). 2022 ANNUAL REPORT 3 01. Who We Are Vision & Values We believe that these concepts are well captured in the Swahili phrase “Kazi Wajibu Utu”, which reflects the themes of “Work, Responsibility and Humanity”. 4 PEAK RARE EARTHS 4 PEAK RARE EARTHS 4 PEAK RARE EARTHS  Who We Are 01. PURPOSE STATEMENT: To develop and operate world-class and sustainable rare earth projects that support global decarbonisation, local communities and shareholder value creation. VALUES STATEMENT: At Peak Rare Earths, we act with Integrity to achieve our Purpose and to ensure the Safety, Health and Wellbeing of our people and communities. We are Accountable to our shareholders, employees and stakeholders to deliver and operate our assets by employing a Sustainability ethos and a Progressive mindset. VALUES: The following set of values were developed and agreed by the Peak Team: Safety, Health & Wellbeing – commitment to safety best practice and the health and wellbeing of the team Integrity – ethics, transparency and adherence to Anti Bribery and Corruption Accountability – reliability, trust and responsibility Sustainability – long-term sustainability ethos Progressive Mindset – innovation, diversity, new technologies, commitment to continuous improvement, empowerment, and speaking-up 2022 ANNUAL REPORT 5 2022 ANNUAL REPORT 5 2022 ANNUAL REPORT 5 Message from the Executive Chairman 02. In this context the strategic and value proposition of Peak Rare Earths Limited (“Peak”) and our Ngualla Rare Earth Project in Tanzania (“Ngualla”) is, we believe, world class and even more critical to tomorrow’s decarbonising world that we had previously believed. Ngualla is one of the world’s largest and highest grade undeveloped NdPr concentrate deposits. Since I came on board as your Chairman only a few months ago, we have changed our strategy to one that I believe is very achievable in the near term, and that is to focus on the most immediate, deliverable and highest value return for our shareholders and the country of Tanzania; that being a focus on producing a concentrate and perhaps other downstream derivatives. This means a decision on building our own refinery or otherwise is left for a later time. This means a simpler and lower cost initial development project and a requirement in the near term to sign agreements for concentrate offtake sufficient to support our future project financing approach. Dear Peak Shareholders, The shift towards decarbonisation of energy production and transportation is now one of the key pillars of the global economy. This was underscored at the end of FY2022 when, in June 2022, the European Parliament voted to ban new Internal Combustion Engine (“ICE”) vehicles from 2035 onwards. More than 30 countries, as well as dozens of states and cities across the world, have committed to the complete phasing-out of ICE vehicles by this date. These commitments sit alongside the net zero emissions by 2050 target of more than 100 countries signed under the Paris Agreement. To achieve this radical change there is a clear and rapidly growing need for the raw materials to build the electric vehicles and wind turbines essential to significantly reducing carbon emissions. The high strength permanent magnets in these technologies require Neodymium and Praseodymium (“NdPr”) rare earth materials. As EV production continued to grow throughout the year, demand growth forecasts for rare earths have incrementally increased and demand is now credibly estimated to grow at a compound rate of close to 10% over the next decade. I agreed to join Peak in July 2022 as Executive Chairman and commenced in the role in August. My experience in the development of major resources projects at Fortescue Metals Group Limited and Sirius Minerals PLC during the past two decades is directly applicable to what we’re trying to achieve at Peak and I am excited to be joining as a leader of the Company at this pivotal point in its history. On assuming the Executive Chairman role, Tony Pearson moved from Non-Executive Chairman to Deputy Chairman and Managing Director Bardin Davis became Chief Executive Officer, stepping down from the Board to focus on executive duties. These changes bolster our executive team and provide greater senior resourcing on our project activities. I would like to thank Bardin, Tony and the wider Peak team across Tanzania and Australia for their efforts during FY2022. Our team worked closely with the Government of Tanzania’s Ministry of Minerals throughout the year and I would like to acknowledge Her Excellency Samia Suluhu Hassan, President of Tanzania, the Honourable Dr. Doto Mashaka Biteko, Minister Of Minerals, Hon.Prof. Palamagamda Kabudi, Chair of the Special Presidential Government Negotiating Committee, and Hon. Philipo Mulugo, Member 6 PEAK RARE EARTHS of Parliament for Songwe for their support for our project. We are confident of finalising a Framework Agreement with the Tanzanian Government by the end of calendar 2022. We would like to express our gratitude to our shareholders for your continued support and belief in the Company’s potential to become the next fully integrated NdPr Oxide producer. It has been a long journey I know but I hope you agree that our revised development strategy and updated Bankable Feasibility Study for Ngualla is compelling, and we look forward to moving through to the final engineering, offtake agreements, financing and development decisions in the second half of FY2023. Yours faithfully, Dr Russell Scrimshaw Executive Chairman Message from Chair and Chief Executive Officer 02. 2022 ANNUAL REPORT 7 Message from the Chief Executive Officer 02. Dear Peak Shareholders, We have made substantial progress in advancing our world-class Ngualla Rare Earth Project (“Ngualla Project”) during FY2022 and our positioning to become a leading international and sustainable rare earth producer. The Ngualla Project is one of the largest and highest grade undeveloped rare earth projects in the world. It benefits from a long life-of-mine supported by JORC Compliant Ore Reserves, low strip ratio, low levels of radionuclides (such as uranium and thorium) and acid consuming elements as well as a robust flowsheet that is supported by two Bankable Feasibility Studies and extensive pilot plant testwork. Following the Cabinet of Ministers of the Government Tanzania approving the Special Mining Licence (“SML”) application for the Ngualla Project in July 2021, we initiated a Bankable Feasibility Study Update (“BFS Update”), completed a $31.675 million equity raising, bought-back a 2% life-of-mine royalty and implemented a series of senior technical and management appointments. The BFS Update follows a Bankable Feasibility Study that was completed in April 2017. It was commissioned to reflect a material improvement in the outlook for rare earth prices, an expansion in production capacity, movements in capital expenditure and operating costs, optimisation opportunities, a reduction in carbon footprint and the potential to further de-risk development. The BFS Update has been substantially completed and is expected to be finalised and announced in late October 2022. Negotiations with the Government of Tanzania on the finalisation of a Framework Agreement for the Ngualla Project are nearing completion. Peak has been working with the Government of Tanzania to structure a Framework Agreement that aligns its strategic and financial objectives with the Tanzanian Government’s objectives to maximise value-addition and financial benefits to the country. We have agreed to initially develop the Ngualla Project on a standalone basis and defer any decision on the development of its Teesside Refinery until the completion of an independent study on the feasibility of a Tanzanian rare earth refinery. Following the finalisation of a Framework Agreement, we intend to commission an independent study into the feasibility of a Tanzanian refinery and further downstream processing in partnership with the Government of Tanzania. This study would assess the technical, economic and environmental feasibility of a Tanzanian refinery as well as the potential to produce intermediate products such as a Mixed Rare Earth Carbonate. The benefits of initially focusing on the development of the Ngualla Project include significantly reducing upfront capital and funding requirements, lowering technical and commissioning risk and preserving optionality around downstream refining options. The Ngualla Project’s high-grade bastnaesite concentrate is well positioned to take advantage of rising deficits in the global rare earth concentrate market and a surplus of global refining capacity. We have received considerable inbound interest around concentrate offtake arrangements for the Ngualla Project and are progressing a Memorandum of Understanding (“MOU”) that covers a high proportion of its annual production. From a sustainability perspective, the development of the Ngualla Project will supply the global market with responsibly mined and processed rare earth products that will enable low carbon technologies to facilitate decarbonisation and power the green transformation. 8 PEAK RARE EARTHS Our approach to sustainability is well captured by the Swahili phrase “Kazi Wajibu Utu”, which reflects the themes of “Work, Responsibility and Humanity”. We are committed to working responsibly to build a better, greener, and more sustainable future for our communities, customers, and stakeholders. One of our key sustainability initiatives completed during FY2022 was a major upgrade and repairs to 46km of the Ngwala–Kininga Road. This has enhanced accessibility to the Ngwala region, provided the community with safe and all-year round road access and facilitated the establishment of regular bus and trucking services. I would encourage you to review the Sustainability section of this Annual Report, which sets out other key sustainability advancements. In support of our positioning to be a leading international rare earth producer, we changed our name from Peak Resources Limited to Peak Rare Earths Limited and implemented a share consolidation to support a more effective capital structure and a share price that would be more appealing to a wider range of investors. As we look forward to FY2023, Peak is well positioned to progress to a Final Investment Decision and commence the construction and development of the Ngualla Project for the benefit of all of our stakeholders. Yours sincerely, Bardin Davis Chief Executive Officer 2022 ANNUAL REPORT 9 Message from Chair and Chief Executive Officer 02.03. Review of Operations 10 PEAK RARE EARTHS 10 PEAK RARE EARTHS Review of Operations 03. Peak Rare Earths Limited (the “Company” or “Peak”) continued to progress the pre-development and commercialisation of its world-class Ngualla Rare Earth Project (“Ngualla Project”) in Tanzania. After consideration of a number of factors, in August 2022, the Company took the strategic decision to undertake a staged development approach with the Ngualla Project to commence ahead of construction of a refinery. The key events of the Company’s operations over the last twelve months and to the date of this Directors’ Report are as follows: ▶ Tanzanian Cabinet approval of a Special Mining Licence application for the Ngualla Project and Initiation of Economic Framework Agreement discussions; ▶ Strategic decision for a staged development of the Ngualla Project ahead of construction of a refinery; ▶ Raising total capital of A$34.421 million in the form of a A$30 million equity placement, A$1.675 million Share Purchase Plan and A$2.746 million from the exercise of options; ▶ Repayment of the ANRF Royalty Facility and the termination of a 2% life-of-mine royalty; ▶ Commencement of a Bankable Feasibility Study Update; ▶ Completion of repairs and improvements to the Ngualla Access Road; ▶ Progressing financing and strategic partnerships; ▶ Senior technical, commercial and Board appointments; ▶ Engagement of ESG reporting adviser and development of Company values and purpose objective; ▶ Change of name to Peak Rare Earths Limited; and ▶ Implementation of a 10-into-1 consolidation of securities. TANZANIAN CABINET APPROVAL OF A SPECIAL MINING LICENCE AND ENGAGEMENT ON ECONOMIC FRAMEWORK AGREEMENT The Company announced on 22 July 2021 that the Cabinet of Ministers (“Cabinet”) of the Government of the United Republic of Tanzania (the “Government”) had approved the Special Mining Licence (“SML”) application by PR NG Minerals Limited (“PR NG”), a wholly owned Tanzanian incorporated subsidiary of the Company, for the Ngualla Rare Earth Project (“Ngualla Project”). The SML is the milestone regulatory authorisation required to develop the Ngualla Project under the Mining Act of the United Republic of Tanzania (“Tanzania”). Subject to the formal grant of the SML by the Minister of Minerals, PR NG has provided a commitment to the Government to work jointly to establish a Tanzanian registered company (“Newco”), to which PR NG will transfer the SML and to seek any requisite consents. Newco is to be owned 84% by Peak (via a wholly owned entity) and 16% by the Government (to be held in the form of non-dilutable free carried interest shares). The Company has made substantial progress during the year on the Framework Agreement negotiations with the Government of Tanzania in relation to the Ngualla Project and in progressing solutions that will meet Peak’s strategic and financial objectives and the Government’s objectives to maximise value-addition and financial benefits to the country. As part of its ongoing engagement with the Government, in March 2022 Peak hosted a delegation from the Government to the Ngualla Project. Senior members of the delegation included the Hon. Dr Stephen Kiruswa - Deputy Minister for Minerals, Hon. Phillip Mulugo – Member of Parliament for the Songwe Region and Mr. Simon Simalenga – Songwe District Commissioner. The Deputy Minister for Minerals, Hon. Dr Stephen Kiruswa, praised Peak’s community initiatives and delivered strong messages of government support for the Ngualla Rare Earth Project. 2022 ANNUAL REPORT 11 2022 ANNUAL REPORT 11 03. Review of Operations During meetings with the Special Presidential Government Negotiating Committee (“SPGNC”), Peak tabled the potential deferment of any decision to proceed with the construction of the Teesside Refinery until an independent assessment of the technical, economic and environmental feasibility of a Tanzanian rare earth refinery has been completed (“Independent Assessment”). Retail shareholders were also extended a similar opportunity via a Share Purchase Plan (“SPP”) raising at A$0.09 per share. The SPP enabled Peak to raise a further A$1.675 million. The use of proceeds for the combined A$31.675 million includes the following: ▶ Progressing pre-development activities for the Ngualla Project and Teesside Refinery (including offtake and financing arrangements); ▶ Expanding the Company’s technical and marketing team; and ▶ Repaying the ANRF Royalty Facility. During the year a further $2.746 million was raised through the exercise of listed and unlisted options. REPAYMENT OF THE ROYALTY FACILITY On 6 August 2021, the Company announced an intention to repay a financing facility from ANRF Royalty Company Limited (“ANRF”) for a total of US$9,978,755 (A$13,750,524). This financing facility was extended to the Company in 2015 and used to fund the original Bankable Feasibility Study. It was accompanied by a 2% life-of-mine royalty and security arrangements and a series of undertakings. Peak is continuing to engage with the SPGNC on this proposed staged development approach as well as finalising the Framework Agreement. STAGED DEVELOPMENT OF THE NGUALLA PROJECT AHEAD OF CONSTRUCTION OF A REFINERY In August 2022, the Company took the strategic decision to undertake a staged development approach with the Ngualla Project to commence ahead of construction of a refinery. Under this approach, Peak would remain committed to a longer-term integrated strategy, but would implement the following staged development approach: ▶ Initially develop the Ngualla Project by constructing a mine and beneficiation plant to produce rare earth concentrate for export to offshore third-party refineries; and ▶ Depending upon the outcome of the Independent Assessment, develop a refinery either in Tanzania or at Teesside, UK. The benefits of this approach include the following: ▶ Maintaining optionality around the potential of a Tanzanian rare earth refinery; ▶ Significantly reducing the up-front capital expenditure and funding requirements; ▶ Lowering commissioning and technical risk around the concurrent development of the Ngualla Project and a rare earth refinery; and ▶ Taking advantage of offtake appetite for Ngualla’s high- grade rare earth concentrate. EQUITY RAISINGS COMPLETED During the financial year, Peak raised total capital of A$34.421 million. A A$30 million two-tranche equity placement was completed to institutional, sophisticated and professional investors at an issue price of A$0.09 per share on 4th October 2021. It resulted in numerous new Australian and international institutional shareholders joining the register. 12 PEAK RARE EARTHS Review of Operations 03. The Company identified an opportunity to further optimise the value of its integrated Ngualla-Teesside Project by pursuing an increase in concentrator capacity and the scope of the BFS Update was amended to allow for an increase in the Ngualla flotation plant average Life-of-Mine (“LOM”) capacity to 800ktpa. This reflects an approximate 28% increase in capacity over the average LOM capacity of 624ktpa in the BFS published in April 2017 (“April 2017 BFS”) and an approximate 13% increase in the average LOM capacity of 711ktpa that was reflected in an internal optimisation study completed in August 2017 (“August 2017 Optimisation”). The rationale for repaying the ANRF Royalty facility included: ▶ Enabling Peak to meet its commitments to the Government of Tanzania in relation to the transfer of the SML into a newly incorporated entity that would be owned 84% by the Company and 16% by the Government of Tanzania; ▶ Termination of a 2% revenue royalty obligation over the life of the Ngualla Project; ▶ Increasing shareholder exposure to project earnings; and ▶ Enhanced ability to finance the Ngualla Project. Shareholders approved the transaction on 28 September 2021 and it was completed on 5 October 2021. COMMENCEMENT OF A BANKABLE FEASIBILITY STUDY UPDATE AND TARGET PRODUCTION CAPACITY INCREASE On 25 August 2021, the Company announced that Amec Foster Wheeler (part of the Wood Group plc) had been engaged to lead a Bankable Feasibility Study (“BFS”) Update. Amec Foster Wheeler led the original BFS which was completed in 2017. 2022 ANNUAL REPORT 13 This higher mine-concentrator throughput should increase the average LOM production to approximately 37.2ktpa of rare earth concentrate. As part of the BFS Update, testwork has and will continue to be undertaken prior to a Final Investment Decision to support detailed design. The program of work is to focus on optimising recoveries, minimising overall operating costs in the mining and the processing plants and further decreasing the start-up risks. Key activities progressed during the year included the following: ▶ Completion of geotechnical studies on the Southern Access and the Plant Access Roads; ▶ Progressing detailed engineering of the Ngualla mine, mill and concentrator and the Teesside Refinery to support a throughput capacity of 800ktpa; ▶ Plant layouts redesigned to support improved operability, maintenance and fire safety; ▶ Updating of mine plan to support the increased throughput capacity of 800ktpa (a ~28% increase over the 2017 Bankable Feasibility Study average capacity of 624ktpa); ▶ Development of constructability plans for the Ngualla Project and the Teesside Refinery; ▶ Commissioning of a detailed transportation and logistics study; ▶ Redesign of the Ngualla Tailings Storage Facility to allow for higher mine throughput and the optimisation of retention structures; ▶ Beneficiation plant testwork programs; ▶ Collection of bulk ore samples from the Ngualla Project for an upcoming beneficiation pilot plant campaign; ▶ Progressing technical and external reviews of the Teesside Refinery; ▶ Finalisation of process design criteria for the purposes of the Bankable Feasibility Study Update; and ▶ Process Flow Diagrams (PFDs) and mass balances; ▶ Commissioning an independent market study for NdPr Oxide and Concentrate by leading intelligence provider Adamas; ▶ A solar-battery-diesel hybrid power plant design concept at Ngualla; ▶ A renewable energy study at Teesside; ▶ Completion of an updated Environmental and Social Impact Assessment (ESIA) at Ngualla and subsequent renewal of Peak’s Environmental Certificate by the National Environmental Management Council within Tanzania; ▶ Hazard Identification Studies (HazID) for both the Ngualla Rare Earth and Teesside Refinery projects; and ▶ Identifying opportunities to mitigate broader inflationary pressures associated with higher shipping rates, commodity input prices and labour rates. On 31 August 2022, Peak announced that it expects the BFS Update to be completed between mid-late October 2022. NGUALLA ACCESS ROADWORKS A major upgrade of the Southern Access Road was completed over a 48 km length from the village of Kininga to the Ngualla Project. Key aspects of the works included the addition of five new major waterway crossings, repairs to heavily eroded sections of the road, the addition of rock and other aggregates to the roadbed, clearing of trees to widen and improve overall safety of the road with increased visibility. This work was completed without any HSE incidents and with over 50% of the workforce being hired directly from local communities. The roadworks will support safe and reliable year-round access to the Ngualla Project and the surrounding communities and will also facilitate early project works. FINANCING AND STRATEGIC PARTNERSHIPS Peak with the assistance of its debt adviser, Waterborne Capital, has been engaging with a broad suite of developments banks, export credit agencies and commercial banks on project and export financing appetite and structures. Prospective financiers have been provided with an Information Memorandum, Financial Model and access to a Virtual Data Room. In conjunction with project and debt financing initiatives, Peak has also been engaging with several strategic parties that have expressed interest in securing a project level investment in the Ngualla Project. Such investments would limit Peak’s equity funding requirements. SENIOR TECHNICAL AND COMMERCIAL APPOINTMENTS The Company made a series of senior and commercial appointments to support the BFS Update and to advance the Ngualla Project towards development and construction. Key appointments include the following: Lello Galassi – Head of Operations & Development Lello has been a project manager and developer for 14 brownfield and greenfield international mining and large infrastructure projects. Lello has a strong track-record in the 14 PEAK RARE EARTHS 03. Review of Operations delivery of greenfield projects, cost control and schedule targets, best practice with respect to safety, environmental and community outcomes and the development of associated infrastructure. His international experience extends to the Democratic Republic of Congo (“DRC”), Guinea, South Africa, Peru, Chile, Guyana, Spain, Australia and Canada. During his career he has worked with ICL, Rio Tinto, Freeport McMoran and Phelps Dodge. Lello was most recently Vice President Project Development & Construction with Sabina Gold & Silver Corporation Mark Godfrey – Head of Technical Services Mark has over 40 years of metallurgical experience and has worked with a broad suite of leading international mining companies including Glencore, Newcrest, MMG, Rio Tinto, BHP and Impala Platinum. Mark has spent a significant portion of his career in Africa and has extensive experience in overseeing feasibility studies, pilot plant test work, optimisation of flow sheets, commissioning of projects, debottlenecking and operational enhancements. Mark was most recently Technical Manager Metallurgy at the Komoto Copper Project (Glencore) based in the DRC. Andrea Cornwell – Head of Marketing & Sales Andrea has over 28 years of international resources marketing experience and has held senior strategic marketing and sales roles with major resources groups such as South32, BHP, Vale, Anglo American and Shell. She has led “go-to market” strategies for large greenfield projects and has substantial experience in leading and executing international marketing strategies, developing and managing customer relationships, overseeing shipping and logistics as well as structuring long-term offtake and sales agreements. Andrea’s most recent role was Vice President Marketing, Carbon Steel Raw Materials & Freight with South32 based in Singapore. Gavin Beer – Consulting Metallurgist Gavin has approximately 30 years of relevant technical and operational experience and specialises in the rare earth and critical metal sectors. Gavin was the General Manager Metallurgy for Peak between 2015 and 2017 and was responsible for the development and optimisation of the metallurgical process from Ore-to NdPr Oxide and other separated rare earth products. He managed pilot plants for the beneficiation, hydrometallurgy and solvent extraction separation processes that led into the original Bankable Feasibility Study (“BFS”) completed in 2017. Matthew Horgan – GM Corporate Development Matthew joined the Company from the corporate advisory firm Azure Capital and was previously with Alcoa where he held a range of corporate development, commercial, marketing and chemical engineering roles. The technical appointments of Lello, Mark and Gavin have provided Peak with a highly experienced and complementary team with a combined track-record in the development and optimisation of African and international mining and rare earth projects. The appointment of Andrea and Matthew has provided Peak with a strong marketing, commercial and corporate development capabilities. BOARD APPOINTMENTS Giles Stapleton – Non-Executive Director Giles Stapleton was appointed to the Board of Directors following his election as a Non-Executive Director at the AGM. Giles is a barrister at Ninth Floor Selborne Chambers in Sydney. His experience as a barrister extends across corporate, commercial, property, equity, and family law. Giles also has extensive experience in banking, property and funds management and was previously Head of Investment Management at Valad Property Group where he was responsible for A$900m of property funds. Russell Scrimshaw – Executive Chairman On 15 August 2022, Russell Scrimshaw was appointed to the role of Executive Chairman. Russell is a distinguished corporate executive and company director with experience in large scale mining project development and operations, product marketing, finance, business development and technology. Russell was a founding director of Fortescue Metals Group and served in executive roles including Deputy CEO and Executive Director. He was a key part of the management team that developed Fortescue’s mining, port and rail operations and was instrumental in establishing Fortescue’s strong relationships with large steel mill groups across a vast Asian customer base. More recently Russell was Chairman of UK-listed Sirius Minerals PLC (acquired by Anglo American in 2020), which is developing a large Polyhalite fertiliser project in North Yorkshire, in close proximity to Peak’s Teesside site. He has also held senior executive positions at the Commonwealth Bank of Australia and Optus. Russell is currently Chairman of the Garvan Research Foundation, a Non-Executive Director of the Garvan Institute of Medical Research, Vice Chairman of Ignition Wealth and a Non-Executive Director of software company, BrewAI. 2022 ANNUAL REPORT 15 Review of Operations 03.03. Review of Operations ENGAGEMENT OF ESG REPORTING ADVISER Peak engaged Environmental, Social and Governance (“ESG”) specialists Futureproof, to help develop a multi- year sustainability program. Futureproof is assisting Peak in articulating a relevant Sustainability Strategy that underpins all the ESG work completed to-date, and ensuring its future ESG goals are set with appropriate structures and processes to enhance ESG performance and sophistication as the company develops. The ESG program will be guided by the Global Reporting Initiative (GRI) Sustainability Reporting Standards. An outline of this ESG framework is included in the sustainability section of the Annual Report with a standalone Sustainability Report planned for 2023. PEAK’S PURPOSE AND VALUES The Peak Team completed a set of workshops to develop and agree on a set of principles to govern our purpose, our decision making and the ways that we deal with each other, our communities and other external stakeholders. The resulting Purpose and Values Statements and set of Values are set out in the Vision and Values section of the Annual Report. CHANGE IN NAME TO PEAK RARE EARTHS Following shareholder approval at the Company’s Annual General Meeting (“AGM”) held on 29 November 2021, the Company’s name was changed from Peak Resources Limited to Peak Rare Earths Limited. The name change was undertaken to better differentiate the Company and align it with the rare earths sector. In conjunction with its name change, the Company also launched a new website www.peakrareearths.com. 16 PEAK RARE EARTHS Review of Operations 03. RISK MANAGEMENT The Company is exposed to business risks which may adversely affect the achievement of its business strategies and financial prospects. During the year the Company conducted workshops to identify, rank and develop controls to mitigate and monitor risks. The Company has identified a number of material risk exposures including but not limited to the following: IMPLEMENTATION OF SECURITIES CONSOLIDATION A capital consolidation entailing the conversion of every ten (10) securities into one (1) security was also approved at the AGM. The rationale for the capital consolidation was to support a more appropriate and effective capital structure and a share price that would be more appealing to a broader range of investors. The consolidation was completed on 10 December 2021 with trading on a normal T+2 basis commencing on 13 December 2021. RISK MITIGATING PRACTICES Serious injury or fatality sustained at work ▶ Embedded safety conscious culture ▶ Staff safety training programs ▶ Contractor pre-qualification ▶ Induction and training Uncertain political/fiscal/ tax environments ▶ Regular review processes and procedures ▶ Ongoing stakeholder/government engagement ▶ Dedicated Country Manager and other in-country expertise ▶ Strong local development track record and local stakeholder support ▶ Active proponents of non-political government agendas Bribery or corruption ▶ Anti-Bribery and Corruption and Code of Conduct ▶ Inclusion of Anti-Bribery and Corruption requirements for sub-contractors included within contracts ▶ Financial system controls in place ▶ Regular review and audits Project delivery failure ▶ Establishing project methodology ▶ Use of third-party technical advisors and consultants ▶ Establishing monitoring and reporting processes ▶ Procurement and contract management procedures and practices 2022 ANNUAL REPORT 17 04. Sustainability 04. Sustainability 18 PEAK RARE EARTHS 18 PEAK RARE EARTHS Our approach to sustainability We are committed to deliver our high-grade, Ngualla Rare Earth Project to enable low carbon technologies to power the green transformation. We recognise that our long-term commitment to sustainability is integral to our ongoing success. Peak has a fundamental belief in ‘kazi wajibu utu’ which means ‘working responsibly to better humanity’ in Swahili. We act consistently with the kazi wajibu utu principle which means we act with integrity to achieve our purpose and to ensure the safety, health and wellbeing of our people and communities. We are accountable to our shareholders, employees, and stakeholders to deliver and operate our assets by employing a sustainability ethos and a progressive mindset. In so doing, the five core values that build Peak’s culture and derives how it goes about delivering its purpose are (i) Integrity, (ii) Safety, Health and Wellbeing, (iii) Accountability, (iv) Sustainability, and (v) Progressive Mindset. ” Sustainability 04. “ Sustainability is one of our core values. It is underpinning every element of the development of both our company and the Ngualla project in Tanzania and I am excited by our Team’s commitment and focus to its evolution, improvement and ultimate success. Andrea Conwell Head of Marketing and Sales (ESG Lead) Sustainability is a pivotal part of our ethos, as it is for our stakeholders including local communities, customers, suppliers, and shareholders. We are integrating sustainability into every aspect of the company. At Peak, we will strive to hold ourselves to the highest standards so that the Ngualla Project becomes a long term, environmentally and socially sustainable supplier of choice to the global rare earth market. Sustainability can be mapped across many facets of the organisation when considering the Environmental, Social and Governance (“ESG”) issues. This section highlights the Sustainability journey that Peak has begun, the work achieved to date, and its long-term goals. 2022 ANNUAL REPORT 19 2022 ANNUAL REPORT 19 Our ESG Journey Peak engaged ESG specialists Futureproof to help develop this multi-year sustainability program and is assisting Peak in articulating a relevant Sustainability Strategy that underpins all the ESG work completed to-date and ensuring its future ESG goals are set with appropriate structures and processes to enhance ESG performance and sophistication as the company develops. Peak created a Sustainability project team which was led by the Chief Executive Officer and consists of a range of internal representatives including from marketing, finance, and operations. The project team participated in a series of workshops to assist in developing the FY22 ESG program which was guided by the Global Reporting Initiative (GRI) Sustainability Reporting Standards. MATERIALITY ASSESSMENT AND STAKEHOLDER ENGAGEMENT We commenced our ESG journey with a materiality assessment which identified and prioritised the sustainability topics that are considered the most important for the business and its stakeholders at its present stage of project maturity. These sustainability topics are the foundation of Peak’s sustainability strategy. 1 IDENTIFICATION 2 PRIORITISATION 3 VALIDATION 4 CONTINUOUS IMPROVEMENT 20 PEAK RARE EARTHS Materiality Assessment Process 04. SustainabilityOur ESG Journey (Continued) EMPLOYEES BOARD GOVERNMENTS & REGULATORS NGOS CONTRACTORS & SERVICE PROVIDERS SUPPLIERS JOINT VENTURE PARTNERS COMMUNITY SHAREHOLDERS & INVESTORS COMPETITORS & PEERS ADVOCATES INDUSTRY ASSOCIATIONS FINANCIERS & INSURERS CUSTOMERS Figure 1: Key stakeholders The first step of the materiality process was conducting a stakeholder mapping exercise to identify key stakeholders. Peak believes that trusted partnerships and relationships are the foundation of a strong social licence to operate. Developing strong, effective, and long-lasting relationships with its stakeholders will ensure the long- term, multigenerational success of Peak’s business. Figure 1 depicts the list of Stakeholders that Peak considers important for ongoing engagement for sustainability issues. 2022 ANNUAL REPORT 21 Sustainability 04.04. Sustainability Our ESG Journey (Continued) The next step in the materiality assessment process was to identify the key sustainability topics affecting Peak and its stakeholders. In Q4/FY22, many topics were identified, rated and prioritised according to the status of the project at the time. This was done by combining feedback from Peak’s senior management and subject matter experts, stakeholder expectations, and an analysis of the external environment. The materiality assessment acts as a useful tool to prioritise the focus areas at a point in time. Peak recognises that material topics will change over time as the project progresses from development to operational readiness and will adapt accordingly. Some of the FY22 material topics prioritised from this first assessment were: ▶ health and safety ▶ government and ▶ business ethics and governance compliance ▶ community benefit and safety regulatory compliance ▶ waste and hazardous materials planning 22 PEAK RARE EARTHS Sustainability Ambition Sustainability 04. Peak recognises that for sustainability to become fully embedded in the business as it progresses from development to production, it must align with the current purpose and values of the business. With this in mind, leadership and the project team created a statement of ambition to articulate what sustainability means to Peak. It aims to set a standard and give focus to the overall objectives of Peak’s sustainability and ESG activities. PEAK’S SUSTAINABILITY AMBITION: We are working responsibly to build a better, greener and more sustainable future for our communities, customers and stakeholders. Supply Chain Supply chain was not considered a material topic for the business in its current stage of development but is likely to become a material topic as Peak transitions into construction and an operating site. We plan to offer a practical transparent and traceable supply chain solution to the growing low carbon technology space. The Company’s plan is to have a green and sustainable approach to production as a fundamental part of our business strategy and a point of differentiation for our products compared with some other sources of rare earths. During FY2022, we implemented a sustainable supply chain questionnaire to enable Peak to better understand its potential supplier’s ESG programs and considerations. The responses to the questionnaire can be used as a part of Peak’s procurement selection criteria. The supply chain evaluation process will continue to evolve as the company grows. 2022 ANNUAL REPORT 23 04. Sustainability Gap Review and Roadmap To ensure Peak operates in line with global best practice, we are developing an ESG roadmap to continue to mature, expand our scope and grow transparency. This process will include establishing a preferred ESG reporting framework and setting up data collection systems to prepare for our inaugural FY23 sustainability report and undertaking an ESG stakeholder survey to validate our material topics. There are numerous ESG reporting frameworks. Reporting against one or more of these frameworks will enable us to communicate with our stakeholders about the sustainability of our business in a clear and comprehensive manner, draw comparisons to our peers, and drive deeper integration of sustainability into our business, whilst identifying new opportunities to increase value for stakeholders. The frameworks shown in Table 1 are being considered for Peak’s inaugural sustainability report. UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS) GLOBAL REPORTING INITIATIVE SUSTAINABILITY REPORTING STANDARDS (GRI) WORLD ECONOMIC FORUM (WEF) STAKEHOLDER TASKFORCE FOR CLIMATE- RELATED FINANCIAL DISCLOSURES (TCFD) The UN SDGs framework consists of a universal set of sustainability goals which have been adopted by over 190 countries and are designed to address urgent global sustainability challenges by 2030. GRI is the oldest and most widely recognised global sustainability reporting standard. It focuses on disclosing a company’s impact on the economy, environment, and society, including financially material information and management approach. This Framework tries to simplify the otherwise complicated landscape of ESG reporting. It is focused on creating long-term sustainable value, while driving positive outcomes for business, the economy, society, and the planet. It is different to GRI as it has a common set of metrics that need to be addressed. Climate risk disclosures are becoming mandatory for large businesses in the United Kingdom, European Union, Japan, and New Zealand. The objective of this reporting framework is to mitigate the financial risks/costs of climate change on a business. 24 PEAK RARE EARTHS Table 1: ESG frameworks Proposed Roadmap We are also reviewing the specific needs of our future customers as well as prospective lenders and financiers as part of the framework assessment. This includes evaluating the International Financial Corporation (IFC) guidelines, Equator Principles, and the Initiative for Responsible Mining Assessment (IRMA) framework. Table 2 describes the proposed roadmap for setting realistic and achievable goals alongside Peak’s business growth strategies. The roadmap begins with establishing measurement systems to understand Peak’s current level of ESG maturity. Once measurement systems have been established, the next stages are focused on continuing to improve Peak’s ESG performance. FY22 FY23 FY24 FY25 ▶ Internal stakeholder engagement mapping ▶ Materiality assessment ▶ Sustainability positioning ▶ Preferred ESG frameworks selected ▶ External stakeholder materiality survey ▶ Governance review ▶ Annual Report ▶ TCFD roadmap ▶ Gap review and roadmap finalised ▶ Inaugural ▶ Set sustainability ▶ Commence targets ▶ Supply chain engagement project reporting against IRMA ▶ Engage with ESG rating agencies ▶ Engage with ESG rating agencies ▶ TCFD/Other reporting ▶ TCFD/Other reporting ▶ Third sustainability report sustainability report ▶ Second sustainability report Table 2: Proposed ESG roadmap 2022 ANNUAL REPORT 25 Sustainability 04.04. Sustainability Case Study – Ngwala-Kininga Road Upgrade In the last quarter of 2021, Peak and its local subsidiary PR NG Minerals reconstructed 46 kilometres of the Ngwala-Kininga Road in Tanzania. This work has had a significant positive impact on the Ngwala local community. For many years prior, the poor road conditions had been a significant obstacle for Ngwala village. The Ngwala – Kininga Road is the main road connecting the Ngwala village to the District Headquarters, and other villages and wards. Forty-six kilometres of the road was in very poor condition. The road was additionally impacted during the rainy season (December to April), where the road at times was completely unpassable, resulting in the temporary closure of the road. These circumstances caused the Ngwala local community to pay as much as two or three times the normal price for public transport along the road. The road improvements included widening and resurfacing the road and installing culverts at locations where watercourses intersected the road to enable year-round access. These changes have significantly improved the social and economic lives of people in Ngwala village. Benefits have included: ▶ Journeys from Ngwala village to the District Headquarters at Mkwajuni- Songwe now takes 3 hours instead of 11 hours, and the journey from Ngwala to Mbeya, is now 8 hours instead of 2 days. ▶ Patients of the Ngwala Dispensary, including pregnant women, can access emergency transport to Mwambani District Hospital and no longer need to pay 200,000 to 300,000 Tanzanian Shillings (TZS) (almost one month’s income). ▶ Prices of day-to-day supplies and groceries in the Ngwala village was previously twice the normal price and has now been significantly reduced due to lower transport costs. ▶ Buses are now reliable and regular when previously there was no reliable public transport from Ngwala to Mkwajuni or Mbeya city. ▶ Farmers in Ngwala are now able to sell their farm produce at a much more profitable price. ▶ The roadworks has also enabled the Tanzanian Government to prepare for the connection of the Ngwala Village to the national power grid. Public transport in Ngwala village before the road upgrade Condition of Ngwala Kininga road before repairs Improved condition of Ngwala- Kininga road after repairs reconstruction 26 PEAK RARE EARTHS Sustainability 04. Nanenane (Farmers Day) Tournament sponsored by Peak and PRNG Minerals 2022 ANNUAL REPORT 27 05. Annual Financial Report 05. Annual Financial Report 30 June 2022 28 PEAK RARE EARTHS Directors’ Report Annual Financial Report 05. The directors of Peak Rare Earths Limited (“Company”) (ACN: 112 546 700) submit herewith the financial statements of the Company for the financial year ended 30 June 2022. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows: DIRECTORS The names of directors who held office during or since the end of the year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated. Russell Scrimshaw Executive Chairman (appointed 15 August 2022) Tony Pearson Bardin Davis Non-Executive Deputy Chair (Non-Executive Director from 21 Aug 2018, Chair from 21 October 2020, appointed Deputy Chair from 15 August 2022) Chief Executive Officer (CEO) (Non-Executive Director from 21 Oct 2020, Managing Director (MD) from 9 Dec 2020, stepped down as MD on 9 July 2022 to take up the CEO role) Abdullah Mwinyi Non-Executive Director (appointed 15 November 2020) Giselle Collins Giles Stapleton Non-Executive Director (appointed 9 March 2021) Non-Executive Director (appointed 29 November 2021) Rebecca Morgan Non-Executive Director (appointed 9 March 2021, resigned 14 February 2022) INFORMATION ON DIRECTORS Russell Scrimshaw – Executive Chairman (Appointed 15 August 2022) Russell is a distinguished corporate executive and company director with experience in large scale mining project development and operations, product marketing, finance, business development and technology. Russell was a founding director of Fortescue Metals Group and served in executive roles including Deputy CEO and Executive Director. He was a key part of the management team that developed Fortescue’s mining, port and rail operations and was instrumental in establishing Fortescue’s strong relationships with large steel mill groups across a vast Asian customer base. More recently Russell was Chairman of UK-listed Sirius Minerals PLC (acquired by Anglo American in 2020), which is developing a large Polyhalite fertiliser project in North Yorkshire, in close proximity to Peak’s Teesside site. He has also held senior executive positions at the Commonwealth Bank of Australia and Optus. Russell is currently Chairman of the Garvan Research Foundation, a Non-Executive Director of the Garvan Institute of Medical Research, Vice Chairman of Ignition Wealth and a Non-Executive Director of software company, BrewAI. Russell served as the Chairman of UK-Listed Sirius Minerals PLC from 2011 to March 2020 and held no other public company directorships in the past three years. 2022 ANNUAL REPORT 29 2022 ANNUAL REPORT 29 05. Annual Financial Report Directors’Report (Continued) Tony Pearson– Non-Executive Deputy Chair (Non-Executive Director from 21 August 2018, Chair from 21 October 2020, appointed Deputy Chair 15 August 2022) B.Comm, MAICD Tony is an experienced international natural resources executive and company director. He is currently the Chair of ASX listed Cellnet Group Ltd, a Non-Executive director of ASX-listed Xanadu Mines Limited, Chair of Lifestyle Solutions, a Trustee of the Royal Botanical Gardens & Domain Trust and a Non-Executive Director of Communicare Inc. He was formerly a Commissioner at the Independent Planning Commission, and previously a group executive at TSX/HKEx listed SouthGobi Resources, based in Hong Kong, where he was responsible for the company’s corporate and strategic initiatives. Tony also has over 15 years’ commercial and investment banking experience, covering the Asia Pacific natural resources industry, most recently as a Managing Director at HSBC. Tony is a member of the Audit & Risk Committee. Tony serves as a non-executive director of the following other listed companies and held no other public company directorships in the past three years: ▶ Cellnet Group Ltd - from 5 October 2018 ▶ Xanadu Mines Limited - from 3 May 2021 Bardin Davis – Chief Executive Officer (Non-Executive Director from 21 Oct 2020, Managing Director (MD) from 9 Dec 2020, stepped down as MD on 9 July 2022 to take on the CEO role) GAICD, MAppFin, GradDipAcc, B.Ag Econ (1st Class Hons) Bardin has over 25 years of investment banking and corporate experience in the mining and energy sectors. He commenced his career with diversified mining group, North Limited, before moving into investment banking and has also spent time working in renewable energy. Previous roles include the Chief Financial Officer of UPC\AC Renewables, the Head of the Resources & Energy Group – Asia Pacific, Deputy Head of Corporates – Asia Pacific and Head of Advisory – Australia for HSBC and Head of Metals & Mining Asia for Macquarie Capital. He has significant emerging markets experience and has worked on a broad range of international advisory, capital markets and financing transactions. Bardin held no listed public company directorships in the past three years. The Hon. Abdullah Mwinyi – Non-Executive Director (Appointed 15 November 2020) LLB, LLM (Cardiff University) Abdullah is a member of the Tanzanian Parliament, having entered Parliament in 2007. He has also held roles as a Member of the East African Legislative Assembly (2007 – 2017), where he was Chair of the Legal, Privileges and Rules Committee and the Regional Affairs and Conflict Resolution Committee, and Chair of Swala Oil and Gas (Tanzania) plc. Abdullah is a lawyer by profession, having been awarded a LLB and LLM from the University of Cardiff, and, in 2007, established Asyla Attorneys, where he specialised in corporate, commercial, labour and employment law. Abdullah has held no listed public company directorships in the past three years. Giselle Collins - Non-Executive Director (Appointed 9 March 2021) B. Economics (U.Syd), Chartered Accountant (CAANZ), GAICD, GFINSIA Giselle brings a wealth of audit, risk, governance, and commercial expertise to Peak. Giselle is currently Chair of ASX listed Hotel Property Investments, a non-executive director of Cooper Energy and Generation Development Group and a Trustee of the Royal Botanic Garden & Domain Trust. Giselle is also Chair of AMP Limited’s Responsible Entity board for its listed managed investment schemes (ipac Asset Management). Giselle was previously Chairman of Aon Superannuation as Trustee for Aon Master Trust (now SmartMonday), Chairman of the Travelodge Hotel Group and Chairman of The Heart Research Institute. Giselle has served as a Non-Executive Director on a diverse range of other boards including Big4 Holiday Parks, GenerationLife, Minjerribah Camping and the Royal Australian Institute of Architects. 30 PEAK RARE EARTHS Directors’ Report (Continued) Annual Financial Report 05. Giselle has been appointed Chair of both the Company’s Audit & Risk Committee and Nomination & Remuneration Committee. Giselle is a Chair of ASX listed Hotel Property Investments, appointed 19 April 2017 (appointed as Chair 9th July 2022) and Non-Executive Director of ASX listed Cooper Energy Limited, appointed 19 August 2021, and ASX listed Generation Development Group Limited, appointed 18th November 2021. Giles Stapleton – Non-Executive Director (Appointed 29 November 2021) Giles is a barrister in private practice at Selborne Chambers, Sydney. Prior to commencing his legal career, Giles spent approximately fifteen years in executive roles with listed companies in banking, property, and funds management. Giles’ previous role immediately before commencing his legal practice was Head of Investment Management at Valad Property Group where he was responsible for managing a number of direct property funds with AUM of c.A$900m. In that role, Giles was responsible for the investment strategies, making the investment recommendations to the responsible entity board and investors and for overseeing the execution of the investment strategies of each managed fund. His approach in that role was focussed on actively engaging with the Board and investors of each fund and in delivering the approved strategies. Rebecca Morgan – Non-Executive Director (Appointed 9 March 2021, Resigned 13 February 2022) BSc(Hons) (Applied Geology), GradDip(Mine Engineering), MscEng (Mine Engineering) Rebecca has a Bachelor of Science (Hons) Applied Geology; Post Graduate Diploma (Mine Engineering, and a Master of Engineering Science (Majoring in Mineral Economics and Mine Optimisation) from Curtin University. Rebecca is also a Member of the Australian Institute of Geoscientists and the Australian Institute of Mining and Metallurgy. Rebecca was appointed Chair of the Company’s Nomination and Remuneration Committee. Rebecca was a Non-Executive Director of ASX listed Salt Lake Potash Limited from 22 June 2021 to 22 October 2021. She was also a director of Vulcan Energy Resources Limited (formerly Koppar Resources Limited) from 5 February 2018 to 4 September 2019. COMPANY SECRETARY Phil Rundell – Chief Financial Officer and Company Secretary (Appointed 16 December 2020) CA, DipBus Phil was a former Partner at Coopers & Lybrand (now PricewatehouseCoopers) and a Director at Ferrier Hodgson. He is now a sole practitioner Chartered Accountant and has specialised in providing company secretarial, compliance, accounting and reconstruction services for the last 10 years. PRINCIPAL ACTIVITIES During the year, the principal activities of the Company included: (a) Mineral processing technological evaluations; (b) Mining and associated infrastructure feasibility evaluations; and (c) Progressing approvals for the Ngualla Project and Teesside Refinery 2022 ANNUAL REPORT 31 05. Annual Financial Report Directors’ Report (Continued) OPERATING RESULTS The loss of the Group after providing for income tax amounted to $22,731,602 (2021: loss $4,770,848). The material expenditures that contributed to the loss that were necessarily incurred to progress the activities of the Company include: ▶ Employee benefits expenses of $2,579,194 (2021: $725,552) with the recruitment of an experienced management team to undertake the bankable feasibility study update and project execution (refer to the Remuneration Report and Review of Operations); ▶ Administration and other costs of $4,284,188 (2021: $1,397,265) include consultants and legal costs primarily associated with the Framework Agreement, financing and offtake documentation, negotiation and advice, and additional insurance costs; ▶ Technical feasibility costs of $7,036,692 (2021: $1,555,761) on the bankable feasibility study update, other technical studies and remediation of the southern access road to the Ngualla project (refer to the Review of Operations); and ▶ Borrowing costs of $7,874,527 (2021: $323,904) primarily related to interest on repayment of the ANRF Royalty Liability and termination of a gross life-of-mine royalty. The basic and diluted loss per share for the Group for the year was 11.66 cents (2021: loss 3.13 cents). FINANCIAL POSITION The net assets of the Group have increased from $55,294,679 at 30 June 2021 to $70,859,306 at 30 June 2022. The Group’s working capital, being current assets less current liabilities, was $7,879,544 at 30 June 2022 (2021: $2,892,383). The Company had $9.479 million cash at bank at the end of the reporting period and is well funded going into the 2022/2023 financial year to fund the pre-development activities in respect pf the Ngualla Project, and its corporate and administration requirements. DIVIDENDS PAID OR RECOMMENDED The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the date of this report. REVIEW OF OPERATIONS The Review of Operations commentary is contained in the section above on page 10. EVENTS SUBSEQUENT TO REPORTING DATE On 15 August 2022, Russell Scrimshaw a distinguished corporate executive was appointed to the role of Executive Chairman. Following this appointment, the Company undertook a Board reorganisation with Tony Pearson transitioning to the role of Non-Executive Deputy Chair and Managing Director Bardin Davis assuming the role of Chief Executive Officer, stepping down from the Board to focus on his executive duties. On 31 August 2021, Peak announced that it expects the BFS Update to be completed between mid-late October 2022. Other than the matters referred to above there were no other events that have a material impact on the financial statements or operations of the Group and Company. 32 PEAK RARE EARTHS Directors’ Report (Continued) Annual Financial Report 05. SIGNIFICANT CHANGES IN STATE OF AFFAIRS Other than detailed below, in Note 27 of the financial statements (subsequent events) and in the Review of Operations above, there were no significant changes in the state of affairs of the Company during the financial year: On 10 December 2021, the Company completed a consolidation of securities by conversion of every ten (10) securities into one (1) security. The figures below are stated on a post consolidated basis. ▶ 33,333,333 shares issued under a two-tranche equity placement at an issue price of $0.90 to raise $30 million ▶ 1,861,451 shares issued under Share Purchase Plan at an issue price of $0.90 to raise a further $1.675 million ▶ 9,133,333 listed and un-listed options were exercised during the year with various exercise prices and expiry dates raising $2.745 million. MEETINGS OF DIRECTORS Tony Pearson Bardin Davis Abdullah Mwinyi Giselle Collins Rebecca Morgan Giles Stapleton BOARD MEETINGS NUMBER HELD AND ENTITLED TO ATTEND NUMBER ATTENDED 13 13 13 13 9 8 13 13 6 13 6 8 The Board has an Audit and Risk Committee, with the Committee to comprise of at least three independent non- executive Directors but where circumstances otherwise determine, the Committee can comprise two independent non-executive Directors. The number of meetings attended by each member of the Committee during the financial year was: Giselle Collins Rebecca Morgan* Tony Pearson * Resigned during the year. AUDIT & RISK COMMITTEE MEETINGS NUMBER HELD AND ENTITLED TO ATTEND NUMBER ATTENDED 5 4 5 5 4 5 2022 ANNUAL REPORT 33 Directors’ Report (Continued) A Nomination and Remuneration Committee was formed during the year with the Committee to comprise of at least three independent non- executive Directors but where circumstances otherwise determine, the Committee can comprise two independent non-executive Directors. Giselle Collins Rebecca Morgan* Tony Pearson* Giles Stapleton^ NOMINATION & REMUNERATION COMMITTEE MEETINGS NUMBER HELD AND ENTITLED TO ATTEND NUMBER ATTENDED 1 1 1 0 1 1 1 0 *Resigned during the year. ^Appointed during the year EQUITY HOLDINGS OF DIRECTORS As at the date of this report, the Directors’ interest in the Company were: EQUITY SHARES EQUITY OPTIONS PERFORMANCE RIGHTS Tony Pearson Abdullah Mwinyi Giselle Collins Giles Stapleton Russell Scrimshaw 470,666 35,000 30,000 110,976 - 500,000 - - - - 800,000 131,666 100,000 - - Details of issues made to directors during the period are provided in the Remuneration Report. FUTURE DEVELOPMENTS Likely future developments in the operations of the Group are referred to elsewhere in the Annual Financial Report. Other than as referred to in this report, further information as to likely developments in the operations of the Group and expected results of those operations would, in the opinion of the Directors, be speculative. ENVIRONMENTAL ISSUES The Company is aware of its environmental obligations with regards to its exploration activities and the Teesside refinery site and ensures that it complies with all regulations when carrying out any exploration work. The directors of the Company are not aware of any breach of environmental regulations for the year under review. The Directors have considered the National Greenhouse and Energy Reporting Act 2007 (the NGER Act) which introduced a single national reporting framework for the reporting and dissemination of information about the greenhouse gas emissions, greenhouse gas projects, and energy use and production of corporations which exceed specified thresholds. At the current stage of development, the Directors have determined that the NGER Act has no effect on the Company for the current or subsequent financial year. The Directors will reassess this position as and when the need arises. 34 PEAK RARE EARTHS 05. Annual Financial ReportDirectors’ Report (Continued) REMUNERATION REPORT (AUDITED) The remuneration report outlines the director and executive remuneration arrangements for the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. Remuneration Policy The remuneration policy of the Company has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component which is assessed on an annual basis in line with market rates and offering specific incentives based on key performance areas affecting the Company’s financial results. The Board believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best directors and executives to manage the Company. The Board’s policy for determining the nature and amount of remuneration for Board members and senior executives of the Company is as follows: The Company has a Nomination and Remuneration Committee to review the remuneration policy that sets the terms and conditions for the executive directors and other senior executives. All executives receive a base salary (which is based on factors such as length of service, expertise and experience) and superannuation is paid for Australian resident employees and directors. The Company reviews executive packages annually by reference to the Company’s performance, executive performance and comparable information from industry sectors and other listed companies in similar industries. The Board may exercise discretion in relation to approving incentives, bonuses, performance rights and options. The policy is to attract the highest calibre of executives and reward them for performance that results in long-term growth in shareholder value. Executives and employees are also entitled to participate in the employee share and option arrangements. The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities. The Board determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required to align directors’ interests with shareholder interests, the directors are encouraged to hold shares in the Company and subject to shareholders approval are able to participate in the employee option and performance rights plans. Non-executive directors are provided superannuation benefits in accordance with Australian statutory requirements, where the Non-Executive Director is a non-Australian resident the superannuation benefit is provided as an additional fee. All remuneration paid to directors and executives is valued at the cost to the Company and expensed. Options and performance rights are valued using the appropriate valuation methodology. Details of options and performance rights provided to directors are detailed in the Remuneration Report. Non-Executive Director Remuneration The total remuneration of non-executive directors has been set at a maximum of $700,000 (that excludes share-based payments) as approved by shareholders at the 29 November 2021 Annual General Meeting. It does not mean that the Company has utilised the entire maximum sum of $700,000 approved for Non-Executive Directors’ fees in each year. Performance Based Remuneration The Company continues to review and consider the inclusion of performance based components built into director and executive remuneration packages. The Company received approval from shareholders for adoption of an Incentive Employee Option Plan (EOP), Incentive Performance Rights Plan (PRP), and Director Fee Plan at the Annual General Meeting on 23 December 2020. The objectives of the EOP and PRP are to attract, motivate and retain key employees and the Company considers that the adoption of the Plans and the future issue of securities under the Plans will provide selected employees with the opportunity to participate in the future growth of the Company. 35 PEAK RARE EARTHS 2022 ANNUAL REPORT 35 Annual Financial Report 05.Directors’ Report (Continued) Following shareholder approval at the Annual General Meeting held on 29 November 2021, the Company issued the following incentive performance rights expiring 9 December 2025 to directors and executives with the vesting milestones set out below. CLASS BARDIN DAVIS TONY PEARSON ABDULLAH MWINYI GISELLE COLLINS REBECCA MORGAN PHIL RUNDELL Class A Class B Class C Class D Class E Class F Class G Class H Class I Total 50,000 50,000 50,000 150,000 150,000 100,000 100,000 50,000 50,000 75,000 75,000 25,000 75,000 75,000 50,000 50,000 25,000 25,000 10,526 10,526 3,509 10,526 10,526 7,018 7,018 3,509 3,508 15,790 15,790 5,263 15,790 15,789 10,526 10,526 5,263 5,263 15,790 15,790 5,263 15,790 15,789 10,526 10,526 5,263 5,263 13,334 13,333 40,000 40,000 13,333 26,667 26,667 13,333 13,333 750,000 475,000 66,666 100,000 100,000 200,000 The performance rights shall have the following vesting criteria (each, a Milestone) attached to them, subject to the directors and executives remaining as eligible participants of the plan: Class A Performance Rights: Class A Performance Rights shall vest subject to the Eligible Participant remaining an Eligible Participant as at the date that is 12 months from the later of the date of acceptance of the Offer or if applicable, the date that shareholder approval to the grant of the Class A Performance Rights to the Eligible Participant is received. Class B Performance Rights: Class B Performance Rights shall vest subject to the Eligible Participant remaining an Eligible Participant as at the date that is 24 months from the later of the date of acceptance of the Offer or if applicable, the date that shareholder approval to the grant of the Class B Performance Rights to the Eligible Participant is received. Class C Performance Rights: Class C Performance Rights shall vest when the Company receives a completed study in relation to Front End Engineering and Design (FEED) for the construction of the Teesside rare earth processing and separation plant in the Tees Valley, United Kingdom (Teesside). Class D Performance Rights: Class D Performance Rights shall vest on the Company, or a subsidiary of the Company, executing a binding agreement with the Government or an authority, or delegate, of the Government of the United Republic of Tanzania that sets out the economic parameters (Framework Agreement) for the development of the Ngualla Rare Earth Project mine and infrastructure in Ngualla, Tanzania (Ngualla Project). Class E Performance Rights: Class E Performance Rights shall vest on the Company entering into a binding construction contract for the construction of a rare earth refinery at Teesside. Class F Performance Rights: Class F Performance Rights shall vest on the Company completing an updated Feasibility Study (as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code)) in respect of the Ngualla Project and the refinery at Teesside. Class G Performance Rights: Class G Performance Rights shall vest on the execution of a binding and unconditional agreement between the Company and a third party whereby the third party undertakes: (i) to provide equity funding of not less than US$25 million for the development of the refinery at Teesside and/or the Ngualla Project; or (ii) to purchase a minimum of 10% of the annual production of the refinery at Teesside over the first five years of operations as disclosed in the Bankable Feasibility Study (as updated). Class H Performance Rights: Class H Performance Rights shall vest on: (i) the execution by the Company of a binding agreement(s) with a third party(s) whereby the third party(s) undertakes to provide funding that is sufficient to enable the Company to develop both the refinery at Teesside and the Ngualla Project in accordance with the Bankable Feasibility Study (as updated); and (ii) the provision of the funding referred to in paragraph (i) above becoming unconditional and available to the Company for drawdown. 36 PEAK RARE EARTHS 05. Annual Financial ReportDirectors’ Report (Continued) Class I Performance Rights: Class I Performance Rights shall vest on: (i) the vesting conditions that relate to the Class H Performance Rights having been satisfied; and (ii) the Company announcing to ASX that construction activities in accordance with the Bankable Feasibility Study (as updated) have commenced at the Ngualla Project. The Board considers that the achievement of these milestones will deliver increased shareholder wealth. During the year the following unlisted options and performance rights issued to directors and executives were exercised/ lapsed or were cancelled: Exercised: ▶ 35,000 vested performance rights with an exercise price of $nil Lapsed: ▶ 300,000 unlisted options with an exercise price of $1.00 ▶ 100,000 performance rights with an exercise price of $nil Company Performance, Shareholder Returns and Director’s and Executive’s Remuneration Summary of Group’s performance and movements in the Peak Rare Earths Limited share price over the last five years: Total income ($) 2022 8,602 2021 111,008 2020 12,374,452 2019 98,795 2018 618,718 Net profit/(loss) before tax ($) (22,731,602) (4,770,848) 7,652,714# (4,596,053) (4,903,224) Net profit/(loss) after tax ($) (22,731,602) (4,770,848) 7,652,714# (4,596,053) (4,903,224) Closing share price at end of year (cents), adjusted^ Basic profit/(loss) per share (cents) Dividends per share (cents) $0.295 $0.100 $0.210 $0.480 $0.360 (11.66) - (3.13) - 6.52 - (5.75) - (8.25) - # Includes gain on remeasurement of financial liabilities of $1.7million and gain on derecognition of associate $10.4million. ^ Note that the closing share price at end of year (cents) has been adjusted to reflect the effects of the 1 for 10 share consolidation on 9 December 2021. The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. Currently, this is facilitated through a policy to issue performance rights and in some instances options to the majority of directors and executives to encourage the alignment of personal and shareholder interests. The Company believes the policy will be effective in increasing shareholder wealth. Details of directors and executives’ interests in shares and options at year end are detailed below. 2022 ANNUAL REPORT 37 Annual Financial Report 05.Directors’ Report (Continued) Details of KMP Remuneration The relevant Key Management Personnel (KMP) of the group for the 2022 financial year were: ▶ Tony Pearson – Chair (appointed Non-Executive Director from 21 Aug 2018, Chair from 21 October 2020,) ▶ Bardin Davis - Managing Director (MD) (appointed Non-Executive Director 21 Oct 2020, MD from 9 Dec 2020) ▶ Abdullah Mwinyi - Non-Executive Director (appointed 15 November 2020) ▶ Giselle Collins - Non-Executive Director (appointed 9 March 2021) ▶ Giles Stapleton - Non-Executive Director (appointed 29 November 2021) ▶ Rebecca Morgan - Non-Executive Director (appointed 9 March 2021, resigned 13 February 2022) ▶ Philip Rundell - Chief Financial Officer & Company Secretary (appointed 16 December 2020) ▶ Mark Godfrey - Head of Technical Services (appointed 6 September 2021) ▶ Lello Galassi - Head of Development and Operations (appointed 20 September 2021) ▶ Andrea Cornwell - Head of Marketing & Sales (appointed 20 October 2021) Total KMP remuneration for the year was: Salary and fees Non-monetary benefits Superannuation Share based payments Termination Payments Total 2022 $ 1,720,824 - 93,384 556,355 - 2,370,563 2021 $ 1,078,312 18,240 80,163 787,526 191,661 2,155,902 Remuneration of individual KMP’s were: SHORT TERM BENEFITS POST- EMPLOYMENT SHARE BASED PAYMENTS* 30-JUN-22 SALARY & FEES NON-MONETARY SUPER- ANNUATION PERFORMANCE^ RIGHTS OPTIONS^ TERMINATION PAYMENTS TOTAL PROPORTION RELATED TO: EQUITY# PERFORMANCE# $ $ $ $ $ $ $ % % DIRECTORS Tony Pearson Bardin Davis Abdullah Mwinyi Giselle Collins1 Rebecca Morgan2 Giles Stapleton3 95,000 350,000 55,000 75,376 39,262 29,167 643,805 - - - - - - 9,500 106,069 23,360 27,500 380,694 - 7,538 3,926 2,917 18,604 9,209 - - - - - - - 51,381 514,576 23,360 - - - - - - - 233,929 10% 758,194 73,604 92,123 43,188 32,083 1,233,122 0% 0% 0% 0% 0% 2% 45% 50% 25% 10% 0% 0% 42% 38 PEAK RARE EARTHS 05. Annual Financial Report Directors’ Report (Continued) SHORT TERM BENEFITS POST- EMPLOYMENT SHARE BASED PAYMENTS* 30-JUN-22 SALARY & FEES NON-MONETARY SUPER- ANNUATION PERFORMANCE^ RIGHTS OPTIONS^ TERMINATION PAYMENTS TOTAL PROPORTION RELATED TO: EQUITY# PERFORMANCE# $ $ $ $ $ $ $ % % EXECUTIVES Philip Rundell4 Mark Godfrey5 Lello Galassi6 296,000 234,577 328,493 Andrea Cornwell7 217,949 Total 1,077,019 1,720,824 - - - - - - - 18,419 22,708 - 19,295 42,003 - - - 18,419 - - - - - - - - - - 314,419 257,284 328,493 237,244 1,137,441 93,383 532,995 23,360 - 2,370,563 0% 0% 0% 0% 0% 1% 6% 0% 0% 0% 2% 22% * Share Based Payments are non-cash components of remuneration and the consideration reported is an accounting value determined in accordance with AASB2. Inclusive in the consideration reported is the accounting values of unvested performance rights and options subject to performance milestones that as at 30 June 2022 had not yet been achieved. The cash benefit of the unvested performance rights and options will only be received by the KMP following any sale of the resultant shares, which can only be attained after the rights and options have been vested, exercised and the shares are issued. ^ Includes the write back of the share-based payments previously recognised for options and performance rights that lapsed during the current period. # The % excludes the value of the options which were written back during the year 1 Ms Collins fees included an additional fee of $20,000 p/a for her role as Chair of the A&R Committee. 2 Ms Morgan resigned on 13 February 2022 3 Mr Stapleton was appointed to the role of Non-Executive Director on 29 November 2021 4 Mr Rundell’s fees include a Bonus payment for $50,000 paid during the period. 5 Mr Godfrey was appointed to the role of Head of Technical Services on 6 September 2021. 6 Mr Galassi was appointed to the role Head of Development and Operations on 20 September 2021. 7 Mrs Cornwell was appointed to the role of Head of Marketing & Sales on 20 October 2021. Remuneration of individual KMP’s were: SHORT TERM BENEFITS POST- EMPLOYMENT SHARE BASED PAYMENTS* 30-JUN-21 SALARY & FEES NON-MONETARY SUPER- ANNUATION PERFORMANCE^ RIGHTS OPTIONS^ TERMINATION PAYMENTS TOTAL PROPORTION RELATED TO: EQUITY# PERFORMANCE# $ $ $ $ $ $ $ % % DIRECTORS Tony Pearson1 Bardin Davis2 133,476 204,232 Abdullah Mwinyi3 35,284 Giselle Collins4 Rebecca Morgan5 Peter Meurer6 15,457 15,457 10,556 Jonathan Murray 7 42,345 Robert Sennitt8 3,332 460,139 - - - - - - - - - 19,759 137,785 28,332 19,380 688,923 - 27,557 - - - - (110,220) - - - 4,500 (45,517) - - 1,468 1,468 - - - - - - - - - - - 319,352 912,535 62,841 16,925 16,925 (99,664) 1,328 3,332 42,075 858,765 (127,405) - 1,233,574 9% 0% 0% 0% 0% 0% 0% 0% 2% 43% 75% 44% 0% 0% 0% 11% 0% 62% 2022 ANNUAL REPORT 39 Annual Financial Report 05. Directors’ Report (Continued) SHORT TERM BENEFITS POST- EMPLOYMENT SHARE BASED PAYMENTS* 30-JUN-21 SALARY & FEES NON-MONETARY SUPER- ANNUATION PERFORMANCE^ RIGHTS OPTIONS^ TERMINATION PAYMENTS TOTAL PROPORTION RELATED TO: EQUITY# PERFORMANCE# $ $ $ $ $ $ $ % % EXECUTIVES Philip Rundell9 Rocky Smith10 Michael Prassas11 Graeme Scott12 Lucas Stanfield13 62,317 162,121 61,180 153,144 179,411 618,173 Total 1,078,312 - 6,500 11,740 - - 18,240 18,240 - - 12,865 14,143 11,080 38,088 - - - 28,083 28,083 56,166 - - - - - - - - 62,317 168,621 163,462 249,247 28,199 223,569 - 218,574 191,661 922,328 80,163 914,931 (127,405) 191,661 2,155,902 0% 14% 13% 15% 14% 0% 1% 0% 0% 0% 0% 0% 6% 40% * The Company’s executive team agreed to a 50% deferral in their contracted cash remuneration and the Company’s Directors agreed to defer a 100% of their Directors’ fees for four months for the period 1 April 2020 to 31 July 2020. As at 30 June 2020 the gross deferred amounts owing to Directors and Executives reported in trade and other payables totalled $190,323. The deferred executive remuneration and Directors fees was settled in equity based on $0.0342 Per Ordinary Fully Paid Share calculated based on the 5 day VWAP up to and including 6 August 2020 for a total value of consideration $128,662, this amount is net of PAYG withholding tax obligations due on the deferred amounts. The gross deferred amounts are excluded from the salary and fees for 2021 as they have been accrued and reported in 2020. ^ Includes the write back of the share-based payments previously recognised for options and performance rights that lapsed during the current period. # The % excludes the value of the options which were written back during the year 1 Mr Pearson received $54,666 for additional executive services the net amount after PAYG withholding tax obligations was settled in shares and is included in salary and fees. From 1 November to 30 June 2021 two thirds of Mr Pearson’s Chair fees were agreed to be settled in shares totalling $51,383 and are included in salary and fees. Mr Pearson was back paid $8,082 in statutory superannuation entitlements for previous periods where the Company had not met this obligation. 2 Mr Davis was appointed in the role of non-executive director on 21 October 2020 before transitioning to the Managing Director position on 9 December 2020. Mr Davis’ non-executive director fees totalled $6,720 the net amount after PAYG withholding tax obligations was settled in shares. Mr Davis ESA stipulated that $75,000 per year of his total Managing Director fees were to be paid in shares, during the year Mr Davis earned $42,030 as part of his equity component of his salary the net amount after PAYG withholding tax obligations was settled in shares. The share settled fees are included in salary and fees for the period. 3 Mr Mwinyi was appointed to the role of non-executive director on 15 November 2020 4 Ms Collins was appointed to the role of non-executive director on 9 March 2021 5 Ms Morgan was appointed to the role of non-executive director on 9 March 2021 6 Mr Meurer ceased employment with the company on 16 September 2020. On cessation of employment Mr Meurer’s unvested performance-based options lapsed and the expensed share-based payments recognised under AASB 2 of $110,220 for those options reversed. 7 Mr Murray ceased employment with the company on 8 March 2021. Mr Murray received $12,773 in fees for additional executive services, payment of which was settled in shares. The share settled fees are included in Salary and fees for the period. On cessation of employment Mr Murry’s unvested performance-based options lapsed and the expensed share-based payments recognised under AASB 2 of $45,517 for those options reversed. 8 Mr Sennitt ceased employment with the company on 11 September 2020. 9 Mr Rundell was appointed to the role of CFO and Company Secretary on 16 December 2020. 10 Mr Smith ceased employment with the company on 8 December 2020. 11 Mr Prassas ceased employment with the company on 15 July 2020, in accordance with the terms of his ESA, Mr Prassas received a termination payment of $125,000 for 6 months’ notice paid in lieu plus other statutory redundancy entitlements. The unused annual leave paid out on termination totalled $50,764 and is included in his salary and fees. 12 Mr Scott ceased employment with the company on 18 December 2020, in accordance with the terms of his ESA, Mr Scott received a termination payment of $28,199 for his notice paid in lieu plus other statutory redundancy entitlements. The unused annual leave paid out on termination totalled $32,318 and is included in his salary and fees. 13 Mr Stanfield ceased employment with the company on 15 December 2020. 40 PEAK RARE EARTHS 05. Annual Financial Report Directors’ Report (Continued) Options and performance rights granted / vested / lapsed during the year ended 30 June 2022 Movements in options during the year: 30-JUN-22 DIRECTORS Tony Pearson Bardin Davis Abdullah Mwinyi Giselle Collins Rebecca Morgan Giles Stapleton EXECUTIVES Philip Rundell Mark Godfrey Lello Galassi Andrea Cornwell Total DATE OF ISSUE NUMBER OF OPTIONS ISSUED FAIR VALUE PER OPTION* TOTAL VALUE OF ISSUE $ VESTING DATE# EXERCISE PRICE EXPIRY DATE NUMBER VESTED DURING THE YEAR NUMBER LAPSED/ CANCELLED DURING THE YEAR - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $1.00 21-Jun-22 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (300,000) - - - - - (300,000) - - - - - (300,000) Note that balances pre share consolidation have been adjusted to reflect the effects of the 1 for 10 share consolidation on 9 December 2021. * Options are valued using the Black-Scholes option pricing model on date of grant. # Unvested Options vest on achievement of length of service criteria. Movements in performance rights during the year: 30-JUN-22 DATE OF ISSUE DIRECTORS Tony Pearson Bardin Davis 9-Dec-21 9-Dec-21 Abdullah Mwinyi 9-Dec-21 Giselle Collins 9-Dec-21 Rebecca Morgan 9-Dec-21 Giles Stapleton NUMBER OF PER- FORMANCE RIGHTS ISSUED FAIR VALUE PER PERFORMANCE RIGHT* TOTAL VALUE OF ISSUE $^ VESTING DATE# EXERCISE PRICE EXPIRY DATE NUMBER VESTED DURING THE YEAR NUMBER LAPSED/ CANCELLED DURING THE YEAR 475,000 750,000 66,666 100,000 100,000 - 1,491,666 $0.66 $0.66 $0.66 $0.66 $0.66 - 313,500 495,000 44,000 66,000 66,000 - 984,500 - - - - - - $nil 9-Dec-25 $nil 9-Dec-25 $nil 9-Dec-25 $nil 9-Dec-25 $nil 9-Dec-25 - - - - - - - - - (100,000) (100,000) 2022 ANNUAL REPORT 41 Annual Financial Report 05. Directors’ Report (Continued) 30-JUN-22 DATE OF ISSUE NUMBER OF PER- FORMANCE RIGHTS ISSUED FAIR VALUE PER PERFORMANCE RIGHT* TOTAL VALUE OF ISSUE $^ VESTING DATE# EXERCISE PRICE EXPIRY DATE NUMBER VESTED DURING THE YEAR NUMBER LAPSED/ CANCELLED DURING THE YEAR EXECUTIVES Philip Rundell 9-Dec-21 200,000 $0.66 132,000 Mark Godfrey Lello Galassi Andrea Cornwell - - - - - - - 200,000 Total - 1,691,666 - - - - - - 132,000 1,116,500 - - - - $nil 9-Dec-25 - - - - - - - - - - - - - - - - (100,000) Note that balances pre share consolidation have been adjusted to reflect the effects of the 1 for 10 share consolidation on 9 December 2021. ^ The Performance Rights were granted for no consideration and the employee received no cash benefit at the time of receiving the rights. The cash benefit will be received by the employee following any sale of the resultant shares, which can only be attained after the rights have been vested and the shares are issued. * Performance Rights are valued using the Black-Scholes option pricing model on date of grant. # For vesting of performance rights with the same expiry date occurring on multiple dates during the period the most recent date is reported in the table. Options and performance rights granted / vested / lapsed during the year ended 30 June 2021 Movements in options during the year: 30-JUN-21 DIRECTORS Tony Pearson Bardin Davis Abdullah Mwinyi Giselle Collins Rebecca Morgan Peter Meurer Jonathan Murray DATE OF ISSUE NUMBER OF OP- TIONS ISSUED FAIR VALUE PER OPTION* TOTAL VALUE OF ISSUE $ VESTING DATE# EXERCISE PRICE EXPIRY DATE NUMBER VESTED DURING THE YEAR NUMBER LAPSED/ CANCELLED DURING THE YEAR - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $0.10 21-Jun-22 $0.15 21-Jun-23 $0.10 21-Jun-22 $0.15 21-Jun-23 - - - - - - - - - - - - - - - - - - - - - - - - - (5,000,000) (15,000,000) (3,000,000) (5,000,000) (28,000,000) 42 PEAK RARE EARTHS 05. Annual Financial Report Directors’ Report (Continued) 30-JUN-21 EXECUTIVES Rocky Smith Michael Prassas Graeme Scott Lucas Stanfield Total DATE OF ISSUE NUMBER OF OP- TIONS ISSUED FAIR VALUE PER OPTION* TOTAL VALUE OF ISSUE $ VESTING DATE# EXERCISE PRICE EXPIRY DATE NUMBER VESTED DURING THE YEAR NUMBER LAPSED/ CANCELLED DURING THE YEAR - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $0.065 16-Jan-21 $0.035 17-Jan-22 $0.030 5-Mar-23 $0.065 16-Jan-21 $0.030 5-Mar-23 $0.065 16-Jan-21 $0.035 17-Jan-22 $0.030 5-Mar-23 $0.065 16-Jan-21 $0.030 5-Mar-23 - - - - - - - - - - - - - - - - - - - - - - - - - - (3,000,000) (1,500,000) (11,000,000) (1,500,000) (4,350,000) (1,500,000) (750,000) (7,250,000) (1,500,000) (3,375,000) (35,725,000) (63,725,000) * Options are valued using the Black-Scholes option pricing model on date of grant. # Unvested Options vest on achievement of length of service criteria. Movements in performance rights during the year: 30-JUN-21 DATE OF ISSUE DIRECTORS NUMBER OF PER- FORMANCE RIGHTS ISSUED FAIR VALUE PER PER- FORMANCE RIGHT* TOTAL VALUE OF ISSUE $^ VESTING DATE# Tony Pearson 5-Feb-21 5,000,000 Bardin Davis 5-Feb-21 25,000,000 Abdullah Mwinyi 5-Feb-21 1,000,000 $0.06 $0.06 $0.06 300,000 28-May-21 1,500,000 28-May-21 60,000 28-May-21 Giselle Collins Rebecca Morgan Peter Meurer - - - - - - - - - - - - - - - EXER- CISE PRICE $nil $nil $nil - - - EXPIRY DATE NUMBER VESTED DURING THE YEAR NUMBER LAPSED/ CANCELLED DUR- ING THE YEAR 5-Feb-25 1,750,000 5-Feb-25 8,750,000 5-Feb-25 350,000 - - - - - - - - - - - - Jonathan Murray 5-Feb-21 1,000,000 $0.06 60,000 5-Mar-21 $nil 5-Feb-25 75,000 (925,000) Robert Sennitt - - - - - - 32,000,000 1,920,000 - - 10,925,000 (925,000) 2022 ANNUAL REPORT 43 Annual Financial Report 05. Directors’ Report (Continued) 30-JUN-21 DATE OF ISSUE NUMBER OF PER- FORMANCE RIGHTS ISSUED FAIR VALUE PER PER- FORMANCE RIGHT* TOTAL VALUE OF ISSUE $^ VESTING DATE# EXER- CISE PRICE EXPIRY DATE NUMBER VESTED DURING THE YEAR NUMBER LAPSED/ CANCELLED DURING THE YEAR EXECUTIVES Philip Rundell Rocky Smith Michael Prassas - - - - - - Graeme Scott 8-Sep-20 2,300,000 8-Sep-20 3,800,000 Lucas Stanfield 8-Sep-20 2,300,000 8-Sep-20 3,800,000 - 12,200,000 - 44,200,000 Total - - - $0.037 $0.037 $0.037 $0.037 - - - - - - 85,100 17-Nov-20 140,600 - 85,100 17-Nov-20 - 140,600 451,400 2,371,400 - - - $nil $nil $nil $nil - - - - - - - - - 8-Sep-21 759,000 (1,541,000) 8-Sep-24 - (3,800,000) 8-Sep-21 759,000 (1,541,000) 8-Sep-24 - (3,800,000) 1,518,000 (10,682,000) 12,443,000 (11,607,000) * Performance Rights are valued using the Black-Scholes option pricing model on date of grant. # The unvested Performance Rights to vest on achievement of performance criteria, as determined by the Company’s Board, by 5 February 2025 or the Performance Rights will lapse. For vesting of performance rights with the same expiry date occurring on multiple dates during the period the most recent date is reported in the table. Shareholdings of KMP’s OPENING BALANCE GRANTED AS REMUNERATION EXERCISE OF OPTIONS/PRS OTHER MOVEMENTS CLOSING BALANCE 30-JUN-22 DIRECTORS Tony Pearson Bardin Davis Abdullah Mwinyi Giselle Collins Rebecca Morgan* Giles Stapleton EXECUTIVES Philip Rundell Mark Godfrey Lello Galassi Andrea Cornwell 463,306 895,417 - - - - 1,358,723 - - - - - - - - - - - - - - - - - - - - 35,000 - - - 35,000 - - - - - 7,360 10,093 - 30,000 - 110,976 158,429 - - - - - 470,666 905,510 35,000 30,000 - 110,976 1,552,152 - - - - - 35,000 158,429 1,552,152 Total 1,358,723 Note that balances pre share consolidation have been adjusted to reflect the effects of the 1 for 10 share consolidation on 9 December 2021. * Ceased to be KMP’s during the period and their holdings are not reported at period end. 44 PEAK RARE EARTHS 05. Annual Financial Report OPENING BALANCE GRANTED AS REMUNERA- TION EXERCISE OF OPTIONS & PRS# EXPIRED/ LAPSED OTHER MOVEMENTS CLOSING BALANCE VESTED AT 30 JUNE Directors’ Report (Continued) Option Holdings of KMP’s including performance rights 30-JUN-22 DIRECTORS Tony Pearson Bardin Davis Abdullah Mwinyi Giselle Collins Rebecca Morgan* Giles Stapleton EXECUTIVES Philip Rundell Mark Godfrey Lello Galassi Andrea Cornwell 1,125,000 1,625,000 100,000 - - - 475,000 750,000 66,666 100,000 100,000 - - - (35,000) - - - (300,000) - - - (100,000) - 2,850,000 1,491,666 (35,000) (400,000) - - - - - 200,000 - - - - - - - - - - - - - - - - - - - - - - - - - - - 1,300,000 2,375,000 131,666 100,000 - - 3,906,666 200,000 - - - - 4,106,666 - - - - - - - - - - - - - Total 2,850,000 1,691,666 (35,000) (400,000) Note that balances pre share consolidation have been adjusted to reflect the effects of the 1 for 10 share consolidation on 9 December 2021. * Ceased to be KMP’s during the period and their holdings are not reported at period end. # During the year, 35,000 performance rights were exercised for 35,000 shares at zero exercise price. Performance income as a proportion of total income $50,000 in bonuses have been paid to executives during the year. Service agreements: The key terms of the service agreements with the KMP’s are: Tony Pearson (Appointed acting Chair 16 September 2020 and confirmed as Chair 21 October 2020) Chair Fees were set at $95,000 plus superannuation entitlements per annum. Non-Executive Directors - Abdullah Mwinyi (Appointed 15 November 2020)/ Giselle Collins (Appointed 9 March 2021)/ Rebecca Morgan (Appointed 9 March 2021, Resigned 13 February 2022)/ Giles Stapleton (Appointed 29 November 2021) Non-Executive Directors are appointed by letter agreement with no fixed term ceasing on resignation or removal as a director in accordance with the Corporations Act 2001. Fees are currently set at $50,000 plus superannuation entitlements per annum, non-resident directors are entitled to receive the superannuation component as fees. Bardin Davis – Managing Director - (Appointed MD 9 December 2020) Bardin is employed under an Executive Service Agreement (ESA). The agreement provides for an annual salary of $350,000 plus statutory superannuation capped at the concessional contribution threshold. Bardin is entitled to leave in accordance with the relevant legislation. The engagement had no fixed term but is subject to a six-month notice period from either party. 2022 ANNUAL REPORT 45 Annual Financial Report 05.Directors’ Report (Continued) Philip Rundell – CFO & Company Secretary (Appointed 16 December 2020) Philip is employed under a consulting agreement with the Company. The agreement allows for an hourly charge rate of $200 per hour to a maximum of $1,500 per day. The engagement has no fixed term and is subject to a 15-day notice period from either party. Phil was paid a discretionary bonus of $50,000 during the 2022 financial year. Mark Godfrey – Head of Technical Services - (Appointed 6 September 2021) Mark is employed under an Executive Service Agreement (ESA). The agreement provided for an annual salary of $285,000 plus discretionary performance bonuses. The Executive is entitled to superannuation and leave in accordance with the relevant legislation. The engagement had no fixed term but is subject to a three-month notice period from either party. Mark is entitled to be issued 450,000 performance rights under the Company’s Performance Rights Plan, in addition he will be entitled to STI’s and LTI’s which may comprise of a combination of cash, shares and performance rights to be agreed. Lello Galassi – Head of Development and Operations - (Appointed 20 September 2021) Lello is employed under an Executive Service Agreement (ESA). The agreement provided for an annual salary of UD$300,000 plus discretionary performance bonuses and will receive 24 days of annual leave per year. Upon relocation to Perth, Australia, the Executive will be entitled to a living away from home allowance of AUD $8,333 per month and will be entitled to superannuation in accordance with the relevant legislation. The engagement had no fixed term but is subject to a three-month notice period from either party. Lello is entitled to be issued 500,000 performance rights under the Company’s Performance Rights Plan, in addition he will be entitled to STI’s and LTI’s which may comprise of a combination of cash, shares and performance rights to be agreed. Andrea Cornwall – Head of Marketing and Sales - (Appointed 29 November 2021) Andrea is employed under an Executive Service Agreement (ESA). The agreement provided for an annual salary of $312,500 plus discretionary performance bonuses. The Executive is entitled to superannuation and leave in accordance with the relevant legislation. The engagement had no fixed term but is subject to a three-month notice period from either party. Andrea is entitled to be issued 450,000 performance rights under the Company’s Performance Rights Plan, in addition she will be entitled to STI’s and LTI’s which may comprise of a combination of cash, shares and performance rights to be agreed. Related party transactions There were no related party transactions with Key Management Personnel during the year (2021: $89,677). The balance outstanding at 30 June 2022 and included in trade creditors is $nil (30 June 2021: $1,183). (End of Remuneration Report) OPTIONS AND PERFORMANCE RIGHTS At the date of this report no Listed options are on issue. Unissued ordinary shares of the Company under option to directors, employees and contractors are: EXPIRY DATE 21 June 2023 5 March 2023 EXERCISE PRICE NUMBER UNDER OPTION $1.50 $0.30 500,000* 559,000 * Vesting subject to length of service and milestone criteria. There are no unissued ordinary shares of the Company under option to service providers. During the year a total of 9,133,333* listed and unlisted options were exercised at various exercise prices. A total of 300,000* unlisted options with exercises price of $1.00* lapsed, were cancelled, or expired unexercised. No options were issued. 46 PEAK RARE EARTHS 05. Annual Financial ReportDirectors’ Report (Continued) Details of options movements during the year are detailed in the Remuneration Report and note 18 to this report. At the date of this report Performance Rights on issue to directors and employees are: EXPIRY DATE 5 February 2025 9 December 2025 EXERCISE PRICE NUMBER OF PERFORMANCE RIGHTS $Nil $Nil 2,015,000 1,818,266 During the year 1,918,266* performance rights were issued to directors and employees of the Company. A total of 46,200 vested performance rights were exercised for $nil consideration and a total of 147,600* performance rights lapsed, were cancelled, or expired. Option or rights holders do not have any right, by virtue of the option or right to participate in any share issue of the Company or any related body corporate. *The Company’s share capital underwent a 1:10 share consolidation on 10 December 2021. All movements in the equity components are stated on a post consolidated basis. INDEMNIFYING OFFICERS OR AUDITOR During the financial year, the company paid a premium in respect of a contract insuring the directors and officers of the Company and related body corporates against a liability incurred as a director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as an officer or auditor. To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year. PROCEEDINGS ON BEHALF OF COMPANY No person has applied to the court under legislation such as section 237 of the Corporations Act of Australia 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. No proceedings have been brought or intervened in on behalf of the consolidated entity with leave of the court under such legislation. 2022 ANNUAL REPORT 47 Annual Financial Report 05.05. Annual Financial Report Directors’ Report (Continued) AUDITOR’S INDEPENDENCE DECLARATION The lead auditor’s independence declaration for the year ended 30 June 2022 has been received and can be found immediately following this Directors’ report. No amounts have been paid or payable to the auditor for non-audit services, payments to the auditors are set out in Note 3 to the Financial Statements. The Board of Directors is satisfied that the provision of non-audit services performed during the year by the Company’s auditors is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services did not compromise the external auditor’s independence for the following reason: ▶ All non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and ▶ The nature of the services provided does not compromise the general principles relating to auditors independence as set out in the APES 110 (Code of Ethics for Professional Accountants). The Directors’ report is signed in accordance with a resolution of Directors made pursuant to s.298(2) of the Corporations Act 2001. On behalf of the Directors, Russell Scrimshaw Executive Chairman 20 September 2022 48 PEAK RARE EARTHS Auditor’s Independence Declaration Annual Financial Report 05. 2022 ANNUAL REPORT 49 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Auditor’s independence declaration to the directors of Peak Rare Earths Limited As lead auditor for the audit of the financial report of Peak Rare Earths Limited for the financial year ended 30 June 2022, I declare to the best of my knowledge and belief, there have been: a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; b. No contraventions of any applicable code of professional conduct in relation to the audit; and c. No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of Peak Rare Earths Limited and the entities it controlled during the financial year. Ernst & Young Pierre Dreyer Partner 20 September 2022 05. Annual Financial Report Independent Auditor’s Report Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Independent auditor's report to the members of Peak Rare Earths Limited Report on the audit of the financial report Opinion We have audited the financial report of Peak Rare Earths Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a) b) giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022 and of its consolidated financial performance for the year ended on that date; 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 and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material uncertainty related to going concern We draw attention to Note 2(a) in the financial report, which describes the principal conditions that raise doubt about the Group’s ability to continue as a going concern. These events or conditions indicate that a material uncertainty exists that may cast significant doubt about the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 50 PEAK RARE EARTHS Independent Auditor’s Report (Continued) Annual Financial Report 05. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matter described below to be the key audit matter to be communicated in our report. For the matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of our report, including in relation to this matter. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matter below, provide the basis for our audit opinion on the accompanying financial report. 1. Carrying value of capitalised exploration and evaluation assets Why significant How our audit addressed the key audit matter As at 30 June 2022, the Group’s Tanzanian subsidiary, PRNG Minerals Limited (“PRNG”), held 100% of the Ngualla Project (“Project”) which included capitalised exploration and evaluation assets of $59.1 million, representing 80% of the Group’s total assets. The carrying amount of exploration and evaluation assets is assessed for impairment by the Group when facts and circumstances indicate that the carrying amount of exploration and evaluation assets may exceed its recoverable amount. The determination as to whether there are any indicators to require the exploration and evaluation assets to be assessed for impairment involves a number of judgments, including whether the Group has tenure, whether it will be able to perform ongoing expenditure and whether there is sufficient information for a decision to be made that the area of interest is not commercially viable. The directors did not identify any impairment indicators at 30 June 2022. Refer to Note 12 in the financial report for capitalised exploration and evaluation asset balances and related disclosures. This was considered a key audit matter because of the significant judgment involved in determining whether any impairment indicators were present for the Group’s capitalised exploration and evaluation asset balances and the significance of these balances. In performing our procedures, we: ► Considered whether the Group’s right to explore was current, which included obtaining and assessing supporting documentation such as license agreements. This included reviewing correspondence between the Group and its external legal counsel with respect to the status of PRNG’s mining and prospecting license rights applications and the status of its tenure over the Project. ► Considered the Group’s intention to carry out significant ongoing exploration and evaluation activities in the relevant areas of interest which included reviewing the Group’s cash-flow forecast and enquiring of senior management and the directors as to their intentions and the strategy of the Group. ► Assessed whether exploration and evaluation data or contrary information existed to indicate that the carrying value of capitalised exploration and evaluation assets was unlikely to be recovered through successful development or sale. ► Reviewed the adequacy of the Group’s disclosures in Note 12 of the financial report. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 2022 ANNUAL REPORT 51 05. Annual Financial Report Independent Auditor’s Report (Continued) Information other than the financial report and auditor’s report thereon The directors are responsible for the other information. The other information comprises the information included in the Company’s 2022 Annual Report other than the financial report and our auditor’s report thereon. We obtained the Directors’ Report that is to be included in the Annual Report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the Annual Report after the date of this auditor’s report. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, 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 Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor's responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 52 PEAK RARE EARTHS Independent Auditor’s Report (Continued) Annual Financial Report 05. ► ► ► ► ► ► 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 entity’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 entity 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 consolidated 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 business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 2022 ANNUAL REPORT 53 05. Annual Financial Report Independent Auditor’s Report (Continued) 54 PEAK RARE EARTHS A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Report on the audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the Directors' report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Peak Rare Earths Limited for the year ended 30 June 2022, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Ernst & Young Pierre Dreyer Partner Perth 20 September 2022 Consolidated Statement of Comprehensive Income For the Year Ended 30 June 2022 Interest income R&D rebate Other income Total income Employee benefits expenses Share based payments expenses Write-off of capitalised exploration costs Depreciation expenses Borrowing costs Administrative and other costs Technical feasibility costs Loss before income tax Income tax expense Loss after income tax Other comprehensive income/(loss), net of tax Items that could be transferred to profit or loss in future: Exchange differences on translation of foreign operations Total comprehensive loss for the year Loss per share (in cents) Basic and Diluted loss per share Annual Financial Report 05. NOTE 3 17 12 10, 11 16 6 4 2022 $ 2021 $ 8,602 - - 8,602 (2,579,194) (610,449) (156,080) (199,074) 9,246 46,137 55,625 111,008 (725,552) (856,325) - (23,049) (7,874,527) (323,904) (4,284,188) (1,397,265) (7,036,692) (1,555,761) (22,731,602) (4,770,848) - - (22,731,602) (4,770,848) 4,598,141 (4,483,550) (18,133,461) (9,254,398) (11.66) (3.13) 2022 ANNUAL REPORT 55 05. Annual Financial Report Consolidated Statement of Financial Position As at 30 June 2022 ASSETS Current assets Cash and cash equivalents Trade and other receivables Prepayments Total current assets Non-current assets Other financial assets Property plant and equipment Right-of-use asset Exploration and evaluation costs Investments Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Provisions Lease liability – current Total current liabilities Non-current liabilities Lease liability – non-current Royalty liability Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity Reserves Accumulated losses Total equity The statement should be read in conjunction with the accompanying note 56 PEAK RARE EARTHS NOTE 2022 $ 2021 $ 7 8 9 10 11 12 13 14 15 11 11 16 18 17 9,479,379 2,680,367 974,411 80,373 732,455 84,740 10,534,163 3,497,562 63,794 225,337 - 24,819 3,774,955 3,583,243 59,114,040 54,472,897 8,000 8,000 63,186,126 58,088,959 73,720,289 61,586,521 2,447,973 96,367 110,279 576,746 28,433 - 2,654,619 605,179 206,364 - - 5,686,663 206,364 5,686,663 2,860,983 6,291,842 70,859,306 55,294,679 140,805,369 107,717,730 5,197,563 (11,027) (75,143,626) (52,412,024) 70,859,306 55,294,679 Consolidated Statement of Cash Flows For the Year Ended 30 June 2022 OPERATING ACTIVITIES Payments to suppliers and employees Interest received Government rebates received Cash used in operating activities INVESTING ACTIVITIES Acquisition of property, plant and equipment Proceeds from sale of non-current assets Cash generated from (used in) investing activities FINANCING ACTIVITIES Proceeds from issue of equity shares Costs of issuing equity shares Proceeds from redemption of bank guarantee Additions to bank guarantee Payment of lease liabilities Repayment of royalty liability Cash generated from financing activities Net increase in cash and cash equivalents Balance at the beginning of the year Effect of foreign currency translation Balance at the end of the year The statement should be read in conjunction with the accompanying notes Annual Financial Report 05. NOTE 2022 $ 2021 $ (12,137,690) (4,583,832) 8,602 - 13,574 101,762 7 (12,129,088) (4,468,496) (239,505) - (239,505) (245) 531 286 34,469,917 (1,382,278) - (63,794) 8,227,067 (402,673) 30,000 - (40,671) (3,220,347) (13,767,214) - 19,215,960 4,634,047 6,847,367 2,680,367 (48,355) 165,837 2,546,021 (31,491) 7 9,479,379 2,680,367 2022 ANNUAL REPORT 57 05. Annual Financial Report Consolidated Statement of Changes in Equity For the Year Ended 30 June 2022 CONTRIBUTED EQUITY SHARE BASED PAYMENT RESERVE FOREIGN CURRENCY TRANSLATION RESERVE ACCUMULATED LOSSES TOTAL EQUITY $ $ $ $ $ At 30 June 2020 Loss for the year Other comprehensive loss Total comprehensive loss for the year Equity issued Equity based payments Transaction costs At 30 June 2021 Loss for the year Other comprehensive income Total comprehensive income/(loss) for the year Equity issued Equity based payments Transaction costs At 30 June 2022 99,893,335 3,787,758 (171,560) (47,641,176) 55,868,357 - - - 8,227,067 - - - - - 856,325 (402,672) - - (4,770,848) (4,770,848) (4,483,550) - (4,483,550) (4,483,550) (4,770,848) (9,254,398) - - - - - - 8,227,067 856,325 (402,672) 107,717,730 4,644,083 (4,655,110) (52,412,024) 55,294,679 - - - 34,469,917 - - - - - 610,449 (1,382,278) - - (22,731,602) (22,731,602) 4,598,141 - 4,598,141 4,598,141 (22,731,602) (18,133,461) - - - - - - 34,469,917 610,449 (1,382,278) 140,805,369 5,254,532 (56,969) (75,143,626) 70,859,306 The statement should be read in conjunction with the accompanying notes 58 PEAK RARE EARTHS Annual Financial Report 05. Notes to the Financial Statements 1. CORPORATE INFORMATION The financial report of Peak Rare Earths Limited (previously Peak Resources Limited; the Group) for the year ended 30 June 2022 was authorised for issue in accordance with a resolution of the directors on 20 September 2022. Peak Rare Earths Limited is a for profit company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange (ASX). The address of its registered office and principal place of business is disclosed in the corporate directory in the Annual Report. The principal activity of the Group during the year was exploration and evaluation of mineral licences. 2. SIGNIFICANT ACCOUNTING POLICIES Group will need to reduce its discretionary spending to ensure that it has sufficient cash on hand to continue its operations. As a result of the need to raise additional equity to continue with the planned development of the Ngualla Project, or reduce discretionary spending if funds are not forthcoming, there is a material uncertainty whether the Group will be able to progress with its current development initiatives and continue as a going concern and therefore in this circumstance whether it will realise its assets and discharge its liabilities in the normal course of business and at the amounts stated in the consolidated financial statements. No adjustments have been made relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Group not continue as a going concern. b) Impact of new standards applied for the first a) Basis of Preparation time The consolidated financial statements have been prepared on the basis of historical cost. All amounts are presented in Australian Dollars unless otherwise noted. Statement of compliance The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards and Interpretations, and complies with other requirements of the law. Compliance with Australian Accounting Standards ensures that the financial statements and notes of the Group comply with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS). The accounting policies adopted in the preparation of the consolidated financial statements for the year are consistent with those followed in the preparation of the Company’s annual financial report for the year ended 30 June 2022, except for the adoption of new and amended accounting standards and interpretations effective as of 1 July 2021. The adoption of these new and amended accounting standards and interpretations did not have a material impact on the consolidated entity and no restatement of comparative financial information to reflect the adoption of these new standards and interpretations was required. The Company has not early adopted any other accounting standard, interpretation or amendment that has been issued but is not yet effective. Going concern The Group incurred a loss after tax of $22,731,602 (2021: $4,770,848) and had operating cash outflows of $12,129,088 for the year ended 30 June 2022 (2021: $4,468,496). The Group’s ability to continue as a going concern and meet its debts as and when they fall due is dependent on its ability to raise additional capital. As reported, with $9,479,379 cash at bank at the end of the reporting period, Peak is well funded in the short term to fund the short term pre-development activities, and its corporate and administration requirements. Further funding will be required to develop the project. Standards issued but not yet effective Significant Australian Accounting Standards and Interpretations that are issued, but are not yet effective, up to the date of issuance of the Group’s financial statements is not expected to be material. The Group intends to adopt these new standards and interpretations, if applicable, when they become effective. The standards issued and amendments but not yet effective are not expected to have a material impact on the Group. ▶ IFRS 17 Insurance Contracts ▶ Amendments to IAS 1: Classification of Liabilities as Current or Non-current In the directors’ opinion, there are reasonable grounds to believe that the Group has the ability to raise further funding as and when required based on the quality of the project and its past ability to raise equity funding. However, in the event that additional funding is not forthcoming, the ▶ Reference to the Conceptual Framework – Amendments to IFRS 3 ▶ Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 2022 ANNUAL REPORT 59 05. Annual Financial Report Notes to the Financial Statements (Continued) ▶ Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37 control until the date the Group ceases to control the subsidiary. ▶ IFRS 1 First-time Adoption of International Financial Reporting Standards – Subsidiary as a first-time adopter ▶ IFRS 9 Financial Instruments – Fees in the “10 per cent” test for derecognition of financial liabilities ▶ IAS 41 Agriculture – Taxation in fair value measurements ▶ Definition of Accounting Estimates - Amendments to IAS 8 ▶ Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2 c) Basis of consolidation The consolidated financial statements of Peak Rare Earths Limited comprise the financial statements of the Company and its subsidiaries as at 30 June 2022. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: ▶ Power over the investee (i.e. existing rights that give it the current ability to direct the relevant ▶ activities of the investee) ▶ Exposure, or rights, to variable returns from its involvement with the investee, and ▶ The ability to use its power over the investee to affect its returns When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: ▶ The contractual arrangement with the other vote holders of the investee ▶ Rights arising from other contractual arrangements ▶ The Group’s voting rights and potential voting rights The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains 60 PEAK RARE EARTHS All inter-company balances and transactions between entities in the Group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those policies applied by the parent entity. All controlled entities have a June financial year-end. If the Group loses control over a subsidiary, it derecognises the related assets, liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value. Where controlled entities have entered or left the economic entity during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased through an equity transaction. d) Foreign Currency Translation The financial statements have been presented in Australian Dollars, which is the Group’s presentation currency. Foreign currency transactions In preparing the financial statements of each individual group entity, transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. The Group’s functional currency is Australian dollars. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date, and gain or loss in exchange rate movements are recognised in profit or loss. Translation of foreign operations As at the reporting date the assets and liabilities of foreign operations are translated from their functional currency at the rate of exchange ruling at the reporting date and the statement of comprehensive income, statement cash flows and statement of changes in equity are translated at the weighted average exchange rates for the year. The exchange differences arising on translation are recognised in other comprehensive income and accumulated balances are carried forward as a separate component of equity. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value Annual Financial Report 05. Notes to the Financial Statements (Continued) gain or loss is recognised in other comprehensive income or profit or loss are also recognised in other comprehensive income or profit or loss, respectively). On disposal of a foreign operation, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the profit or loss. Group as a lessee The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. e) Other income Interest Interest income is recognised as the interest accrues on the financial asset carried at amortised cost. R&D rebate grant The Group is treating its receipt of the R&D rebate as a government grant. Government grants are recognised as income when there is reasonable assurance that the grant will be received and all conditions will be complied with. When the grant relates to an expense item, it is recognised as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate. When the grant relates to an asset, it is deducted from the asset to which it relates, the net value of which is amortised over its expected useful life. f) Employee benefits Employee benefits such as salary and wages are measured at the rate at which the entity expects to settle the liability; and recognised during the period over which the employee services are being rendered. Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Superannuation entitlements Contributions are made by the Group to employee superannuation funds and are charged as expenses when incurred. g) Leases The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. i) Right-of-use assets The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right- of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows: ▶ 3 to 26 years The right-of-use assets are also subject to impairment. The carrying values of right-of-use assets are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. Impairment losses, if any, are recognised in the profit or loss. ii) Lease liabilities At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After 2022 ANNUAL REPORT 61 05. Annual Financial Report Notes to the Financial Statements (Continued) the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. iii) Short-term leases and leases of low-value assets ▶ In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. The Group applies the short-term lease recognition exemption to its short-term leases of its office space. This has been recognised as an expense in Administrative and other costs in the consolidated statement of comprehensive income. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. h) Income tax Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for the financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: ▶ Where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and ▶ In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised except: ▶ Where the deferred income tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and Income taxes relating to items recognised directly in equity are recognised in equity and not in the profit or loss. i) Other taxes Revenues, expenses and assets are recognised net of the amount of GST/VAT except: When the GST/VAT incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST/VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and Receivables and payables, which are stated with the amount of GST/VAT included. The net amount of GST/VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. The GST/VAT component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, is classified as part of operating cash flows. Commitments and contingencies are disclosed net of the amount of GST/VAT recoverable from, or payable to, the taxation authority. j) Loss per share i) Basic loss per share Basic loss per share is determined by dividing the group operating result after income tax attributable to members by weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year. 62 PEAK RARE EARTHS Annual Financial Report 05. Notes to the Financial Statements (Continued) ii) Diluted loss per share Subsequent measurement Diluted loss per share is calculated by dividing the profit attributable to ordinary equity holders of the parent (after adjusting for interest on the convertible preference shares) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. k) Financial Instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets Initial recognition and measurement Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI) and fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under AASB 15. In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset. For purposes of subsequent measurement, financial assets are classified in four categories: ▶ Financial assets at amortised cost (debt instruments) ▶ Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments) ▶ Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) ▶ Financial assets at fair value through profit or loss Financial assets at amortised cost (debt instruments) This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the following conditions are met: ▶ The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and ▶ The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Group’s financial assets at amortised cost includes trade receivables. Financial assets designated at fair value through OCI (equity instruments) Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under AASB 132 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis. Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit or loss when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment. The Group elected to classify irrevocably its non-listed equity investments under this category. 2022 ANNUAL REPORT 63 05. Annual Financial Report Notes to the Financial Statements (Continued) Financial assets at fair value through profit or loss consolidated statement of financial position) when: Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through OCI, as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss. This category includes derivative instruments and listed equity investments which the Group had not irrevocably elected to classify at fair value through OCI. Dividends on listed equity investments are also recognised as other income in the statement of profit or loss when the right of payment has been established. A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category. A derivative embedded within a hybrid contract containing a financial asset host is not accounted for separately. The financial asset host together with the embedded derivative is required to be classified in its entirety as a financial asset at fair value through profit or loss. Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group’s 64 PEAK RARE EARTHS ▶ The rights to receive cash flows from the asset have expired; or ▶ The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay. Impairment of financial assets The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). Annual Financial Report 05. Notes to the Financial Statements (Continued) Financial liabilities Initial recognition and measurement For the purposes of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables and loans and borrowings. Subsequent measurement The measurement of financial liabilities depends on their classification, as described below Loans and borrowings This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss. This category generally applies to the royalty liability. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss. The financial instruments of the Group are (i) cash and cash equivalents, including other financial assets; (ii) trade and other receivables; (iii) investments, (iv) trade and other payables and v) royalty liability. l) Cash and Cash Equivalents Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand and short term deposits with an original maturity of three months or less. m) Trade and Other Receivables Trade receivables, which generally have 30-90 day terms, are recognised initially at fair value and subsequently at amortised cost, less provisions for expected credit losses. For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. n) Property, plant and equipment Plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Plant and equipment is depreciated on the straight line basis over their expected useful lives to their estimated residual value The useful life of the assets have been set at the following levels to determine the depreciation rates: Plant and equipment: 2 to 5 years Impairment The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. Impairment losses, if any, are recognised in the profit or loss. Derecognition and disposal An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. o) Exploration and evaluation costs Exploration and evaluation expenditure in relation to each separate area of interest is recognised as an exploration and evaluation asset in the year in which it is incurred where the following conditions are satisfied: The rights to tenure of the area of interest are current; and at least one of the following conditions is also met: 2022 ANNUAL REPORT 65 05. Annual Financial Report Notes to the Financial Statements (Continued) ▶ the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or ▶ exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling and associated activities and an allocation of depreciation and amortisation of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). The recoverable amount of exploration and evaluation assets is the higher of fair value less costs of disposal 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. An impairment exists when the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. Any impairment losses are recognised in profit or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset 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 in previous years. Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to production assets. 66 PEAK RARE EARTHS p) Trade and Other Payables Trade payables and other payables are initially recognised at fair value, then carried at amortised cost. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arising when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. q) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. r) Share-based payment transactions Equity settled transactions: The Group provides benefits to employees (including senior executives) of the Group in the form of share- based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). The current plans in place to provide these benefits are the Incentive Performance Rights Plan (PRP) and the Incentive Employee Option Plan (EOP), provides benefits to directors, senior executives and other eligible participants as determined by the Board. The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a Black-Scholes option pricing model. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Peak Rare Earths Limited (market conditions) if applicable. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period). Annual Financial Report 05. Notes to the Financial Statements (Continued) The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects: ▶ the extent to which the vesting period has expired and ▶ the Group’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The profit or loss charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition. If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share- based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of loss per share. s) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. t) Critical accounting judgements and estimates In the application of Australian Accounting Standards, management is required to make judgments about applying accounting policies and estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Impairment of exploration and evaluation costs The future recoverability of exploration and evaluation costs are dependent on a number of factors, including the level of proved, probable and inferred mineral resources, future technological changes which could impact the cost of mining, future legal changes (including changes to environment restoration obligations) and changes to commodity prices. To the extent that exploration and evaluation costs is determined not to be recoverable in the future, this impairment will reduce profits and net assets in the period in which this determination is made. Share based payment transactions The Group measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. Accounting for contingent consideration in asset acquisition In accounting for the cash component of contingent consideration payable in an asset acquisition, including future royalties, the Group considers AASB 137 “Provisions, Contingent Liabilities and Contingent Assets” to be the applicable accounting standard. Accordingly, no obligation for the cash component of contingent consideration payable based on the future performance of the asset and actions of the Group is recognised at the date of purchase of the related asset. Measurement of royalty liability The Group is required to estimate the amount and timing of anticipated repayment dates for the royalty liability disclosed in note 16. Any changes in either the estimated timing or amount of repayments will impact the measurement of this liability through the profit and loss and these changes could be significant. 2022 ANNUAL REPORT 67 Notes to the Financial Statements (Continued) 3. INCOME AND EXPENDITURE ITEMS Included in loss for the year are: Interest income Australian R&D rebate Other income Total other income Fees to Ernst & Young (Australia): Fees for auditing the statutory financial report of the parent covering the group and auditing the statutory financial reports of any controlled entities Total fees to Ernst & Young (Australia) (A) Fees to other overseas member firms of Ernst & Young (Australia) Fees for auditing the financial report of any controlled entities Total fees to overseas member firms of Ernst & Young (Australia) (B) Total auditor’s remuneration (A)+(B) 4. LOSS PER SHARE 2022 $ 2021 $ 8,602 - - 8,602 9,246 46,137 55,625 111,008 Auditors’ remuneration 83,860 75,560 83,860 75,560 29,381 29,381 117,314 29,119 29,119 104,679 2022 CENTS 2021 CENTS Basic and Diluted loss per share based on reported losses after tax as set out in the Statement of Comprehensive Income (11.66) (3.13) 2022 NOS. 2021 $ NOS. Weighted average number of ordinary shares used in calculating basic loss per share 195,031,962 152,607,173 Weighted average number of ordinary shares used in calculating diluted loss per share 195,031,962 152,607,173 Anti-dilutive options over ordinary shares and performance rights excluded from the weighted average number of shares 4,433,266 9,820,625 The weighted average number of ordinary shares in the above were adjusted to reflect the capital consolidation entailing the conversion of every ten (10) securities into one (1) security, which occurred on 10 December 2021 (see Note 17). 68 PEAK RARE EARTHS 05. Annual Financial ReportNotes to the Financial Statements (Continued) 5. OPERATING SEGMENTS Information reported to the chief operating decision makers for the purposes of resource allocation and assessment of segment performance focuses on the exploration activities of the Group. The chief operating decision makers include the board of directors. The Group’s reportable segments under AASB 8 are as follows: ▶ Exploration & Development (E&D) – Group’s exploration and development activities for the Ngualla project in Tanzania; and ▶ Unallocated - to manage the corporate affairs of the group. The segments have applied the same accounting policies as applied to the Group and disclosed in the notes 1 and 2 to these financial statements. 30 JUNE 2022 30 JUNE 2021 E&D $ UNALLOCATED TOTAL $ $ E&D $ UNALLOCATED TOTAL $ $ Interest income Other income Total income Depreciation and amortisation Share based payment expenses Borrowing costs Write-off of capitalised exploration costs - - - 8,602 - 8,602 8,602 - 8,602 - - - (165,708) (33,366) (199,074) (16,607) - - (156,080) (610,449) (610,449) (7,874,527) (7,874,527) (156,080) - - - - - 9,246 101,762 111,008 (6,442) 9,246 101,762 111,008 (23,049) (856,325) (856,325) - - - - - (1,555,761) Technical feasibility costs (7,036,692) (7,036,692) (1,555,761) Other expenses Income Tax Segment results Segment assets - - (6,863,382) (6,863,382) - - - - (2,446,721) (2,446,721) - - (7,358,480) (15,373,122) (22,731,602) (1,572,368) (3,198,480) (4,770,848) 62,773,663 10,946,625 73,720,288 58,076,050 3,510,471 61,568,521 Segment liabilities (133,830) (2,727,153) (2,860,983) (5,686,663) (605,179) (6,291,842) Additions to non-current assets during the year: Plant and equipment Right-of-use assets 212,010 33,432 245,442 27,495 318,366 345,861 239,505 351,798 - 3,583,243 245 - 245 3,583,243 591,303 3,583,243 245 3,583,488 2022 ANNUAL REPORT 69 Annual Financial Report 05. Notes to the Financial Statements (Continued) 6. INCOME TAX a. The components of tax expense comprise: Current tax Deferred tax Income tax expense reported in statement of comprehensive income 2022 $ 2021 $ - - - - - - b. The prima facie tax expense/(benefit) on profit/(loss) from ordinary activities before income tax is reconciled to the income tax as follows: Loss before income tax Prima facie tax expense/(benefit) on profit/(loss) from ordinary activities before income tax at 30.0% (2021:30%) (22,731,602) (4,770,848) (6,819,481) (1,431,254) Add tax effect of: Revenue losses not recognised Other non-allowable items Less tax effect of: Gain on derecognition of associate Gain on re-measurement of financial liabilities Other deferred tax balances not recognised Non-assessable items Income tax expense reported in statement of comprehensive income c. Unrecognised deferred tax assets at 30.0% (2021:30%) (Note 1): Carry forward revenue losses Carry forward capital losses Unrealised FX Capital raising costs Provisions and accruals Net right-of-use assets/lease liability Other 1,466,717 4,913,965 (438,799) 617,258 1,320,223 506,227 - - (438,799) - - - - 136,169 370,058 - 9,504,524 8,037,807 295,504 665,723 298,181 1,164,670 131,314 9,350 295,504 265,945 86,725 979,943 - 9,350 12,069,266 9,675,274 The tax benefits of the above deferred tax assets will only be obtained if: (a) the Group derives future assessable income of a nature and of an amount sufficient to enable the benefits to be utilised; (b) the Group continues to comply with the conditions for deductibility imposed by law; and (c) no changes in income tax legislation adversely affect the company in utilising the benefits. Note 1 - Deferred tax assets and liabilities are required to be measured at the tax rate that is expected to apply in the future income year when the asset is realised or the liability is settled. The Directors have determined that the deferred tax balances be measured at the tax rates stated. Note 2 - Tax Consolidation For the purpose of income taxation, the Company and its 100% Australian controlled entities have formed a tax consolidated group effective from 1 July 2012. 70 PEAK RARE EARTHS 05. Annual Financial ReportNotes to the Financial Statements (Continued) 7. CASH AND CASH EQUIVALENTS Reconciliation of cash and cash equivalent For the purpose of the Cash Flow Statement, cash and cash equivalents comprise the following: Cash at bank and in hand Reconciliation of operating loss to operating cash flows Loss for the year Adjustments for non-cash items: Borrowing costs Share based payments expenses Creditors settled in equity Write-off exploration costs Depreciation expenses Foreign exchange loss/(gain) Other non-cash items Movement in working capital items: Increase in trade and other receivables (Increase)/Decrease in prepayments Increase in trade and other payables Increase/(Decrease) in provisions 8. TRADE AND OTHER RECEIVABLES Current GST/VAT receivable Other receivable Ageing of receivables Recoverable within 3 months 2022 $ 2021 $ 9,479,379 2,680,367 9,479,379 2,680,367 (22,731,602) (4,770,848) 7,874,527 610,449 19,847 156,080 199,073 40,966 - 323,904 856,325 - - 23,049 (6,089) 543 (241,956) (845,171) 4,367 1,871,227 (274) 164,568 67,934 (214,503) (12,129,088) (4,468,496) 2022 $ 2021 $ 968,271 6,140 974,411 730,375 2,080 732,455 974,411 974,411 732,455 732,455 2022 ANNUAL REPORT 71 Annual Financial Report 05. Notes to the Financial Statements (Continued) 9. OTHER FINANCIAL ASSETS Bank Term Deposit 2022 $ 2021 $ 63,794 63,794 - - A deposit of $63,794 (2021: $Nil), has been secured against a guarantee issued by the bank for an office rental deposit. This cash balance is not available for withdrawal until the guarantee is withdrawn. 10. PROPERTY, PLANT AND EQUIPMENT 2022 $ 2021 $ 452,814 (227,477) 225,337 24,819 239,505 (38,987) 225,337 213,309 (188,490) 24,819 41,789 (828) (16,142) 24,819 2022 $ 2021 $ 3,583,243 - 351,798 3,590,150 (160,087) (6,907) 3,774,954 3,583,243 Plant and equipment At cost Accumulated depreciation Movement in net carrying amount Balance at the beginning of the year Net Additions / (Disposals) Depreciation for the year Balance at the end of the year 11. LEASES RIGHT OF USE ASSETS Movement in net carrying amount: Balance at beginning of year Additions Depreciation for the year Balance at 30 June 2022 72 PEAK RARE EARTHS 05. Annual Financial Report Notes to the Financial Statements (Continued) LEASE LIABILITIES Movement in net carrying amount: Balance at beginning of year Additions Accretion of interest Lease payments Balance at 30 June 2022 Current Non-Current Total 2022 $ 2021 $ - 352,812 4,502 (40,671) 316,643 110,279 206,364 316,643 - - - During the year ended 30 June 2021, the Group executed a 250-year lease on a 19-hectare parcel of land at Teesside, UK for an upfront payment of £1,858,712 or A$3,403,424 (net of VAT receivable) and with an annual peppercorn lease payment of £0.01 or A$0.01 per annum. During the year ended 30 June 2022, the Group executed a 3-year lease on its office space. The Group also has certain contracts which contain a lease with terms of 12 months or less and contracts which contain a lease of low value. The Group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these. Leases that are short-term and low value amounted to $14,536 for the year ended 30 June 2022 (2021: $35,434). 12. EXPLORATION AND EVALUATION EXPENDITURE Movement in net carrying amount: Balance at beginning of year Exploration assets written off during the year Foreign exchange movements Balance at 30 June Capitalised areas of interest Ngualla Rare Earth Project, Tanzania 13. INVESTMENTS Investment in listed shares – at fair value through profit or loss 2022 $ 2021 $ 54,472,897 59,419,382 (156,080) - 4,797,223 (4,946,485) 59,114,040 54,472,897 59,114,040 54,472,897 59,114,040 54,472,897 2022 $ 2021 $ 8,000 8,000 8,000 8,000 2022 ANNUAL REPORT 73 Annual Financial Report 05. Notes to the Financial Statements (Continued) 14. TRADE AND OTHER PAYABLES Current Trade and other payables Ageing of payables Payable within 3 months Payables are non-interest bearing, unsecured and are generally payable in 30-120 days. 15. PROVISIONS 2022 $ 2021 $ 2,447,973 576,746 2,447,973 2,447,973 576,746 576,746 2022 $ 2021 $ Employee benefits - leave entitlements 96,367 28,433 16. ROYALTY LIABILITY Non-current: ANRF Royalty Liability 2022 $ 2021 $ - - 5,686,663 5,686,663 In July 2015, ANRF Royalty Company Limited (ANRF) and International Finance Corporation (IFC) advanced US$5,191,201 to the Group for a 2% Gross Sales Royalty from the Ngualla Rare Earth’s project in accordance with the Royalty Agreement. On 5 August 2021, Peak Rare Earths Limited, PR NG Minerals Limited (wholly owned subsidiary of the Group), Appian and ANRF entered into a conditional Royalty Repayment and Release Agreement whereby the parties agreed to terminate the Royalty Agreement following a cash payment by PR NG Minerals Limited to Appian and ANRF of the Principal Sum of US$5,191,201 and accrued interest of US$4,787,554 totalling US$9,978,755 (or A$13,767,214). The Royalty Repayment and Release Agreement was approved by Peak shareholders at a General Meeting held on 28 September 2021 and the transaction was completed on 5 October 2021. The excess of the total repayment of A$13,767,214 over the carrying value of the royalty liability at 5 October 2021 is recognised as “Borrowing costs” in the profit or loss. 74 PEAK RARE EARTHS 05. Annual Financial ReportNotes to the Financial Statements (Continued) Movement in net carrying amount of ANRF Royalty Liability: Balance at beginning of year Accretion of interest Foreign exchange movements Repayment of royalty liability Balance at 30 June 2022 17. RESERVES 2022 $ 2021 $ 5,686,663 5,857,433 90,688 197,460 (5,974,811) 323,904 (494,674) - - 5,686,663 SHARE BASED PAYMENT RESERVE FOREIGN CURRENCY TRANSLATION RESERVE TOTAL $ $ At 30 June 2020 Share based payments Exchange difference on translation of foreign operations At 30 June 2021 Share based payments Exchange difference on translation of foreign operations At 30 June 2022 3,787,758 856,325 - 4,644,083 610,449 - 5,254,532 (171,560) - (4,483,550) (4,655,110) - 4,598,141 (56,969) 3,616,198 856,325 (4,483,550) (11,027) 610,449 4,598,141 5,197,563 Share based payment reserve – the reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for supply of goods and services. Foreign currency translation reserve – the reserve is used to recognise exchange differences arising from translation of foreign operations to the Australian dollar. 18. CONTRIBUTED EQUITY NOS. $ Balance at 30 June 2020 1,405,305,618 99,893,335 Issue of shares for nil consideration on exercise of vested Performance Rights 3-Jul-20 2,000,000 - Shares issued in settlement of deferred directors fees and deferred executive remuneration @ $0.0342 7-Aug-20 3,762,020 128,661 Placement @3.2c per share SPP @3.2c per share 28-Oct-20 109,375,000 3,500,000 17-Nov-20 26,562,493 850,000 Issue of shares for nil consideration on exercise of vested Performance Rights 24-Nov-20 2,442,000 Shares issued in settlement of director fees at $0.063078 per Share Issue of shares on exercise of unlisted options Issue of shares on exercise of unlisted options 23-Dec-20 25-Jan-21 25-Jan-21 861,469 750,000 14,000,000 - 54,340 48,750 700,000 2022 ANNUAL REPORT 75 Annual Financial Report 05.Notes to the Financial Statements (Continued) NOS. $ Issue of shares on settlement deed Issue of shares on exercise of unlisted options Issue of shares on settlement deed Issue of shares on exercise of unlisted options Issue of shares on exercise of unlisted options Issue of shares on exercise of unlisted options Issue of shares on exercise of unlisted options Issue of shares on exercise of unlisted options Issue of shares on settlement deed Issue of shares on exercise of unlisted options Issue of shares on exercise of unlisted options Issue of shares on exercise of unlisted options Issue of shares for nil consideration on exercise of vested performance rights 8-Mar-21 Issue of shares on exercise of unlisted options Issue of shares for nil consideration on exercise of vested performance rights Shares issued in settlement of director fees at $0.0954 per share Issue of shares on exercise of unlisted options Issue of shares on exercise of unlisted options Issue of shares on exercise of unlisted options Issue of shares on exercise of unlisted options Issue of shares on exercise of unlisted options Issue of shares on exercise of unlisted options 11-Mar-21 1-Apr-21 1-Apr-21 6-May-21 7-May-21 10-May-21 25-May-21 4-Jun-21 10-Jun-21 Issue of shares for nil consideration on exercise of vested performance rights 21-Jun-21 Issue of shares on exercise of unlisted options 25-Jun-21 Equity issue costs Balance at 30 June 2021 Issue of shares for nil consideration on exercise of vested performance rights Shares issued in settlement of equity component of executive remuneration @ 11.3722 cents per share 29-Jan-21 29-Jan-21 1-Feb-21 2-Feb-21 2-Feb-21 2-Feb-21 4-Feb-21 11-Feb-21 15-Feb-21 3,019,230 400,000 4,500,000 4,000,000 4,000,000 800,000 800,000 2,000,000 730,770 15-Feb-21 1,125,000 19-Feb-21 5-Mar-21 3,375,000 1,750,000 75,000 3,000,000 2,250,000 205,751 11,166,295 2,171,596 662,109 208,747 4,500,000 4,500,000 8,250,000 210,000 196,250 20,000 191,250 240,000 240,000 40,000 40,000 100,000 47,500 39,375 101,250 52,500 - 180,000 - 19,628 669,978 130,296 39,727 6,262 292,500 292,500 - 6,300 (402,672) 1,628,758,098 107,717,730 1-Jul-21 8-Jul-21 330,000 174,518 - 19,847 Issue of shares on exercise of listed PEKOD options @ 3 cents per share 6-Aug-21 333,333 10,000 Issue of shares Tranche 1 Capital Raising @ 9 cents per share 13-Aug-21 226,851,892 20,416,670 Issue of shares on exercise of listed PEKOD options @ 3 cents per share Issue of shares on exercise of listed PEKOD options @ 3 cents per share Issue of shares on exercise of listed PEKAI options @ 3.5 cents per share 8-Sep-21 1-Oct-21 1-Oct-21 4,166,667 1,300,000 375,000 125,000 39,000 13,125 Issue of shares Tranche 2 Capital Raising @ 9 cents per share 4-Oct-21 106,481,442 9,583,330 Issue of shares for nil consideration on exercise of vested performance rights 5-Oct-21 Share Purchase Plan @ 9 cents per share Capital Consolidation 10 securities into 1 Issue of shares on exercise of listed PEKAI options @ 35 cents per share Issue of shares on exercise of listed PEKAI options @ 30 cents per share 76 PEAK RARE EARTHS 8-Oct-21 482,000 18,614,511 10-Dec-21 (1,789,079,928) 14-Jan-22 21-Jan-22 75,000 290,000 - 1,675,311 - 26,250 87,000 05. Annual Financial Report Notes to the Financial Statements (Continued) NOS. $ Issue of shares on exercise of listed PEKOD options @ 30 cents per share 2-Feb-22 Issue of shares on exercise of listed PEKOD options @ 30 cents per share 15-Feb-22 Issue of shares on exercise of listed PEKOD options @ 30 cents per share 22-Feb-22 Issue of shares on exercise of listed PEKOD options @ 30 cents per share 23-Feb-22 Issue of shares on exercise of listed PEKOD options @ 30 cents per share 01-Mar-22 Issue of shares on exercise of listed PEKOD options @ 30 cents per share Issue of shares on exercise of listed PEKOD options @ 30 cents per share 4-Mar-22 11-Mar-22 Issue of shares on exercise of listed PEKOD options @ 30 cents per share 15-Mar-22 Issue of shares for nil consideration to Tanzanian employees in recognition of continuing and valued service to the company 17-Mar-22 Issue of shares on exercise of listed PEKOD options @ 30 cents per share 17-Mar-22 Issue of shares on exercise of listed PEKOD options @ 30 cents per share 22-Mar-22 Issue of shares on exercise of listed PEKOD options @ 30 cents per share 24-Mar-22 Issue of shares on exercise of listed PEKOD options @ 30 cents per share 25-Mar-22 Issue of shares on exercise of listed PEKOD options @ 30 cents per share 28-Mar-22 Issue of shares on exercise of listed PEKOD options @ 30 cents per share 29-Mar-22 Issue of shares on exercise of listed PEKOD options @ 30 cents per share Issue of shares on exercise of listed PEKOD options @ 30 cents per share Issue of shares on exercise of listed PEKOD options @ 30 cents per share Issue of shares on exercise of listed PEKOD options @ 30 cents per share Issue of shares on exercise of listed PEKOD options @ 30 cents per share 4-Apr-22 5-Apr-22 7-Apr-22 12-Apr-22 19-Apr-22 66,667 32,000 18,600 129,560 500,000 116,667 100,000 651,986 45,171 288,667 54,041 2,535,116 34,578 15,000 203,709 215,483 51,000 2,628,132 277,184 232,443 20,000 9,600 5,580 38,868 150,000 35,000 30,000 195,596 29,135 86,600 16,212 760,535 10,373 4,500 61,113 64,645 15,300 788,440 83,155 69,733 Equity Issue Costs Balance at 30 June 2022 (1,382,278) 207,348,537 140,805,369 Ordinary shares have the right to receive dividends as declared, and in the event of winding up the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid upon on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company. Options and Performance Rights over ordinary shares At the end of the reporting period, there were 4,892,266 options and performance rights over unissued shares as follows: OPTIONS AND PERFORMANCE RIGHTS OVER ORDINARY SHARES DATE OF EXPIRY/ EXERCISE OR ISSUE NOS STATUS EXERCISE PRICE EXPIRY DATE Balance at 30 June 2021 Expired/ Lapsed/ Cancelled: 127,644,253 PEKAK Performance Rights lapsed 13-Sep-21 (476,000) Capital Consolidation 10 securities into 1 – Unlisted Options & Performance Rights 10-Dec-21 (34,776,000) - - 13-Sep-21 - 2022 ANNUAL REPORT 77 Annual Financial Report 05.Notes to the Financial Statements (Continued) OPTIONS AND PERFORMANCE RIGHTS OVER ORDINARY SHARES DATE OF EXPIRY/ EXERCISE OR ISSUE NOS STATUS EXERCISE PRICE EXPIRY DATE Capital Consolidation 10 securities into 1 – Listed PEKOD Options 10-Dec-21 (73,387,120) - - Lapse of Unlisted PEKAI Options 17-Jan-22 (125,000) $0.35 17-Jan-22 PEKAK Performance Rights lapsed on director resignation Lapse of Listed PEKOD Options Lapse of Unlisted PEKAI Options 14-Feb-22 (100,000) - 9-Dec-25 17-Apr-22 21-Jun-22 (3,300) (300,000) (109,167,420) $0.30 $1.50 17-Apr-22 21-Jun-22 Issued: 9-Dec-21 1,918,266 Unvested - 9-Dec-25 Performance Rights issued as a Long Term Incentive to employees under the Company’s Incentive Performance Rights Plan and with the approval of the Company’s shareholders given at the Annual General Meeting held on 29 November 2021. Vested PEKAK Performance Rights Listed PEKOD Options Listed PEKOD Options Unlisted PEKAI Options Unlisted PEKAI Options Vested PEKAK Performance Rights Vested PEKAK Performance Rights Listed PEKOD Options Listed PEKOD Options Listed PEKOD Options Listed PEKOD Options Listed PEKOD Options Listed PEKOD Options Listed PEKOD Options Listed PEKOD Options Listed PEKOD Options Listed PEKOD Options Listed PEKOD Options Listed PEKOD Options Listed PEKOD Options Listed PEKOD Options 78 PEAK RARE EARTHS 1-Jul-21 6-Aug-21 1,918,266 (330,000) (333,333) 8-Sep-21 (4,166,667) 1-Oct-21 1-Oct-21 5-Oct-21 5-Oct-21 2-Feb-22 15-Feb-22 22-Feb-22 (375,000) (1,300,000) (132,000) (350,000) (66,667) (32,000) (18,600) 23-Feb-22 (129,560) 1-Mar-22 (500,000) 4-Mar-22 (116,667) 11-Mar-22 15-Mar-22 (100,000) (651,986) 17-Mar-22 (288,667) 22-Mar-22 (54,041) 24-Mar-22 (2,535,116) 25-Mar-22 28-Mar-22 29-Mar-22 (34,578) (15,000) (203,709) - 08-Sep-21 $0.03 $0.03 $0.035 $0.03 - - $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 14-Apr-22 14-Apr-22 17-Jan-22 5-Mar-23 8-Sep-21 5-Feb-25 14-Apr-22 14-Apr-22 14-Apr-22 14-Apr-22 14-Apr-22 14-Apr-22 14-Apr-22 14-Apr-22 14-Apr-22 14-Apr-22 14-Apr-22 14-Apr-22 14-Apr-22 14-Apr-22 05. Annual Financial ReportNotes to the Financial Statements (Continued) OPTIONS AND PERFORMANCE RIGHTS OVER ORDINARY SHARES DATE OF EXPIRY/ EXERCISE OR ISSUE NOS STATUS EXERCISE PRICE EXPIRY DATE Listed PEKOD Options Listed PEKOD Options Listed PEKOD Options Listed PEKOD Options Listed PEKOD Options Balance at 30 June 2022 4-Apr-22 5-Apr-22 (215,483) (51,000) 7-Apr-22 (2,628,132) 12-Apr-22 19-Apr-22 (277,184) (232,443) (15,502,833) 4,892,266 $0.30 $0.30 $0.30 $0.30 $0.30 14-Apr-22 14-Apr-22 14-Apr-22 14-Apr-22 14-Apr-22 Vested & unvested $0.00 -$1.50 08/09/21 - 09/12/25 For the year ended 30 June 2022, 1,918,266 performance rights were issued to employees under the Performance Rights Plan’s approved at the Annual General Meeting held on 29 November 2021. No options were issued under the Employee Option Plan (EOP). During the year a total of 428,300 options and 576,000 performance rights expired, lapsed or were cancelled. Capital consolidation of 10 securities into 1 occurred on 10 December 2021. During the year ended 30 June 2021, 47,000,000 performance rights were issued to employees under the Performance Rights Plan’s approved at the Annual General Meeting held on 29 November 2017 and 21 December 2020. No options were issued under the EOP. During the year a total of 75,169,419 options and 12,545,000 performance rights expired, lapsed or were cancelled. Capital Management Policy The Group’s policy is to effectively manage its capital structure so that it would continue to operate as a going concern. The Group manages its contributed equity and reserves as part of its capital. The Group is not subject to any externally imposed capital requirements. As is similar with many other exploration companies, the operational requirements of the Group are funded through equity and debt raised in various tranches. The overall capital management policy of the Group remains unchanged and is consistent with prior years. 2022 ANNUAL REPORT 79 Annual Financial Report 05.Notes to the Financial Statements (Continued) 19. SHARE BASED PAYMENTS Employee share option plan The Group has an Incentive Employee Option Plan (EOP) for the granting of options to eligible participants. During the financial year ended 30 June 2022, no options were issued under the EOP to executives and employees. Options granted during and as at the year ended 30 June 2022: Outstanding at 1 July 20211 Granted / Vested during the year: Exercised during the year Expired/ Lapsed/ Cancelled during the year Outstanding at 30 June 2022 Exercisable at 30 June 2022 ^WA (weighted average) NUMBER WA EXERCISE PRICE^ 5,816,500 $0.4413 - (4,332,500) (425,000) 1,059,000 559,000 - - - $0.8666 $0.3000 1 Outstanding balance of shares at 1 July 2021 adjusted to reflect Capital consolidation of securities 10 to 1 on 10th Dec 2021. Options granted during and as at the year ended 30 June 2021: Outstanding at 1 July 2020 Granted / Vested during the year: Exercised during the year Expired/ Lapsed/ Cancelled during the year Outstanding at 30 June 2021 Exercisable at 30 June 2021 ^WA (weighted average) NUMBER WA EXERCISE PRICE^ 190,794,419 $0.0659 - 57,460,000) (75,169,419) 58,165,000 50,165,000 - - - $0.0441 $0.0302 The weighted average remaining contractual life for share options outstanding at 30 June 2022 was 0.82 years (2021: 1.04 years). Performance Rights Plan The Group has an Incentive Performance Rights Plan (PRP) for the granting of performance rights to eligible participants which was last approved by Shareholders at a General Meeting of the Company on 29 November 2021. 1,918,266 performance rights were issued during the year ended 30 June 2022 (2021: 47,000,000). 80 PEAK RARE EARTHS 05. Annual Financial Report Notes to the Financial Statements (Continued) Performance rights granted during and as at the year ended 30 June 2022: NUMBER EXERCISE PRICE FAIR VALUE PER PERFORMANCE RIGHT Outstanding at 1 July 20211 Granted during the year: Performance Rights issued under the Company’s Incentive Performance Rights Plan and with the approval of the Company’s shareholders given at the Annual General Meeting held on 29 November 2021 Expired/ Lapsed during the year Exercised during the year Outstanding at 30 June 2022 Exercisable at 30 June 2022 2,143,800 1,918,266 (147,600) (81,200) 3,833,266 - 1 Outstanding balance of shares at 1 July 2021 adjusted to reflect Capital consolidation of securities 10 to 1 on 10th Dec 2021. Performance rights granted during and as at the year ended 30 June 2021: NUMBER EXERCISE PRICE Outstanding at 1 July 2020 Granted during the year: Performance Rights as a Short-Term Incentive employees. The Performance Rights will vest on achievement of performance milestones set by the Board Performance Rights as a Long-Term Incentive to employees. The Performance Rights will vest on achievement of performance milestones set by the Board Performance Rights issued under the Company’s Incentive Performance Rights Plan and with the approval of the Company’s shareholders given at the Annual General Meeting held on 21 December 2020 Expired/Lapsed during the year Exercised during the year Outstanding at 30 June 2021 Exercisable at 30 June 2021 2,000,000 7,400,000 7,600,000 32,000,000 (12,545,000) (15,017,000) 21,438,000 - $0.66 FAIR VALUE PER PERFORMANCE RIGHT $0.024 0.037 0.037 0.06 - - - - - - - - - - - - - *Vest subject to achievement of performance criteria as determined by the Company’s Board. The volume weighted exercise price of rights issued during the year was $0.00 (2021: $0.00) The weighted average remaining contractual life for rights outstanding at 30 June 2022 was 3 years (2021: 3.81 years) The weighted average fair value of rights issued during the year was $0.66 per right (2021: $0.06273) 2022 ANNUAL REPORT 81 Annual Financial Report 05.Notes to the Financial Statements (Continued) The options and performance rights have been valued using the Black-Scholes option pricing model with the following inputs: Options and performance rights granted during the year ended 30 June 2022: 9-Dec-2021 – unvested LTI Performance Rights to vest on achievement of performance criteria by 29 Nov 2025 or the Performance Rights will lapse WA Share price on date of grant WA Risk-free interest rate Dividend yield Expected volatility Fair value per performance right (WA weighted average) Options and performance rights granted during the year ended 30 June 2021: 8-Sep-2020 – unvested STI Performance Rights to vest on achievement of performance criteria by 8 Sep 2021 or the Performance Rights will lapse WA Share price on date of grant WA Risk-free interest rate Dividend yield Expected volatility Fair value per performance right 8-Sep-2020 – unvested LTI Performance Rights to vest on achievement of performance criteria by 8 Sep 2024 or the Performance Rights will lapse WA Share price on date of grant WA Risk-free interest rate Dividend yield Expected volatility Fair value per performance right 5-Feb-2021 – unvested Performance Rights to vest on achievement of performance criteria by 5 Feb 2025 or the Performance Rights will lapse WA Share price on date of grant WA Risk-free interest rate Dividend yield Expected volatility Fair value per performance right (WA weighted average) $0.66 0.75% 0% 77% $0.66 $0.037 0.75% 0% 77% $0.037 $0.037 0.75% 0% 77% $0.037 $0.06 0.75% 0% 77% $0.06 The expected volatility reflects the assumption that historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the case. The value of options and performance rights granted are expensed over the vesting period. Included in share based payments expense of $610,449 (2021: $856,325) is $Nil (2021: $Nil) relating to the shares issued during the year, $23,360* (2021: -$127,405*) relating to options granted during the year and prior years, and $587,089* (2021: $983,730*) relating to performance rights granted during the year and prior years. * Includes write back of non-market based Options and Performance Rights expired unvested during the year. 82 PEAK RARE EARTHS 05. Annual Financial ReportNotes to the Financial Statements (Continued) 20. CONTINGENCIES AND COMMITMENTS Lease commitments - Group as a lessee The maturity analysis of lease payments as at 30 June are as follows Up to 1 year 1 to 5 Years Capital Commitments At 30 June 2022, the Group has no capital commitments (2021: Nil). Contingencies At 30 June 2022, the Group has no contingencies (2021: Nil). 21. KEY MANAGEMENT PERSONNEL DISCLOSURE Salary and fees – short term benefits Non-monetary benefits Superannuation Share based payments^ Termination Payments 2022 $ 2021 $ 122,110 214,958 337,068 12,425 20,708 33,133 2022 $ 2021 $ 1,720,824 1,078,312 - 93,384 556,355 - 18,240 80,163 787,526 191,661 2,370,563 2,155,902 ^ Includes the write back of the share-based payments previously recognised for options and performance rights that lapsed during the period. Loans to KMP’s No loans were made to KMPs during the financial year (2021: Nil) Other transaction and balances with KMPs There were no other related party transactions with KMPs during the year (2021: $89,677). The balance outstanding at 30 June 2022 and included in trade creditors is $nil (2021: $1,183). 2022 ANNUAL REPORT 83 Annual Financial Report 05. Notes to the Financial Statements (Continued) 22. GROUP STRUCTURE Parent and subsidiaries The parent and the ultimate parent entity of the Group is Peak Rare Earths Limited, a company listed on the Australian Securities Exchange. The components of the Group are: INCORPORATION 2022 2021 OWNERSHIP INTEREST Parent Peak Rare Earths Limited Controlled entities PRL Pty Ltd Peak Hill Gold Mines Pty Ltd Redpalm Pty Ltd Pan African Exploration Limited Peak Resources (Tanzania) Limited Peak African Minerals Limited PR Ng Minerals Limited (Indirectly) Peak Technology Metals Limited Teesside Rare Earth Elements Limited (indirectly) Ngualla Group UK Limited (indirectly) 23. FINANCIAL INSTRUMENTS Australia 100% 100% Australia Australia Australia Australia Tanzania Mauritius Tanzania United Kingdom United Kingdom United Kingdom 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% - - The financial instruments of the Group are (i) cash and cash equivalents, including other financial assets; (ii) trade and other receivables; (iii) investments, (iv) trade and other payables, v) royalty liability. The Group’s principal financial instruments are cash and short term deposits. The main purpose of these financial instruments is to finance the Group’s operations. It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be undertaken. The financial instruments expose the group to certain risks. The nature and extent of such risks, and the management’s risk management strategy are noted below. Cash and cash equivalents Trade and other receivables Investments Trade and other payables Royalty liability 2022 $ 2021 $ 9,479,379 2,680,367 974,411 8,000 732,455 8,000 (2,447,973) (576,746) - (5,686,663) The carrying amount of financial instruments closely approximate their fair value on account of the short maturity cycle except for royalty liability. The carrying amount of royalty liability approximates its fair values as it is subject to market rates (Level 2). 84 PEAK RARE EARTHS 05. Annual Financial ReportNotes to the Financial Statements (Continued) Credit Risk The Group’s credit risks arise from potential default of trade and other receivables, cash and cash equivalents and other financial assets. The maximum credit exposure is limited to the carrying amount of trade and other receivables of $974,411 at 30 June 2022 (2021: $732,455). As at 30 June 2022, the receivable balances consist primarily of UK VAT and GST credits. Management does not consider the UK VAT or GST receivable to be at risk of default as these are receivable from the Government agencies. Credit risk from balances with banks and financial instruments is mitigated by holding balances with banks with a high credit rating. The maximum exposure for cash and cash equivalents is shown below. There were no significant concentrations of credit risks. Liquidity risk The Group’s liquidity risks arise from potential inability of the Group to meet its financial obligations as and when they fall due, generally due to shortage of cleared funds. The Group is exposed to liquidity risk on account of trade and other payables. The Group manages its liquidity risk through continuously monitoring the cleared funds position; and by utilising short term cash budgets. The contractual maturity analysis of the Group’s financial instruments are noted below: 2022 2021 UP TO 3 MONTHS $ > 3 MONTHS TOTAL $ $ UP TO 3 MONTHS $ > 3 MONTHS TOTAL $ $ Financial liabilities Trade and other payables (2,447,973) - (2,447,973) (576,746) Lease Liabilities Royalty liability 316,643 316,643 - - - - - - - (576,746) - (5,686,663) (5,686,663) Total financial liabilities (2,447,973) 316,643 (2,131,330) (576,746) (5,686,663) (6,263,409) Financial assets Cash and cash equivalents 9,479,379 Investments Trade and other receivables - 974,411 63,794 8,000 - 9,543,173 2,680,367 - 2,680,367 8,000 974,411 - 732,455 8,000 - 8,000 732,455 Total financial assets 10,453,790 71,794 10,525,584 3,412,822 8,000 3,420,822 Interest rate risk Interest rate risk is the risk that fair values and cash flows of the Group’s financial instruments will be affected by changes in the market interest rates. The Group’s cash and cash equivalents are impacted by interest rate risks. Trade and other receivables and payables have short maturities and are non-interest bearing. Management believes that the risk of interest rate movement would not have a material impact of the Group’s operations. Management does not closely monitor the interest rates offered on cash and cash equivalents as the Group’s primary objective is exploration of resources rather than earning interest income. The cash balances are invested at the prevailing short term market interest rates with credit worthy financial institutions. 2022 ANNUAL REPORT 85 Annual Financial Report 05.Notes to the Financial Statements (Continued) The sensitivity of the interest-bearing financial instruments to a 1% change in market interest rate are noted below: Cash and cash equivalents Impact on profit and equity: +1% movement Impact on profit and equity: -1% movement Foreign currency risk 2022 $ 2021 $ 9,479,379 2,680,367 94,794 (94,794) 26,804 (26,804) The Group’s exposure to foreign currency price risk is limited to the USD denominated royalty liability. At 30 June 2022, the Group had an outstanding balance of USD $nil (2021: USD $5,191,191). The Group will transfer cash and cash equivalents into foreign currency to meet short term expenditure obligations. The Group’s expenditure obligations in Tanzania are primarily in US dollars as a result the Group is exposed to fluctuations in the US dollar to Australian currency. These exposures are not subject to a hedging programme. The Board and management from time to time having regard to likely forward commitments review this policy. The following table demonstrate the sensitivity to a reasonably possible change in USD exchange rates, with all other variables held constant. The impact on the Group’s profit before tax and equity is due to changes in the fair value of the USD denominated loan balances. USD$ denominated Royalty liability balances in AU$ Impact on profit and equity: +5% movement in USD exchange rate Impact on profit and equity: -5% movement in USD exchange rate 2022 $ 2021 $ - - - 5,686,663 284,333 (284,333) Commodity price risk The Group’s exposure to commodity price risk is minimal at this stage of the operation. Changes in liabilities arising from financing activities during the year ended 30 June 2022: 1-JUL-21 CASH FLOWS 2022 FOREIGN EXCHANGE MOVEMENT OTHER MOVEMENT 30-JUN-22 $ $ $ $ $ Financial liabilities Royalty liability Lease liabilities 5,686,663 (5,974,811) 197,460 - (40,671) - 90,688 357,314 Total liabilities from financing activities 5,686,663 (6,015,482) 197,460 448,002 - 316,643 316,643 86 PEAK RARE EARTHS 05. Annual Financial ReportNotes to the Financial Statements (Continued) Changes in liabilities arising from financing activities during the year ended 30 June 2021: 1-JUL-20 CASH FLOWS 2021 FOREIGN EXCHANGE MOVEMENT OTHER MOVEMENT 30-JUN-21 $ $ $ $ $ Financial liabilities Royalty liability Lease liabilities 5,857,433 - (494,674) 323,904 5,686,663 - (3,220,392) - 3,220,392 - Total liabilities from financing activities 5,857,433 (3,220,392) (494,674) 3,544,296 5,686,663 24. SUBSEQUENT EVENTS On 15 August 2022, Russell Scrimshaw a distinguished corporate executive was appointed to the role of Executive Chairman. Following this appointment, the Company undertook a Board reorganisation with Tony Pearson transitioning to the role of Non-Executive Deputy Chairman and Managing Director Bardin Davis assuming the role of Chief Executive Officer, stepping down from the Board to focus on his executive duties. On 31 August 2021, Peak announced that it expects the BFS Update to be completed between mid-late October 2022. Other than the matters referred to above there were no other events that have a material impact on the financial statements or operations of the Group and Company. 2022 ANNUAL REPORT 87 Annual Financial Report 05.Notes to the Financial Statements (Continued) 25. PARENT ENTITY DISCLOSURE The following details information related to the parent entity, Peak Rare Earths Limited. The information presented here has been prepared using consistent accounting policies as presented in Note 2. Financial position Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets Equity Contributed equity Share based payment reserve Accumulated losses Total equity Financial performance Loss for the year Other comprehensive income Total comprehensive loss for the year 2022 $ 2021 $ 10,264,535 3,347,560 63,326,337 46,208,048 73,590,872 49,555,608 2,296,564 9,210,260 420,005 7,834,740 11,506,824 8,254,745 62,084,048 41,300,863 140,805,369 107,717,730 5,318,016 4,707,567 (84,039,337) (71,124,434) 62,084,048 41,300,863 (12,914,903) (2,775,363) - - (12,914,903) (2,775,363) Peak Rare Earths Limited had no commitments to purchase property, plant and equipment or contingent liabilities at 30 June 2022 (2021: None). 88 PEAK RARE EARTHS 05. Annual Financial Report Directors’ Declaration In accordance with a resolution of the directors of Peak Rare Earths Limited, I state that: In the opinion of the Directors: (a) Subject to the matters set out in Note 2(a) to the Financial Statements 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 attached financial statements are in compliance with International Financial Reporting Standards, as stated in note 2 to the financial statements; (c) the attached financial statements and notes thereto for the financial year ended 30 June 2022 are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position as at 30 June 2022 and performance of the Group for the year ended on that date; (d) The Directors have been given the declarations required by section 295A of the Corporations Act 2001 Signed in accordance with a resolution of the Directors made pursuant to s295(5) of the Corporations Act 2001. On behalf of the Directors Russell Scrimshaw Executive Chairman 20 September 2022 2022 ANNUAL REPORT 89 Annual Financial Report 05. 06. ASX Additional Information SHAREHOLDER INFORMATION As at 12 October 2022 QUOTED SECURITIES DISTRIBUTION The distribution of members and their holding of quoted equity securities in the Company were as follows: SIZE OF HOLDING 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and Over Total NUMBER OF FULLY PAID ORDINARY SECURITIES 522,597 3,944,421 4,655,785 42,455,324 155,770,410 207,348,537 There were 1,276 holders with less than a marketable parcel of fully paid shares representing 844,265 shares. SUBSTANTIAL SECURITY HOLDERS The substantial shareholder listed in the Company’s register was: HOLDER NUMBER OF SHARES PERCENTAGE OF ISSUE CAPITAL SHENGHE RESOURCES (SINGAPORE) PTE LTD 41,153,414 19.85% UNQUOTED SECURITIES CLASS OF EQUITY SECURITY EXPIRY DATE NUMBER Vested Options exercisable at $0.30 Unvested Options exercisable at $1.50 5 March 2023 21 June 2023 Unvested Performance Rights exercisable at $Nil 5 February 2025 Unvested Performance Rights exercisable at $Nil 9 December 2025 Unvested Performance Rights exercisable at $Nil 29 September 2026 559,000 500,000 2,015,000 1,818,266 2,053,400 NUMBER OF SECURITY HOLDERS 5 1 3 9 9 Names of person holding greater than 20% of a class of unquoted securities not issued under an employee incentive scheme: CLASS OF EQUITY SECURITY EXPIRY DATE Unvested Options exercisable at $1.50 5 March 2023 NUMBER 500,000 HOLDERS Ciao! Punto Pty Limited AFT Ciao! Punto Family Trust VOTING RIGHTS Ordinary Shares In accordance with the Company’s Constitution, on a show of hands every member present in person or by proxy or attorney or duly authorised representative has one vote. On a poll every member present in person or by proxy or attorney or duly authorised representative has one vote for every fully paid ordinary share held. 90 PEAK RARE EARTHS RESTRICTED SECURITIES As at 12 October 2022, there were no restricted securities. TWENTY LARGEST SECURITY HOLDERS The names of the twenty largest holdings of quoted equity securities are as follows: NAME NUMBER % HELD SHENGHE RESOURCES (SINGAPORE) PTE LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED BNP PARIBAS NOMINEES PTY LTD CS FOURTH NOMINEES PTY LIMITED DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT SAIL AHEAD PTY LTD CITICORP NOMINEES PTY LIMITED BNP PARIBAS NOMS PTY LTD SPARTA AG ASHABIA PTY LTD BNP PARIBAS NOMINEES PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 PASAGEAN PTY LIMITED BUSHELL NOMINEES PTY LTD SAMBOLD PTY LTD ONE MANAGED INVESTMENT FUNDS LIMITED PINNACLE SUPERANNUATION PTY LIMITED BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM MEURER INVESTMENTS PTY LTD J P MORGAN NOMINEES AUSTRALIA PTY LIMITED CRX SECURITIES PTY LIMITED MR RICHARD SMITH Total Balance of register Total on issue 41,153,414 7,534,969 5,731,327 3,352,255 3,125,000 3,060,000 3,051,401 2,934,599 2,706,042 2,565,000 2,120,885 2,083,098 2,000,000 2,000,000 2,000,000 1,882,924 1,600,000 1,579,399 1,550,000 1,544,721 1,543,750 1,423,334 19.85 3.63 2.76 1.62 1.51 1.48 1.47 1.42 1.31 1.24 1.02 1.00 0.96 0.96 0.96 0.91 0.77 0.76 0.75 0.74 0.74 0.69 96,542,118 110,806,419 207,348,537 46.56 53.44 100.00 Note: Information in the above schedule is based on data recorded in the Company’s Share Register on the date noted. A listed holder may hold shareholdings or hold an associated shareholding in addition to those listed above. The data provided is solely attributable to a HIN or SRN particular to that holding and as such may not necessarily represent the total of all holdings of the shareholder noted or their associates. CORPORATE GOVENANCE STATEMENT The Company has adopted the recommendations of the ASX Corporate Governance Council’s Principles and Recommendations (Third Edition) in regard to the Corporate Governance Disclosures and provides disclosure of the Company’s Corporate Governance Statement on the Company’s website at: http://www.peakresources.com.au/corporate- governance/. 2022 ANNUAL REPORT 91 ASX Additional Information 06.Tenement Schedule & Reserves and Resources 07. PROJECT TENEMENT % STATUS Tanzanian Projects Mlingi Ngualla PL 10897/2016 100 Granted SML 00601/2017 100 Application ARRANGEMENT/ COMMENT Held by 100% Tanzanian subsidiary company PR NG Minerals Ltd Held by 100% Tanzanian subsidiary company PR NG Minerals Ltd ORE RESERVES AND MINERAL RESOURCES Compliance Statement Information contained in this presentation relating to financial forecasts, production targets, infrastructure, project execution, cost estimating, metallurgical test work, exploration results, Mineral Resource estimates , Ore Reserve estimates and studies are taken from the Company’s ASX announcements dated 22 February 2016, 2 March 2017, 12 April 2017, 28 August 2017, 12 October 2017, 25 August 2021 and 28 October 2021. The ASX announcements are available to view on / https://www.peakresources.com.au/asx-announcements/. The Company confirms that at this time it is not aware of any confirmed new information or data that materially affects the information included in the relevant announcement and that all material assumptions and technical parameters underpinning the estimates in the relevant announcement continue to apply and have not materially changed. The Company confirms that at this time the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcements. The Company also advises that it is undertaking a Bankable Feasibility Study Update and negotiating an Economic Framework Agreement with the Government of Tanzania, and the outcome of one or both, may confirm new information or data that materially affects the information included in the relevant announcement. Table 1: Classification of Ore Reserve estimates for the Weathered Bastnaesite Zone at Ngualla. ORE RESERVE AS AT 30 JUNE 2020 JORC CATEGORY ORE TONNES (MILLIONS) Proved Probable Total 17.0 1.5 18.5 REO % 4.78 5.10 4.80 CONTAINED REO TONNES 813,000 74,000 887,000 See Table 2 for the breakdown of individual REO’s. Reported according to the JORC 2012 Code and Guidelines. 92 PEAK RARE EARTHS Table 2: Relative components of individual rare earth oxides (including yttrium) as a percentage of total REO for the Ngualla Project Ore Reserve estimate (refer to Table 1) RARE EARTH OXIDES Lanthanum Cerium Praseodymium Neodymium Samarium Europium Gadolinium Terbium Dysprosium Holmium Erbium Thulium Ytterbium Lutetium Yttrium Total REO REO GRADE (%) % OF TOTAL REO PROVED PROBABLE 1.318 2.305 0.228 0.788 0.077 0.014 0.029 0.002 0.004 0.000 0.001 0.000 0.001 0.000 0.010 4.78 1.418 2.456 0.243 0.838 0.082 0.015 0.031 0.002 0.004 0.000 0.002 0.000 0.001 0.000 0.010 5.10 ALL 1.326 2.317 0.229 0.792 0.077 0.014 0.030 0.002 0.004 0.000 0.002 0.000 0.001 0.000 0.010 4.80 PROVED PROBABLE 27.59 48.25 4.77 16.49 1.61 0.30 0.62 0.05 0.07 0.01 0.03 0.00 0.01 0.00 0.20 27.80 48.15 4.77 16.43 1.61 0.28 0.60 0.05 0.07 0.01 0.03 0.00 0.01 0.00 0.19 ALL 27.61 48.24 4.77 16.49 1.61 0.30 0.62 0.05 0.07 0.01 0.03 0.00 0.01 0.00 0.20 100.00 100.00 100.00 Values may not balance due to rounding to 0.01% Ore Reserves The information in the announcement that relates to Ore Reserve estimates and estimated mine operating costs is based on information compiled by Mr Ryan Locke, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Locke is a Principal Planner and is employed by Orelogy Pty Ltd, an independent consultant to Peak Resources. Mr Locke has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Ryan Locke consents to the inclusion in the report of the maters based on his information in the form and context in which it appears. Mineral Resource estimates The information in this statement that relates to the Mineral Resource estimates is based on work conducted by Rod Brown of SRK Consulting (Australasia) Pty Ltd, and the work conducted by Peak Resources, which SRK has reviewed. Rod Brown takes responsibility for the Mineral Resource estimate. Rod Brown is a Member of The Australian Institute of Mining and Metallurgy and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration, and to the activities undertaken, to qualify as Competent Person in terms of the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code, 2012 edition).Rod Brown consents to the inclusion of such information in this report in the form and context in which it appears. Project Engineering and Cost Estimation The information in this report that relates to infrastructure, project execution and cost estimating is based on information compiled and / or reviewed by Lucas Stanfield who is a Member of the Australasian Institute of Mining and Metallurgy. Lucas Stanfield is the General Manager – Development for Peak Resources Limited and is a Mining Engineer with sufficient experience relevant to the activity which he is undertaking to be recognized as competent to compile and report. Lucas consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Mineral Resource estimates The Mineral Resource as at 30 June 2020 is detailed in the ASX announcement titled ‘Mineral Resource estimate re-stated to include barite’ of 2 March 2017. The estimates were reported according to the JORC 2012 Code and Guidelines and were completed by Rod Brown of SRK Consulting (Australasia) Pty Ltd. 2022 ANNUAL REPORT 93 Tenement Schedule & Reserves and Resources 07.Table 3: Classification of All Mineral Resources for the Ngualla Rare Earth Project at a 1.0% REO cut-off grade. LOWER CUT-OFF GRADE 1.0% REO MINERAL RESOURCE AS AT 30 JUNE 2020 JORC CATEGORY ORE TONNES (MILLIONS) REO % CONTAINED REO TONNES BASO4 % Measured Indicated Inferred Total 86.1 112.6 15.7 214.4 2.61 1.81 2.15 2.15 2,250,000 2,040,000 340,000 4,620,000 20.2 13.8 17.6 16.6 NGUALLA ALL MINERAL RESOURCES * REO (%) includes all the lanthanide elements plus yttrium oxide. See Tables 5 for breakdown of individual REO’s. Figures above may not sum due to rounding. The number of significant figures does not impy an added level of precision. The Weathered Bastnaesite Zone Mineral Resource estimate summarised below is a subset and contained within the All Mineral Resources reported in Table 3 above. LOWER CUT- OFF GRADE 1.0% REO 3.0% REO JORC CATEGORY Measured Indicated Inferred Total Measured Indicated Inferred Total MINERAL RESOURCE AS AT 30 JUNE 2020 ORE TONNES (MILLIONS) REO % CONTAINED REO TONNES BASO4 % 18.9 1.9 0.5 21.3 1.7 0.4 19.9 19.9 4.75 4.85 4.43 4.75 5.14 4.84 4.90 4.90 900,000 90,000 20,000 1,010,000 90,000 20,000 980,000 980,000 37.8 38.3 31.5 37.7 39.3 35.4 38.6 38.6 NGUALLA ALL MINERAL RESOURCES * REO (%) includes all the lanthanide elements plus yttrium oxide. See Table 5 for breakdown of individual REO’s. The Weathered Bastnaesite Zone Mineral Resource is contained within an is a subset of the Total All Ngualla Project Mineral Resource at a 1% REO cut-off grade in Table 3 above. Figures above may not sum due to rounding. The number of significant figures does not impy an added level of precision. 94 PEAK RARE EARTHS 07. Tenement Schedule & Reserves and ResourcesTable 5: Relative components of individual rare earth element oxides (including yttrium) as a percentage of total REO for 2018 Total Ngualla +1% REO, Weathered Bastnaesite Zone +1% REO and Weathered Bastnaesite Zone +3% REO and Mineral Resources summarised in Tables 3 and 4. NGUALLA 2020 TOTAL MINERAL RESOURCE NGUALLA 2020 WEATHERED BASTNAESITE ZONE RESOURCE NGUALLA 2020 WEATHERED BASTNAESITE ZONE RESOURCE 1% REO 1% REO 3% REO REO GRADE (%) % OF TOTAL REO REO GRADE (%) % OF TOTAL REO REO GRADE (%) % OF TOTAL REO 0.587 1.039 0.104 0.348 0.036 0.007 0.016 0.001 0.003 0.000 0.001 0.000 0.001 0.000 0.010 2.15 27.25 48.23 4.81 16.2 1.66 0.34 0.75 0.07 0.16 0.02 0.06 0.00 0.04 0.00 0.47 100 1.310 2.293 0.227 0.784 0.076 0.014 0.029 0.002 0.004 0.000 0.002 0.000 0.001 0.000 0.010 4.75 27.58 48.27 4.77 16.5 1.60 0.29 0.61 0.05 0.07 0.01 0.03 0.00 0.01 0.00 0.20 100 1.353 2.364 0.234 0.806 0.078 0.014 0.030 0.002 0.004 0.000 0.002 0.000 0.001 0.000 0.010 4.90 27.63 48.27 4.77 16.5 1.60 0.29 0.61 0.05 0.08 0.01 0.03 0.00 0.01 0.00 0.20 100 OXIDE Lanthanum Cerium Praseodymium Neodymium Samarium Europium Gadolinium Terbium Dysprosium Holmium Erbium Thulium Ytterbium Lutetium Yttrium Total La2O3 CeO2 Pr6O11 Nd2O3 Sm2O3 Eu2O3 Gd2O3 Tb4O7 Dy2O3 Ho2O3 Er2O3 Tm2O3 Yb2O3 Lu2O3 Y2O3 * Figures may not sum due to rounding. 2022 ANNUAL REPORT 95 Tenement Schedule & Reserves and Resources 07.08. Corporate Directory PEAK RARE EARTHS LIMITED ABN:72 112 546 700 DIRECTORS Russell Scrimshaw Executive Chairman Tony Pearson Non-Executive Deputy Chair Abdullah Mwinyi Non-Executive Director Giselle Collins Non-Executive Director AUDITORS Ernst and Young 11 Mounts Bay Road Perth WA 6000 Giles Stapleton Non-Executive Director SHARE REGISTRY Link Market Services Limited Level 12, 680 George Street Sydney NSW 2000 CONTACT DETAILS Website: www.peakrareearths.com Email: info@peakrareearths.com Telephone: (08) 9200 5360 Facsimile: (08) 9226 3831 STOCK EXCHANGE LISTING Australian Securities Exchange Limited Home Exchange: Perth, Western Australia Code: PEK COMPANY SECRETARY Philip Rundell REGISTERED OFFICE Peak Rare Earths Limited Level 9, 190 St Georges Terrace Perth WA 6000 SOLICITORS Corrs Chambers Westgarth (Australia) Level 6, Brookfield Place Tower 2 123 St Georges Terrace Perth WA 6000 Clyde & Co/Ako Law (Tanzania) 11th Floor, Jubilee Towers Ohio Street ,Dar es Salaam 96 PEAK RARE EARTHS HEAD OFFICE PERTH HEAD OFFICE (TANZANIA) Level 9, 190 St Georges Terrace Perth WA 6000 First Floor Mezzanine, Kambarage Tower, Kikuyu Avenue PO Box 7362 Cloisters Square WA 6850 +61 8 9200 5360 +61 8 9226 3831 info@peakrareearths.com www.peakrareearths.com PO Box 2764 Dodoma, Tanzania 

Continue reading text version or see original annual report in PDF format above