PNX METALS LIMITED ABN 67 127 446 271 ANNUAL REPORT 2021 ANNUAL REPORT Share Registry Computershare Level 5, 115 Grenfell Street Adelaide SA 5000 Telephone (within Australia): 1300 305 232 Telephone (outside Australia): +61 (3) 9415 4657 Auditors Grant Thornton Level 3, 170 Frome St Adelaide SA 5000 Lawyers Piper Alderman Level 16 70 Franklin Street Adelaide SA 5000 ASX The Company’s fully paid ordinary shares are quoted on the ASX under the code PNX. Corporate Governance Statement The Corporate Governance Statement for PNX Metals Limited is available on the Company’s website and can be accessed by clicking on the following URL Link: https://pnxmetals.com.au/corporate-governance/ CORPORATE DIRECTORY Australian Business Number 67 127 446 271 Country of Incorporation Australia Board of Directors Graham Ascough – Non-executive Chairman Hans-Jörg Schmidt – Non-executive Director Hansjoerg Plaggemars – Non-executive Director Frank Bierlein – Non-executive Director Richard Willson – Non-executive Director James Fox – Managing Director & CEO Company Secretary Angelo Gaudio Principal Administrative Office Level 1, 135 Fullarton Rd Rose Park SA 5067 Telephone: +61 (8) 8364 3188 Facsimile: +61 (8) 8364 4288 Registered Office Level 1 135 Fullarton Rd Rose Park SA 5067 Telephone: +61 (8) 8364 3188 Facsimile: +61 (8) 8364 4288 Contact info@pnxmetals.com.au Website www.pnxmetals.com.au Cover photo: Drilling at Glencoe. Photo page 3: Weed control area at Moline. 2 PNX METALS LIMITED | ANNUAL REPORT 2021 CONTENTS CHAIRMAN’S LETTER OVERVIEW EXPLORATION REPORT TENEMENTS MINERAL RESOURCES AND ORE RESERVES DIRECTORS’ REPORT REMUNERATION REPORT AUDITOR’S INDEPENDENCE DECLARATION FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS DIRECTORS’ DECLARATION 4 5 8 17 19 22 28 33 34 38 57 INDEPENDENT AUDITOR’S REPORT TO MEMBERS 58 ADDITIONAL SHAREHOLDER INFORMATION 61 PNX METALS LIMITED | AN N UAL RE PORT 2021 3 CHAIRMAN’S LETTER Dear Fellow Shareholders, On behalf of the Board of Directors, it is my pleasure to present the 2021 Annual Report for PNX Metals Limited (‘PNX’ or ‘Company’). During the year the Company made significant progress in advancing the 100% owned Fountain Head gold and Hayes Creek zinc-silver-gold projects towards development and in June 2021 the Company released a prefeasibility study confirming the technical and financial viability of our strategy to sequentially develop these projects. The study envisages initial gold mining and processing at Fountain Head (Years 1 to 5) to be followed by gold-silver-zinc development at Hayes Creek (from Year 4), resulting in a long-life, multi-commodity operation (~10 years) that would produce approximately 250,500 ounces of gold, 11.4 million ounces of silver, and 116,300 tonnes of zinc. Under the proposed staged development approach, Stage 1 would see the construction of a low capital and operating cost carbon-in-leach gold plant at Fountain Head to treat the near-surface oxide and free-milling gold and silver ore from three open-pit mines at Fountain Head, Mt Bonnie and Glencoe over an initial 5-year period. Subsequent to the treatment of the currently defined oxide gold and silver resources, Stage 2 envisages upgrading the Plant infrastructure to incorporate a sulphide flotation circuit capable of processing the Hayes Creek high-grade gold-silver-zinc massive sulphide ores to produce two valuable product streams, a zinc concentrate, and a precious metals concentrate. In May 2021, the Environmental Impact Statement (EIS) to develop Fountain Head was submitted to the Northern Territory Environmental Protection Authority (NTEPA) and the public consultation period has now concluded. PNX is now considering the feedback from the public consultation and the NTEPA and will provide an updated EIS to address the issues raised as part of the normal consultation process. We anticipate approval of the EIS by early 2022. Significantly, approval has already been received from the Northern Territory Department of Industry, Tourism and Trade (DITT) for a variation to the Company’s Mine Management Plan (MMP) to allow dewatering of the Fountain Head pit as a precursor to development. In addition to Fountain Head and Hayes Creek, the Company holds a 90% interest in a large and very prospective land holding (in excess of 1,500km2) in the vicinity of these projects. In parallel with the studies and permitting activities currently completed during the year, PNX has implemented an exploration strategy that identified a number of promising exploration targets with the potential to deliver a pipeline of gold mineral resources for processing at Fountain Head, with the aim of adding to mine life and enhancing project economics. Testing these exploration targets has since been deferred as drilling progresses at the newly acquired Glencoe gold deposit (part of the Fountain Head project) where we are excited to see new extensional zones of gold mineralisation being intersected. The Board and management are confident that continued technical studies and exploration work will be successful in growing our resource base and that the completion of development studies, permitting and financing at Fountain Head will provide a clear pathway for this exciting production opportunity, that has the potential to deliver strong returns for PNX shareholders. I would like to take this opportunity to express my thanks to my fellow directors, management and staff for their dedication and work during the past 12 months. We are committed to progressing the Company and growing our flagship Fountain Head and Hayes Creek projects towards development for the benefit of all shareholders. I also take this opportunity to thank all shareholders for your continued support of PNX and I look forward to providing further updates as our activities move forward in 2021. Yours sincerely, Graham Ascough Chairman 24 September 2021 4 PNX METALS LIMITED | ANNUAL REPORT 2021 OVERVIEW GENERAL PNX Metals Limited (PNX or the Company) is an ASX listed minerals exploration company with the objective of being a successful explorer and a sustainable and profitable gold and base metals producer for the benefit of its shareholders, employees and the communities in which it operates. PNX holds a large exploration and development portfolio which is highly prospective for gold, silver and base metals located in the Pine Creek region of the Northern Territory (NT), approximately 170km from Darwin (Figure 1). During the year a Preliminary Feasibility Study (PFS) was released by the Company that supports the robust multi- commodity development of Fountain Head and Hayes Creek over an initial 10-year mine-life. The Company’s 100% owned Mineral Leases host considerable Mineral Resources including the Fountain Head Gold Project (“Fountain Head”) and the recently acquired Glencoe deposit which host 156,000oz of gold and 79,000oz of gold respectively, and at the Mt Bonnie and Iron Blow polymetallic deposits (“Hayes Creek”) which contain 237,700oz of gold, 16.2Moz silver and 177,200 tonnes of zinc. Collectively the projects host 472,700oz of gold, 16.2Moz of silver, 177,200 tonnes of zinc, 37,000 tonnes of lead and 10,050 tonnes of copper (details of the Mineral Resource Estimates (MRE) are provided in the MRE section on Page 21 of this report. Included in the proposed development is the construction of a purpose build gold plant where Como Engineers have been engaged to assist with this process. Production estimates (refer PNX ASX release 17 June 2021) of metals recovered to doré and concentrates is 250,500oz gold, 11.4Moz silver and 116,300t of zinc commencing from mid-late 2022 subject to Government, Environmental and Board approvals and financing, which the Company is currently working through. During the year, drilling at Fountain Head was completed with the aim of identifying areas of near-surface mineralisation with the potential to augment the existing mine plan, and to provide information around sterilisation of areas that may be used for the waste stockpile and other infrastructure. (Refer to PNX ASX release on 11 August 2021 for results). The Company also identified and acquired the Glencoe tenement located on a granted Mining Lease approximately 3 kilometres north of Fountain Head. The acquisition represents a ‘bolt on’ asset that expands the proposed Fountain Head development and is a key component of the Company’s NT gold development strategy. DARWIN N O R T H E R N T E R R I T O R Y Burnside Project Darwin Moline Project Hayes Creek, Fountain Head and Glencoe Projects Chessman Project Burnside Project Glencoe Project Hayes Creek Fountain Head Project Hayes Creek Project Moline Project Pine Creek 0 50 100 Katherine kilometres Chessman Project NT 06 Figure 1 NT Project locations. NORTHERN TERRITORY QUEENSLAND WESTERN AUSTRALIA SOUTH AUSTRALIA NEW SOUTH WALES Adelaide VICTORIA TASMANIA Aust 04 5 PNX METALS LIMITED | ANNUAL REPORT 2021 OVERVIEW GENERAL KEY FINANCIAL RESULTS Approximately 2,000m of RC drilling was completed at Glencoe during August 2021 to increase geological confidence in the updated Mineral Resource, and to identify mineralised extensions with the potential to host additional gold resources. This drilling was extremely successful with multiple zones of new high-grade gold mineralisation intersected and a second RC drill program is to commence in October 2021. The Burnside exploration project has been systematically reviewed and evaluated to identify targets with the potential to host significant “standalone” gold deposits, and to supplement and extend proposed gold processing operations at Fountain Head. Numerous high-value target areas were identified and are being progressed to drill-ready status. IMPACTS OF COVID-19 The Company continually reviews updates regarding the COVID-19 pandemic and the implications for the health and wellbeing of our employees, contractors and stakeholders. The safety of PNX employees and contractors is paramount and appropriate measures regarding COVID-19 are taken in-line with government advice, particularly in relation to interstate travel. NT field- based activities are safely continuing with personnel movements limited to the NT in line with any border restrictions and closures with other states, in particular South Australia. ($000’S, EXCEPT AS INDICATED) 30 JUNE 2021 30 JUNE 2020 Interest/other income Research & Development tax offset refund Corporate/administrative costs Impairment – exploration assets (Income)/loss on Sunstone investment 117 - 1,373 - (103) 113 150 1,269 500 438 Comprehensive Loss after tax 1,153 1,944 Comprehensive Loss per share 0.04 cents 0.06 cents Net operating cashflows Exploration expenditure Funds raised – equity (net of costs) Cash on hand Net working – capital1 Investment in Sunstone - at fair value Capitalised exploration expenditure Debt Lease liabilities Contract liabilities – silver streaming Net assets (1,184) (3,582) 6,470 3,632 3,632 193 19,573 - 50 2,400 21,085 (692) (4,282) 1,602 1,973 1,973 90 16,365 - - 2,400 15,661 Number of shares on issue 3,652,193,511 2,542,621,476 Number of performance rights on issue 54,300,000 10,800,000 Number of unlisted options on issue 359,125,000 379,125,000 Share price (ASX: PNX)2 0.8 cents 1.0 cents 1 Excluding investment in Sunstone Metals Ltd. 2 Closing share price as at 30 June. 6 PNX METALS LIMITED | ANNUAL REPORT 2021 At 30 June 2021, the Group had no debt, and: • cash holdings of $3.63 million, • investment in Sunstone Metals Ltd valued at $0.2 million. OVERVIEW KEY FINANCIAL RESULTS The Company and its wholly owned subsidiary (the Group) reported a loss after tax for the year of $1.3 million (2020: $1.5 million). As a comparison to last year’s results the lower loss figure (down $0.2 million) was primarily due to no impairment of Exploration and Evaluation expenditure during the year, and no Research and Development (R&D) tax offset recorded during the year. The loss for the year was net of a $Nil million (2020: $0.15 million) income tax benefit from the Company’s R&D tax offset claims. Pre-tax loss for the year was $1.26 million compared to $1.66 million in 2020. The comparable pre-tax loss is not unexpected given PNX’s corporate cost structure has not significantly changed, and exploration costs in the Northern Territory (the primary area of expenditure) are capitalised. Corporate and administration costs include head office wages, directors’ fees, audit fees, insurance, professional fees, regulatory, occupancy and communications, and these have not changed significantly. Net cash inflow of $1.7 million for the year primarily reflects payments for exploration activities ($3.6 million) and to suppliers and employees ($1.3 million) financed through new shares issued ($6.5 million after of costs) and various government grants and R&D tax offset ($0.1 million). Exploration and Evaluation cash outflows of $3.6 million consisted of $1.5 million on the Fountain Head gold project (including drilling that resulted in an updated MRE being completed and reported in accordance with the JORC Code 2012, released to the ASX 16 June 2020), $1.2 million towards the acquisition of Glencoe, $0.1 million at Hayes Creek and $0.8 million on other NT regional exploration for the year. The Company raised a total of $6.7 million (before costs) during December 2020 and January 2021 comprising of a share placement at 0.6 cents per share to sophisticated and professional investors for $2.3 million, and $4.4 million under a non-renounceable rights issue of one (1) for every four (4) shares held at a price of 0.6 cents per share. Fountain Head pit ramp. 7 PNX METALS LIMITED | ANNUAL REPORT 2021 EXPLORATION REPORT During the year the Company made significant progress with the development of its Northern Territory projects through the release of a Preliminary Feasibility Study (PFS) that supports the sequential development of its 100% owned Fountain Head gold and Hayes Creek gold-silver- zinc projects (Project) (see PNX ASX release dated 17 June 2021). The Project is located within the boundaries of the Ban Ban Springs and Douglas pastoral stations approximately 13km east of the Stuart Highway and 170km south of Darwin in the Northern Territory and comprises 19 Mineral Leases (MLs) covering an area of 1246.6 hectares providing continuous coverage of, and unrestricted access over, the Fountain Head, Glencoe, Mt Bonnie and Iron Blow deposits. The Project areas are 100% owned by PNX and located on granted MLs where the original MLs pre-date Native Title. The Project is ideally located within an existing infrastructure services corridor in an historic and mining region. PNX is a 100% holder of 366km², and 90% holder of a further 1,113km² of highly prospective exploration tenure (in Joint venture with Kirkland Lake Gold (ASX: KLA, TSX: KL)) surrounding the Project with numerous high-priority gold and base metals exploration targets. Development and exploration activities were ongoing for much of the year with only minor delays related to COVID-19 travel restrictions between the Northern Territory and South Australia. The Company is fortunate to have secured the services of skilled staff as continued domestic and international border restrictions have meant that shortages of personnel and equipment are becoming more commonplace. Table 1 Project pre and post tax NPV and IRR metrics (all $ are AUD, unless otherwise noted) . NPV6% NPV8% NPV10% IRR The PFS was published in mid-June 2021 and contains a comprehensive assessment of the technical and economic parameters relating to the sequential development of the Project which the Company believes holds the best potential to maximise shareholder returns. The proposed development will make optimum use of the Company’s Mineral Resource inventory which collectively contain 472,700 ounces of gold, 16.2 million ounces of silver and 177,200 tonnes of zinc. 37,000 tonnes of lead and 10,050 tonnes of copper from ore located at Fountain Head, Glencoe and the Hayes Creek VMS deposits (Mt Bonnie and Iron Blow) (details of the Mineral Resource Estimates (MRE) are provided on Page 21 of this report) The Project is forecast to return a strong Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) of A$413 million from total revenues of A$972 million (net of treatment refining and transport charges) representing an EBITDA margin of 42% over its 10-year mine-life from a total combined mining inventory which exceeds 7 million tonnes. Gold will be the largest contributor to life- of-mine revenue (48%) followed by silver (27%) and zinc (25%) (Tables 1-3). PRE-TAX $ MILLION $197 $171 $149 63% POST-TAX $ MILLION $147 $127 $111 55% Commodity prices (US$) and FX rates used in the PFS: gold US$1,733/oz, silver US$25/oz, zinc US$1.31lb, US$0.77/ A$1.00. A healthy pre-tax unleveraged Internal Rate of Return (IRR) of 63% (post-tax IRR 55%) is calculated based on an upfront A$46 million pre-production capital investment, inclusive of a working capital component of A$4 million to manage the cost of the Project through the commissioning phase. The Project is forecast to generate net revenues of A$352 million over the life of mine, returning a net cash position of A$276 million after tax. The Company’s aim is to construct a low capital and operating cost carbon-in-leach (CIL) gold plant (Plant) and infrastructure capable of treating 750ktpa with a capacity potential of 900ktpa (Figure 2). Near-surface oxide and free-milling gold and silver ore from three open-pit mines at Fountain Head, Mt Bonnie and the newly acquired Glencoe gold deposit (see PNX ASX release 10 December 2020) is planned to be processed over an initial 5-year period (Stage 1) to produce a gold doré and commencing, subject to approvals, later in 2022. 8 PNX METALS LIMITED | ANNUAL REPORT 2021 EXPLORATION REPORT FOUNTAIN HEAD GOLD AND HAYES CREEK GOLD-SILVER-ZINC PROJECT – KEY METRICS Note: All financial values are in Australian dollars unless otherwise noted. Table 2 Project key production metrics summary. PRODUCTION SUMMARY METALS UNITS FOUNTAIN HEAD HAYES CREEK TOTALS tonnes per annum 750,000-900,000 450,000 Plant throughput rate Mine life Ore mined open-pit Strip-ratio open-pit Ore mined underground Average mined grades Metals recovered Metals paid years tonnes waste: ore - g/t g/t % ounces ounces tonnes ounces ounces tonnes Gold Silver Zinc Gold Silver Zinc Gold Silver Zinc - 10* 4.8 6.6 4,032,828 1,015,400 5,048,228 5.96 - 1.23 7.42 - 147,678 688,491 - 147,678 688,491 - - 8.02 - 1,957,565 1,957,565 1.76 131 4.45% 102,844 - - - 250,522 10,684,910 11,373,401 116,333 82,638 116,333 230,316 9,176,852 9,865,343 83,851 322,309 83,851 - Concentrates produced dry metric tonnes * Fountain Head (Stage 1) and Hayes Creek (Stage 2) processing to overlap from Year 4. Table 3 Project key economic metrics summary. PROJECT ECONOMICS A$’000 FOUNTAIN HEAD HAYES CREEK TOTALS CONTRIBUTION Total revenue (ex-mine gate) Gold Silver Zinc Royalties payable (NT & 3rd party) C1 Cash Costs EBITDA Pre-production capital (Stage 1) Sustaining and life of mine capital (Stage 2) AIC (Opex + Capex) AISC* 354,623 332,276 22,347 - 15,320 245,385 93,919 42,018 - 287,403 302,722 682,287 161,583 259,426 261,278 49,287 314,227 318,772 - 65,000 379,227 428,515 1,036,910 493,859 281,773 261,278 64,607 559,612 412,691 42,018 65,000 666,630 731,237 47.6% 27.2% 25.2% * All-in sustaining costs (AISC) is defined as the all-in costs (which includes all site-based capital and operating costs; mining, processing, haulage and admin), plus royalties. 9 PNX METALS LIMITED | ANNUAL REPORT 2021 EXPLORATION REPORT Figure 2 Fountain Head draft process plant and infrastructure. To assist with fast-tracking the Project development the Company appointed Como Engineers Pty Ltd earlier in the year to design a ‘fit for purpose’ solution and utilising modular and transportable equipment for the Project. The parties are operating under an Early Contractor Involvement structure which aims to deliver a design and construct proposal for the Plant for a fixed-duration, lump- sum price, thereby removing a large portion of the project risk from PNX. An initial capital outlay of A$40.3 million, per the PFS, is required for the Stage 1 pre-production mine-development, Plant and associated infrastructure, inclusive of Engineering Procurement Construction and Management costs. Plant first fill and critical path spares are expected to be a further A$1.69 million. These projected capital costs are being refined and this process, which was expected to be completed in September 2021, is ongoing due to challenges such as extended lead times and well publicised materials price increases being offset with proposed utilisation of secondhand equipment. Subsequent to the treatment of the currently defined oxide gold and silver resources in Stage 1, the Plant will be upgraded to incorporate a sulphide flotation circuit capable of processing the Hayes Creek high-grade gold-silver-zinc massive sulphide ores into two valuable product streams, a zinc concentrate, and a precious metals concentrate (Stage 2) which will be trucked to the Port of Darwin and then shipped to international markets for sale and smelting and refining. Capital required for the Stage 2 development is estimated to be an additional A$58 million (PNX ASX release 12 July 2017 ‘Hayes Creek confirmed to be a leading Zinc and Precious Metals Project in Australia’). The timing and quantum of Stage 2 capital is being assessed as there are a number of items that will be utilised across both process streams such as maintenance, administration, telecommunications, power, crushing and tailings. Considerable capital cost savings are expected to be realised upon completion of this work. The intent is that Stage 2 capital will be funded from operating cash-flows after the pay-back of the initial Stage 1 capital. 10 PNX METALS LIMITED | ANNUAL REPORT 2021 EXPLORATION REPORT The resultant void space generated from mining at Fountain Head will be used for sub-aqueous storage of tailings from Stage 2, and generate flexibility in water management which eliminates the need for an above ground tailings dam. This will result in significant time and cost savings, and a considerable reduction in the Project’s environmental footprint and potential Project risks. A key component of the Government and environmental approvals process for Fountain Head, the Environmental Impact Study (EIS), was lodged in June 2021 with the Northern Territory Environmental Protection Authority (EPA). An 8-week Public Consultation period ended on 8 August 2021, and the Company is currently working through the feedback received with a view to submit the updated EIS next quarter. Based on published statutory timelines full EIS approval is anticipated towards the end of March 2022. Approval was received from the Northern Territory Department of Industry, Tourism and Trade (DITT) for a variation to the Company’s Mine Management Plan (MMP) to allow dewatering of the Fountain Head pit (see PNX ASX release 24 March 2021). Numerous opportunities exist within PNXs approximate 1,500km² exploration tenure to delineate additional gold resources which, if successful, could extend gold processing in parallel with concentrates production, generating a significant increase in the production profile from Year 7, or earlier. REGIONAL EXPLORATION GLENCOE During the year, PNX finalised the Sale and Purchase Agreement (SPA) with private company, Ausgold Trading Pty Ltd, to acquire the Glencoe gold deposit (see PNX ASX release 10 December 2020). Glencoe represents a ‘bolt-on’ asset that has significantly expanded the proposed Fountain Head development. An updated MRE was published and multiple new zones of high-grade gold mineralisation intersected during PNX’s first RC drill program (refer PNX ASX release 14 September 2021). In April 2021 the Company reported a Mineral Resource Estimate1 for the Glencoe gold deposit in accordance with the JORC Code2, 2012 (refer PNX ASX release 28 April 2021), comprising: • 2.1Mt @ 1.2g/t Au for 79,000oz Au (Inferred Category) The Glencoe MRE, remains open in all directions and extends from surface to 120m vertical depth and comprises discrete lodes over a strike length of approximately 1.5km (Figure 3). The Company’s first drill program at Glencoe, which is located 3km to the north of Fountain Head, was highly successful and intersected multiple new zones of high-grade gold mineralisation (see PNX ASX release 14 September 2021. The first phase of drilling comprising 27 RC holes for 2,352m confirmed historic drilling results with equivalent gold grades and widths, and identified significant gold mineralisation more than 200 metres southeast of the current MRE. Mineralisation also appears to be thickening to the southeast where broader zones of mineralisation containing multiple gold intercepts were encountered, including: • 8m at 1.69g/t Au from 65m in GLRC012 • 9m at 2.23g/t Au from 21m in GLRC019 • 3m at 5.37g/t Au from 31m in GLRC027 A detailed topographic survey, surveying of historic drill collars, geological mapping of pits walls and surfaces (Figure 3), and reprocessing of regional aeromagnetic data have provided greater confidence in the validity of the historic drill data, contributed robust geological data to inform the future MRE, and identified new target areas. Integration and interpretation of these datasets are ongoing. A second phase of RC drilling comprising 20 RC holes for approximately 2,000m is proposed to start in October 2021. These holes will build on the results of recently completed drilling. In addition, three diamond holes for 360 m will be drilled to provide rock density data (predominantly in the Oxide and Transitional zones), structural information, geotechnical and metallurgical data. 1 Refer PNX ASX release 28 April 2021 ‘New Glencoe Mineral Resource expands Fountain Head Development’ including a summary report prepared by H&S Consultants Pty Ltd and JORC Table 1 2 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The JORC Code, 2012 Edition. Prepared by: The Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC). Example of ferruginous stockwork veins. 11 PNX METALS LIMITED | ANNUAL REPORT 2021 EXPLORATION REPORT REGIONAL EXPLORATION Figure 3 Glencoe drilling for 2021 (red traces), in relation to MRE outline (yellow), historic drilling (RAB, Arircore and RC) (white traces), and geochemical anomaly (hashed orange line). An example of sheeted ‘Tally Ho’ quartz veins in Glencoe South pit. Termite mounds at Glencoe. 12 PNX METALS LIMITED | ANNUAL REPORT 2021 EXPLORATION REPORT REGIONAL EXPLORATION FOUNTAIN HEAD Commencing June 2021, 20 RC holes were drilled at Fountain Head for a total of 1,992m. The aim of drilling was to identify areas of near-surface mineralisation with the potential to augment the existing mine plan, and test that there were no significant mineralised zones in the vicinity of proposed waste stockpiles or other infrastructure (Figures 2 and 3). Numerous zones of potentially economic gold mineralisation were intersected, and further work has been planned, including a detailed structural study to assist in vectoring extensions of the more significant gold lodes or offset high-grade gold shoots (Figure 4). Integration of recent mapping with existing geological data suggests that gold mineralisation at Fountain Head exists over a strike extent of at least 5km along the Fountain Head anticline fold hinge. Two sets of gold lodes have been identified to date – the NW-trending Fountain Head lodes and the crosscutting NNW-trending Tally Ho lodes. These lode sets remain open along strike and down dip and host the current MRE. Limited exploration has taken place outside of the known mineralised zones and geological controls of gold mineralisation are not well understood in these peripheral areas. Four main exploration targets were tested at Fountain Head (Figure 4) during the year. Significant results include several narrow zones of gold mineralisation from three of the targets that remain open: North West Zone • 3m at 8.54g/t Au from 34m in FHRC145, including 1m at 23.72g/t from 34m • 2m at 3.56g/t Au from surface, 3m at 4.13g/t Au from 16m, and 3m at 1.83g/t Au from 116m in FHRC192 • 1m at 1.83g/t Au from 73m in FHRC196 South East Zone • 1m at 4.38g/t Au from surface in transported gravel in hole FHRC190 Far East Zone • 1m at 2.87g/t Au from 5m, and 1m at 1.30g/t Au from 65m in FHRC182 • 1m at 1.44g/t Au from 26m, and 2m at 1.36g/t Au from 56m in FHRC187 • 1m at 3.98g/t Au from 24m in FHRC189 Figure 4 Fountain Head drilling areas for 2021. Field setup for RC logging at Fountain Head. 13 PNX METALS LIMITED | ANNUAL REPORT 2021 EXPLORATION REPORT REGIONAL EXPLORATION BURNSIDE EXPLORATION PROJECT The Burnside area, part of the broader Pine Creek Orogen, has a substantial gold endowment of approximately 3.5Moz (see PNX ASX release 10 October 2020). The majority of the gold mineralisation typically occurs in zones of quartz veining, brecciation and shearing along fold hinges, shear zones and thrust faults. Each of the target areas defined by PNX contains one or more of these zones. In October 2020, the Company completed a regional review of its Burnside Exploration Project and identified multiple high priority gold targets, separate from Fountain Head, each with the potential to host economic quantities of gold mineralisation. Four areas were prioritised for additional follow-up work (Figure 5). Concurrent with development activities relating to Fountain Head, PNX has been systematically reviewing the broader Burnside area to identify targets with the potential to host significant “standalone” gold deposits, and to supplement and extend future proposed gold processing operations at Fountain Head. An Aboriginal Areas Protection Authority (AAPA) Certificate was applied for in February 2021 in relation to the Western Arm North area and is expected to be issued in October 2021. Historic exploration has largely involved surface prospecting throughout areas of outcrop to identify prospective zones followed by trenching (costeaning) and drilling. PNX’s recent assessment has highlighted that while exploration in the vicinity of some of the known deposits is extensive, areas along strike from existing mineralisation and non-outcropping areas have not been effectively explored in the past and remain essentially untested despite being highly prospective for gold mineralisation. The majority of regional exploration at Burnside took place in the period between the late 1980s and early 2000s when low gold prices prevailed. Consequently, various gold anomalies and targets originally identified during that period were not followed up and now present as opportunities for PNX in the current environment of substantially higher gold prices. Priority Gold Targets Structural interpretation of regional aeromagnetic data, compilation and verification of historic exploration data (approximately 36,000 drill holes, 424 costeans, and 30,000 surface geochemical samples), and target generation incorporating both empirical and conceptual criteria has been completed. The following priority gold targets are typically characterised by strong surface geochemical anomalism and drilled bedrock mineralisation. Medusa The Medusa gold target lies within the central portion of the project and is characterised by a large surface (700m x 600m area) gold and arsenic in soil anomaly, and rock chip values up to 2.56g/t gold and 6.70% arsenic (arsenic being a good pathfinder for gold mineralisation in the Pine Creek and Burnside region). Initial reconnaissance drill testing of the structure undertaken in 1996 returned encouraging near- surface intercepts which have never been followed up. The mineralisation, which occurs within a zone of quartz veining and shearing, has been intersected over a 600m strike length and remains open in all directions. Significantly the original surface geochemical anomaly extends well beyond the limits of drilling and interpretation of magnetic data suggests that there are multiple parallel NE trending fault zones running through the area which have never been drill tested. Cookies Corner Cookies Corner is located on a NE trending fault approximately 3km to the NNE of the historic Goodall deposit where Western Mining Corporation mined 4.1Mt @ 1.99g/t gold (228koz contained gold) from 1988 to 1992. Gold mineralisation at Goodall occurs within a 25m to 50m wide x 600m long zone of shearing and quartz veining on the western limb of an anticlinal fold hinge closure adjacent to the same NE trending fault that hosts Cookies Corner. At Cookies Corner an 800m long x 300m wide gold in soil anomaly has been defined that overlies an area of outcropping gossanous quartz veins. Drilling by PNX in late 2018 intersected gold mineralised quartz veining over a 400m strike, which remains open in all directions. Numerous high-grade gold intercepts reported at the time (see ASX release 29 January 2019). Western Arm North Western Arm North is characterised by a linear north-south trending 900m long x 400m wide surface gold in soil anomaly overlying the soil-covered northern continuation of the same faulted anticlinal fold hinge that hosts Kirkland Lake’s Western Arm Gold Deposit (Inferred Resource 1.79Mt @ 1.4g/t gold for 86,000 contained ounces) 1km to the south. Three drill traverses (spaced 300m to 500m apart) of 20m deep vertical reconnaissance holes were drilled across the anomaly in 1993 with several holes intersecting anomalous gold within weathered ferruginous quartz veining and sediments Chimera Lying east of Medusa within the same dolerite and sediment rock sequence, Chimera is an east-west trending 700m long x 200m wide surface gold in soil anomaly. Four 60m deep angled RC holes drilled in 1996 did not identify the source of the anomaly and as such it remains unexplained. 14 PNX METALS LIMITED | ANNUAL REPORT 2021 EXPLORATION REPORT REGIONAL EXPLORATION N O R T H E R N T E R R I T O R Y Cookies Corner Goodall PNX Exploration Licence Ringwood Range n PNX Mining Licence Other parties production licence Other parties production licence application Highway Gold occurrence Fault Granite Target Medusa Bons Rush Santorini Kazi Chimera Western Arm North Western Arm Woolwonga Howley Rising Tide Glencoe Brocks Creek Zapopan Fountain Head Big Howley Chinese Howley Cosmo Howley (Cosmo Deeps) Long Airfield Hayes Creek 0 5 10 Fenton Airfield kilometres Princess Louise Iron Blow Mount Bonnie Davies Golden Dyke Langleys Burnside 03 Figure 5 Burnside Exploration Project – TMI magnetics. Emerald Springs Roadhouse 15 PNX METALS LIMITED | ANNUAL REPORT 2021 EXPLORATION REPORT REGIONAL EXPLORATION MOLINE The 100% owned Moline Project is located approximately 65km to the east of Hayes Creek. Moline comprises three main “lines of lode” hosting numerous gold and gold-zinc prospects, including Moline, School, Tumbling Dice, Swan, and Hercules. The majority of historical mining only extended to shallow depths in the oxide zone and studies have indicated that the primary mineralisation at depth could potentially be recovered and upgraded to a high-value concentrate to supplement future proposed processing at Fountain Head or at Hayes Creek. No on-ground exploration work took place at Moline with all of the Company’s focus on the Fountain Head and Hayes Creek projects. OCCUPATIONAL HEALTH AND SAFETY PNX is committed to the health and safety of all its stakeholders, including employees, contractors and visitors. No reportable incidents occurred during the year. Access to site and existing infrastructure is well maintained, and relevant OHS and ESG policies and procedures are regularly updated and reviewed. The Company utilises camp facilities operated by Kirkland Lake Gold at their Cosmo mine and has developed and maintained an excellent relation with staff and management. Regarding the COVID-19 pandemic the Company continually reviews updates and assesses the implications for the health and wellbeing of our employees, contractors and stakeholders. The safety of PNX employees and contractors is paramount and appropriate measures regarding COVID-19 are taken in-line with government advice, particularly in relation to interstate travel. The Company reviews its Health and Safety policies and procedures on a regular basis to ensure it maintains a high standard. All field staff take part in ongoing training to develop skills for supervising and conducting exploration activities in remote environments. ENVIRONMENT The Company has approved exploration, and care and maintenance Mine Management Plans (MMP) for all project areas in the NT. Environmental rehabilitation bonds are held by the NT Government and are required prior to any ground disturbing activities taking place. Progressive rehabilitation of disturbed areas has occurred in accordance with licence conditions and will continue to occur in the future. Regular water monitoring and weed mapping was completed in accordance with approved MMPs. SOCIAL & COMMUNITY PNX recognises and responds to the growing expectation from community, regulators and industry leaders for more open community engagement and stakeholder consultation. The Company engages with local stakeholders, including government, pastoral leaseholders, Aboriginal groups, and local community as an integral part of its social license to operate. The Company also took part in a number of online investor interviews, and presented at the Annual Geoscience Exploration Seminar (AGES) 2021 in Alice Springs (Figure 6). Figure 6 Presenting at the 2021 AGES seminar. 16 PNX METALS LIMITED | ANNUAL REPORT 2021 TENEMENTS NORTHERN TERRITORY TENEMENT ML30512 ML30589 MLN1033 MLN1039 MLN214 MLN341 MLN342 MLN343 MLN346 MLN349 MLN405 MLN459 MLN811 MLN816 MLN794 MLN795 ML30936 ML31124 MLN1020 MLN4 MLN1034 NAME Mt Bonnie Mt Bonnie Mt Bonnie Mt Bonnie Iron Blow Iron Blow Mt Bonnie Iron Blow Mt Bonnie Iron Blow Mt Bonnie Mt Bonnie Mt Bonnie Mt Bonnie Fishers-1 Fishers-2 HOLDER PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% Good Shepherd PNX Metals Ltd 100% Fountain Head Fountain Head Fountain Head Fountain Head PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% Total Hayes Creek Total Other ML29679+ Glencoe PNX Metals Ltd 100% Total Fountain Head Total Glencoe ML24173 MLN1059 MLN41 EL28616 EL31099 EL31893 EL32489+ Moline Moline Mt Evelyn PNX Metals Ltd 100% PNX Metals Ltd 100% PNX Metals Ltd 100% Total Moline Total Mineral Leases Moline Bridge Creek PNX Metals Ltd 100% PNX Metals Ltd 100% Ringwood Station PNX Metals Ltd 100% J25 Anomaly PNX Metals Ltd 100% + ML29679 was acquired by PNX Metals Limited on 27 April 2021. Total Exploration Licences AREA HECTARE 6.4 31.6 4.8 1.2 6.3 14.9 13.7 14.9 16.0 15.0 12.0 15.0 8.1 8.1 168.0 8.1 8.1 106.0 122.2 33.5 12.0 529.9 304.2 879.6 199.0 199.0 3126.0 418.7 8.9 3,553.6 4,922.4 262.5km2 60.2km2 23.4km2 19.9km2 366.0km2 17 PNX METALS LIMITED | ANNUAL REPORT 2021 TENEMENTS NORTHERN TERRITORY – FARM-IN TENEMENTS TENEMENT NAME HOLDER (AREA SQ KM) Burnside Project* EL10012 EL10347 EL23431 EL23536 EL23540 EL23541 EL24018 EL24051 EL24058 EL24351 EL24405 EL24409 EL24715 EL25295 EL25748V EL9608 Chessman Project* EL25054 EL28902 ML30293 Rocklands Project# EL10120# EL25120# EL27363# EL25379# EL23509# ML29933^ Mt Ringwood Golden Dyke Thunderball Brocks Creek Jenkins Cosmo North Hayes Creek Margaret River Yam Creek PNX Metals Limited 90%, NTMO 10% PNX Metals Limited 90%, NTMO 10% PNX Metals Limited 90%, NTMO 10% PNX Metals Limited 90%, NTMO 10% PNX Metals Limited 90%, NTMO 10% PNX Metals Limited 90%, NTMO 10% PNX Metals Limited 90%, NTMO 10% PNX Metals Limited 90%, NTMO 10% PNX Metals Limited 90%, NTMO 10% McCallum Creek PNX Metals Limited 90%, NTMO 10% Yam Creek PNX Metals Limited 90%, NTMO 10% Brocks Creek South PNX Metals Limited 90%, NTMO 10% Mt Masson PNX Metals Limited 90%, NTMO 10% Margaret Diggings PNX Metals Limited 90%, NTMO 10% Burnside Mt Bonnie Maud Maud PNX Metals Limited 90%, NTMO 10% PNX Metals Limited 90%, NTMO 10% PNX Metals Limited 90%, NTMO 10% PNX Metals Limited 90%, NTMO 10% Chessman PNX Metals Limited 90%, NTMO 10% Rocklands 1 Rocklands 2 Rocklands 4 Rocklands 7 Rocklands 8 Rocklands 3 PNX Metals Ltd – earning-in 100% PNX Metals Ltd – earning-in 100% PNX Metals Ltd – earning-in 100% PNX Metals Ltd – earning-in 100% PNX Metals Ltd – earning-in 100% PNX Metals Ltd – earning-in 80%, Trojan Enterprises Pty Ltd and David Trow 20% PNX Metals Ltd – earning-in 80%, Trojan Enterprises Pty Ltd and David Trow 20% ML29937^ Rocklands 5 Total Exploration Licences 14.9 10.0 13.4 70.4 16.7 3.3 23.4 86.9 3.3 13.4 4.1 22.1 56.8 10.0 584.5 10.0 64.0 104.5 1.1 6.94 9.96 6.64 6.64 19.92 0.86 3.54 1,167.30 V * Subject to exclusion of two non-material discrete blocks totalling 38km2 which are excluded due to third party interests. PNX Metals Ltd has earned a 90% interest under a farm-in agreement with NT Mining Operations Pty Ltd (NTMO) a wholly owned subsidiary of Kirkland Lake Gold Australia Pty Ltd. # PNX Metals Ltd earning-in 100% interest in the Hardrock Rights under a farm-in agreement with Rockland Resources Pty Ltd (Rockland) and Oz Uranium Pty Ltd Holdings Pty Ltd (Oz). ^ PNX Metals Ltd earning-in 80% interest in the Hardrock Rights under a farm-in agreement with Rockland Resources Pty Ltd (Rockland) and Oz Uranium Pty Ltd Holdings Pty Ltd (Oz). A 20% interest is held by Trojan Enterprises Pty Ltd and David Trow. 18 PNX METALS LIMITED | ANNUAL REPORT 2021 MINERAL RESOURCES AND ORE RESERVES As at 30 June 2021 NORTHERN TERRITORY HAYES CREEK MINERAL RESOURCES Table 1: Iron Blow Mineral Resources by JORC Classification as at 3 May 2017. JORC CLASSIFICATION LODE AuEq CUT-OFF (g/t) TONNAGE (kt) Zn (%) Indicated East Lode Total Indicated Inferred West Lode East Lode West Lode FW Gold HW Gold Interlode Gold Interlode Base Metal Total Inferred 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 800 7.64 1,280 4.14 2,080 5.49 20 20 0.48 0.76 210 0.25 40 40 120 450 0.06 0.21 3.52 1.11 Total Indicated + Inferred Mineral Resource 2,530 4.71 Pb (%) 1.83 0.33 0.91 0.34 0.96 0.07 0.09 0.03 0.32 0.18 0.78 Cu (%) 0.30 0.31 0.30 0.16 0.13 0.03 0.01 0.07 0.14 0.07 0.26 Ag (g/t) 275 60 143 132 109 16 6 8 35 27 122 Au (g/t) 2.90 1.73 2.19 6.01 1.02 2.03 1.68 1.66 0.69 1.71 2.10 ZnEq (%) AuEq (g/t) 20.64 15.53 8.84 6.66 13.39 10.08 13.65 5.90 3.48 2.57 2.79 5.87 4.38 11.79 9.43 4.44 2.62 1.94 2.10 4.42 3.30 8.87 Total Contained Metal (t) 119,200 19,700 6,650 9.9Moz 170.9koz 298,000t 721.5koz Table 2: Mt Bonnie Mineral Resources by JORC Classification as at 8 February 2017. JORC CLASSIFICATION Indicated Indicated Total Indicated Inferred Inferred Inferred Total Inferred DOMAIN CUT-OFF GRADE TONNAGE (kt) Zn (%) Oxide/Transitional 0.5g/t Au 195 0.94 Fresh 1% Zn 1,180 4.46 Oxide/Transitional 0.5g/t Au 32 0.43 1,375 3.96 Fresh Ag Zone 1% Zn 50g/t Ag 118 2.91 21 0.17 171 2.11 Total Indicated + Inferred Mineral Resource 1,545 3.76 Pb (%) 2.43 0.94 1.15 1.33 0.90 0.03 0.87 1.12 Cu (%) 0.18 0.23 0.23 0.29 0.15 0.04 0.16 0.22 Ag (g/t) 171 121 128 74 135 87 118 127 Au (g/t) 3.80 1.02 1.41 2.28 0.54 0.04 0.80 1.34 ZnEq (%) 11.50 9.60 9.87 6.37 7.61 2.36 6.73 9.53 AuEq (g/t) 9.44 7.88 8.11 5.23 6.25 1.94 5.53 7.82 Total Contained Metal (t) 58,000 17,300 3,400 6.3Moz 66.8koz 147,000t 388.5koz Table 3: Total Hayes Creek Mineral Resources (Iron Blow + Mt Bonnie) by JORC Classification at 3 May 2017. JORC CLASSIFICATION Total Indicated (84.7%) Total Inferred (15.3%) Total Indicated + Inferred Mineral Resource TONNAGE (kt) Zn (%) 3,455 4.88 622 1.39 4,077 4.35 Pb (%) 1.01 0.37 0.91 Cu (%) 0.27 0.10 0.25 Ag (g/t) 137 52 124 Au (g/t) 1.88 1.46 1.81 ZnEq (%) 11.99 5.03 10.93 AuEq (g/t) 9.29 3.91 8.47 Total Contained Metal (t) 177,200 37,000 10,050 16.2Moz 237.7koz 445,000t 1,110koz 19 PNX METALS LIMITED | ANNUAL REPORT 2021 MINERAL RESOURCES AND ORE RESERVES As at 30 June 2021 NORTHERN TERRITORY Notes relating to Hayes Creek Project Resource Tables • Due to effects of rounding, the total may not represent the sum of all components. No material changes in the estimates of the mineral resources at Mt Bonnie and Iron Blow have occurred since they were originally reported. • Metallurgical recoveries and metal prices (Table 4) have been applied in calculating zinc equivalent (ZnEq) and gold equivalent (AuEq) grades. • Iron Blow – A mineralisation envelope was interpreted for each of the two main lodes, the eastern lode (Zn-Au-Ag-Pb) and western lode (Zn-Au), and four subsidiary lodes with a 1g/t AuEq cut-off used to interpret and report these lodes. • Mt Bonnie – Zinc domains are reported above a cut-of grade of 1% zinc, gold domains are reported above a cut-off grade of 0.5g/t gold and silver domains are reported above a cut-off grade of 50g/t silver. Table 4: Commodity price and metal recovery assumptions for the estimation of gold and zinc equivalents. METALS Zinc Lead Copper Silver Gold UNIT USD / t USD / t USD / t USD / troy ounce USD / troy ounce PRICE* 2,450 2,100 6,200 20.50 1,350 80% 60% 60% 70% 55% RECOVERY MT BONNIE RECOVERY IRON BLOW * consensus prices at the time of the resources estimates. FOUNTAIN HEAD MINERAL RESOURCES Table 5: Fountain Head and Tally Ho Mineral Resources by JORC Classification as at 16 June 2020. JORC CLASSIFICATION TALLY HO Indicated Inferred Total FOUNTAIN HEAD Indicated Inferred Total GLOBAL Indicated Inferred Total TONNAGE (Mt) 0.94 – 0.94 0.89 1.11 2.00 1.83 1.11 2.94 Au (g/t) 2.0 – 2.0 1.4 1.6 1.5 1.7 1.6 1.7 80% 60% 60% 80% 60% OUNCES (koz) 59 – 59 41 56 96 100 56 156 Notes relating to Fountain Head Mineral Resources • Due to effects of rounding, the total may not represent the sum of all components. The updated estimate of the Mineral Resources at Fountain Head and Tally Ho deposits was reported during June 2020. (Please refer to PNX ASX release dated 16 June 2020). The estimate of the initial Mineral Resources was reported on 11 July 2019. • Fountain Head and Tally Ho mineralisation reported utilising a cut-off grade of above 0.7g/t Au/t gold, which is consistent with the assumed open cut mining method. 20 PNX METALS LIMITED | ANNUAL REPORT 2021 MINERAL RESOURCES AND ORE RESERVES As at 30 June 2021 NORTHERN TERRITORY GLENCOE MINERAL RESOURCES Table 6: Glencoe Mineral Resources by JORC Classification as at 28 April 2021. JORC CLASSIFICATION Inferred Total OXIDATION Oxide Transitional Fresh TONNAGE (Mt) 0.5 0.3 1.3 2.1 Au (g/t) 1.3 1.2 1.1 1.2 OUNCES (koz) 20 11 48 79 Notes relating to Glencoe Mineral Resources • Due to effects of rounding, the total may not represent the sum of all components. Glencoe Mineral Resources by oxidation zone as at 26 April 2021 estimated using a cut-off grade of 0.7g/t Au which is consistent with the assumed open-cut mining method. (Please refer to PNX ASX release dated 28 April 2021). • The cut-off grade is also consistent with the Mineral Resource Estimate for Fountain Head. PNX TOTAL MINERAL RESOURCES Table 7: Total JORC Mineral Resources (Iron Blow + Mt Bonnie + Fountain Head + Glencoe). TONNAGE (kt) Zn (t) Pb (t) Cu (t) Total Contained Metal (t) 9,117 177,200 37,000 10,050 Ag (Moz) 16.2 Au (koz) 472.7 The reported mineral resources for Iron Blow and Mt Bonnie were updated in February 2017 and May 2017 and there have been no material changes in the estimated resources, underlying assumptions or technical parameters since then. The reported mineral resources for Fountain Head and Tally Ho were updated on 16 June 2020 (Refer to PNX ASX release dated 16 June 2020) and there have been no material changes in the estimated resources, underlying assumptions or technical parameters since then. The reported mineral resources for Glencoe were reported on 28 April 2021 (Refer to PNX ASX release dated 28 April 2021) and there have been no material changes in the estimated resources, underlying assumptions or technical parameters since then. PNX utilises suitably qualified independent consultants to compile all new mineral resources estimates. These resource estimates and the underlying assumptions and interpretations, are reviewed by PNX management, and in particular full-time employee and Resources Geologist with PNX Metals Limited, Mr Marco Scardigno (a Competent Person), for reasonableness prior to being finalised. COMPETENT PERSON’S STATEMENT The information in this report that relates to Exploration Results is based on information compiled by Mr Marco Scardigno, a Competent Person who is a Member of the Australian Institute of Mining and Metallurgy (AusIMM). Mr Scardigno has sufficient experience relevant to the style of mineralisation and the type of deposits under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Scardigno is a full-time employee and Resource Geologist with PNX Metals Ltd and consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. 21 PNX METALS LIMITED | ANNUAL REPORT 2021 DIRECTORS’ REPORT The Directors of PNX Metals Limited (‘PNX’ or ‘Company’) present their report for the financial year ended 30 June 2021. DIRECTORS The names and details of directors in office during and since the end of the financial year, unless otherwise stated, are as follows: HANSJOERG PLAGGEMARS Non-executive Director Appointed 28 November 2020 Mr Hansjoerg Plaggemars was appointed to the board as Non-Executive Director with effect from 28 November 2020. He is an experienced company director with a strong background in corporate finance, corporate strategy, and governance. He has qualifications in Business Administration and has served on the Board of Directors of many listed and unlisted companies in a variety of industries including mining, agriculture, shipping, construction, and investments. Mr. Plaggemars has previously served on the Board of Delphi Unternehmensberatung AG, the Company’s major shareholder. In the three years immediately prior to 30 June 2021, Hansjoerg Plaggemars held the following directorships of other ASX listed companies for the following periods: • Non-executive Director, Kin Mining NL – since July 2019 • Non-executive Director, South Harz Potash Limited – since October 2019 • Non-executive Director, Azure Minerals Limited – since November 2019 • Non-executive Director, Altech Chemicals Limited – since August 2020 • Non-executive Director, Gascoyne Resources Limited – since July 2021 • Non-executive Director, Wiluna Mining Corporation Limited – since July 2021 GRAHAM ASCOUGH Non-executive Chairman Appointed 7 December 2012 HANS-JÖRG SCHMIDT Non-executive Director Appointed 11 November 2019 Based in Monaco, Mr Schmidt has a Master of Business & Administration from the University of Mannheim (Germany) and has a strong track record of business start-up and investment management. He is an experienced Private Equity Investor, working and investing across a broad range of industries and has held senior positions in investment banking and investment research firms along with director roles for publicly listed Companies in Europe. He has advised boards and management teams on investment decisions, financings and transactions across a broad range of industries. In the three years immediately prior to 30 June 2021, Hans-Jörg Schmidt held no directorships of other ASX listed companies. Graham Ascough (BSc, PGeo, MAusIMM) is a senior resources executive with more than 30 years of industry experience evaluating mineral projects and resources in Australia and overseas. Mr Ascough, a geophysicist by training, has had broad industry involvement playing a leading role in setting the strategic direction for companies, completing financing and in implementing successful exploration programmes. Mr Ascough was the Managing Director of Mithril Resources Ltd from October 2006 until June 2012. Prior to joining Mithril in 2006, he was the Australian Manager of Nickel and PGM Exploration at a major Canadian resources house, Falconbridge Limited, which was acquired by Xstrata Plc in 2006. He is a member of the Australian Institute of Mining and Metallurgy and is a Professional Geoscientist of Ontario, Canada. In the three years immediately prior to 30 June 2021, Graham Ascough held the following directorships of other listed companies for the following periods: • Non-executive Chairman, Musgrave Minerals Limited – since 26 May 2010 • Non-executive Chairman, Sunstone Metals Limited – since 30 November 2013 • Non-executive Chairman, Black Canyon Limited – since 25 August 2013 (listed on 5 May 2021) • Non-executive Chairman, Mithril Resources Limited – from 9 October 2006 to 15 May 2019 22 PNX METALS LIMITED | ANNUAL REPORT 2021 DIRECTORS’ REPORT FRANK BIERLEIN Non-executive Director Appointed 18 June 2021 RICHARD WILLSON Non-executive Director Appointed 18 June 2021 Dr Bierlein is a geologist with 30 years of experience as a consultant, researcher, lecturer and industry professional. Dr Bierlein has held exploration and generative geology management positions with QMSD Mining Co Ltd, Qatar Mining, Afmeco Australia and Areva NC, and consulted for, among others, Newmont Gold, Resolute Mining, Goldfields International, Freeport-McMoRan, and the International Atomic Energy Agency. He was a non- executive director of Gold Australia Pty Ltd from 2015 to 2019, and chaired the Advisory Board of a Luxemburg- based private equity fund between 2014 and 2021. Dr Bierlein has worked on six continents spanning multiple commodities, and over the course of his career has published and co-authored more than 130 articles in peer-reviewed scientific journals. Dr Bierlein obtained a PhD (Geology) from the University of Melbourne, is a Fellow of the Australian Institute of Geoscientists (AIG), and a member of both the Society of Economic Geologists (SEG) and the Society of Geology Applied to Mineral Deposits. In the three years immediately prior to 30 June 2021, Frank Bierlein held no directorships of other ASX listed companies. Mr Willson is an experienced, Non- Executive Director, Company Secretary and CFO with more than 20 years’ experience with both publicly listed and private companies. Mr Willson holds a Bachelor of Accounting Degree from the University of South Australia, is a Fellow of CPA Australia, and a Fellow of the Australian Institute of Company Directors. He is a Non-Executive Director of Titomic Limited (ASX:TTT), AusTin Mining Limited (ASX:ANW), Thomson Resources Limited (ASX:TMZ), 8IP Emerging Companies Limited (ASX:8EC), Unity Housing Company Ltd and Variety SA; and Company Secretary of a number of ASX listed Companies. Mr Willson is the Chairman of the Audit Committee of Titomic Limited, AusTin Mining Limited, 8IP Emerging Companies Limited, and Unity Housing Company, and is the Chairman of the Remuneration & Nomination Committee of Titomic Limited. In the three years immediately prior to 30 June 2021, Richard Willson held the following directorships of other listed companies for the following periods: • Non-executive Director, Aus Tin Mining Limited – since February 2011 • Non-executive Director, Titomic Limited – since May 2017 • Non-executive Director, Thomson Resources Limited – since July 2019 • Non-executive Director, 8IP Emerging Companies Limited – since April 2021 • Non-executive Director, 1414 Degrees Limited – from July 2020 to May 2021 • Non-executive Director, Graphene Technology Solutions Limited (now Sparc Technologies Limited) – from March 2019 to December 2020 JAMES FOX Managing Director & Chief Executive Officer (MD & CEO) Appointed 26 November 2014 James Fox has been CEO of the Company since May 2012. He has over 20 years’ experience in the mining industry. Prior to joining PNX, he was responsible for the development and operation of the Nickel Laterite Heap Leach project at the Murrin Murrin operations in Western Australia. Mr Fox has held various senior processing positions including Process Manager at the Nifty Copper Operation in Western Australia. He has worked in the UK, Cyprus, Uganda and Australia in gold, lead, zinc, copper, nickel and cobalt mining and processing operations. In the three years immediately prior to 30 June 2021, James Fox held no directorships of other listed companies. The names and details of directors who resigned during the year are as follows: PAUL J DOWD Non-executive Director Appointed 27 September 2007 and resigned on 5 March 2021 Paul Dowd has over 50 years’ experience in the mining industry in Australia and many overseas countries. In April 2012 he retired as Managing Director of PNX, a position he assumed in September 2008. Mr Dowd’s experience includes executive management roles including Vice President of Newmont Mining Corporation’s Australian and New Zealand Operations and Managing Director of Newmont Australia Limited, and as a senior public servant – head of the resources and petroleum department in the Kennett Government of Victoria. In 2015, he retired as Chairman of the SA Mineral Resources & Heavy Engineering Skills Centre but remains on the Board. In 2017, Mr Dowd retired as a non-executive director of Oz Minerals Limited after eight years of 23 PNX METALS LIMITED | ANNUAL REPORT 2021 DIRECTORS’ REPORT service. He is a non-executive director of Energy Resources of Australia Limited (ERA), a board member of the Sustainable Minerals Institute (University of Queensland) and retired as Chairman, but remains a Councillor of the Mineral Resources Sector Advisory Council of the CSIRO. In the three years immediately prior to 30 June 2021, Paul Dowd held the following directorship of other listed companies for the following period: • Non-executive director, Energy Resources of Australia Limited – since 26 October 2015 PETER WATSON Non-executive Director Appointed 7 September 2007 and resigned on 5 March 2021 Peter Watson, a founder of PNX, studied Law at Melbourne University and graduated with honours. He has practiced law since 1970, specialising in commercial, corporate, resources and trade practices law. He is admitted to practice in South Australia, New South Wales, Victoria and Western Australia as well as the High Court of Australia. For over 20 years, Mr Watson was a partner in the national law firm now known as Norton Rose Fulbright. During that time he established, and for 4 years managed, its Perth office. He also managed its Melbourne office for 2 years. In 1996 Mr Watson joined Andersen Legal as its first Melbourne partner and in 1999 was recruited by Normandy Mining Limited as its group legal counsel and a group executive. Following the takeover of Normandy by Newmont Mining Corporation, he returned to private legal practice and founded the boutique law firm Watsons Lawyers in Adelaide which on 1 July 2016 merged with Piper Alderman (an Adelaide headquartered firm with Sydney, Melbourne and Brisbane offices). Mr Watson is a director of BGRF Company Ltd, the trustee of the Bethlehem Griffiths Research Foundation (a medical research charitable foundation), non-executive director of Felton Grimwade & Bosisto’s 24 Pty Ltd (a manufacturer and supplier of essential oil products and over-the-counter therapeutic products) and a trustee of a perpetual charitable trust. In the three years immediately prior to 30 June 2021, Peter Watson held no directorships of other listed companies. INTERESTS IN SHARES AND PERFORMANCE RIGHTS OF THE COMPANY As at the date of this report, the interests of the Directors in the shares, unlisted options and Performance Rights of PNX are as follows: DAVID HILLIER Non-executive Director Appointed 17 September 2010 and resigned on 26 November 2020 David Hillier is a Chartered Accountant and has more than 40 years’ experience in commercial aspects of the resources industry. He has served as Chairman and as a director of a number of public companies in the mining and exploration fields, including Lawson Gold Limited and Buka Gold Limited. He was Chief Financial Officer and an executive director of AIM listed Minerals Securities Limited, based in London. Over a period of 14 years Mr Hillier held a range of senior executive positions in the Normandy Mining Limited Group of companies and was Chief Financial Officer of Normandy for six of these years. In the three years immediately prior to 30 June 2020, David Hillier held no directorships of other listed companies. COMPANY SECRETARY Angelo Gaudio Appointed 10 January 2019 Angelo Gaudio has significant experience in senior financial positions within the resource sector. Previous roles include; the Chief Financial Officer and Company Secretary for Investigator Resources Limited, Renascor Resources Limited, as well as Vice President, Finance and Administration with Heathgate Resources. Angelo is a qualified accountant with over forty years of finance, management and accounting experience. His expertise includes corporate finance, risk management, financial reporting and corporate development. Angelo is a Fellow of the Institute of Public Accountants and a certificated member of the Governance Institute of Australia. Graham Ascough Non-executive Chairman Graham Ascough has an indirect interest in 13,833,166 Shares and 3,125,000 unquoted options with an exercise price of 1.464 cents each, expiring on 30 September 2021. Paul Dowd Non-executive Director Resigned on 5 March 2021 Paul Dowd has a direct interest in 500,000 Shares, an indirect interest in 26,693,298 Shares and 6,250,000 unquoted options with an exercise price of 1.464 cents each, expiring on 30 September 2021. Peter Watson Non-executive Director Resigned on 5 March 2021 Peter Watson has a direct interest in 3,534,464 Shares, an indirect interest in 16,857,143 Shares and related parties of Mr Watson hold 1,962,707 Shares. David Hillier Non-executive Director (Resigned on 26 November 2020). David Hillier has an indirect interest in 12,000,001 Shares and 3,125,000 unquoted options with an exercise price of 1.464 cents each, expiring on 30 September 2021. James Fox Managing Director & CEO James Fox holds 30,800,000 Performance Rights, and a related party of Mr Fox holds 11,000,000 Shares and 1,875,000 unquoted options with an exercise price of 1.464 cents each, expiring on 30 September 2021. PNX METALS LIMITED | ANNUAL REPORT 2021 DIRECTORS’ REPORT DIVIDENDS AND DISTRIBUTIONS No dividends or distributions were paid to members during the financial year and none were recommended or declared for payment. PRINCIPAL ACTIVITIES The principal activity of the Company and its wholly owned subsidiary (‘Group’) during the financial year was advancement of the Fountain Head Gold Project and progression of Feasibility Studies over its Fountain Head Gold Project, situated in the Pine Creek region of the Northern Territory (‘NT’). The Group continued to conduct near-mine and regional mineral exploration at its Fountain Head and other projects in the Pine Creek region of the NT. REVIEW OF OPERATIONS PNX continued to make significant progress during the year and released a PFS that supports the sequential development of Fountain Head and Hayes Creek Projects (Project), both of which are located approximately 170km south of Darwin in the Pine Creek region of the Northern Territory. The PFS confirmed the technical and economic viability of a staged development approach, to construct a low capital and operating cost carbon-in-leach gold plant (Plant) and infrastructure capable of treating 750ktpa with a capacity potential of 900ktpa. Near-surface oxide and free- milling gold & silver ore from three open-pit mines at Fountain Head, Mt Bonnie and Glencoe and would be processed over an initial 5-year period (Stage 1). Subsequent to the treatment of the currently defined oxide gold and silver resources in Stage 1, the Plant will be upgraded to incorporate a sulphide flotation circuit capable of processing the Hayes Creek high-grade gold-silver-zinc massive sulphide ores into two valuable product streams, a zinc concentrate and a precious metals concentrate (Stage 2). In June 2021, the Company lodged an EIS for the Fountain Head Gold Project with the Northern Territory EPA. An 8-week Public Consultation period ended on 8 August 2021 and the Company is expecting feedback from this process during September 2021. The broader Burnside area has, along with other exploration areas, been systematically reviewed to identify targets with the potential to host significant “standalone” gold deposits, and to supplement and extend proposed gold processing operations at Fountain Head. The Group’s Exploration and Mineral Leases remain in good standing. During the year, drilling at Fountain Head was completed with the aim of identifying areas of near-surface mineralisation with the potential to augment the existing mine plan, and to provide information around sterilisation of areas that may be used for the waste stockpile and other infrastructure. (Refer to PNX ASX release on 11 August 2020 for results). During the year, the Company acquired the Glencoe project located on a granted Mining Lease approximately 3 kilometres north of Fountain Head. The acquisition represents a ‘bolt on’ asset that expands the proposed Fountain Head development and is a key component of the Group’s NT gold development strategy. Drilling at Glencoe was undertaken during August 2021 to increase geological confidence in the updated Mineral Resource, and to identify mineralised extensions with the potential to host additional gold resources. The Company is also progressing evaluation of additional gold prospects that may have the potential to augment overall project returns. PNX holds a large exploration tenement portfolio with potential for zinc, gold and silver, also inthe Pine Creek region. The Group continually reviews updates regarding the COVID-19 pandemic and the implications for the health and wellbeing of its employees, contractors and stakeholders. The safety of PNX employees and contractors is paramount and appropriate measures regarding COVID-19 are taken in-line with government advice, particularly in relation to interstate travel. NT field- based activities are safely continuing with personnel movements limited to the NT in line with any border restrictions and closures with other states, in particular South Australia. The Group reported a loss after tax for the year of $1.3 million (2020: $1.5 million). No impairments were recorded during the year. The Group’s corporate costs, which include head office wages, directors’ fees, professional fees, insurance, regulatory, occupancy and communication costs have not changed significantly. Net operating cash inflows of $1.7 million for the year primarily reflect payments for exploration activities ($3.6 million) and to suppliers and employees ($1.3 million) financed through new shares issued ($6.5 million) and various government grants received ($0.1 million). The Company raised a total $6.5 million during December 2020 and January 2021 through a share placement at 0.6 cents per share to sophisticated and professional investors and a non- renounceable Rights Issue at 0.6 cents per share. 25 PNX METALS LIMITED | ANNUAL REPORT 2021 DIRECTORS’ REPORT SIGNIFICANT CHANGES IN STATE OF AFFAIRS There were no significant changes in the state of affairs of the Group during or since the end of the year. ENVIRONMENT REGULATION AND PERFORMANCE The Group continues to meet all environmental obligations across its tenements. SIGNIFICANT EVENTS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR The Group’s office lease in Rose Park, South Australia, extended to August 2021 as at year end. Subsequent to 30 June 2021, the Group secured the extension of the office lease for a further 12 months. There has been no other matter or circumstance that has occurred subsequent to the end of the financial year that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years. LIKELY DEVELOPMENTS The Group’s aim is to be a sustainable, profitable gold and base metals producer and successful minerals explorer by advancing the Fountain Head and Hayes Creek Projects to development and production, and by making new mineral discoveries in the Pine Creek region of the Northern Territory to either supplement the Fountain Head and Hayes Creek Projects or to be developed as stand- alone operations. An EIS for the Fountain Head Gold Project was lodged on 1 June 2021 with the NT EPA. An 8-week Public Consultation period ended on 8 August 2021 and the Group is finalising a Supplement with approvals expected, based on statutory timelines, by end March 2022. The EIS is an important milestone in the Fountain Head Gold Project approval process and the culmination of a significant detailed body of work by the Group and its Environmental Consultants, ERIAS Group, to identify potential environmental impacts and risks and mitigate these through careful and considered management. OPTIONS AND PERFORMANCE RIGHTS 53,500,000 Performance Rights were issued to personnel during the financial year. There were no shares issued in satisfaction of Performance Rights that vested under the Company’s Performance Rights Plan. 10,000,000 Performance Rights lapsed during the year as the vesting conditions were not met. At the date of this report, 54,300,000 unvested Performance Rights are on issue. There were no options issued during the financial year, however, 20,000,000 unquoted options exercisable at a price of $0.0147 per share, expired on 30 October 2020. As at the date of this report, a total of 359,125,000 unquoted options are on issue at a price of $0.01464 per share, expiring on 30 September 2021. 26 INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company entered into a Deed of Access, Insurance and Indemnity with Peter Watson and Paul Dowd on 12 November 2007, David Hillier on 22 September 2010, Graham Ascough on 11 December 2012, James Fox on 26 November 2014, Hans-Jörg Schmidt on 11 November 2019, Hansjoerg Plaggemars on 28 November 2020, Frank Bierlein and Richard Willson on 18 June 2021. Under the terms of these Deeds, the Company has undertaken, subject to restrictions in the Corporations Act 2001, to: • indemnify each Director in certain circumstances; • advance money to a Director for the payment of legal costs incurred by a Director in defending legal proceedings before the outcome of those proceedings is known (subject to an obligation by the Director to repay money advanced if the costs become costs in respect of which the Director is not entitled to be indemnified under the Deed); • maintain Directors’ and Officers’ insurance cover (if available) in favour of each Director whilst they remain a Director of the Company and for a run out period after ceasing to be such a director; and • provide each Director with access to Board papers and other documents provided or available to the Director as an Officer of the Company. Throughout the year and since the end of the financial year, the Group has had in place and paid premiums for insurance policies, with a limit of liability of $10 million, indemnifying Directors and Officers of the Group against certain liabilities incurred in the conduct of business or in the discharge of their duties as Directors or Officers of the Group. The contracts of insurance contain confidentiality provisions that preclude disclosure of the premium paid. PNX METALS LIMITED | ANNUAL REPORT 2021 DIRECTORS’ REPORT DIRECTORS’ ATTENDANCE AT MEETINGS There were twelve Board meetings and three Audit Committee meetings held during the financial year. The following table summarises director attendance: TOTAL MEETINGS HELD DURING THE YEAR GRAHAM ASCOUGH (Board Chairman) HANS-JÖRG SCHMIDT5,6 HANSJOERG PLAGGEMARS (Audit Committee Chairman)1 FRANK BIERLEIN4 RICHARD WILLSON4 JAMES FOX6 PETER WATSON3 PAUL DOWD3,6 DAVID HILLIER Audit Committee Chairman)2 Meetings attended Meetings attended Meetings attended Meetings attended Meetings attended Meetings attended Meetings attended Meetings attended Meetings attended 12 3 12 3 10 2 6 2 0 0 0 0 12 3 9 2 8 1 6 1 YEAR ENDED 30 JUNE 2021 Board meetings Audit committee meetings 1 Hansjoerg Plaggemars was appointed as a director on 28 November 2020 and appointed Chairman of the Audit Committee on 27 January 2021. He was a director for six of the Board meetings and two of the Audit Committee meetings 2 Mr. Hillier resigned on 26 November 2020 and was a director for six of the board meetings and one of the Audit Committee meetings. 3 Mr. Watson and Mr. Dowd resigned on 5 March 2021 and were directors for nine of the board meetings and two of the Audit Committee meetings. 4 Mr. Bierlein and Mr. Willson appointed on 18 June 2021 and there was no board meeting prior to the financial year end. 5 Mr Schmidt was nominated as Audit Committee member on 21 Apr 2021. 6 Invited to attended Audit Committee meetings. AUDITOR’S INDEPENDENCE DECLARATION The auditor’s independence declaration is included on page 33. NON-AUDIT SERVICES Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 22 to the financial statements. The directors are of the opinion that the services as disclosed in note 22 to the financial statements do not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons: • all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and • none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Group, acting as advocate for the Group or jointly sharing economic risks and rewards. 27 PNX METALS LIMITED | ANNUAL REPORT 2021 DIRECTORS’ REPORT REMUNERATION REPORT – AUDITED This Report outlines the remuneration arrangements in place for the Directors and the Company Secretary. Where this Report refers to the ‘Grant Date’ of Shares or Performance Rights, the date mentioned is the date on which those Shares or Performance Rights were agreed to be issued (whether conditionally or otherwise) or, if later, the date on which key terms of the Shares or Performance Rights (eg performance conditions) were determined. DIRECTORS AND KEY MANAGEMENT PERSONNEL DETAILS The following persons acted as Directors of the Company during and since the end of the financial year: • Graham Ascough Non-executive Chairman • Hans-Jörg Schmidt Non-executive Director The following persons were Key Management Personnel of the Company and Group during and since the end of the financial year: • Angelo Gaudio Chief Financial Officer & Company Secretary RELATIONSHIP BETWEEN REMUNERATION POLICY AND GROUP PERFORMANCE There is no direct link between the Group’s financial and operating performance and the setting of remuneration except as discussed below in relation to certain Performance Rights. REMUNERATION PHILOSOPHY The performance of the Group depends on the quality of its Directors and management and therefore the Group must attract, motivate and retain appropriately qualified industry personnel. The Group embodies the following principles in its remuneration framework: • Hansjoerg Plaggemars Non-executive Director (appointed on 28 November 2020) • provide competitive rewards to attract and retain high calibre executives, directors and employees; • Frank Bierlein Non-executive Director (appointed on 18 June 2021) • Richard Willson Non-executive Director (appointed on 18 June 2021) • James Fox Managing Director & CEO The following persons acted as Directors and resigned from their position during the year as noted below: • David Hillier Non-executive Director (resigned on 26 November 2020) • Paul Dowd Non-executive Director (resigned on 5 March 2021) • Peter Watson Non-executive Director (resigned on 5 March 2021) • link executive rewards to Group operating performance and shareholder value by the granting of Performance Rights with performance-based vesting conditions; and • ensure total remuneration is competitive by market standards. The Group does not currently have a policy on trading in derivatives that would limit exposure to losses resulting from share price decreases applicable to Directors and employees who receive part of their remuneration in securities of the Company. The Board is not aware of any of the Company’s Directors or key management personnel ever conducting such activity. REMUNERATION POLICY The Group does not have a separately established remuneration committee. The full Board acts as the Group’s remuneration committee. The Board is responsible for determining and reviewing remuneration arrangements for Non-executive Directors, the Managing Director & CEO, the Company Secretary and other senior management. The Board assesses the appropriateness of the nature and amount of remuneration of such persons on a periodic basis with reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team. External advice on remuneration matters is sought when the Board deems it necessary. The remuneration of Non-executive Directors and senior management is not dependent on the satisfaction of performance conditions, except in relation to Performance Rights as described below. The Company has established an Employee Performance Rights Plan (‘Plan’), where the Directors can, at their discretion, grant Performance Rights to eligible participants. Upon a grant of Performance Rights, the Board may set vesting conditions, determined at the Board’s discretion, which if not satisfied will result in the lapse of the Performance Rights granted to the particular employee. Each Performance Right granted converts into one ordinary share in PNX on vesting. No amounts are paid or payable by the recipient on receipt of the Performance Right, nor at vesting. Performance Rights have no entitlement to dividends or voting rights. 28 PNX METALS LIMITED | ANNUAL REPORT 2021 DIRECTORS’ REPORT REMUNERATION REPORT – AUDITED NON-EXECUTIVE DIRECTOR REMUNERATION The Board seeks to set remuneration of Non-executive Directors at a level which provides the Company with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost which is appropriate at this stage of the Company’s development. As Non-executive Chairman, Graham Ascough is entitled to receive $75,000 per annum inclusive of superannuation and Non-executive Directors are each entitled to receive $40,000 per annum inclusive of superannuation. Non- executive Directors are entitled to be paid reasonable travelling, accommodation and other expenses incurred as a consequence of their attendance at meetings of Directors and otherwise in the execution of their duties as Directors. Non-executive Directors are also entitled to additional remuneration for extra services or special exertions, in accordance with the Company’s Constitution. There are no schemes for retirement benefits other than government mandated superannuation. No additional amounts were paid to any Director during the financial year (2020: $Nil). There has been no changes to these fees or entitlemets since the inception of the Company in 2007. Summary details of remuneration for Non-executive Directors are given in the tables on pages 30 and 31. Remuneration is not dependent on the satisfaction of performance conditions. The maximum aggregate remuneration of Non-executive Directors, other than for extra services or special exertions, is $500,000 per annum. MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER REMUNERATION The Group aims to reward the Managing Director & Chief Executive Officer (MD & CEO) with a level and mix of remuneration commensurate with his position and responsibilities within the Group to: • align the interests of the MD & CEO with those of shareholders; • through Performance Rights, link reward with the strategic goals and performance of the Group; and • ensure total remuneration is competitive by market standards. James Fox has been Chief Executive Officer of PNX since 1 May 2012 and assumed the title Managing Director & CEO on 26 November 2014 with his appointment to the Board. Mr Fox is entitled to an annual salary of $275,000, vehicle and telephone benefits to an estimated remuneration value of $20,000, as well as mandated superannuation contributions, 20 days annual leave and 10 days sick leave per annum. At 30 June 2021 and as of the date of this report, Mr Fox held no Shares in the Company directly. At 30 June 2020 and the date of this report, a related party of Mr Fox held 11,000,000 Shares in the Company. During the year, 5,000,000 of 10,800,000 Performance Rights held by Mr Fox lapsed as the performance conditions were not met. On 27 January 2021, 25,000,000 additional Performance Rights were issued to Mr Fox. The Performance Rights have performance conditions related to key Company objectives, including development of the Fountain Head and Hayes Creek projects and the Company’s share price performance. Performance conditions are required to be achieved within specified time periods (extending to 27 January 2024) in order for the Rights to vest. At 30 June 2021, a total of 30,800,000 Performance Rights subject to performance conditions were held by Mr Fox. James Fox’s employment with the Company may be terminated on three months written notice or on summary notice if he: • • • is charged with any criminal offence or is guilty of any other conduct which, in the reasonable opinion of the Board, is prejudicial to the interests of the Group; is negligent in the performance of his duties; is incapacitated from performing his duties as Chief Executive Officer by illness or injury for a period of two consecutive months; • materially breaches any term of his contract of employment and this is not remedied within 14 days of notice of the breach to him by the Company; • materially contravenes any share dealing code relating to shares; • • is the subject of, or causes the Company or Group to be the subject of, a material penalty or serious reprimand imposed by any regulatory authority; or independently acts in a manner contravening the directives and expressed wishes of the Board. CHIEF FINANCIAL OFFICER & COMPANY SECRETARY REMUNERATION Angelo Gaudio has been the Chief Financial Officer and Company Secretary of the Company since 10 January 2019. Through his company, Angelo Gaudio provides his services on a part-time basis and at a rate of $10,000 per month plus GST plus reimbursement of out of pocket expenses. The services may be terminated by either party on one months’ notice. During the 2021 financial year, Mr Gaudio was paid fees of $120,000 (excluding GST). On 1 February 2021, 5,000,000 Performance Rights were issued to Mr Gaudio and at 30 June 2021, a total of 5,000,000 Performance Rights subject to performance conditions were held by Mr Gaudio. 29 PNX METALS LIMITED | ANNUAL REPORT 2021 DIRECTORS’ REPORT REMUNERATION REPORT – AUDITED REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL Directors’ and Key Management Personnel remuneration (all amounts are paid or payable) for the year ended 30 June 2021: FINANCIAL YEAR ENDED 30 JUNE 2021 SHORT TERM EMPLOYMENT BENEFITS POST- EMPLOYMENT EQUITY SALARY & FEES NON–CASH BENEFITS5 SUPERANNUATION SHARES AND PERFORMANCE RIGHTS TOTAL % OF TOTAL REMUNERATION CONSISTING OF EQUITY Directors Graham Ascough Paul Dowd3 Peter Watson3 David Hillier1 Hans-Jörg Schmidt Hansjoerg Plaggemars2 Frank Bierlein4 Richard Willson4 James Fox $75,000 $26,127 $26,127 $16,329 $36,530 $23,716 $1,305 $1,305 - - - - - - - - - $2,352 $2,352 - $3,470 - $124 $124 - - - - - $75,000 $28,479 $28,479 $16,329 $40,000 $23,716 $1,429 $1,429 $276,125 $10,3345 $25,000 $80,6176 $392,076 Chief Financial Officer & Company Secretary Angelo Gaudio TOTALS $120,000 $602,564 - - $10,334 $33,422 $4,8486 $85,465 $124,848 $731,785 1 David Hillier resigned as a director on 26 November 2020. 2 Hansjoerg Plaggemars was appointed as a director on 28 November 2020. 3 Paul Dowd and Peter Watson resigned as a director on 5 March 2021. 4 Frank Bierlein and Richard Willson were appointed as directors on 18 June 2021. 5 Use of a company provided motor vehicle. 6 Value of Performance Rights that have not yet vested that is attributable to the 2021 financial year. 0% 0% 0% 0% 0% 0% 0% 0% 20.6% 3.9% 11.7% 30 PNX METALS LIMITED | ANNUAL REPORT 2021 DIRECTORS’ REPORT REMUNERATION REPORT – AUDITED Directors’ and Key Management Personnel remuneration for the year ended 30 June 2020: FINANCIAL YEAR ENDED 30 JUNE 2020 SHORT TERM EMPLOYMENT BENEFITS POST- EMPLOYMENT EQUITY SALARY & FEES NON–CASH BENEFITS5 SUPERANNUATION SHARES AND PERFORMANCE RIGHTS TOTAL % OF TOTAL REMUNERATION CONSISTING OF EQUITY Directors Graham Ascough3 Paul Dowd3 Peter Watson3 David Hillier3 Hans-Jörg Schmidt1,3 $71,250 $34,704 $34,704 $38,000 $21,501 - - - - James Fox4 $276,125 $17,0235 Chief Financial Officer & Company Secretary - $3,296 $3,296 - $2,043 $25,000 - - - - - $71,250 $38,000 $38,000 $38,000 $23,543 $33,8252 $351,973 Angelo Gaudio TOTALS $120,000 $596,284 - - - $17,023 $33,635 $33,825 $120,000 $680,766 0% 0% 0% 0% 0% 9.6% 0% 5.0% 1 Hans-Jörg Schmidt was appointed as a director on 11 November 2019. 2 3 4 Value of Performance Rights that have not yet vested that is attributable to the 2020 financial year. 20% reduction in Directors fees Directors was applied for Qtr 4 (Apr-Jun 2020) in response to the COVID-19 Pandemic. 20% reduction in James Fox CEO salary was applied for Qtr 4 (Apr-Jun 2020) in response to the COVID-19 Pandemic and annual leave entitlement was taken in lieu of the reduction. 5 Use of a company provided motor vehicle. EQUITY HOLDINGS OF DIRECTORS AND KEY MANAGEMENT PERSONNEL i) Fully paid ordinary shares of PNX Metals Limited: BALANCE 1 JULY 2020 NET CHANGES BALANCE 30 JUNE 2021 Directors Graham Ascough Paul Dowd3 Peter Watson3 David Hillier1 Hans-Jörg Schmidt Hansjoerg Plaggemars2 Frank Bierlein4 Richard Willson4 James Fox5 Key management personnel Angelo Gaudio 11,066,532 21,854,638 16,313,285 10,500,001 - - - - - - 2,766,634 5,338,660 4,078,322 1,500,000 - - - - - - 1 David Hillier resigned as a director on 26 November 2020. 2 Hansjoerg Plaggemars was appointed as a director on 28 November 2020. 3 Paul Dowd and Peter Watson resigned as a director on 5 March 2021. 4 Frank Bierlein and Richard Willson were appointed as directors on 18 June 2021. 5 Shares held by related party at 30 June 2021: 11,000,000 (2020: 9,999,999). 13,833,166 27,193,298 20,391,607 12,000,001 - - - - - - 31 PNX METALS LIMITED | ANNUAL REPORT 2021 DIRECTORS’ REPORT REMUNERATION REPORT – AUDITED ii) Unquoted options exercisable at 1.464 cents, expiring on 30 September 2021 of PNX Metals Limited: Directors Graham Ascough Paul Dowd3 Peter Watson3 David Hillier1 Hans-Jörg Schmidt Hansjoerg Plaggemars2 Frank Bierlein4 Richard Willson4 James Fox5 Key management personnel Angelo Gaudio BALANCE 1 JULY 2020 3,125,000 6,250,000 - 3,125,000 - - - - - - NET CHANGES - - - - - - - - - - BALANCE 30 JUNE 2021 3,125,000 6,250,000 - 3,125,000 - - - - - - 1 David Hillier resigned as a director on 26 November 2020. 2 Hansjoerg Plaggemars was appointed as a director on 28 November 2020. 3 Paul Dowd and Peter Watson resigned as a director on 5 March 2021. 4 Frank Bierlein and Richard Willson were appointed as directors on 18 June 2021. 5 Options held by related party at 30 June 2021: 1,875,000 (2020: 1,875,000). iii) Performance Rights of PNX Metals Limited and outstanding: DIRECTORS James Fox BALANCE 1 JULY 2020 BALANCE 30 JUNE 2021 VESTED UNVESTED GRANTED VESTED LAPSED VESTED UNVESTED Key management personnel Angelo Gaudio - - 10,800,000 25,000,000 - 5,000,000 - - 5,000,000 - - - 30,800,000 5,000,000 OTHER RELATED PARTY TRANSACTIONS During the financial year the Group engaged Piper Alderman, an entity in which a Director (Peter Watson) is a senior consultant, to advise on legal matters. The cost of services paid to Piper Alderman during the financial year inclusive of GST, was $120,614 (2020: $34,438). END OF REMUNERATION REPORT – AUDITED Signed on 14th September 2021 in accordance with a resolution of the Board made pursuant to section 298(2) of the Corporations Act 2001. Graham Ascough Chairman 32 PNX METALS LIMITED | ANNUAL REPORT 2021 AUDITORS INDEPENDENCE DECLARATION PNX Metals Limited (ASX: PNX) Financial Report for the year ended 30 June 2021 AUDITOR’S INDEPENDENCE DECLARATION 14 33 PNX METALS LIMITED | ANNUAL REPORT 2021 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the year ended 30 June 2021 Interest income Other income Employee benefits Professional fees Directors’ fees Exploration – tenement maintenance Occupancy Insurance Share registry and regulatory Communication Audit fees Equity-based remuneration Other expenses Depreciation Impairment – exploration and evaluation assets Interest charges Loss before income tax Income tax benefit Loss for the year Other comprehensive income/loss: Items that will not be subsequently reclassified to profit or loss: Financial assets – fair value through OCI Total comprehensive loss for the year, attributable to equity holders of the parent Loss per share – continuing operations and total NOTE 4(a) 4(e) 10 4(c) 22 20 4(b) 4(d), 10 5(a) 9, 18 YEAR ENDED 30/06/21 $ 4,836 112,681 (212,955) (557,935) (212,124) 2,710 (56,931) (26,265) (65,296) (17,233) (39,473) (103,401) (73,017) (11,077) - (403) (1,255,883) (196) (1,256,079) YEAR ENDED 30/06/20 $ 43,417 70,000 (258,518) (414,447) (208,793) (34,719) (66,501) (29,196) (61,560) (12,882) (36,028) (33,824) (105,072) (7,591) (500,000) - (1,655,714) 150,189 (1,505,525) 103,136 (1,152,943) (438,329) (1,943,854) Basic and diluted (cents per share) 27 (0.04) (0.06) The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 34 PNX METALS LIMITED | ANNUAL REPORT 2021 CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June 2021 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Prepayments and deposits Other financial assets Total current assets NON-CURRENT ASSETS Exploration and evaluation expenditure Other financial assets Plant and equipment Total non-current assets Total assets CURRENT LIABILITIES Trade and other payables Provisions Lease liabilities Total current liabilities NON-CURRENT LIABILITIES Provisions Lease liabilities Contract liabilities Total non-current liabilities Total liabilities Net assets EQUITY Issued capital Reserves Accumulated losses Total equity NOTE 30/06/21 $ 30/06/20 $ 6 7 8 9 10 12 11 13 14 15 14 15 16 17 18 19 3,632,252 1,972,721 52,314 180,119 193,380 93,582 155,165 90,244 4,058,065 2,311,712 19,573,034 1,090,585 56,424 20,720,043 24,778,108 1,075,865 152,269 8,886 1,237,020 15,091 41,026 2,400,000 2,456,117 3,693,137 16,364,563 - 14,768 16,379,331 18,691,043 479,920 130,586 - 610,506 19,258 - 2,400,000 2,419,258 3,029,764 21,084,971 15,661,279 53,545,287 127,143 (32,587,459) 21,084,971 47,072,054 (19,297) (31,391,478) 15,661,279 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. 35 PNX METALS LIMITED | ANNUAL REPORT 2021 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2021 ISSUED CAPITAL $ EQUITY-BASED PAYMENT RESERVES $ FAIR VALUE OCI RESERVES $ ACCUMULATED LOSSES $ TOTAL $ Balance at 1 July 2019 45,469,675 50,015 335,193 (29,885,953) 15,968,930 Total loss for the year Other comprehensive income Total comprehensive loss for the year Shares issued (placement) Shares issued (unlisted options exercised) Share issue costs Fair value of equity settled payments - - - 500,000 1,110,000 (7,621) - Balance at 30 June 2020 47,072,054 - - - - - - 33,824 83,839 - (1,505,525) (1,505,525) (438,329) - (438,329) (438,329) (1,505,525) (1,943,854) - - - - - - - - 500,000 1,110,000 (7,621) 33,824 (103,136) (31,391,478) 15,661,279 Balance at 1 July 2020 47,072,054 83,839 (103,136) (31,391,478) 15,661,279 Total loss for the year Other comprehensive loss Total comprehensive loss for the year Shares issued Share issue costs Fair value of equity settled payments Lapsed performance rights transferred to accumulated losses - - - 6,657,432 (184,199) - - - - - - - 103,401 (60,097) Balance at 30 June 2021 53,545,287 127,143 - (1,256,079) (1,256,079) 103,136 - 103,136 103,136 (1,256,079) (1,152,943) - - - - - - - - 6,657,432 (184,199) 103,401 60,097 - (32,587,459) 21,084,971 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. 36 PNX METALS LIMITED | ANNUAL REPORT 2021 CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 30 June 2021 Cash flows relating to operating activities Receipt of Research and Development tax offsets COVID-19 stimulus support received Payments for exploration activities expensed Payments to suppliers and employees Net operating cash flows Cash flows relating to investing activities Term Deposits (terms greater than 90 days) – Matured /(Purchased) Interest received Payments for exploration activities Payments for plant and equipment Deposits paid for acquisition of Glencoe tenement Payments for tenement security bonds Net investing cash flows Cash flows relating to financing activities Proceeds from share issues (Note 15) Payments for capital raising costs Payments for leases Net financing cash flows Net increase/(decrease) in cash Cash at beginning of financial year Cash at end of financial year Reconciliation of loss to net operating cash flow Loss for the year Interest income Miscellaneous income Equity-based remuneration Depreciation and amortisation Depreciation on right of use assets Unwinding discount on Lease liability Exploration not capitalised – investing Impairment charges – exploration and evaluation assets (Increase)/decrease in receivables - operating (Increase)/decrease in other current assets – operating Increase/(decrease) in payables – operating Increase/(decrease) in employee provisions Net operating cash flows INFLOWS/(OUTFLOWS) YEAR ENDED 30/06/21 $ INFLOWS/(OUTFLOWS) YEAR ENDED 30/06/20 $ 54,804 102,500 - (1,341,492) (1,184,188) - 7,934 (2,406,998) (10,486) (1,175,000) (42,002) (3,626,552) 6,657,432 (184,199) (2,962) 6,470,271 1,659,531 1,972,721 3,632,252 415,025 50,000 (34,720) (1,122,469) (692,164) 2,500,000 41,780 (4,282,964) - - - (1,741,184) 1,610,000 (7,621) - 1,602,379 (830,970) 2,803,691 1,972,721 (1,256,079) (1,505,525) (7,934) - 103,401 7,384 3,693 371 (2,710) - 35,228 (1,044) (84,012) 17,516 (43,417) (50,000) 33,824 7,591 - - 34,720 500,000 263,092 12,954 56,737 (2,140) (1,184,188) (692,164) The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes 37 PNX METALS LIMITED | ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2021 1 GENERAL INFORMATION AND 3 SIGNIFICANT ACCOUNTING POLICIES In the application of the Group’s accounting policies, which are described below, management is required to make judgements, estimates and assumptions. Key areas of judgement and estimation uncertainty are discussed in Note 3(s). The following significant accounting policies have been adopted in the preparation of the financial report: a) Going concern basis The financial report has been prepared on the going concern basis which contemplates the continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. For the year ended 30 June 2021, the Group made a loss of $1,256,079 (2020: loss of $1,505,525) and recorded a net cash outflow from operating and investing activities of $4,810,740 (2020: $2,433,348). At 30 June 2021, the Group had cash of $3,632,252 (2020: $1,972,721), net current assets, excluding the investment in Sunstone Metals Ltd of $2,627,664 (2020: $1,610,963) and net assets of $21,084,971 (2020: $15,661,280). The Directors believe that it is appropriate to prepare the financial statements on the going concern basis, as the Group raised sufficient capital during the year to allow activities to progress towards the development of the Fountain Head Gold Project. The Group’s ability to continue as a going concern is contingent on raising additional capital and/or the successful exploration and subsequent exploitation of its areas of interest through sale or development. If sufficient additional capital is not raised, the going concern basis of accounting may not be appropriate, and the Group may have to realise its assets and extinguish its liabilities other than in the ordinary course of business and at amounts different from those stated in the financial report. No allowance for such circumstances has been made in the financial report. BASIS OF PREPARATION PNX Metals Limited (“Company”) is a for-profit Australian publicly listed company, incorporated and operating in Australia. Its registered office and principal place of business is Level 1, 135 Fullarton Road, Rose Park, South Australia 5067. The consolidated financial statements of PNX Metals Limited comprises the Company and its controlled entity (“Group”) and is a general purpose financial report prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. The consolidated financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The consolidated financial statements have been prepared on the basis of historical cost, which is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted. The financial statements were authorised for issue by the Directors on 13th September 2021. 2 NEW AND REVISED ACCOUNTING STANDARDS The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the year ended 30 June 2021. The following Accounting Standards and Interpretations are most relevant to the consolidated entity: Conceptual framework for financial reporting (Conceptual Framework) The consolidated entity has adopted the revised Conceptual Framework from 1 July 2020. The Conceptual Framework contains new definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards, but it has not had a material impact on the consolidated entity’s financial statements At the date of authorisation of these financial statements, several new, but not yet effective, Standards and amendments to existing Standards, and Interpretations have been published by the IASB. None of these Standards or amendments to existing Standards have been adopted early by the Group. Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement. New Standards, amendments and Interpretations not adopted in the current year have not been disclosed as they are not expected to have a material impact on the Group’s financial statements. The accounting policies applied by the Group in the consolidated financial statements are consistent with those applied in the prior year. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. 38 PNX METALS LIMITED | ANNUAL REPORT 2021 b) Principles of consolidation e) Cash and cash equivalents The consolidated financial statements comprise the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved when the Company: ¬ has power over the investee; ¬ is exposed, or has rights, to variable returns from its involvement with the investee; and ¬ has the ability to use its power to affect its returns. The Company reassesses 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 listed above. The results of subsidiaries acquired or disposed of are included in the Statement of Profit or Loss and Other Comprehensive Income from the effective date of acquisition and up to the effective date of disposal. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. All intra-group transactions, balances, income and expenses, and cash flows are eliminated in full on consolidation. c) Revenue Revenue is measured at the fair value of consideration received or receivable. Contract liabilities Cash received from the forward sale of metal from future mining projects is accounted for as a long-term liability until such time as the metal is delivered. Deferred revenue amounts are recognised as revenue from the sale of goods in the period that the related metal is delivered. Interest Interest income is accrued on a time basis, with reference to the principal balance and at the effective interest rate applicable, which is that rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the asset’s net carrying amount. d) Government Grants Government grants that are received or receivable as direct compensation for mineral exploration expenditure already incurred are recognised as a reduction in the accumulated cost of the relevant exploration and evaluation asset. The Group applies AASB120 “Accounting for Government Grants and Disclosure of Government Assistance” in accounting for such programmes as the cash flow boost and Jobkeeper wage subsidy, whereby a credit is recognised in other income over the period necessary to match the benefit of the credit with the costs which they are intended to compensate (for). Cash and cash equivalents comprise cash on hand, cash held at financial institutions and bank deposits with a maturity not more than 3 months. Any Term Deposits with terms greater than a 3 month maturity are classified as Financial assets – Term Deposits on the statement of financial position. f) Financial instruments Financial assets Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVPL): ¬ they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows ¬ the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments. The Group’s trade and other receivables are subject to AASB 9 ‘s credit loss model. 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 listed equity investments under this category. Financial liabilities The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than any derivative financial instruments that are designated and effective as hedging instruments). All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income. 39 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 g) Exploration and evaluation expenditure Exploration and evaluation expenditure in relation to each separate area of interest is recognised as an asset in the year in which it is incurred or acquired and where the following conditions are satisfied: i) the rights to tenure of the area of interest are current; and ii) at least one of the following conditions is also met: – – the exploration and evaluation expenditure is expected to be recouped through successful development of the mineral exploration project, 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 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 the acquisition cost of rights to explore, studies, exploration drilling, trenching and sampling and associated activities. General and administrative costs are only included in the measurement of exploration and evaluation assets where they relate directly to operational activities in a particular area of interest. Exploration and evaluation assets are assessed for impairment when facts and circumstances (as defined in AASB 6 Exploration for and Evaluation of Mineral Resources) suggest that the asset’s carrying amount may exceed its recoverable amount. The recoverable amount of exploration and evaluation assets is determined in accordance with AASB 136 Impairment of Assets, being the higher of fair value less costs to sell and value in use. If the recoverable amount as determined is less than the carrying amount, an impairment loss is recognised. 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 had no impairment loss been recognised for the asset in previous years. Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment, reclassified to development properties, and then amortised over the life of the reserves associated with the area of interest once mining operations have commenced. h) Impairment of assets (other than financial assets, exploration and evaluation assets and property, plant and equipment) At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset which have not already been incorporated into the future cash flows estimates. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognised in profit or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit 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 had no impairment loss been recognised in prior periods. A reversal of an impairment loss is recognised in profit or loss. i) Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition. Depreciation is provided on plant and equipment. Depreciation is calculated on a straight line basis so as to write off the cost of each asset over its expected useful life to its estimated residual value. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period. Estimated useful lives of 3-5 years are used in the calculation of depreciation for plant and equipment. j) Trade and other payables Liabilities for goods and services provided to the Group are recognised initially at their fair value and subsequently at amortised cost using the effective interest method. Trade and other payables are unsecured. 40 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 k) Debt and equity instruments n) Share-based payments Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual arrangement. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Contracts settled via the delivery of a fixed number of equity instruments in the Group in exchange for cash or other assets are accounted for as equity instruments. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs. l) Employee benefits A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required and amounts are capable of being measured reliably. Liabilities recognised in respect of employee benefits expected to be settled within 12 months are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date. The present value is calculated using a discount rate that references market yields on high quality corporate bonds that have maturity dates that approximate the timing of the estimated future cash flows. Contributions to accumulated benefit superannuation plans are expensed when incurred. m) Site restoration and environmental rehabilitation Provision for the costs of environmental restoration and rehabilitation are recognised when the Group has a present obligation (legal or constructive) to perform restoration activities, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Restoration and rehabilitation provisions are measured as the present value of estimated future cash flows to perform the rehabilitation activities, discounted at pre-tax rate that reflects market assessments of the time value of money and risks specific to the rehabilitation obligation. There are cash backed deposits recorded under Other financial assets in support of these rehabilitation obligations. Equity-settled share-based payments made to employees and directors are measured at fair value at the grant date, which is the date on which the equity instruments were agreed to be issued (whether conditionally or otherwise) or, if later, the date on which key terms (e.g. subscription or exercise price) were determined. Fair value is determined using the Black-Scholes model or another binomial model, depending on the type of equity instrument issued. The fair value of the equity instruments at grant date is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the number of equity instruments that will eventually vest, with a corresponding increase to the equity settled benefits reserve in shareholders’ equity. Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods and services received, except where the fair value cannot be estimated reliably, in which case the transactions are measured at the fair value of the equity instruments granted, measured at the date the Group obtains the goods or the counterparty renders the service. o) Lease liabilities The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term. At 30 June 2021 the Group was committed to a short-term tenancy lease expiring on 31 August 2021, and the total commitment at that date was $11,336. A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. 41 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 p) Income tax Tax consolidation The Company and its wholly-owned Australian resident entity are part of a tax-consolidated group under Australian taxation law. The members of the tax consolidated group are disclosed in Note 28. PNX Metals Limited is the head entity in the tax-consolidated group. Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial statements of the members of the tax-consolidated group using the ‘separate taxpayer within group’ approach. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and tax credits of the members of the tax-consolidated group are recognised by the Company (as the head entity in the tax- consolidated group). Under a tax funding arrangement between the entities in the tax-consolidated group, amounts transferred from entities within the tax consolidated group and recognised by the Company (‘tax contribution amounts’) are recorded in intercompany accounts in accordance with the arrangement. Where the tax contribution amount recognised by a member of the tax-consolidated group for a particular period is different to the aggregate of the current tax liability or asset and any deferred tax asset arising from unused tax losses and tax credits in respect of that period, the difference is recognised as a contribution from (or distribution to) the group member. Research and development tax incentive To the extent that research and development costs are eligible activities under the “Research and development tax incentive” programme, a 43.5% refundable tax offset is available for companies with annual turnover of less than $20 million. The Group recognises refundable tax offsets based on management’s best estimate of the amount receivable as an income tax benefit, in profit or loss, resulting from the monetisation of available tax losses that otherwise would have been carried forward. Income tax expense represents the sum of tax currently payable and deferred tax. Current tax Current tax is calculated with reference to the amount of income tax payable or recoverable in respect of the taxable profit or tax loss for the financial year. It is calculated using tax rates and tax laws that have been enacted or substantively enacted at the reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable). Deferred tax Deferred tax is accounted for in respect of temporary differences arising from differences between the carrying amount of assets and liabilities for accounting purposes and the corresponding tax base of those items. In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period(s) when the assets or liabilities giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of the related assets and liabilities. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax recognition Current and deferred tax is recognised as an expense or income in the Statement of Profit or Loss and Other Comprehensive Income, except when it relates to items credited or debited directly to equity (in which case the deferred tax is also recognised directly in equity), or where it arises from the initial accounting for a business combination. 42 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 q) Goods and service tax t) Critical accounting judgements and key sources of Revenues, expenses, assets and liabilities are recognised net of the amount of goods and services tax (GST), except: i) where the amount of GST incurred is not recoverable from the taxation authority, in which case it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or ii) for receivables and payables which are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. r) Earnings per share Basic earnings per share is calculated by dividing the profit or loss attributable to owners of the Group (excluding any costs of servicing equity other than ordinary shares) by the weighted average number of ordinary shares outstanding during the financial year. Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account: ¬ the after tax effect of interest and other financing costs associated with dilutive potential ordinary shares; and ¬ the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. s) Right-of-use assets A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. The consolidated entity has elected not to recognise a right- of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low- value assets. Lease payments on these assets are expensed to profit or loss as incurred. estimation uncertainty In the application of the Group’s accounting policies, management is required to make judgements, estimates and assumptions about the carrying values of assets, liabilities and equity. These estimates and assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgements. Actual results may differ from these estimates. 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 the current period, or in the period of the revision and future periods if the revision affects both current and future periods. The following are the critical judgements that management has made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements. Impairment Determining whether assets are impaired requires an estimation of the value in use or fair value of the assets or cash-generating units to which assets are allocated. The fair value of exploration assets is inherently difficult to estimate, particularly in the absence of comparable transactions and where a purchase offer has not been made, and relies on management judgement. No impairment loss was recognised during the year (2020: $500,000) in relation to Exploration and Evaluation Assets - refer to Note 10 for detail. Equity-based payments The determination of the fair value at grant date of options and Performance Rights utilises a financial asset pricing model with a number of assumptions, the most critical of which is an estimate of the Company’s future share price volatility. Refer to Note 18 for more information regarding equity-based payments made during the year. Research & Development (R&D) tax offset incentive The Group is entitled to claim R&D tax offset incentives in Australia. The R&D tax offset incentive is calculated based on management’s assessment of eligible expenditure multiplied by 43.5%. 43 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 4 LOSS FROM CONTINUING OPERATIONS a) Interest income Interest on bank deposits b) Depreciation YEAR ENDED 30/06/21 $ YEAR ENDED 30/06/20 $ 4,836 43,417 Depreciation of plant and equipment 11,077 7,591 c) Occupancy Short-term lease expenses d) Impairment Exploration and evaluation assets e) Professional fees Accounting and taxation expenses Legal fees Contractor services Company promotion Secretarial services Total professional fees 56,931 66,501 - 500,000 44,085 139,563 6,313 247,974 120,000 557,935 32,639 38,472 20,189 203,147 120,000 414,447 44 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 5 INCOME TAX a) Income tax recognised in profit or loss Current tax expense/(benefit) Deferred tax expense/(benefit) Total tax expense/(benefit) The prima facie income tax benefit on the loss before income tax reconciles to the tax expense/(benefit) in the financial statements as follows: Total loss for the year before tax Income tax benefit calculated at 26.0% (2020: 27.5%) Equity-based remuneration – Performance Rights Current year tax losses and movements in temporary differences not recognised Recognition of estimated research and development tax offset refund related to the current tax year Recognition of actual research and development tax offset refund related to the previous tax year Tax expense (benefit) YEAR ENDED 30/06/21 $ 196 - 196 1,255,883 (326,530) 26,884 299,646 - 196 196 YEAR ENDED 30/06/20 $ (55,000) (95,189) (150,189) 1,655,714 (455,321) 9,302 446,019 (55,000) (95,189) (150,189) The tax rate used in the above reconciliation is the corporate tax rate of 26.0% payable by Australian base rate entities (those with turnover less than $50 million of revenue, and 80% or less of their assessable income is base rate entity passive income). b) Recognised tax assets and liabilities Deferred tax assets and (liabilities) are attributable to the following: Exploration and evaluation expenditure (4,884,098) (4,471,844) Plant and equipment Trade and other payables Employee benefits Share issue costs Net deferred tax liabilities Tax losses recognised Net deferred tax assets / (liabilities) (15,079) 7,454 43,514 116,186 (4,732,023) 4,732,023 - (4,061) 6,930 41,207 106,092 (4,321,676) 4,321,676 - A net deferred tax liability will only arise if the Group generates taxable income in the future (for example via a profitable mining operation). Deferred tax balances shown above have been calculated utilising a 26.0% tax rate. The potential benefit of unrecognised tax losses (shown below) has similarly been calculated utilising a 26.0% tax rate. c) Unrecognised tax losses: A deferred tax asset has not been recognised in respect of the following: Tax losses – operating (tax effected) Tax losses – capital (tax effected) 8,098,833 138,932 8,167,833 146,948 Of the total operating tax losses of approximately $49.3 million in the Group at 30 June 2021, $31 million are unrecognised as shown above as a $8.098 million potential tax benefit. A deferred tax asset has not been recognised in respect of these losses because it is not considered probable at this time that future taxable profit will be available against which to utilise the losses. 45 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 6 CASH AND CASH EQUIVALENTS AND TERM DEPOSITS Cash and cash equivalents 30/06/21 $ 30/06/20 $ 3,632,252 1,972,721 Cash and cash equivalents comprise cash on hand, cash held at financial institutions and bank term deposits with a maturity of not greater than 3 months. At 30 June 2021, the Group did not hold any term deposits with maturity terms of greater than 3 months (2020: $Nil). 7 TRADE AND OTHER RECEIVABLES Interest Research & development tax offset incentive Goods & services tax Other 8 PREPAYMENTS AND DEPOSITS Prepayments Environmental deposits – Northern Territory Deposit – office bond 30/06/21 $ 52 - 49,951 2,311 52,314 30/06/21 $ 15,237 132,122 32,760 180,119 30/06/20 $ 3,150 55,000 34,914 518 93,582 30/06/20 $ 14,193 108,212 32,760 155,165 Environmental deposits are required to be lodged with the Department of Industry, Tourism and Trade (DITT) in the Northern Territory prior to the commencement of exploration activities. Environmental bonds totalling $132,122 have been lodged with the DITT in relation to exploration activities in the Northern Territory. The office bond of $32,760 is invested in a 365 day term deposit maturing February 2022 and earning 0.4% interest. 9 OTHER FINANCIAL ASSETS Investment in Sunstone Metals Ltd 30/06/21 $ 193,380 30/06/20 $ 90,244 The Group continues to hold 12,892,013 shares in ASX listed Sunstone Metals Limited (‘Sunstone’, previously Avalon Minerals Limited). This investment is recognised as “Fair Value through Other Comprehensive Income (FVOCI)”, under AASB 9 Financial Instruments – refer to Note 3 (f). At 30 June 2021, the investment was reflected at fair value of $193,380, with the incremental movement recorded at fair value through other comprehensive income (FVOCI) - refer to Note 18. 46 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 10 EXPLORATION AND EVALUATION EXPENDITURE Costs brought forward Expenditure incurred during the year South Australian expenditure not capitalised Impairment charges Security bonds offset against the carrying costs# 30/06/21 $ 16,364,563 4,479,015 2,710 - (1,273,254) 19,573,034 30/06/20 $ 12,505,077 4,394,205 (34,719) (500,000) - 16,364,563 # During the year, the formal transfer of the Fountain Head and Moline tenements to PNX was completed, pursuant to the purchase and sale agreement between Kirkland Lake Gold Australia (“Kirkland Lake”) (formerly called Newmarket Gold) and the Company. The security bonds previously provided to the DPIR by Kirkland Lake, totalling $1,273,254, were transferred to the Company. A total of $1,273,254 was recorded and offset against the carrying costs for the Fountain Head and Moline projects. The focus of the Group continues to be on the NT projects and in particular the development of the Fountain Head Gold and the Hayes Creek Projects, in the Pine Creek region of the Northern Territory. There has been significant improvement in the Fountain Head Gold and Hayes Creek Projects economics during the financial year ended 30 June 2021, particularly related to gold, silver and zinc prices, with forecasts for metal prices remaining relatively strong. In addition, the acquisition of the Glencoe tenement has added 79koz gold based on the Mineral Resource Estimate as announced on 28 April 2021. The PFS for the Fountain Head Gold and Hayes Creek Gold-Silver-Zinc Projects was announced on 17 June 2021 showing the potential for positive economic returns. Evaluation of additional gold prospects is progressing that the Company believes may have the potential to augment overall Project returns. The Fountain Head Environmental Impact Statement (EIS) was lodged on 1 June 2021 and the Project development approval process is being progressed. Concurrent with activities underway at Fountain Head, the Group continues with its review of the Burnside and Moline regional prospectivity, with the aim of identifying new targets within those projects with the potential to host significant “stand alone” gold deposits, and to supplement future gold production at Fountain Head. There was no impairment of the Group’s Exploration & Evaluation Expenditure during the year ended 30 June 2021 47 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 11 MOTOR VEHICLES, PLANT, EQUIPMENT AND RIGHT OF USE COST Balance at 30 June 2019 Additions Disposals Balance at 30 June 2020 Additions Disposals Balance at 30 June 2021 ACCUMULATED DEPRECIATION Balance at 30 June 2019 Depreciation expense Depreciation capitalised to exploration assets Disposals Balance at 30 June 2020 Depreciation expense Depreciation capitalised to exploration assets Disposals Balance at 30 June 2021 NET BOOK VALUE – MOTOR VEHICLES, PLANT, EQUIPMENT AND RIGHT OF USE Balance at 30 June 2020 Balance at 30 June 2021 $ 545,676 - - 545,676 56,258 - 601,934 519,916 7,591 3,400 - 530,907 11,077 3,526 - 545,510 14,769 56,424 The useful lives applied in the determination of depreciation for all items of plant and equipment is 3-5 years. Of the year ended 30 June 2021 balance of $56,424 for the net book value, an amount of $47,079 relates to right of use Assets. 12 OTHER FINANCIAL ASSETS – NON-CURRENT Environmental bonds (care & maintenance) 30/06/21 $ 1,090,585 30/06/20 $ - During the year, the formal transfer of the Fountain Head and Moline tenements to PNX was completed, pursuant to the purchase and sale agreement between Kirkland Lake Gold Australia (“Kirkland Lake”) (formerly called Newmarket Gold) and the Company. The security bonds previously provided to the DITT by Kirkland Lake were transferred to the Company and offset against the carrying costs for the Fountain Head and Moline projects. Environmental bonds totalling $1,090,585 were lodged with the DITT in relation to the Care and Maintenance conditions of the Fountain Head and Moline mineral leases, in the Northern Territory. 48 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 13 TRADE AND OTHER PAYABLES Trade payables Accrued expenses Accrued completion payment for the acquisition of Glencoe Other payables Average credit period on trade payables is 30 days. 14 PROVISIONS Current Employee benefits – annual leave Employee benefits – long service leave Non-current 30/06/21 $ 313,425 36,670 700,000 25,770 1,075,865 30/06/21 $ 70,933 81,336 152,269 30/06/20 $ 358,139 108,982 - 12,799 479,920 30/06/20 $ 57,241 73,345 130,586 Employee benefits – long service leave 15,091 19,258 15 LEASE LIBILITIES Lease liabilities – current Lease liabilities – non-current 16 CONTRACT LIABILITIES 30/06/21 $ 8,886 41,026 30/06/21 $ 30/06/20 $ - - 30/06/20 $ Silver streaming receipts 2,400,000 2,400,000 Two parties have entered into silver streaming and royalty agreements with the Company. The Company has previously received a total of $2.4 million under these agreements, for the forward sale of a total of 336,000oz of silver, to be delivered over a 3 year period once commissioning and ramp up of the Hayes Creek Project is complete. At the end of the three year silver delivery period, each investor is to receive a 0.36% Net Smelter Return (NSR) royalty over gold and silver produced from the Hayes Creek Project, and will be paid for a 5-year period. PNX can buy back the NSR royalty from an investor prior to production commencing for $0.4 million. These agreements have been amended to transfer silver delivery obligations from the Hayes Creek Project to the Fountain Head Project; to modify the silver delivery to consist of an equivalent value of gold in the event that the silver production from Fountain Head could not fulfill the silver delivery obligation; and to reflect that the NSR royalty at the end of the three year delivery period is calculated over gold and silver produced from the Fountain Head Project. Cash previously received from the forward sale of silver has been accounted for as a contract liability, classified in the Statement of Financial Position as a long-term liability. Revenue will be recognised as the silver or gold is delivered in the future. In the event the Fountain Head Gold Project is not developed, the forward payments will be converted to shares in the Company. 49 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 17 ISSUED CAPITAL 30/06/21 $ 30/06/20 $ 3,652,193,511 fully paid ordinary shares (2020: 2,542,621,476) 53,545,287 47,072,054 Movement in ordinary shares for the year: Ref Balance at beginning of year 2,542,621,476 47,072,054 2,435,288,142 45,469,675 30/06/21 NO. 30/06/21 $ 30/06/20 NO. 30/06/20 $ a b c d e f Placement Shares issued at 0.6 cents 378,333,333 2,270,000 Shares issued at 0.6 cents under a Non Renounceable Rights Issue (NRRI) Shares issued at 0.6 cents per share to a service provider 527,950,076 3,167,700 1,000,000 6,000 Shares issued at 0.6 cents for the placement of the shortfall under the NRRI 202,288,626 1,213,732 - - - - Shares issued at 1.5 cents Shares issued on the exercise of unlisted options at 1.5 cents Share issue costs Balance at end of year - - - - 33,333,334 500,000 74,000,000 1,110,000 (184,199) (7,621) 3,652,193,511 53,545,287 2,542,621,476 47,072,054 Fully paid shares carry one vote per share and a right to dividends. a) 378,333,333 Shares were issued at 0.6 cents under a placement to sophisticated and professional investors on 2 December 2020. b) 527,950,076 Shares were issued to Shareholders who subscribed for shares under a Non Renounceable Rights Issue at 0.6 cents per share (NRRI) on 24 December 2020. c) 1,000,000 Shares were issued at 0.6 cents per share to a service provider on 24 December 2020, in lieu of cash payment for services rendered to the Company. d) 202,288,626 Shares were issued at 0.6 cents per share under the placement of the NRRI Shortfall on 29 January 2021. e) 33,333,334 Shares were issued at 1.5 cents under a placement to sophisticated and professional investors on 23 March 2020. f) 74,000,000 Shares were issued on the exercise of 74,000,000 unlisted options at 1.5 cents per share to major shareholder, DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT\C on 23 March 2020. 18 RESERVES FVOCI investment Equity-settled benefits 30/06/21 $ - 127,143 127,143 30/06/20 $ (103,136) 83,839 (19,297) The change in Fair Value through Other Comprehensive Income (FVOCI) investment reserve reflects the current year increase in the fair value of the Group’s investment in Sunstone Metals Ltd of $103,136 as at 30 June 2021. The equity-settled benefits reserve arises on the fair value of the Performance Rights granted to employees, consultants and executives under the PNX Metals Limited Employee Performance Rights Plan. The reserve at 30 June 2021, includes an adjustment for lapsed rights together with changes in fair value due to the passage of time to 30 June 2021. Amounts are transferred out of the reserve and into Issued Capital when the rights are converted into shares, or to accumulated losses if rights lapse. During the year, 53,500,000 Performance Rights were granted to employees, consultants and executives. The Performance Rights have performance conditions related to key Group objectives, including development of the Fountain Head and Hayes Creek projects and the Company safety and share price performance. Performance conditions are required to be achieved within specified time periods (extending to 2 February 2024) in order for the Rights to vest. 10,000,000 Performance Rights lapsed during the year and there were no Performance Rights that vested and converted to ordinary shares. During the year the fair value of equity-settled benefit payments was $103,401. During the year 10,000,000 Performance Rights lapsed and together with previously lapsed Performance Rights, an amount of $60,098 was transferred to retained earnings and the total of $127,143 held in the equity-settled benefits reserve represents the value relating to the Performance Rights on issue as at 30 June 2021. Further information on share-based payments is disclosed in Note 20. 50 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 19 ACCUMULATED LOSSES Balance at beginning of year Lapsed performance rights transferred to accumulated losses (Note 18) Loss for the year Balance at end of year 20 PERFORMANCE RIGHTS AND SHARE OPTIONS Performance Rights 30/06/21 $ 31,391,478 (60,098) 1,256,079 32,587,459 30/06/20 $ 29,885,952 1,505,526 31,391,478 Under PNX’s Employee Performance Rights Plan (‘Plan’), Directors may issue Performance Rights to Company executives, employees and consultants. Performance Rights are granted for no monetary consideration and entitle the holder to be issued one fully paid ordinary share per performance right upon vesting. As at 1 July 2020, there were 10,800,000 unvested Performance Rights on issue under the Plan as follows: » » 800,000 Performance Rights were held by the Company’s Managing Director & CEO were originally issued on 8 February 2017; and 10,00,000 Performance Rights were held by the Company’s Managing Director & CEO were originally issued on 3 December 2018. On 27 January 2021, 25,000,000 Performance Rights (approved by shareholders at the AGM held during October 2020) were issued under the Plan to the Company’s Managing Director & CEO, subject to performance vesting conditions related to key Company objectives. For valuation of these Performance Rights, a 5-day VWAP was used at the grant date, being the 27 October 2020 when shareholder approval was received at the AGM. The 5-day VWAP (calculated as 1.1 cents) was considered a better estimate of the market value of PNX shares than the spot price and the 5-day VWAP was used to calculate the total fair value of the rights issued. On 1 February 2021, a further 28,500,000 Performance Rights were issued under the Plan to Company executives, employees and consultants, subject to performance vesting conditions related to key Company objectives. For valuation of these Performance Rights, a 5-day VWAP at the grant date was used, being the date of issue on 1 February 2021. The 5-day VWAP (calculated as 0.7 cents) was considered a better estimate of the market value of PNX shares than the spot price and accordingly the 5-day VWAP was used to calculate the total fair value of the rights at the time of issue. During the year, 5,000,000 Performance Rights held by the Company’s Managing Director & CEO, originally issued on 3 December 2018, did not meet performance vesting conditions, and accordingly lapsed unvested. During the year, 5,000,000 Performance Rights held by the Company’s Exploration Manager, originally issued on 1 February 2021, were forefeited following his resignation. The total remaining 54,300,000 unvested Performance Rights at 30 June 2021 are subject to various performance vesting conditions related to key Company objectives, including development of the Hayes Creek project, development of the Fountain Head project, exploration discoveries and Company share price performance. Performance conditions are required to be achieved within specified time periods (extending to 1 February 2024) in order for the Performance Rights to vest. Options At the discretion of the Directors, and subject to ASX listing rules (including the requirement for shareholder approval in some circumstances), options to acquire shares can be issued. Options may be used as part of corporate and asset acquisitions or as part of a capital raising process for example. There were no new options issued during the financial year. Of the 379,125,000 unquoted options on issue as at 1 July 2020, 20,000,000 options with an exercise price of 1.47 cents each, expired on 30 October 2020. The balance of 359,125,000 unquoted options are exercisable at 1.464 cents each and expire on 30 September 2021. At 30 June 2021, a total of 359,125,000 unlisted options were on issue, as shown in the table below. OPTIONS 30/06/21 NUMBER OF OPTIONS 30/06/21 WEIGHTED AVERAGE EXERCISE PRICE $ 30/06/20 NUMBER OF OPTIONS 30/06/20 WEIGHTED AVERAGE EXERCISE PRICE $ Balance at beginning of the year 379,125,000 0.01498 453,125,000 0.01499 Options granted Options exercised Options lapsed Balance at end of the year - - 20,000,000 359,125,000 - - 0.01470 0.01464 - (74,000,000) - - 0.015 - 379,125,000 0.01498 51 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 21 KEY MANAGEMENT PERSONNEL DISCLOSURE The Key Management Personnel of the Group during the year were: » Graham Ascough (Non-executive Chairman) » Hans-Jörg Schmidt – (Non-executive Director) » Hansjoerg Plaggemars – appointed 28 November 2020 (Non-executive Director) » » » Frank Bierlein – appointed 18 June 2021 (Non-executive Director) Richard Willson – appointed 18 June 2021 (Non-executive Director) James Fox (Managing Director & Chief executive Officer) » David Hillier – resigned 26 November 2020 (Non-executive Director) » » » Paul Dowd – resigned 5 March 2021 (Non-executive Director) Peter Watson – resigned 5 March 2021 (Non-executive Director) Angelo Gaudio – (Chief Financial Officer and Company Secretary) The aggregate compensation of Key Management Personnel of the Group is set out below: Short-term employee benefits Post-employment benefits Share-based payments 30/06/21 $ 612,898 33,422 85,465 731,785 Details of Key Management Personnel compensation are disclosed within the Remuneration Report in the Directors’ Report. 22 REMUNERATION OF AUDITOR Audit and Review of the financial reports Other services - Tax advisory services 30/06/21 $ 39,473 10,500 49,973 30/06/20 $ 613,307 33,635 33,825 680,767 30/06/20 $ 36,028 - 36,028 During the financial year the above fees were paid or payable for services provided by Grant Thornton Audit Pty Ltd, the auditor of the Group, its network firms and unrelated firms. 23 RELATED PARTY DISCLOSURES a) Subsidiaries Detail of the percentage of ordinary shares held in the Company’s subsidiary is disclosed in Note 28. b) Other related party transactions During the year the Company engaged Piper Alderman, an entity in which a Director (Peter Watson) is a senior consultant, to advise on legal matters. The cost of those services during the financial year inclusive of GST was $120,614 (2020: $34,438). $2,509 inclusive of GST was owed to Piper Alderman at 30 June 2021 (2020: $11,922). 52 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 24 COMMITMENTS FOR EXPENDITURE AND CONTINGENT LIABILITIES a) Expenditure commitments The Group has certain obligations to perform exploration work and expend minimum amounts of money on mineral exploration tenements in the Northern Territory in order to retain the full tenement. There are no minimum expenditure requirements on the Group’s mineral leases in the Northern Territory. These obligations vary from time to time, subject to statutory approval. The terms of current and future joint ventures, the grant or relinquishment of licences and changes to licence areas at renewal or expiry will alter the expenditure commitments of the Group. Total expenditure commitments at 30 June 2021 in respect of minimum expenditure requirements not provided for in the financial statements are approximately: Minimum exploration expenditure on exploration licences 30/06/21 $ 513,130 30/06/20 $ 154,250 The Group’s office tenancy is located in Rose Park, South Australia, with annual lease payments of $68,754 exclusive of GST, and extended to August 2021 as at year end. Subsequent to 30 June 2020, the Group secured the extension of the office lease for a further 12 months. b) Royalty agreements The Company has granted the following royalties (relating to Northern Territory tenements): ¬ Newmarket Gold NT Holdings Pty Ltd (Newmarket) - 2% royalty on the market value of any future production of gold and silver from the 14 mineral leases in the Northern Territory comprising the Hayes Creek Project. ¬ Newmarket - 2% net smelter return royalty on precious metals produced from the Moline and Fountain Head tenements. c) Other rights held by Newmarket Gold NT Holdings Pty Ltd (relating to Northern Territory tenements) Newmarket can re-acquire 90% of any gold or silver deposits when a JORC compliant resource is defined on certain tenements subject to PNX’s farm-in agreement by paying PNX three times the Group’s accumulated expenditure on the deposit(s). A single payment of $500,000, either in cash or shares at the Company’s election, is due to Newmarket if a bankable feasibility study is completed over the Hayes Creek Project or on any of the tenements that are subject to a farm-in agreement between the two companies. 53 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 25 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT Categories of financial instruments Financial assets Cash and cash equivalents Financial assets – term deposits Deposits Trade and other receivables Environmental bonds Other financial assets – investment in Sunstone Financial liabilities Trade and other payables Lease liabilities 30/06/21 $ 30/06/20 $ 3,632,252 1,972,721 - 164,882 2,362 1,090,585 193,380 1,050,095 49,912 - 140,972 3,668 - 90,244 467,120 - The Group’s activities expose it to several financial risks which impact on the measurement of, and potentially could affect the ultimate settlement amount of, its financial instruments including market risk, credit risk, and liquidity risk. Market risk The development prospects of the Fountain Head Gold and Hayes Creek Projects are to some extent exposed to the risk of unfavourable movements in the US/Australian dollar exchange rate and gold, silver and zinc prices. However, the Group has no direct exposure to foreign exchange or commodity price risk at present. The Group has some exposure to movements in the share price of Sunstone Metals Limited, as the Group’s investment of 12,892,013 shares is carried at fair value, and price movements are reflected through profit or loss and other comprehensive income/loss. Each one cent change in the market value of Sunstone’s shares changes the fair value of the Group’s investment by $128,920. The Group’s exposure to interest rate movements is limited to increases or decreases in interest earned on cash, cash equivalents, and deposits. If interest rates had been 50 basis points higher or lower during the financial year and all other variables were held constant, the Group’s net loss would increase or decrease by approximately $2,989 (2020: increase or decrease by approximately $7,535). As the Group’s exposure to market risks is not significant, management of these risks is limited to monitoring movements in commodity prices, foreign exchange rates, interest rates, and the market value of the shares of Sunstone Metals Ltd. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from activities. The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit- rating agencies. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained. Liquidity risk Ultimate responsibility for managing liquidity risk rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Board and senior management manage liquidity risk by continuously monitoring forecast and actual cash flows, and raising capital as needed, primarily through new equity issuances, in order to meet the Group’s exploration expenditure commitments and corporate and administrative costs. 54 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 Liquidity and interest risk tables The following table details the Company’s and the Group’s remaining contractual maturity for its non-derivative financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. WEIGHTED AVERAGE EFFECTIVE INTEREST RATE % LESS THAN ONE MONTH $ 1-3 MONTHS $ 3-12 MONTHS $ 1-5 YEARS $ 2021 Non-interest bearing Fixed Interest bearing 2020 Non-interest bearing Fixed Interest bearing - 2.9% - - 232,551 - 36,670 2,222 700,000 6,664 - 41,026 370,938 108,981 - - - - - - Fair value of financial instruments The Directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair values. Capital risk management The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns through the optimisation of debt and equity balances. Due to the nature of the Group’s activities, the Directors believe that the most appropriate and advantageous way to fund activities is through equity issuances, and all capital raised to date with the exception of the silver streaming transactions (see Note 16) has been equity based. The Group closely monitors and forecasts its cash flow and working capital to ensure that adequate funds are available in the future to meet project development, exploration and administrative activities. 26 SEGMENT INFORMATION There was a change in the operating segments during the financial year. The Group has a number of exploration tenements in South Australia and Northern Territory, which it manages on a portfolio basis. The tenements in South Australia have been fully impaired and the decision to allocate resources to individual projects in the portfolio is predominantly based on available cash assets, technical data and the expectation of future metal prices. Accordingly, the Group now operates as one segment being exploration for minerals in Northern Territory. This is the basis on which its internal reports are reviewed and used by the Board of Directors (the ‘chief operating decision maker’) in monitoring, assessing performance and in determining the allocation of resources. The results, asset and liabilities from this segment are equivalent to the consolidated financial statements 27 EARNINGS PER SHARE 30/06/21 CENTS PER SHARE 30/06/20 CENTS PER SHARE Basic and diluted loss per share – continuing operations (0.04) (0.06) The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share are as follows: Loss after tax – continuing operations ($) (1,256,079) (1,505,525) Weighted average number of ordinary shares 3,120,018,894 2,466,080,492 The weighted average number of ordinary shares in the calculation of diluted earnings per share is the same as for basic earnings per share, as the inclusion of potential ordinary shares in the diluted earnings per share calculation is anti-dilutive due to the loss incurred for the year. 55 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 28 CONTROLLED ENTITIES NAME OF ENTITY Parent entity PNX Metals Limited Subsidiaries Wellington Exploration Pty Ltd i) Head entity in tax consolidated group ii) Member of tax consolidated group COUNTRY OF INCORPORATION OWNERSHIP INTEREST 2021 % OWNERSHIP INTEREST 2020 % i) ii) Australia Australia 100% 100% The ultimate parent entity in the wholly-owned group is PNX Metals Limited. During the financial year, PNX Metals Limited provided accounting and administrative services at no cost to the controlled entity and advanced interest free loans to the entity. Tax losses have been transferred to PNX Metals Limited by way of inter-company loans. 29 PARENT ENTITY DISCLOSURES The summarised Statement of Financial Position and Statement of Profit or Loss for PNX Metals Limited as parent entity in the Group is identical to that of the Group, as the investment in subsidiary and intercompany loan receivable (parent) and related exploration and evaluation asset (subsidiary) are both non-current assets. Commitments for expenditure and contingent liabilities of the parent entity Note 24 discloses the Group’s commitments for expenditure and contingent liabilities, which are also applicable to the parent entity. STATEMENT OF FINANCIAL POSITION Current assets TOTAL ASSETS Current liabilities TOTAL LIABILITES Net assets EQUITY Issued capital Share option reserve Accumulated losses Total equity STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Income (Loss) for the year 30 SUBSEQUENT EVENTS 30/06/21 $ 4,058,065 24,778,108 1,237,021 3,693,137 21,084,971 53,545,287 127,413 (32,587,459) 21,084,971 30/06/20 $ 2,311,712 18,691,043 610,506 3,029,764 15,661,279 47,072,054 (19,297) (31,391,478) 15,661,279 117,517 1,152,943 113,417 1,943,854 The Group’s office lease in Rose Park, South Australia, extended to August 2021 as at year end. Subsequent to 30 June 2021, the Group secured the extension of the office lease for a further 12 months. There has been no other matter or circumstance that has occurred subsequent to the end of the financial year that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years. 56 NOTES TO THE FINANCIAL STATEMENTSPNX METALS LIMITED | ANNUAL REPORT 2021 DIRECTORS’ DECLARATION In the Directors’ opinion: a) the consolidated financial statements and notes thereto are in accordance with the Corporations Act 2001, including i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and ii) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its performance for the financial year ended on that date; b) the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board; c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by Section 295A of the Corporation Act 2001. Signed in accordance with a resolution of the Directors made pursuant to Section 295(5) of the Corporations Act 2001. Graham Ascough Chairman 14th September 2021 57 PNX METALS LIMITED | ANNUAL REPORT 2021 INDEPENDENT AUDITOR’S REPORT to the Members of PNX Metals Limited PNX Metals Limited (ASX: PNX) Financial Report for the year ended 30 June 2021 INDEPENDENT AUDIT REPORT TO THE MEMBERS OF PNX METALS LIMITED 58 44 PNX METALS LIMITED | ANNUAL REPORT 2021 INDEPENDENT AUDITOR’S REPORT to the Members of PNX Metals Limited PNX Metals Limited (ASX: PNX) Financial Report for the year ended 30 June 2021 45 59 PNX METALS LIMITED | ANNUAL REPORT 2021 INDEPENDENT AUDITOR’S REPORT to the Members of PNX Metals Limited PNX Metals Limited (ASX: PNX) Financial Report for the year ended 30 June 2021 60 46 PNX METALS LIMITED | ANNUAL REPORT 2021 ADDITIONAL SHAREHOLDER INFORMATION as at 31 August 2021 SHARES The total number of shares issued as at 31 August 2021 was 3,652,193,511 held by 1,491 registered shareholders. 451 shareholders hold less than a marketable parcel, based on the market price of a share as at 31 August 2021. Each share carries one vote. PERFORMANCE RIGHTS/OPTIONS As at 31 August 2021, the Company had 54,300,000 Performance Rights and 359,125,000 unquoted options on issue. All of the 359,125,000 options have a 1.464 cent exercise price expiring 30 September 2021. 49% of the unquoted options are held by DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT. TWENTY LARGEST SHAREHOLDERS As at 31 August 2021, the twenty largest Shareholders were as shown in the following table and held 77.39% of the Shares: RANK NAME SHARES % OF SHARES 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT\C 1,620,362,034 44.37 SOCHRASTEM SA\C MARILEI INTERNATIONAL LIMITED 1215 CAPITAL PTY LTD ROBERT LEON BNP PARIBAS NOMS PTY LTDPOTEZNA GROMADKA LTD CITICORP NOMINEES PTY LIMITED TALIS SA\C MSI 888 PTY LTD BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD ESM LIMITED BNP PARIBAS NOMS PTY LTD PJ & BA DOWD INVESTMENTS PTY LTD LATSOD PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED KOMON NOMINEES PTY LTD WGS PTY LTD BNP PARIBAS NOMINEES PTY LTD SYNOD NOMINEES PTY LTD Total 211,754,050 176,766,095 156,345,440 102,665,001 95,294,815 90,207,053 43,556,208 39,319,603 35,090,000 30,379,090 29,500,000 27,925,865 26,693,298 25,287,202 25,106,542 24,679,033 23,888,888 22,946,963 18,500,000 5.80 4.84 4.28 2.81 2.61 2.47 1.19 1.08 0.96 0.83 0.81 0.76 0.73 0.69 0.69 0.68 0.65 0.63 0.51 2,826,267,180 77.39 61 PNX METALS LIMITED | ANNUAL REPORT 2021 ADDITIONAL SHAREHOLDER INFORMATION as at 31 August 2021 SUBSTANTIAL SHAREHOLDERS As at 31 August 2021, the substantial Shareholders in the Company’s Register of Substantial Shareholders are listed below: SHAREHOLDER Delphi Unternehmensberatung Aktiengesellschaft\C Sochrastem SA\C HOLDING 1,620,362,034 211,754,050 % 44.37 5.80 DISTRIBUTION SCHEDULES A distribution schedule of the number of Shareholders, by size of holding, as at 31 August 2021 is set out below: SIZE OF HOLDINGS 1 – 1000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total NUMBER OF SHAREHOLDERS % OF SHARES 62 42 52 506 829 1,491 0.00 0.00 0.01 0.80 99.19 100.00 There is no current on-market buy-back. A distribution schedule of the number of unlisted Option holders, by size of holding, as at 31 August 2021 is set out below: SIZE OF HOLDINGS 1 – 1000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total NUMBER OF OPTION-HOLDERS % OF OPTIONS 0 0 0 0 23 23 0.00 0.00 0.00 0.00 100.00 100.00 VOTING RIGHTS Subject to the Company Constitution: a) at meetings of shareholders, each shareholder is entitled to vote in person, by proxy, by attorney or by representative; b) on a show of hands, each shareholder present in person, by proxy, by attorney or by representative is entitled to one vote; and c) on a poll, each shareholder present in person, by proxy, by attorney or by representative is entitled to one vote for every share held by the shareholder. In the case of joint holdings, only one joint holder may vote. ENQUIRIES FROM SHAREHOLDERS Shareholders wishing to record a change of address or other holder details or with queries regarding their Shareholding should contact the Company’s share registry, Computershare, as detailed in the Corporate Directory at the front of this Annual Report. Shareholders with any other query are invited to contact the Company’s registered office as detailed in the Corporate Directory at the front of this Annual Report. 62 PNX METALS LIMITED | ANNUAL REPORT 2021