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Annual Report 2020

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2020 ANNUAL REPORT Prodigy Gold NL CORPORATE DIRECTORY ABN 58 009 127 020 ACN 009 127 020 Directors Secretary Auditors Bankers Share Registry Solicitors Stock Exchange Registered Office Principal Place of Business Mr Thomas McKeith (Chairman) Mr Matthew Briggs (Managing Director) Mr Brett Smith Mr Michael Stirzaker Ms Jutta Zimmermann BDO Audit (WA) Pty Ltd 38 Station Street SUBIACO WA 6008 Australia and New Zealand Banking Group Limited Level 10, 77 St Georges Terrace PERTH WA 6000 Automic Group Level 2, 267 St Georges Terrace PERTH WA 6000 Telephone: 1300 288 664 Ward Keller Northern Territory House Level 7, 22 Mitchell Street DARWIN NT 0800 Piper Alderman Level 16, 70 Franklin Street ADELAIDE SA 5000 Australian Securities Exchange Limited ASX Code: PRX Level 1, 141 Broadway NEDLANDS WA 6009 Level 1, 141 Broadway NEDLANDS WA 6009 Telephone: +61 8 9423 9777 Fax: + 61 8 9423 9733 Postal Address Level 1, 141 Broadway NEDLANDS WA 6009 Website Email www.prodigygold.com.au admin@prodigygold.com.au 2 Prodigy Gold Annual Report 2020 CONTENTS Chairman’s Report Managing Director’s Report – Review of Operations Summary of Mining Tenements and Areas of Interest Directors’ Report Corporate Governance Statement Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Cash Flows Consolidated Statement of Changes in Equity Notes to the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report to the Members Additional Information for Listed Public Companies Page 4 6 29 32 41 42 45 46 47 48 49 67 68 72 3 Prodigy Gold Annual Report 2020 MESSAGE FROM THE CHAIRMAN Dear Shareholder, I would like start by acknowledging the widespread impacts of the COVID-19 pandemic currently being felt across the globe – in particular the associated economic and travel restrictions has been challenging for us all. I do hope that you have been able to manage through this crisis and remain healthy and safe. For Prodigy Gold, the 2020 financial year has been a tale of two halves. The first half saw the Company raise $12 million and undertake a record level of exploration activity across its 100% owned and joint venture projects. Unfortunately, this actvity was stopped suddenly in the second half by restrictions imposed by the Northern Territory Government and the Central Land Council to limit the spread of the COVID-19 virus. While access to our projects was restricted, our team used the time to re-examine our exploration strategy and to generate and refine our exploration targets. Entering the new financial year, your Company is well funded, has a clear exploration strategy in place with activity back underway on our 100% owned projects and is re-energised to deliver value to you our shareholders. Through perserverance and our robust relationships with key local stakeholders Prodigy Gold has become a leading exploration company in the Tanami. However, operating a gold exploration company in the Tanami district is challenged by: • the remoteness of the project areas and the lack of infrastructure; • more than 95% of the prospective areas under cover; • • a shortened field season; and, a slow, cumbersome and costly approvals processes. Notwithstanding, the Company has assembled and controls a large and prospective exploration tenement portfolio. Together with its quality joint venture partners IGO Limited, Newcrest Mining Limited and Newmont Corporation it now operates one of the largest greenfields exploration drilling programs in the country. This was achieved in the challenging, costly and time consuming environment described – an exceptional feat. Re-examination of our strategy has made it clear that Prodigy Gold needs to make some changes to realise the potential of its landholding and its top class exploration team. 4 We will expand our strategy of securing and supporting joint venture partners for our Tanami tenements. This way we will maintain and possibly increase exploration activity while retaining significant exposure to discovery success on our prospective holdings. We will accelerate exploration at our 100% owned North Arunta Project which is less remote and located on pastoral leases making it easier and cheaper to explore. Lastly we will seek drill-ready opportunities in Western Australia where we can leverage our exploration team’s top class abilities to deliver shareholder value. The Board would like to thank Managing Director Matt Briggs and the team for their hard work and achievements in very difficult circumtances. Highlights for the year include: • • • • • • • keeping our team safe and supporting our local communities during the COVID-19 restrictions; identification and development of high quality targets in our portfolio while access to the field was prohibited; developing COVID-19 management plans to regain access to our project areas; completing a $12 million fully underwritten placement that has left the Company well funded to pursue its strategy; signing an Operator Agreement on the Old Pirate Project that will see the redevelopment of the project; completing an innovative prospectivity analysis of the Tanami using machine learning; and encouraging initial metallurgical recoveries received for Co and Mn from samples taken at the Grimlock Prospect in the Lake Mackay joint venture with IGO. In addition to increasing work on our 100% owned targets, we also have a lot to look forward to across our joint venture portfolio. Our partner at the Lake Mackay Project, IGO Limited, is encouraged by the Co and Mn recoveries from Grimlock and further drilling is planned at Grimlock as well as other Cu-Au targets during the next year. Our partner at the Euro Project, Newcrest, has received encouraging results from drilling at the Dune Propsect within our Euro JV Project. Prodigy Gold Annual Report 2020 MESSAGE FROM THE CHAIRMAN At the Tobruk Project, our partner Newmont, has completed deep probing geochemical sampling and geophysical surveys to identify targets for drilling in the next year. Prodigy Gold and our partners are committed to environmentally responsible exploration and rehabilitates disturbances on an ongoing basis. Our team has worked to increase the transparency of our environmental, social and governance reporting and remains committed to our values. On behalf of the Board I would like to thank the team for their energy and focus in delivering our strategy and developing a clear path for identifying new strategic opportunities and delivering shareholder value. I look forward to supporting their renewed energy and effort. I would also like to thank my fellow directors for their support and strategic guidance over the last year. And lastly, as always, I would like to thank you our valued shareholders for your support and look forward to rewarding you through discovery. Again, on behalf of the Board I am pleased to present you with the Company’s 2020 Annual Report. I expect 2021 to be a very exciting year unlocking the discovery potential of our extensive exploration tenure and renewing the Company’s focus on delivering shareholder value. T H O M A S M C K E I T H 5 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS EXPLORATION Strategy & Target Generation Prodigy Gold is focussed on exploration in the Tanami region in the Northern Territory. The Tanami is one of Australia’s most prospective gold regions. This prospective terrain has had limited previous work completed with the majority of discoveries to date in areas of outcrop. The Company is systematically working through its tenement holding and advancing the high priority opportunities in the portfolio. Prodigy Gold has built a deep knowledge and understanding of its Tanami portfolio through drilling and the acquisition of geochemical and geophysical data. In particular, the recent acquisition of the detailed airborne survey from the Northern Territory Geological Survey (NTGS), covering the majority of the Tanami Gold Province, has been a step change in the mapping of stratigraphy, fold hinges and structural offsets, which are key predictors of large scale deposits in this region. These culminated in the completion of an updated prospectivity analysis in the second half of the financial year, leading to a refining of target areas for 2020 exploration. As a result of this improved understanding, the Company plans to test 19 high priority targets during the FY2021 field season. The work comprises up to 27,000m of aircore drilling across three project areas and follow-up RC drilling. Campaigns of field mapping and geochemical sampling of drill spoils and rock chips will be run concurrent to the drilling programs. The exploration programs planned for the 2020/2021 field season continue to systematically screen the Tanami for large scale gold deposits. Aircore drilling is planned at Bluebush, West Bonanza, Tregony, Hyperion and the North Arunta Projects. Several targets can be rapidly progressed to RC drilling following results of the aircore drilling programs. Further information on individual targets and exploration plans has been outlined in the below report. COVID-19 Impacts on Exploration In March, the Company received a request from the Central Land Council (CLC) to delay the commencement of field activities to assist the CLC to mitigate coronavirus transmission to Traditional Owners and ensure the health services for the remote communities are in place. In spite of the remoteness of our exploration programs all exploration companies with Exploration Licences in Central Australia were requested to delay non-essential travel. As a result no on-ground exploration work was undertaken during the second half of the FY2020. Prodigy Gold values its positive relationship with, and support of the Traditional Owners, and has continued to work with the Central Land Council to mitigate transmission risk. During 2020, Joint Venture activities were suspended due to the implementation of a biosecurity zone over the majority of the Northern Territory. Following detailed consultation with the CLC and Federal Government, Prodigy Gold has implemented a robust COVID-19 management plan, which has allowed the Company post FY-end to re-start exploration work across several priority gold targets. The Company continues to monitor the COVID-19 situation and will advise shareholders of any further impacts or delays caused by the virus. 6 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS Figure 1 - Prodigy Gold project areas, gold deposits, and major infrastructure 100% PRODIGY GOLD PROJECTS Refined Near-Term Priority Targets – Future work for FY2021 West Bonanza –Beluga Target Previous historic surface sampling campaigns across the West Bonanza Area included gold grades of 63ppb Au in soils. In 1995 – 1996 vacuum drilling generated significant surficial gold and arsenic anomalies that remain ineffectively tested. 180 holes are planned to test 3 targets in the area. Figure 2 illustrates the West Beluga Target which warrants immediate aircore drilling. Several fences of aircore drilling are planned to identify bedrock mineralisation along the 3.5km strike of the structure. Tregony Project – PHD Prospect The Tregony Project falls within the same structural trend that includes the Groundrush (1.7Moz Au), Hyperion (310koz Au), and Crusade (119koz) deposits. Ord River completed prefeasibility studies on a JORC 2004 gold resource following diamond drilling in 2012. The PHD and Boco Prospects were last systematically explored by AngloGold Ashanti/Acacia Resources from 1998 – 2004. Shallow RC drilling by Ord River Resources in 2005 defined gold in RC drilling within two zones over 3.5km of strike at the PHD Prospect. The soil anomalism associated with this structure is now interpreted to extend for over 9 km. Airborne magnetic surveying completed in 2019 highlights the extensions of the structure along strike and the potential for parallel structures (Figure 3). Fences of aircore drilling are planned to confirm the position of the structure and prioritise areas along the gold trend to be RC drilled. The Suplejack Downs pastoral lease covers the Tregony Area and an access agreement is in place. Additional aircore reconnaissance programs, including at the Bluebush Project, are planned to screen for large scale gold deposits in areas of transported cover. 7 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS Figure 2 - West Bonanza Project Beluga Target with coincident rock chip and soil gold anomalism in historic sampling. Figure 3 -PHD soil samples (left) and drilling (right). 2019 airborne magnetics highlights strike extensions planned to be drilled in FY2021. 8 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS North Arunta Project The North Arunta Project consists of a 200km long gravity trend with associated metamorphosed sedimentary rocks, dolerite intrusions and large granite intrusions. The region has several known mineral occurrences including gold, copper, nickel, zinc, tin and tantalum. Many targets identified by Newmont remain undrilled. Prodigy Gold has planned aircore drilling to systematically screen these prospects for large scale gold mineralisation. As there is less transported cover, soil sampling has successfully identified gold, arsenic and multi-element anomalism as commonly occurs associated with gold deposits. Aircore programs totaling 300 holes have been planned for 6 priority prospects (Figure 4). As reported on 5 August 2020, drilling has commenced at the Tulsa Target. Previous ionic leach analysis of soil samples collected on this target produced coherent anomalies in the projected extension of gold mineralisation from the Kroda Prospect. Soil anomalism extends for more than 5km of strike. Table 1 - Summary of 100% owned North Arunta Project Targets Prospect Target Anomaly Best Historic Results Target Harrison 4.2km by 1km Au-in-soil Eleanor Lennon Waldron’s 6km by 4km Au-As-in-soil 7km by 3km Au-Cu-Mo-in-soil 4km by 1.5km Au-As-Sb-Mo-Ag-Cu 12m @ 1.03g/t Au from 36m incl 4m @ 2.27g/t Au from 36m 20m @ 0.7g/t Au from 28m incl 4m @ 2.67g/t Au from 40m untested by drilling untested by drilling historical workings with rock chips up to 15g/t Au, and historical drilling results of 1m @ 29.5g/t Au, 7m @ 1.5g/t Au, 2m @ 4.4g/t Au Mineralisation untested for 1,200m west of 4m @ 2.27g/t Au result untested by drilling untested by drilling Previous drilling too shallow to effectively test potential Tulsa Kroda 5km x 3km Au-in-soil untested by drilling untested by drilling 400m strike >1g/t Au including a shoot of 50m+ at >5g/t Au 57m @ 3.8g/t Au and 6m @ 26g/t Au Depth extensions and additional shoots on strike (ASX: GLA 7 March 2018, 18 June 2018, PRX 19 March 2013) Figure 4 - North Arunta Prospects on 1vd magnetic image. 9 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS The Company has been successful in being awarded co-funding for the Lennon Prospect as part of the Northern Territory’s “Resourcing the Territory” initiative. This will contribute up to 50% of the cost of RC drilling. The fieldwork is dependent on COVID-19 access restrictions and sacred site clearance surveys being completed at Lennon. Assessment of Western-Australian Projects With ongoing delays and extended timeframes for permitting in the Northern Territory combined with the risk of further COVID-19 related restrictions, the Company is continuing due diligence on projects in Western Australia. Exploration Work undertaken during FY2020 Bluebush Project Bluebush is considered prime exploration ground with potential for the discovery of another Callie deposit (14.2Moz). It is a large-scale project area falling within the Trans-Tanami Fault Zone located 50km (Figure 5) to the northwest of the world-class Callie Gold Mine owned by Newmont Mining. The prospective Dead Bullock Formation, host rock of the Callie deposit, extends into the project area with structural similarities of folding and faulting complexity and geochemical anomalism associated with Callie. Figure 5 - Prodigy Gold Bluebush Projects and work programs Exploration Aircore drilling was completed during the year at the Bluebush Project targeting deposits analogous to the 14.2Moz Callie Gold Mine. Drilling included 12 RC holes and 192 aircore holes. A summary of the targets and exploration activity completed at Bluebush is provided below. 10 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS Capstan Capstan is a 22km x 8km sub-area of the Bluebush Project, falling within the Trans-Tanami Fault Zone and located 50km northwest of the world-class Callie Gold Mine. The interpreted folding and faulting complexity and geochemical anomalism within the Dead Bullock Formation (host rocks of Callie) highlight the prospectivity of the area. Approximately 95% of Capstan is undercover and surface sampling has only been effective in very limited areas in the north and south of the Prospect. Capstan North RC Drilling A total of 11 RC holes for 1,959m of drilling were completed testing 1,000m of strike (Figure 6). These holes were designed to confirm the interpreted orientation of mineralisation and infill between previous results including 4m @ 6.1g/t Au (RC), 9m @ 1.3g/t Au (RC) (ASX: 18 December 2018). Results of this drilling continued to define the mineralised structures. Sampling at Capstan returned results including 2m @ 1.2g/t Au from 122m (BLRC028) and 1m @ 1.1g/t Au from 102m (BLRC027) (ASX: 22 November 2019). While the target structure was intersected, the RC drilling limited the scale of gold mineralisation in this part of the prospect. Figure 6 - RC drilling gold results at the Capstan Prospect Hat RC and Aircore Drilling Hat is a 3km long gold anomaly. The first wide spaced RC program completed in 2018, produced a result of 4m @ 1.2g/t Au from 111m (ASX: 18 December 2018). A single RC hole was drilled at the Hat target designed to confirm the westerly dip to the north south striking structure. Sampling of the single RC hole drilled at Hat returned 2m @ 0.7g/t Au from 152m (BLRC038) (ASX: 22 November 2019). This hole has confirmed the interpreted steep westerly dip to mineralisation. An aircore program of 44 drill holes was completed at the Hat Prospect in October 2019. 11 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS Results outlined a 0.3g/t Au anomaly within the larger system with best results (ASX: 9 December 2019) including: - - - - 6m @ 0.52g/t Au from 36m (BL0888) 3m @ 0.58g/t Au from 57m & 3m @ 0.51g/t Au from 69m (BL0880) 6m @ 0.45g/t Au from 75m (BL0844) 6m @ 0.47g/t Au from 45m (BL0854) The gold anomalism has been defined along 3km of strike and is over 500m wide on the southern two sections most recently drilled. The best results and widest part of the gold anomaly coincide with the favourable Dead Bullock Formation and a northwest trending antiformal fold hinge. Gold deposits in the Tanami are typically associated with folded iron rich sediments as occurs at Hat. This data will be combined with geophysical data to determine potential scale of targets and optimise future drilling. Figure 7 - Hat Prospect Geology Map and Recent Result Highlights Capstan North Aircore Drilling Capstan North was first drilled with aircore in 2018. Initial results included 1m @ 4.0g/t Au (ASX: 2 August 2018) at end of hole within a 900m zone of gold and arsenic anomalism hosted in folded Dead Bullock Formation. A total of 18 aircore holes were drilled at Capstan North in late 2019, targeting an area of structural complexity coincident with gold anomalism. The best result (ASX: 9 December 2019) was in an area where results of up to 4g/t Au had previously been intersected (Figure 8). - 3m @ 0.25g/t Au from 36m (BL0896) No further drilling is planned on this target as the recent program has reduced the size of the potential target. 12 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS Figure 8 - Capstan North Target Geology Map and Recent Result Highlights Capstan East Aircore Drilling The Capstan East gold trend has a strike length of 7km identified as a priority target for 2019. Drilling in 2018 included a result of 6m @ 0.5g/t Au at the north end of the 7km trend (ASX: 2 August 2018). Gold anomalism is coincident with arsenic anomalism and a northsouth fault. Results from 39 reconnaissance aircore holes failed to identify gold anomalism of interest. Arsenic anomalism previously intersected is now interpreted to be sourced from graphitic shales. Capstan South Aircore Drilling Results were returned for 61 stratigraphic aircore holes completed at Capstan South (Figure 9). The broad drilling has confirmed stratigraphy and will form the foundation of a detailed aeromagnetic structural interpretation to target Callie- style deposits. No significant gold anomalism was identified in this drilling. Apertawonga Target The Apertawonga Prospect is located 50km northwest of the Callie Gold Mine. The target is a >7km long northwest trending magnetic anomaly. Apertawonga lies on a steep gravity gradient and is bisected by the Trans-Tanami Fault Zone, a long-lived regional structure that is interpreted to be a focus for gold bearing fluids during deformation. A program of 54 aircore holes completed in June 2019 defined gold and pathfinder anomalism over 4.5km including highlights of 1m @ 0.7g/t Au from 36m and 3m @ 0.14g/t Au from 36m (ASX: 16 July 2019). An additional 49 aircore holes were completed during the year to further define the gold anomaly at Apertawonga (Figure 9). Results of this drilling reduced the potential for gold mineralisation. 13 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS 3m @ 0.14g/t Au (AC) 1m @ 0.7g/t Au (AC) Figure 9 - Recent aircore drilling and results reported at the Apertawonga Prospect Gravity surveys co-funded by the Northern Territory Government as part of the Resourcing the Territory Initiative were completed at Capstan East and Hyperion during the year. Hyperion Gold Project The Hyperion Project is located 19km to the north of the 1.6Moz Groundrush Pit (Figure 10) and 58km to the northeast of the Central Tanami Processing Plant site. The area has historically received sporadic shallow drilling. Drilling often ended in the depleted oxide zone testing the area ineffectively. The Hyperion gold camp contains an indicated and inferred resource of 4.93Mt at 1.95g/t Au for 310koz (ASX: 31 July 2018). As part of its broader exploration strategy, Prodigy Gold is focused on growing the existing resource base at Hyperion and progressing the discovery of new standalone projects. A summary of the targets and exploration work completed at Hyperion is provided below. 14 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS Figure 10 - Hyperion Project location on 100% owned Tenements. Seuss Aircore Drilling The Seuss Structure was first recognised in late 2016. Geochemical analysis of drilling in 2017 confirmed that a mafic sediment was the control of shallow high-grade shoots. Subsequent drilling has focused on the intersection of the sediment and mineralised structures. A total of 32 aircore holes were completed in October 2019. This program was drilled to identify extensions of the east- west Hyperion structures to the east of the resource and extension of the Seuss and Hyperion Faults to the south and east of the resource. Two lines of drilling were completed 100m and 500m to the east of the resource, and a single line 15 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS 600m to the south. The best results (ASX: 17 December 2019) from the program include: - - - - 6m @ 0.20g/t Au from 84m (SJ0187) 3m @ 0.13g/t Au from 102m (SJ0186) 3m @ 0.10g/t Au from 84m (SJ0185) 3m @ 0.10g/t Au from 54m (SJ0181) Gold and arsenic results seen in SJ0186 and SJ087 indicate the mineralisation continues to the south of the resource. The drilling to the east appears to close off the potential for extensions in that direction. Seuss Diamond Drilling Previous drilling by Prodigy Gold identified breccia hosted gold mineralisation associated with the Seuss Fault. This is a new style of mineralisation for the district and the prospective structure has potential to host significant mineralisation where it obliquely intercepts the mafic sediments at Seuss. A 369.8m NTGS co-funded diamond drill hole HYDD100054 was completed in November 2019. This hole was designed to provide structural information to assist in the targeting of gold mineralisation. The drill hole has successfully intersected the target structure with similar veining and alteration (Figure 11) seen in the previous RC holes. Drilling intersected approximately 78m of veining from within the interval 141-261m (ASX: 22 November 2019). Figure 11 - Veining, sulphides, and alteration in diamond hole HYDD100054 similar to that seen in the 2018 RC drilling HYDD100054 defined a broad interval of low-grade gold mineralisation along the targeted fault. This hole is consistent with the previous RC drill holes completed to the north and SJRD0058 to the south. Intervals of arsenopyrite and veining correlated with elevated gold anomalism. Results from drill hole HYDD100054 include (ASX: 10 February 2020): - - - - - - 4m @ 0.6g/t Au from 106m 2m @ 0.5g/t Au from 144m 15m @ 0.4g/t Au from 167m 3m @ 0.3g/t Au from 236m 18.76m @ 0.6g/t Au from 243m 1m @ 2.4g/t Au from 255m A diamond tail was also completed on RC hole SJRC0058. This tail extended the hole from 156m to 249.2m. The hole previously ended with a 0.7g/t Au sample from within an interval of 89m @ 0.3g/t Au (Figure 13) (ASX: 20 December 2018). The diamond tail intersection of this hole intersected additional quartz veining and sulphide. Final results from extended drill hole SJRD0058 include: - - 89m @ 0.3g/t Au from 67m (ASX: 20 December 2018) 5m @ 0.3g/t Au from 166m (ASX: 10 February 2020) Drilling has continued to define gold mineralisation to the south of the existing resource area. Broad intervals of mineralisation are unusual in the district. A favourable lithology or structural intersection may yield higher grade gold mineralisation to the south (Figure 12) and the Company is assessing potential follow-up drilling options in this area. 16 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS Figure 12 - Hyperion Project geology map with recent drill results, to the south of the Hyperion Resource, highlighted in black. Figure 13 - Hyperion Project east-west cross section illustrating the broad zone of mineralisation to the south of the Hyperion Resource. 17 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS Prospectivity analysis Prodigy Gold utilized an integrated prospectivity analysis approach in collaboration with the Corporate Geoscience Group (CGSG) to assist targeting large-scale gold systems. Prospectivity analysis integrating empirical and conceptual data, and mineral systems mapping are commonly employed to assist targeting for exploration projects. The prospectivity analysis approach improves Prodigy Gold’s confidence to target these areas more effectively. Seven models were run with the following three methods deemed the best for predicting the known deposits in the Tanami Region using Prodigy Gold and public data: - - - Continuous Fuzzy Gamma Prospectivity Geometric Average Prospectivity Model Data Driven Index Overlay Prospectivity Model This analysis was incorporated into the Company’s prioritising of targets for the FY2021 field season. Figure 14 highlights the higher relative prospectivity of the Boco, Tregony, Hyperion, and West Bonanza areas. Figure 14 - Example of the output of the 2019 CGSG prospectivity analysis. Note that the Bonanza, Hyperion and Tregony-Boco areas are identified as the most prospective (hot colours). 18 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS JOINT VENTURE PROJECTS Joint Venture Portfolio Overview Project Lake Mackay (Cu-Au, Ni-Co and Orogenic Au potential) JV Partner IGO (IGO. AX) JV Terms IGO 70% / PRX 30% Euro Gold Project Newcrest (NCM. AX) Tobruk Gold Project Newmont Exploration Pty Ltd, a wholly owned subsidiary of Newmont Corporation (NEM. NYSE) Old Pirate Gold Project TRL Tanami (Private) NCM to spend $12M on the Euro Project to ultimately earn a 75% interest $12M in-ground earn-in to 70% / $2.5M cash + financing option Operator agreement $2.3M + 2.5% NSR Lake Mackay JV Project Current Status RC drilling completed by IGO in late 2019 returned 12m @ 3.5g/t Au from 112m from the Arcee Gold Prospect. Soil sampling completed during the December quarter extended the gold in-soil anomaly at Arcee to 2.3km long. A number of conductors and Co-Ni-Mn projects remain to be tested. Further follow-up work is planned. RC drilling at Dune Prospect identified significant gold in oxide and further extends the 1.4km gold and arsenic anomaly which remains open to the north. The Tobruk Project is interpreted to have occurrences of similar prospective lithologies that host Newmont’s Callie Gold deposit and several smaller deposits including Groundrush and Oberon. Laboratory analysis of 675 soil samples completed across the Tobruk Project area has been completed. Agreement signed with TRL Tanami to develop and mine the Old Pirate Project under a strategic 10-year Operator Agreement. IGO Limited (”IGO”) commenced activity on the current Lake Mackay JV area in 2014. Systematic exploration lead to the discovery of gold and base metal mineralisation at Bumblebee in 2015 and Grapple in 2016. Diamond drilling of Grapple in 2017 defined gold and copper mineralisation over 800m of plunge including a result of 11m @ 7.9g/t Au, 20.7g/t Ag, 0.8% Cu, 0.5% Pb, 1.1% Zn & 0.1% Co in 17GRDD001 (ASX: 18 September 2017). In 2018 further work identified Ni, Co and Mn-bearing laterites. During 2018, IGO completed the $6M earn-in and the JV Project is now funded 70/30. Subsequent work at the Grimlock Prospect has identified cobalt of up to 2% and test work has demonstrated leach extraction rates for Co of up to 98%. Project Background The Lake Mackay Project is 400km northwest of Alice Springs, adjacent to the Western Australian border, and comprises approximately 15,630km2 of exploration licences and applications (14,730km2 IGO/Prodigy Gold JV, 900km2 IGO/Prodigy Gold/Castile JV). The emerging mineralised belt at Lake Mackay is at a very early stage of exploration. The Project has consolidated tenure over the favourable Proterozoic margin between the Aileron and Warumpi Provinces and is characterised by a continent-scale geophysical gravity ridge and the Central Australian Suture. 19 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS Figure 15 - Lake Mackay JV Project Location Phreaker Cu-Au-Ag Prospect Six holes for 1,596m of RC drilling were completed at the Phreaker Prospect. Results for RC holes drilled at Phreaker include (ASX: 17 July 2019): - - - 19LMRC028 14m @ 0.84% Cu, 0.15g/t Au, 4.1g/t Ag from 353m 19LMRC031 10m @ 0.98% Cu, 0.06g/t Au, 13.9g/t Ag from 146m 19LMRC032 11m @ 1.15% Cu, 0.07g/t Au, 7.9g/t Ag from 189m The RC holes confirmed anomalous Cu, Au and Ag over a strike length of 750m, although DHEM results suggest that the more conductive parts of the target have not been adequately tested with the recently completed RC holes likely drilled up dip of the main mineralisation (Figure 15). Additional RC drilling completed at the Phreaker Prospect in August 2019 confirmed that the mineralised system extends for over 750m of strike (ASX: 16 October 2019). Downhole EM completed in these drill holes demonstrated that the strongest parts of the ~1,000m long EM conductor have not been effectively tested. Two diamond drill holes are planned to test positions down dip of the existing RC drilling. Grimlock Ni-Co-Mn Prospect Stage 1 metallurgical test work was undertaken during the December quarter on approximately 100kg of lateritic duricrust (containing strong Mn, Ni and Co enrichment) from the Grimlock Co-Ni-Mn Prospect (Figure 15). The first bench-scale leach extraction results were released on 12 December 2020, on a bulk sample grade of 1.94% Co, 0.47% Ni and 51.91% Mn. The preliminary leaching tests conducted at the Perth laboratories of Bureau Veritas used SO2 (Sulphur Dioxide) to reduce the manganese dioxide present and with the addition of some H2SO4 (sulphuric acid) at 40°C and 70°C. These tests were performed at atmospheric pressure with a 3-hour residence time. The best conditions from testing yielded extractions of 97.6% cobalt, 85% nickel, and 99% manganese into solution. The test work showed encouraging extraction results at a bench scale and further leach tests are planned as part of a series of future metallurgical studies. Following on from successful leach test work, two PQ diamond holes are planned to acquire additional samples for metallurgical test work. A ground penetrating radar (GPR) survey is also planned to map the depth, thickness and continuity of the Ni-Co-Mn enriched duricrust from surface to approximately 25m depth. This will be used to target a 10- 12 hole RC drill program to assess the size potential of the prospect. 20 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS Arcee Gold Prospect The Arcee Prospect is a 2.3km long coherent gold-in-soil anomaly open to the west (Figure 17). Initial drilling intersected disseminated sulphide in amphibolite yielding a 12m interval of low-level gold. A hole completed 350m to the southeast, 19LMRC072, returned 12m @ 3.5g/t Au from 112m, including 8m @ 4.9g/t Au from 116m (ASX: 16 October 2019). This intersection included disseminated pyrite and minor quartz veining. Results were returned for an additional six RC holes completed at the Arcee Prospect in December, following the completion of drilling on five sections testing ~600m of strike. The drilling confirmed the interpreted orientation of mineralisation. The best results were returned from the original section drilled, 19LMRC073 4m @ 1.6g/t Au from 72m (Figure 16), and the section 120m to the west (19LMRC076); 4m @ 1.5g/t Au from 128m (ASX: 12 December 2019). On the most western line of drilling, 19LMRC078 intersected 4m @ 0.9g/t Au from 104m, demonstrating the mineralisation likely extends to the west as suggested by recent soil sampling (Figure 17). Assays were also received from infill soil sampling around Arcee and to the west into E80/5001. 200 x 400m soil sampling close to the WA/NT border has extended the Arcee gold anomaly into E80/5001 bringing the Arcee gold-in-soil anomaly to 2.3km long. Soil sampling is proposed to follow up soil anomalies identified at the end of 2019, including the Arcee Au anomaly. Positive results would allow for step out drilling from the RC result of 12m @ 3.5g/t Au (ASX: 16 October 2019) Figure 16 - Arcee Prospect Cross-section 21 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS Figure 17 - Arcee Prospect Collar and Soil Sample Map Raw Prospect Results of soil sampling at the Raw Prospect defined a 1.1km long polymetallic soil anomaly. Moving loop EM of an AEM anomaly has defined a conductor modelled at >400m from surface adjacent to the soil anomalism. A single 540m diamond drill hole is planned to intersect the EM conductor which was too deep to drill with conventional RC at the end of 2019. Additionally, ~400m of RC drilling is planned to test beneath the 1.1km long gold and multi- element soil anomaly adjacent to the conductor at Raw (ASX: 16 October 2019). Blaze Prospect Anomalous gold was detected from drilling of the Blaze Prospect soil anomaly, however drilling completed to date within the Blaze Prospect has failed to identify an economic accumulation of copper or gold. Customisable Target A 350m diamond drill hole is planned to test a modelled EM conductor. Future Work Planning was well underway for the 2020 field season, however the drilling program was postponed due to COVID-19 pandemic-related regional travel access restrictions, which were introduced to protect remote outback communities. IGO is in consultation with the Central Land Council and the Department of Primary Industry and Resources; and will recommence field activities at the earliest appropriate time. At this juncture, this timing remains uncertain. Notwithstanding, drilling remains planned for at least 6 targets at Lake Mackay. Systematic fieldwork is planned across numerous targets at Lake Mackay in FY2021. Diamond drilling is to be undertaken at the Grimlock, Phreaker, Raw and Customisable targets. RC drilling is planned at Grimlock and Raw. 22 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS Euro Farm-in Agreement In July 2018 a subsidiary of Newcrest Mining Ltd (“Newcrest”) and Prodigy Gold signed an earn-in agreement. Under the agreement Newcrest will sole fund up to $12M over seven years to ultimately earn up to a 75% interest in the Project. Project Background The Project includes ~3,478km2 of exploration licenses and applications in the Tanami Region of the Northern Territory along strike of, or contains structures parallel to, the Trans-Tanami Trend. This is the regional control of major gold deposits in the area, including Newmont Mining’s 14.2Moz Callie Gold Mine. Previous exploration has primarily been soil sampling and patchy reconnaissance drilling with 10 of the 17 tenements in the Euro JV Project having no drilling in the last 20 years. Exploration During the year 616.9m of diamond drilling and 512m of RC drilling were completed at Anomaly 16 and Dune respectively. Dune Prospect The Dune Prospect is located 1.5km to the south of the Newmont Exploration Oberon Deposit. Drilling has focused on gold anomalism defined by historic aircore in folded sediments. Results of 2,730m of drilling completed at the Dune Prospect included broad intersection of 36m @ 0.65g/t Au including 20m @ 0.95g/t Au (ASX: 19 August 2019) along the same trend as the previously reported results of 2m @ 12g/t Au and 3m @ 1.5g/t Au (ASX: 22 January 2019). Figure 18 - Dune Prospect 2019 drilling program. FY2020 results highlighted in black 23 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS Results were returned for three RC drill holes drilled (Figure 18) for a total of 512m. The holes completed tested northern extensions of the Dune Target 2 anomaly and for an antiformal closure to the east of Target 1. Holes EUR0019 and EUR0021 infill and extend gold anomalism in oxide to the north to a strike length of 1.4km. The area, thickness and grade of gold in oxide is significant when compared to gold deposits in the district. Best intercepts included (ASX: 28 November 2019): - - 18m at 0.4g/t Au from 126m, including 2m at 1.24g/t Au from 126m (EUR0019) 10m at 0.3g/t Au from 146m (EUR0021) There is no previous drilling between the northern line of drilling and the Newmont tenement boundary. The ongoing intersection of water in RC drilling has made the drilling into fresh rock challenging. Future work, and success on this target requires an effective method of defining the bedrock source of the anomalism through transported cover. Anomaly 16 The Anomaly 16 Prospect is located 50km north of the Granites Gold Mine and 40km northwest along strike of the main controlling structure to the Minotaur (Windy Hill) gold deposit. Anomaly 16 was initially generated through first pass reconnaissance vacuum drilling during 1990 by North Flinders Mines which identified a 2.5km NW-trending gold bulk cyanide leach anomaly. This target is interpreted to be folded Dead Bullock Formation with coincident gold and arsenic anomalism in lag sampling and RAB drilling. Previous drilling appears to have been ineffective in testing the denser magnetic rocks. A single 616.9m diamond hole, co-funded by the Northern Territory Government as part of the Resourcing the Territory Initiative, was completed. Despite the encouraging veining and sulphides, no significant gold intercepts were returned. No additional work is currently planned for this target. Tobruk Farm-in Agreement In May 2019 Prodigy Gold signed a A$14.5M Exploration Farm-in and Joint Venture Agreement (“Agreement”) with Newmont Exploration Pty Ltd (“Newmont Exploration”) (ASX: 16 May 2019). Under the Agreement, Newmont Exploration can earn up to a 70% interest in the Tobruk Project by sole funding A$12M in exploration expenditure. The Agreement includes a total of A$2.5M cash payments to Prodigy Gold (with A$1M being contingent on Newmont Exploration electing to proceed to phase 2 of the earn-in). The Agreement covers nine of the Company’s tenements and tenement applications, within the vicnity of Newmont’s >14Moz Callie Gold Mine. Project Background The Tobruk Project is interpreted to have occurrences of the similar prospective lithologies that host Newmont’s Callie Gold deposit and several smaller deposits including Groundrush and Oberon. The Tobruk Project’s potential is further enhanced by having analogous structural settings to known Tanami deposits, including tightly folded stratigraphy, Trans Tanami parallel faults and drill defined anomalous geochemistry positioned on the margins of magnetic features. Most of the historical exploration work in the Tobruk area was undertaken by North Flinders Mines Limited /Normandy Mining Limited in the late 1980s and 1990s and subsequently by Newmont and AngloGold Australia in the early 2000s. Previous exploration has comprised field mapping, aeromagnetic/detailed ground magnetic surveys and targeted soil, rock chip and lag sampling. Drilling (RAB and aircore) was primarily directed at testing magnetic features supported by anomalous surface geochemistry at targets identified in Dead Bullock Formation sediments, considered the most prospective sequence in the Tanami group. Key logistical advantages include the 450km gas pipeline to the Newmont Granites Plant recently constructed and the Federal Government’s commitment to upgrade the Tanami Track, which will improve the economics of any future discoveries. 24 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS Exploration 675 soil samples were collected across the northern half of the Tobruk Project during 2019. Results of the extensive geochemical survey (utilising Newmont’s proprietary deep sensing geochemistry) and the passive seismic survey carried out during the December quarter of 2019 were received. Three target areas of interest were recognised in the results of this survey. Future Work On-ground work has been suspended pending the re-issue of entry and transit permits. Operator Agreement – Old Pirate In October 2019, the Company signed a strategic 10-year operator agreement with private company TRL Tanami over the Company’s Old Pirate Project located in the Tanami Region of the Northern Territory (ASX: 3 October 2019). The Old Pirate agreement includes staged cash payments totaling approximately $600,000, replacement of bonds totaling approximately $1.7M and a 2.5% NSR. The Old Pirate agreement also includes an option for TRL Tanami to acquire the Old Pirate plant and equipment for a cash consideration of $500k, or both the Old Pirate Project and Old Pirate plant and equipment for $3M. The agreement is in line with Prodigy Gold’s strategy to monetise Twin Bonanza and significantly reduce portfolio holding costs. Some payments due under the agreement are delayed. The Buccaneer option included in the original agreement has now lapsed. Study work is advancing on Old Pirate. North Arunta JV Project Gladiator Resources returned all tenements that formed of the North Arunta JV project to Prodigy Gold. The termination of the Joint Venture Agreement is pending the lodgement of an environmental report by Gladiator Resources with the DPIR. The North Arunta Project is now 100% owned by Prodigy Gold and exploration work has commenced post year-end on the Tulsa Target. 25 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS MINERAL RESOURCES Prodigy Gold’s Mineral Resources for 30 June 2020 are summarised below. See the 2020 Annual Mineral Resource Statement (ASX: 25 August 2020) and the individual announcements referenced below for additional information. Prodigy Gold's Mineral Resource governance includes systems and procedures that ensure: • All persons responsible for preparing and reporting Prodigy Gold estimates qualify as a Competent Person as • • defined by the JORC Code (2012 Edition), and the Competent Persons have provided written sign-off on publicly reported estimates Estimates are prepared using accepted industry methods Competent Persons prepare and provide Prodigy Gold with the supporting documentation for each estimate, and before being reported to the Board, estimates are either reviewed by Prodigy Gold senior technical staff or by a suitably qualified external reviewer • Any material changes or updates to estimates are reviewed and approved by the Prodigy Gold's Board before being promptly announced to the market Consolidated Resource Summary Table 2 – Prodigy Gold Mineral Resource Summary as at 30 June 2020 Indicated Inferred Total Tonnes (Mt) Grade (g/t Gold) Metal (Koz) Tonnes (Mt) Grade (g/t Gold) Metal (Koz) Tonnes (Mt) Grade (g/t Gold) Metal (Koz) Resource Author 0.04 1.2 0.92 2.2 4.6 1.7 2.35 2.0 7 65 69 141 0.72 8.8 4.02 13.5 4.7 1.8 1.86 2.0 109 520 240 869 0.76 10.0 4.93 15.7 4.7 1.8 1.95 115 585 310 2.0 1,010 1 2 2 Project Date Old Pirate Aug-16 Buccaneer Aug-17 Hyperion July-18 Cut-Off Grade (g/t) 1.0 1.0 0.8 Total Note: Totals may vary due to rounding. various • • 1 CSA Global 2 Optiro Pty Ltd Old Pirate Mineral Resource Table 3 – Old Pirate August 2020 Mineral Resource Estimate Old Pirate-Project – Mineral Resource Estimate – August 2016 Domain Classification Tonnes (Mt) Grade (Au g/t) Metal (koz) Western Limb Central East Golden Hind Sub-Total Indicated Inferred Indicated Inferred Indicated Inferred Indicated Inferred Indicated Inferred Total Indicated + Inferred 0.010 0.280 0.020 0.420 0.005 0.010 0.005 0.005 0.040 0.720 0.760 7.5 5.5 3.1 4.2 7.6 4.9 3.5 4.1 4.6 4.7 4.7 3.0 49.7 2.4 56.3 0.5 1.6 0.5 0.9 6.5 108.5 114.9 Note: Totals may vary due to rounding. The above Mineral Resource Estimate was first reported in 2016 (ASX: 19 August 2016). 26 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS Buccaneer Mineral Resource Table 4 – Buccaneer August 2020 Mineral Resource Estimate Buccaneer Project - Mineral Resource Estimate – August 2017 Oxide Oxidised Transitional Fresh Total Indicated Grade (Au g/t) 1.69 1.69 1.59 1.67 Tonnes (Mt) 0.2 0.7 0.3 1.2 Metal (koz) 12 40 13 65 Tonnes (Mt) 0.1 0.5 8.3 8.8 Inferred Grade (Au g/t) 1.82 1.52 1.86 1.84 Metal (koz) 4 22 494 521 Tonnes (Mt) 0.3 1.2 8.5 10.0 Total Grade (Au g/t) 1.73 1.63 1.85 1.82 Metal (koz) 16 62 507 585 Note: Totals may vary due to rounding. The above Mineral Resource Estimate was first reported in 2017 (ASX: 1 September 2017). Hyperion Mineral Resource Table 5 – Hyperion August 2020 Mineral Resource Estimate Hyperion Project - Mineral Resource Estimate July 2018 Oxide Oxide Transitional Fresh Total Indicated Grade Au (g/t) 1.48 1.79 2.62 2.35 Tonnes (Mt) 0.03 0.26 0.63 0.92 Metal (koz) 1.3 14.8 53.1 69.3 Tonnes (Mt) 0.29 1.16 2.57 4.02 Inferred Grade Au (g/t) 2.28 2.08 1.72 1.86 Metal (koz) 21.2 77.3 141.8 240.3 Tonnes (Mt) 0.32 1.41 3.20 4.93 Total Grade Au (g/t) 2.21 2.03 1.89 1.95 Metal (koz) 22.6 92.1 194.9 309.5 Note: Reported above 0.8g/t cut-off and above the 230mRL. Totals may vary due to rounding. The above Mineral Resource Estimate was first reported in 2018 (ASX: 31 July 2018). The Hyperion Project was formerly known as the Suplejack Project however it was renamed at the request of the local community. Competent Persons Statements The information in this announcement relating to exploration targets and exploration results is based on information reviewed and checked by Mr Matt Briggs who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Briggs is a full time employee and shareholder of Prodigy Gold NL and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the “Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves”. Mr Briggs consents to the inclusion in the documents of the matters based on this information in the form and context in which it appears. The information in this report relating to the Mineral Resources is based on information reviewed and compiled by Mr Matt Briggs who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Briggs is a full time employee and shareholder of Prodigy Gold NL and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 edition of the “Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves”. Mr Briggs consents to the inclusion in the documents of the matters based on this information in the form and context in which it appears. All information compiled in this statement has been previously announced and this annual statement fairly represents a summary of the supporting information and documentation. Prodigy Gold NL confirms that it is not aware of any new information or data that materially affects the information included in the market announcement and that all material assumptions and technical parameters underpinning the estimates included in referenced previous market announcements continue to apply and have not materially changed. 27 Prodigy Gold Annual Report 2020 MANAGING DIRECTOR’S REPORT – REVIEW OF OPERATIONS TENEMENT MANAGEMENT The total area of 38,848km2 (2019: 42,577km2) held under tenure by Prodigy Gold and its joint venture partners has decreased during the financial year. The area held under granted mineral tenements is 16,554km2 with 22,294km2 held under exploration licence application. To address the costs associated with maintaining such a large land holding and to better focus exploration activities, the Company continues to actively seek to reduce its tenure costs through joint venture and divestment. The Company relinquished two granted tenements during the year, withdrew five tenement applications and no additional tenements were applied for during the year. Joint venture interests in the Lake Mackay JV with IGO remained at 70% IGO and 30% Prodigy Gold during the year and in the Lake Mackay JV with IGO and Castile, Prodigy Gold increased its interest to 25.4%, with IGO increasing to 59.3% andCastile diluting to 15.3%. A map showing the location of the Company’s current tenement holding is presented in Figure 1 of the review of operations report and a complete list of tenements follows this report. CORPORATE Shares on Issue and Unlisted Options Prodigy Gold placed 100,000,000 shares at an issue price of $0.12 per share for total gross proceeds of $12,000,000 during August 2019. The shares were issued following the completion of a fully underwritten institutional placement announced on 21 August 2019. The Company issued 16,500,000 options to employees under the terms and conditions of the Company’s Employee Share Option Plan during the financial year and 3,675,000 options expired. As at 30 June 2020, Prodigy Gold has a total of 580,627,606 shares and 39,150,000 million unlisted options on issue. Share Registry The Company’s share registry changed to Automic Pty Ltd during January 2020. 28 Prodigy Gold Annual Report 2020 SUMMARY OF MINING TENEMENTS AND AREAS OF INTEREST Summary of Mining Tenements as at 30 June 2020 Area of Interest Tenement Group’s Interest Tenement Status Status Changes During the Year NORTHERN TERRITORY TANAMI Birrindudu Bluebush Bonanza Hyperion Abroholos Tobruk (1) EL5889 EL23523 EL28326 EL31332 EL23659 EL24436 EL26610 EL26634 EL27119 EL27127 EL27589 EL28327 EL29860 EL31288 EL31290 EL31291 EL30944 EL25194 EL26608 EL27378 EL28322 EL28324 EL28325 EL28328 EL28394 EL29790 EL31289 ML29822 EL30814 EL9250 EL26619 EL27125 EL27126 EL27979 EL31330 EL31331 EL31530 EL32055 EL26623 EL32056 EL29833 EL29834 EL25156 EL25191 EL25192 EL28785 EL29832 EL29859 EL30270 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 0 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 granted granted granted granted granted granted granted granted granted granted granted granted granted granted granted granted application granted granted granted granted granted granted granted granted granted granted granted application granted granted granted granted granted granted granted granted granted application application application application granted granted granted granted granted granted application  Relinquished during the year  Granted during the year 29 Prodigy Gold Annual Report 2020 SUMMARY OF MINING TENEMENTS AND AREAS OF INTEREST Area of Interest Tenement Tobruk (1) Euro (2) Tanami Altura JV (3) LAKE MACKAY Tarawera Lake Mackay North Tekapo Warumpi (4) EL30274 EL32057 EL25845 EL26590 EL26591 EL26592 EL26593 EL26613 EL26615 EL26618 EL26620 EL26621 EL26622 EL26673 EL27604 EL30271 EL30272 EL30273 EL30283 EL26626 EL26628 EL29828 EL26627 EL23898 EL24473 EL27894 EL30552 EL30553 EL30554 EL30555 EL30556 EL28682 EL24915 EL25146 EL30729 EL30730 EL30731 EL30732 EL30733 EL30739 EL30740 EL31234 EL31723 E80/5001 EL27947 (5) EL31974 (5) EL25147 EL31718 EL31719 EL31720 EL31721 EL31722 Group’s Interest 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 90 90 90 90 100 100 100 100 100 100 100 100 100 30 30 30 30 30 30 30 30 30 30 0 30 15.3 15.3 30 30 30 30 30 30 Tenement Status Status Changes During the Year application application granted granted granted granted granted granted granted granted granted granted granted granted granted application application application application granted granted granted application application application application application application application application application application granted granted granted granted granted granted granted granted granted granted granted granted granted granted application application application application application application Relinquished during the year IGO Limited  IGO Limited Castile Resources Pty Ltd Castile Resources Pty Ltd IGO Limited IGO Limited IGO Limited IGO Limited IGO Limited 30 Prodigy Gold Annual Report 2020 SUMMARY OF MINING TENEMENTS AND AREAS OF INTEREST Area of Interest Tenement Warumpi (4) NORTH ARUNTA Barrow Creek Reynolds Range Walkeley EL31723 EL31913 EL32095 EL32096 EL32097 EL32098 EL32099 EL32100 EL32101 EL32102 EL32103 EL8766 EL23880 EL23883 EL23884 EL23885 EL23886 EL25031 EL25033 EL25034 EL25035 EL25041 EL25042 EL25044 EL26825 EL28515 EL28727 EL29723 EL29724 EL29725 EL29896 EL30470 EL30507 EL30637 EL25030 EL25036 EL29819 EL29820 EL23655 EL23888 EL28083 EL26903 Group’s Interest 30 30 30 30 30 30 30 30 30 30 30 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 0 100 100 100 100 100 100 100 0 0 0 0 80 (6) 100 100 0 Tenement Status Status Changes During the Year application application application application application application application application application application application granted granted granted granted granted granted granted granted granted granted granted granted granted granted granted granted granted granted granted granted granted granted granted application application application application granted granted granted application IGO Limited IGO Limited IGO Limited IGO Limited IGO Limited IGO Limited IGO Limited IGO Limited IGO Limited IGO Limited IGO Limited  Relinquished during the year      Withdrawn during the year Withdrawn during the year Withdrawn during the year Withdrawn during the year Withdrawn during the year 1) 2) 3) 4) 5) 6) 31 Farm-in and Joint Venture Agreement with Newmont Exploration Pty Ltd earning up to a 70% interest in the tenements. Farm-in and Joint Venture Agreement with Newcrest Operations Ltd earning up to a 75% interest in the tenements. Joint Venture with Altura Lithium Operations Pty Ltd. Joint Venture with IGO Limited 70% / Prodigy Gold NL 30%. Tenement is subject to a Joint Venture between with Castile Resources Pty Ltd (49%), IGO Limited (35.7%) and Prodigy Gold NL (15.3%). Tenement is subject to a Joint Venture with Select Resources Pty Ltd. Prodigy Gold holds an 80% beneficial interest with a 60% interest currently registered on title. Prodigy Gold Annual Report 2020 DIRECTORS’ REPORT The Directors of Prodigy Gold NL present their report on the consolidated entity (Group), consisting of Prodigy Gold NL and the entities it controlled at the end of, and during, the financial year ended 30 June 2020. Mr Thomas McKeith Non-Executive Chairman Mr Matthew Briggs Managing Director Mr Brett Smith Non-Executive Director Mr Michael Stirzaker Non-Executive Director Directors have been in office since the start of the financial year to the date of this report. Principal Activities The principal activities of the Company during the year consisted of exploration and evaluation of mineral resources. There was no significant change in the nature of the Company’s activities during the year. Dividends There were no dividends paid or declared during the year. Operating Results The consolidated loss for the Group after providing for income tax amounted to $5,620,204 (2019: loss of $5,004,727). Financial Position The net assets of the Group have increased by $5,883,159 from 30 June 2019 to $20,955,691 in 2020. The increase is largely due to a capital raising undertaken during the year. Significant Changes in the State of Affairs In October 2019, the Company signed a strategic 10-year operator agreement with private company TRL Tanami over the Company’s Old Pirate Project located in the Tanami Region of the Northern Territory. Other than as disclosed in this Report, no additional significant changes in the state of affairs of the Company occurred during the financial year. Matters Subsequent to the End of the Financial Year The impact of the Coronavirus (COVID-19) pandemic is ongoing and it is not practicable to estimate the potential impact after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the State, Territory and Commonwealth Governments as well as the Central Land Council. Such measures include, but are not limited to, social distancing and quarantine requirements, travel restriction, land access restrictions, ability to undertake land clearances and any economic stimulus that may be provided. Subsequent to year-end 2,000,000 unlisted options vested and the Company issued 1,050,000 and cancelled 12,500,000 unlisted options. Additionally the Company agreed to issue 400,000 unlisted options to the Company’s Managing Director, subject to shareholder approval at the next AGM (for details refer to Note 17). Likely Developments • • • Continued regional exploration; Further rationalisation of tenement holdings in the Northern Territory through divestment or joint venture; and Systematic evaluation of high potential early stage targets in Western Australia. Environmental Regulation The Group’s operations are subject to standard environmental regulation under the laws of the Commonwealth of Australia and the Northern Territory. The Group monitors its compliance with environmental regulations on an ongoing basis. The Directors are not aware of any significant breaches during the period covered by this report. 32 Prodigy Gold Annual Report 2020 DIRECTORS’ REPORT INFORMATION ON DIRECTORS Mr Thomas McKeith BSc Hons (Geol), GDE (Mining), MBA, Fellow AusIMM Status: Independent Position: Non-Executive Chairman Qualifications and Experience: Mr McKeith is a resource company executive with over 30 years’ experience in various exploration, business development, mine geology and executive leadership roles. He has led exploration teams to several significant discoveries and concluded several significant business development transactions. Mr McKeith was formerly executive vice president: Growth and International Projects for Gold Fields Ltd, where he was responsible for global exploration and project development. He has also served as CEO of Troy Resources Ltd and held non-executive director roles at Sino Gold Ltd and Avoca Resources. He is currently a non-executive director of Evolution Mining Ltd (since February 2014), non- executive chairman of Genesis Minerals Limited (since November 2018), non-executive director of Arrow Minerals Limited (since August 2019) and principal in various private resource investment companies. Mr Matthew Briggs BSc Hons (Geol), Member AusIMM, Member AICD Status: Not independent Position: Executive Director Qualifications and Experience: Mr Briggs has more than 20 years’ experience in Australia and internationally in various aspects of mine geology, exploration, project management and strategic leadership in the gold industry. Matt graduated as a geologist from the University of Queensland and worked at a number of mine sites in Western Australia. Since then he has worked internationally on projects in Africa and headed Group Strategic Planning for Gold Fields Limited. Matt has been directly involved or managed teams that have discovered several multi-million ounce gold deposits. Mr Brett Smith BEng Hons (Chem), MBA, MA Status: Not independent Position: Non-Executive Director Qualifications and Experience: Mr Smith has participated in the development and delivery of a number of mining and mineral processing projects including coal, iron ore, base and precious metals. He has also managed engineering and construction companies in Australia and internationally. Mr Smith has served on boards of both private and public mining and exploration companies. He is currently executive director of Hong Kong listed Dragon Mining Limited (since February 2014), deputy executive Chairman of Hong Kong listed APAC Resources Limited (since May 2016), executive director of Metals X Limited (board member since December 2019), non-executive director of Tanami Gold NL (since November 2018) and non- executive director of Elementos Limited (since January 2020). Overall, Mr Smith has over 30 years’ international experience in the engineering, project development and organisational change management. Mr Michael Stirzaker BCom, CA Status: Not independent Position: Non-Executive Director Qualifications and Experience: Mr Stirzaker has over 30 years’ commercial experience, mainly in mining finance and mining investment with KPMG, HSBC Group, Kleinwort Benson Limited, RFC Group Limited, Tennant Metals and Finders Resources. From 2010 to 2019, Mr Stirzaker was a partner at the private equity mining fund manager, Pacific Road Capital. Mr Stirzaker is currently non- executive director of Base Resources Limited and Firestone Diamonds PLC. 33 Prodigy Gold Annual Report 2020 DIRECTORS’ REPORT Ms Jutta Zimmermann Dip AQF, Dip IT, GradDipACG, FGIA, FCIS Position: Company Secretary Qualifications and Experience: Ms Zimmermann is an accountant (Australian AQF diploma level) with over 30 years’ of Australian and international industry experience encompassing accounting, company secretarial, government and community liaison, business development and corporate administration management. She holds a diploma in information technology (Australian bachelor degree level) and a graduate diploma in applied corporate governance. Ms Zimmermann holds the position of Chief Financial Officer and Company Secretary with the Company. She is a fellow of the Governance Institute of Australia and is a Director of two of Prodigy Gold’s subsidiaries. Directors’ Meetings The Company had no Board committees during the financial year. The number of meetings of the Group’s Board of Directors held during the year ended 30 June 2020, and the number of meetings attended by each Director were: Directors Mr T McKeith Mr M Briggs Mr B Smith Mr M Stirzaker Board Meetings Eligible to Attend Attended 7 7 7 7 7 7 7 7 Interests in Shares and Share Rights of the Company At the date of this report, the interests of the Directors in the shares and share rights of the Group were as follows: Directors Mr T McKeith Mr M Briggs Mr B Smith Mr M Stirzaker Fully Paid Ordinary Shares Unlisted Options 2,158,586 500,000 175,000 - 7,000,000 14,500,000 1,500,000 - 34 Prodigy Gold Annual Report 2020 DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) This Remuneration Report outlines the Director’s and the Group’s key management personnel remuneration arrangements in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report, key management personnel of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any Director (whether executive or otherwise) of the Group. Remuneration Principles Remuneration levels are set with the objective of attracting and retaining appropriately qualified and experienced staff. Remuneration packages are structured to recognise, encourage and reward improved performance and business growth, balanced between short-term and long-term goals. Benchmarking is undertaken where considered appropriate to ensure remuneration packages are competitively positioned in the market. Non-Executive Director Remuneration Non-Executive Directors’ fees are set by the Board within the maximum aggregate amount of fees approved by shareholders at a general meeting. Non-Executive Directors are not entitled to retirement benefits other than statutory superannuation or other statutory required benefits. The remuneration of Non-Executive Directors is fixed for each individual Director taking into account market rates for comparable companies for time, commitment, responsibilities and accountability. The available Non-Executive Directors’ fees pool is currently $400,000. As at 30 June 2020 the Company utilised $94,310 (2019: $60,000) of the pool. Performance evaluations of the Board are usually undertaken annually with a view to comparing the performance of the Board and Directors against their relevant Charters and their interactions with and performance of management. A review of the Board’s performance for the year was finalized during July 2020. Key Management Personnel Remuneration including the Managing Director The key management personnel remuneration framework has three components and the combination of these comprise the key management personnel’s total remuneration: • • • Base salary and benefits Short-term incentives at the Boards discretion Long-term incentives at the Boards discretion Base Salary and Benefits Executive Directors, key management personnel and employees are offered a fixed base salary and benefits. Base salary and benefits are usually reviewed every year to ensure the employee’s remuneration is competitive with the market. Employment contracts do not guarantee increases in base salary and benefits. The Executive Directors, key management personnel and employees receive the superannuation guarantee contribution required by the government, which was 9.5% during the reporting period, and do not receive any other retirement benefits. Other benefits include personal accident (working directors) insurance and other fringe benefits. No remuneration consultants were engaged. Short-Term Incentives The objective of short-term incentives is to align the interests of Executive Directors, key management personnel and employees with those of the shareholders through the payment of short-term incentives linked to pre-agreed targets. The targets include, where appropriate meeting budget forecasts, occupational health and safety measures, relationship management, exploration success, staff retention, compliance and formulating company strategies. Short-term incentives are designed to incentivise and reward individual contribution to achieving overall performance. No discretionary short-term incentive cash bonuses have been granted during the year. 35 Prodigy Gold Annual Report 2020 DIRECTORS’ REPORT Long-Term Incentives All long-term and equity incentives must be linked to predetermined performance and/or continuity criteria. Long-term incentives are designed to align Executive Directors, key management personnel and employee’s interest with the Company’s longer term objectives of growth in market capitalisation, earnings per share, share performance compared to peer companies, exploration and strategic success. The Board may exercise its discretion in relation to approving incentives, including equity participation. The policy is designed to attract high calibre key management personnel and reward them for performance. Key management personnel are also entitled to participate in employee share or option arrangements. No discretionary long-term incentive cash bonuses have been granted during the year. Executive management received options during the financial year with details provided in Note 15 and prior year options continued to vest. Performance Evaluation There was no performance based cash remuneration paid during the year but the Company may in future grant, as part of each Executive Director and key management personnel’s remuneration package, a performance-based component, consisting of cash bonuses and/or incentives, including equity participation (refer to Note 15), linked to the achievement of key performance indicators (KPIs) and taking into account experience, qualifications and length of service. Company Performance The following table shows the gross revenue and interest, losses and dividends for the last five years for the listed entity, as well as the share price at the end of the respective financial years. Revenue and interest Net loss Share price at year-end Dividend paid Key Management Personnel 2016 36,149,624 21,616,759 0.065 - 2017 180,138 2018 141,739 2019 168,037 2020 205,300 7,012,190 5,693,350 5,004,727 5,620,204 0.095 - 0.087 - 0.089 - 0.045 - The following persons were key management personnel of the Group during the financial year: Key Management Personnel Position Commencement of Position Mr T McKeith Mr M Briggs Mr B Smith Mr M Stirzaker Non-Executive Chairman Managing Director Non-Executive Director Non-Executive Director 27 June 2016 3 October 2016 9 May 2016 3 December 2018 Ms J Zimmermann CFO / Company Secretary 1 June 2005 36 Prodigy Gold Annual Report 2020 DIRECTORS’ REPORT Details of Remuneration Details of compensation for key management personnel (“KMP”) and Directors of the Group are set out below: Short-Term Employee Benefits Cash Salary and Fees $ Cash Bonus $ Annual Leave 1) $ Post- Employ- ment Super- annuation $ Long-Term Benefits Long Service Leave 2) $ Share- based Payments Options 3) $ Termina- tion Benefits $ 2020 Directors Mr T McKeith Mr M Briggs Mr B Smith4) Mr M Stirzaker4) 54,795 315,000 15,849 15,849 Total Directors 401,493 Other KMP Jutta Zimmermann 220,000 Total Other Total 220,000 621,493 - - - - - - - - - 5,205 - 53,660 9,903 25,000 5,073 151,517 - - 1,306 1,306 - - 16,921 16,921 9,903 32,817 5,073 239,019 6,705 6,705 20,900 20,900 3,543 3,543 - - 16,608 53,717 8,616 239,019 1) 2) 3) 4) Annual leave relates to movements in annual leave provisions during the year. Long service leave relates to movements in long service leave provisions during the year. These amounts are accounting accruals required under accounting standards and have not actually been paid during the year, nor do they reflect the benefit (if any) that KMP may ultimately receive. The share-based payments are options expensed based on vesting conditions (refer to Note 15 in the consolidated financial statements). Cash Salary and Fees includes JobKeeper top-up payments. Short-Term Employee Benefits Cash Salary and Fees $ Cash Bonus $ Annual Leave 1) $ Post- Employ- ment Super- annuation $ Long-Term Benefits Long Service Leave 2) $ Share- based Payments Options 3) $ Termina- tion Benefits $ 2019 Directors Mr T McKeith Mr M Briggs 4) Mr B Smith Mr M Stirzaker5) Mr M Faul5) 54,795 315,000 - - - Total Directors 369,795 Other KMP J Zimmermann 4) Total Other Total 220,000 220,000 589,795 - - - - - - - - - - 5,205 - - 3,445 25,000 4,975 13,077 - - - - - - - - - - - - 3,445 30,205 4,975 13,077 (1,675) 20,900 (1,675) 20,900 1,770 51,105 3,520 3,520 8,495 159 159 13,236 1) 2) 3) 4) 5) 37 Annual leave relates to movements in annual leave provisions during the year. Long service leave relates to movements in long service leave provisions during the year. These amounts are accounting accruals and have not actually been paid during the year. Share-based payments are options expensed based on the vesting conditions (refer to Note 15 in the consolidated financial statements). Mark Faul resigned on 30 November 2018 and Mike Stirzaker was appointed director on 3 December 2018. Prodigy Gold Annual Report 2020 Proportion of Remune- ration that is at Risk 47.2% 29.9% 49.7% 49.7% 0% Total $ 113,660 506,493 34,076 34,076 688,305 251,148 251,148 939,453 - - - - - - - - Proportion of Remune- ration that is at Risk 0% 3.6% 0% 0% 0% 0.1% Total $ 60,000 361,497 - - - 421,497 242,904 242,904 664,401 - - - - - - - - - DIRECTORS’ REPORT Options and Shares Issued as Part of Remuneration Options valued at $239,019 (2019: $13,236) were issued to KMP and prior year options continued to vest during the financial year. These amounts are accounting accruals required under accounting standards and have not actually been paid during the year, nor do they reflect the benefit (if any) that KMP may ultimately receive. For further detail refer to Note 15. Employment Contracts of Directors and Other Key Management Personnel Remuneration and other terms of engagement for Non-Executive Directors are formalised in service agreements. The agreement summarises the Board policies and terms, including compensation relevant to the office of Director. The employment contracts of Executive Directors and Other KMP stipulate a range of one to four month resignation notification periods. The Company may terminate an employment contract without cause by providing a range of one to three-month written notice or making payment in lieu of notice based on the individual’s annual salary component. In the instance of serious misconduct the Company can terminate employment at any time. Other material provisions of the agreements relating to remuneration are set out below. Non-Executive Directors The base fees for the Non-Executive Chairman is $60,000 per year. The base fee for shareholder nominee Directors was resolved to be $30,000 per year commencing on 1 January 2020, with a zero base fee for the period to 31 December 2019. The Commonwealth Government introduced the JobKeeper payment of $1,500 per employee per fortnight which led to an increased payment to the shareholder nominee Directors as required by JobKeeper legislation. Mr M Briggs, Managing Director • • • Term of agreement – 3 year contract commencing 3 October 2019; Base salary, inclusive of superannuation, $340,000 per year; Payment of a termination benefit on early termination by the Company, other than for gross misconduct, equals 3 month salary and, in the event of a takeover, equals 9 month salary; • Notice period varies between no notice if mutually agreed and three month notice by the Company or the executive without reason. Ms J Zimmermann, CFO and Company Secretary • • • Term of agreement – 2 year contract commencing 1 July 2012, contract extended automatically; Base salary, exclusive of superannuation, $220,000 per year; Payment of a termination benefit on early termination by the Company, other than for gross misconduct, equals 6 month salary and, in the event of a takeover, equals 9 month salary; • Notice period varies between no notice if mutually agreed and three month notice by the Company and 4 month notice by the executive without reason. Additional Disclosure Relating to Key Management Personnel Share-Based Payments Fair values at grant date are independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. These amounts are accounting accruals required under accounting standards and have not actually been paid during the year, nor do they reflect the benefit (if any) that KMP may ultimately receive. Refer to Note 15 of the financial statements for more information on options provided as part of remuneration to the Directors and key management personnel. 38 Prodigy Gold Annual Report 2020 DIRECTORS’ REPORT Shareholding No shares were issued by the Company to KMP as remuneration during the financial year. Details of shares held directly, indirectly or beneficially by Directors and KMP and their related parties are as follows: Name Mr T McKeith Mr M Briggs Mr B Smith 1) Mr M Stirzaker 2) Ms J Zimmermann Balance at the Start of the Year Received as Part of Remuneration Additions Disposals/Other Balance at the End of the Year 2,158,586 500,000 175,000 - 2,001,145 4,834,731 - - - - - - - - - - - - - - - - - - 2,158,586 500,000 175,000 - 2,001,145 4,834,731 1) 2) Mr Smith is a nominee of APAC Resources Limited who are a substantial shareholder of Prodigy Gold. Mr Stirzaker is a nominee of Pacific Road Capital Management who are a substantial shareholder of Prodigy Gold. Option Holding Directors and other KMP of the Group, including their personally related parties, hold options over ordinary shares in the Company. Name Mr T McKeith1) Mr M Briggs Mr B Smith1) Mr M Stirzaker1) Ms J Zimmermann Balance at the Start of the Year Received as Part of Remuneration Additions Disposals/Other Balance at the End of the Year 7,000,000 11,000,000 1,500,000 - 1,550,000 21,050,000 - 15,000,000 - - - 15,000,000 - - - - - - - - - - - - 7,000,000 26,000,000 1,500,000 - 1,550,000 36,050,000 1) Non-Executive Director options (10 Million) were agreed during the financial year, however were not issued and are pending shareholder approval. Loans to Directors and Other Key Management Personnel No loans to Directors and other key management personnel of the Group were provided in 2020 (2019: NIL). Other Transactions with Directors and Other Key Management Personnel The terms and conditions of transactions with Directors, other key management personnel and their related parties and entities were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions with non-Director related parties and entities on an arm’s length basis. This concludes the Remuneration Report, which has been audited. 39 Prodigy Gold Annual Report 2020 DIRECTORS’ REPORT Insurance of Officers and Indemnities During the financial year, the Company paid an insurance premium in respect of a contract insuring the Directors and executive officers of the Company and its related entities against a liability incurred as such a Director or executive officer to the extent permitted by the Corporations Law. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Company has not otherwise, during or since the end of the financial year, indemnified or agreed to indemnify an officer of the Company or any of its related entities against a liability incurred by such an officer. Proceeding on Behalf of the Company No person has applied to the Court under Section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under Section 237 of the Corporations Act 2001. Non-Audit Services The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the Company and/or the Group are important. The Directors are satisfied that the provision of non-audit services, during the year, by the auditor (or by another person or firm on behalf of the auditor), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. Payments for non-audit services were $19,593 (2019: $28,181) and are detailed in Note 13. The Directors are satisfied that the provision of non-audit services by the auditor, as set out above, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: • • all non-audit services have been reviewed by the Board to ensure they do not impact the impartiality 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. Auditor’s Independence Declaration A copy of the auditor's independence declaration as required under Section 307C of the Corporations Act 2001 is set out on page 42. Auditor BDO Audit (WA) Pty Ltd continues in office in accordance with section 327 and the Corporation Act 2001. This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the Directors MATTHEW BRIGGS Managing Director Dated this 25th day of August 2020 Perth, Western Australia 40 Prodigy Gold Annual Report 2020 CORPORATE GOVERNANCE STATEMENT In February 2019, the ASX Corporate Governance Council released a fourth edition of the ASX Corporate Governance Council’s Principles and Recommendations (ASX Principles) which takes effect for an entity’s first full financial year commencing on or after 1 January 2020. The Company has undergone a full review of its corporate governance policies during the financial year ending 30 June 2020 and amended its disclosures effective 1 July 2020. The Group’s Corporate Governance Statement for the year ended 30 June 2020 (which reports against these ASX Principles) may be accessed from the Company’s website at www.prodigygold.com.au/about-prodigy- gold/corporate-governance. The Group’s ESG (Environmental Social Governance) Statement for the year ended 30 June 2020 may also be accessed from the Company’s website at www.prodigygold.com.au/about-prodigy-gold/corporate-governance. 41 Prodigy Gold Annual Report 2020 Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au 38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia DECLARATION OF INDEPENDENCE BY GLYN O'BRIEN TO THE DIRECTORS OF PRODIGY GOLD NL As lead auditor of Prodigy Gold NL for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Prodigy Gold NL and the entities it controlled during the period. Glyn O’Brien Director BDO Audit (WA) Pty Ltd Perth, 25 August 2020 42 BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. ANNUAL FINANCIAL REPORT The financial statements of Prodigy Gold NL for the year ended 30 June 2020 were authorised for issue in accordance with a resolution of the Directors on 25 August 2020 and cover the consolidated entity consisting of Prodigy Gold NL and its subsidiaries as required by the Corporations Act 2001. Separate financial statements for Prodigy Gold NL as an individual entity are no longer presented as a consequence of a change to the Corporations Act 2001. However, limited financial information for Prodigy Gold NL as an individual entity is included in Note 20. The financial statements are presented in Australian currency. Prodigy Gold NL is a company limited by shares, incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange. The address of the registered office and principal place of business is: Prodigy Gold NL Level 1, 141 Broadway NEDLANDS WA 6009 A description of the nature of the Group’s operations and its principal activities is included in the review of operations and activities on pages 6 to 28 and in the Directors’ Report on pages 32 to 40, both of which are not part of this financial statement. Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases, financial reports and other information are available on our website: www.prodigygold.com.au 43 Prodigy Gold Annual Report 2020 ANNUAL FINANCIAL REPORT CONTENTS Financial Report Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Cash Flows Consolidated Statement of Changes in Equity Notes to the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report to the Members Additional Information for Public Listed Companies 43 45 46 47 48 49 67 68 72 44 Prodigy Gold Annual Report 2020 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2020 Consolidated Notes 2020 $ 2019 $ 2 3 3 3 3 7 4(a) Interest Other income Administrative expenses Employee and Directors benefits expenses Share-based payments Depreciation expenses Other expenses Exploration expenses Impairment of property, plant and equipment Impairment of capitalised exploration and evaluation expenditure Loss before income tax expense Income tax expense Loss for the year Loss attributable to members of Prodigy Gold NL Other comprehensive income Total other comprehensive income for the year Total comprehensive loss for the year Total comprehensive loss for the year attributable to members of Prodigy Gold NL 205,300 550,944 168,037 1,650,410 (567,317) (239,176) - (412,605) (5,157,350) - - (530,559) (13,256) - (455,041) (5,703,721) (15,670) (104,927) (5,620,204) (5,004,727) - (5,620,204) (5,620,204) - (5,004,727) (5,004,727) - - - - (5,620,204) (5,004,727) (5,620,204) (5,004,727) Basic and diluted loss per share attributable to the ordinary equity holders of the Company Basic and diluted loss per share (cents per share) 19 (1.00) (1.09) The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 45 Prodigy Gold Annual Report 2020 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020 ASSETS CURRENT ASSETS Cash and cash equivalents Other receivables Inventories Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Term deposits Property, plant and equipment Exploration and evaluation expenditure TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Employee benefits TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Employee benefits Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulated losses TOTAL EQUITY Consolidated Notes 2020 $ 2019 $ 5 6 6 7 8 9 10,699,944 6,356,062 248,865 45,980 166,673 907,803 143,525 110,010 11,161,462 7,517,400 2,427,490 48,722 9,943,824 12,420,036 23,581,498 683,649 197,543 881,192 58,385 1,686,230 1,744,615 2,625,807 2,427,490 84,256 9,943,824 12,455,570 19,972,970 2,921,645 234,178 3,155,823 58,385 1,686,230 1,744,615 4,900,438 20,955,691 15,072,532 10 11(a) 187,262,068 176,027,723 3,462,495 3,336,136 (169,768,872) (164,291,327) 20,955,691 15,072,532 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. 46 Prodigy Gold Annual Report 2020 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2020 CASH FLOWS FROM OPERATING ACTIVITIES Contribution from joint venturers Expense re-imbursements from JV Partners Payments to suppliers and employees (excludes payments for exploration) Interest received Government Grants Payments for exploration Payments for JV Projects Net cash (outflow) from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of property, plant and equipment Net cash inflow from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Placement / Refund of security deposits (cash-back) Share issue costs Net cash inflow from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Consolidated Notes 2020 $ 2019 $ 250,000 2,215,044 (1,158,060) 192,993 218,117 1,500,000 1,944,348 (810,160) 177,270 - (4,423,800) (4,446,423) (4,187,939) (6,893,645) (1,821,044) (3,456,009) 3,182 3,182 - - 12,000,000 3,692,155 - (765,655) 11,234,345 4,343,882 6,356,062 10,699,944 51,087 (67,823) 3,675,419 219,410 6,136,652 6,356,062 18 5 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. 47 Prodigy Gold Annual Report 2020 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2020 Contributed Equity $ Share-based Payment Reserve $ Accumulated Losses $ Notes Total $ 172,403,391 3,310,340 (159,286,600) 16,427,131 - - - 10(a) 10(a) 15 3,692,155 (67,823) - 3,624,332 176,027,723 - - - 10(a) 10(a) 15 12,000,000 (765,655) - - 11,234,345 187,262,068 - - - - - 25,796 25,796 (5,004,727) (5,004,727) - - (5,004,727) (5,004,727) - - - - 3,692,155 (67,823) 25,796 3,650,128 3,336,136 (164,291,327) 15,072,532 - - - - - (142,659) 269,018 126,359 (5,620,204) (5,620,204) - - (5,620,204) (5,620,204) - - 142,659 12,000,000 (765,655) - - 269,018 142,659 11,503,363 3,462,495 (169,768,872) 20,955,691 Balance at 1 July 2018 Comprehensive income for the year Loss for the year Other comprehensive income Total comprehensive loss for the year Transaction with owners in their capacity as owners: Shares Issued Transaction costs Share-based payments Total transactions with owners Balance at 30 June 2019 Comprehensive income for the year Loss for the year Other comprehensive income Total comprehensive loss for the year Transaction with owners in their capacity as owners: Shares issued Transaction cost Share-based payments reversal Share-based payments Total transactions with owners Balance at 30 June 2020 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. 48 Prodigy Gold Annual Report 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 CONTENTS OF THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Segment Information 2. Other Income 3. 4. 5. 6. 7. 8. 9. Expenses Income Tax Expense Cash and Cash Equivalents Term Deposits and Other Receivables Exploration, Evaluation and Development Expenditure Trade and Other Payables Provisions 10. Contributed Equity 11. Reserves 12. Financial Risk Management 13. Auditor’s Remuneration 14. Contingencies 15. Share-Based Payments 16. Related Party Transactions 17. Subsequent Events 18. Cash Flow Information 19. Loss per Share 20. Parent Entity Information 21. Subsidiaries 22. Company Details 23. Summary of Significant Accounting Policies Page 50 50 50 51 52 53 53 54 54 55 56 57 59 59 59 62 63 63 64 64 65 65 65 49 Prodigy Gold Annual Report 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1: SEGMENT INFORMATION Commencing 1 July 2018 the full Board of Directors, who are the chief operating decision makers, identified one operating segment reportable as exploration for the Group. NOTE 2: OTHER INCOME Contribution from joint ventures Expense re-imbursements from JV Partners Sale of Fixed Assets Government Grants Other Income NOTE 3: EXPENSES Employee and Directors’ benefits expense Less: Amounts included in exploration expenses Share-based payment expense Less: Amounts included in exploration expenses Depreciation expense Less: Amounts included in exploration expenses Allowance for expected credit loss Less: Amounts included in exploration expenses Exploration expenses: Employee benefit expense Share-based payment expense Depreciation expense Allowance for expected credit loss Other exploration expenses Consolidated 2020 $ 250,000 13,533 2,744 251,349 33,318 550,944 2019 $ 1,500,000 64,567 - 85,843 - 1,650,410 Consolidated 2020 $ 2019 $ 1,913,756 2,028,851 (1,346,439) (1,498,292) 567,317 530,559 269,018 (29,842) 239,176 35,096 (35,096) - 404,802 (404,802) - 25,796 (12,540) 13,256 55,250 (55,250) - - - - 1,346,439 1,498,292 29,842 35,096 404,802 3,341,171 5,157,350 12,540 55,250 - 4,137,639 5,703,721 50 Prodigy Gold Annual Report 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 4: INCOME TAX EXPENSE a) Income tax expense Current tax Deferred tax b) Reconciliation of income tax expense to prima facie tax payable Loss from continuing operations before income tax expense Tax at the Australian tax rate of 27.5% (2019: 27.5%) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Non-assessable income Share-based payments Other permanent differences Deferred tax assets not brought to account Income tax expense The applicable weighted average effective tax rates Consolidated 2020 $ 2019 $ - - - - - - (5,620,204) (5,004,727) (1,545,556) (1,376,300) (37,596) 65,774 327 (23,607) 7,094 483 (1,517,051) (1,392,330) 1,517,051 1,392,330 - 0% - 0% The Group made an election to form a tax-consolidated group from 1 July 2003. As a consequence, the transactions between the member entities will be ignored. c) Deferred tax liability Exploration and evaluation expenditure Temporary difference Off-set of deferred tax assets Net deferred tax liability recognised d) Unrecognised deferred tax assets arising on timing Tax losses Temporary differences Expenses taken into equity Off-set of deferred tax liabilities Net deferred tax assets not brought to account 2,444,000 2,683,542 57,817 71,096 2,501,817 2,754,638 (2,501,817) (2,754,638) - - 37,151,988 40,439,731 1,970,830 164,863 2,104,479 17,844 39,287,681 42,562,054 (2,501,817) (2,754,638) 36,785,864 39,807,416 No deferred tax assets have been recognised as it is not probable that future tax profits will be available to offset these balances. 51 Prodigy Gold Annual Report 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 4: INCOME TAX EXPENSE cont’d Accounting Policy Income taxes Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are not brought to account unless realisation of the asset is probable. Deferred tax assets in relation to tax losses are not brought to account unless it is probable that the benefit will be utilised. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. Tax consolidation legislation Prodigy Gold NL and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. The Parent Entity, Prodigy Gold NL, and the controlled entities in the tax consolidated group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand-alone taxpayer in its own right. Accounting estimates and judgements Income taxes The Group is subject to income taxes in Australia. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group estimates its tax liabilities based on the Group’s understanding of the tax law. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax provisions in the period in which such determination is made. NOTE 5: CASH AND CASH EQUIVALENTS Cash at bank and in hand Short-term bank deposits Consolidated 2020 $ 2019 $ 1,399,944 9,300,000 10,699,944 4,106,062 2,250,000 6,356,062 For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of six months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 52 Prodigy Gold Annual Report 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 6: TERM DEPOSITS AND OTHER RECEIVABLES CURRENT Other receivables (Note 6(a)) Provisions for Allowance for expected credit loss (Note 6(a)) NON-CURRENT Bond term deposit and DPIR Cash Bonds (a) Other receivables Consolidated 2020 $ 2019 $ 653,667 (404,802) 248,865 907,803 - 907,803 2,427,490 2,427,490 2,427,490 2,427,490 These amounts generally arise from transactions outside the usual operating activities of the Group and are predominantly receivables from joint venture partners for expense re-imbursements. Accounting Policy The Group measures other receivables at amortised cost, less any allowance for expected credit losses. Accounting estimates and judgements The Group’s other receivables and financial assets were subject an assessment under AASB 9 as at 30 June 2020. The assessment took into account the likelihood of an impairment event occurring in the future for Prodigy Gold’s debtors and other debtor. This assumption includes the assessment of the ability of other debtors to pay. The amounts contain some past due assets that have been provided for and a total of $404,802 (2019: $0) of likely future credit losses have been recognised for the year ended 30 June 2020. NOTE 7: EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE Carrying amount at the beginning of reporting period Less: Impairment expense Carrying amount at the end of reporting period Accounting Policy Consolidated 2020 $ 2019 $ 9,943,824 10,048,751 - (104,927) 9,943,824 9,943,824 Acquired exploration and evaluation assets are carried at acquisition value less any subsequent impairment. All exploration and evaluation expenditure, subsequent to initial acquisition, is expensed until the Directors conclude that the technical feasibility and commercial viability of extracting a Mineral Resource are demonstrable and that future economic benefits are probable. In making this determination, the Directors consider the extent of exploration, the proximity to existing mine or development properties as well as the degree of confidence in the mineral resource. No amortisation is charged during the exploration and evaluation phase. Amortisation is charged upon commencement of commercial production. Exploration and evaluation assets are tested for impairment triggers annually and if there is an indicator of impairment under AASB 6 Exploration for and Evaluation of Mineral Resources, the area of interest is tested for impairment under AASB 136 Impairment of Assets. Upon establishment of commercially viable mineral resources, exploration and evaluation assets are tested for impairment. 53 Prodigy Gold Annual Report 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 7: EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE cont’d Accounting estimates and judgements The Group undertook an assessment for impairment triggers of its exploration assets. No tenements with an assigned value were surrendered and no impairment was recognised. The balances of the exploration assets are considered to be recoverable on the basis that the Group holds rights to tenure and has undertaken, and will continue to undertake, significant exploration on the exploration assets. NOTE 8: TRADE AND OTHER PAYABLES CURRENT LIABILITIES (Unsecured) Trade payables Sundry payables and accrued expenses Consolidated 2020 $ 2019 $ 526,661 156,988 683,649 1,846,559 1,075,086 2,921,645 Information about the Group’s exposure to liquidity risk is provided in Note 12. Accounting Policy These amounts represent unpaid liabilities for goods and services provided to the Group prior to the end of financial year and liabilities to government departments offset by government grants for COVID-19 measures. Trade and other payables are recognised initially at fair value and subsequently at amortised cost. NOTE 9: PROVISIONS NON-CURRENT Exploration and mine restoration Movement in provisions Consolidated 2020 $ 2019 $ 1,686,230 1,686,230 1,686,230 1,686,230 Movement in provisions during the current financial year, other than employee benefits, are set out below: Opening balance Additional provisions Amounts reversed Closing balance Consolidated 2020 $ 2019 $ 1,686,230 1,688,251 - - 46,900 (48,921) 1,686,230 1,686,230 54 Prodigy Gold Annual Report 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 9: PROVISIONS cont’d Accounting Policy Long-term environmental obligations are based on the Group's environmental management plans, in compliance with current environmental and regulatory requirements. Full provision is made based on the value of the estimated cost of restoring the environmental disturbance that has occurred up to the reporting date. The restoration provision relates to exploration, evaluation and development expenditure and rehabilitation relating to the mining lease. The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in legislation, technology or other circumstances. Cost estimates are not reduced by the potential proceeds from the sale of assets. Accounting estimates and judgements Rehabilitation obligation The Group estimates the future rehabilitation costs of the site and exploration locations taking into consideration facts and circumstances available at statement of financial position date. A provision has been recognised for the cost to be incurred for the restoration of mine and exploration sites based on the estimated cost. The estimated cost is determined to be the equivalent to the bonds provided to the relevant government departments, reduced by restoration work completed and then increased by a correction factor. The bonds provided are calculated by the government by allocating rehabilitation cost to activities proposed in a mine management plan submitted to the department. Restoration work is completed on an ongoing basis. NOTE 10: CONTRIBUTED EQUITY (a) Ordinary Shares Details Opening balance Share placement Date Number of Shares Issue Price $ Value $ 1 July 2018 435,601,334 172,403,391 14 December 2018 45,026,272 0.082 3,692,155 Transaction costs relating to share issues Closing balance 30 June 2019 480,627,606 (67,823) 176,027,723 Share placement 29 August 2019 100,000,000 0.12 12,000,000 Transaction costs relating to share issues Closing balance 30 June 2020 580,627,606 (765,655) 187,262,068 Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital. (b) Options The number of unlisted options of the Company as at 30 June 2020 is 39,150,000 (2019: 26,325,000). For further details refer to Note 15. 55 Prodigy Gold Annual Report 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 10: CONTRIBUTED EQUITY cont’d Accounting Policy Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration. If the entity re-acquires its own equity instruments, for example as the result of a share buy-back, those instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity. NOTE 11: RESERVES (a) Reserves Share-based payment reserve Movements in reserves Balance at 1 July 2018 Share-based payments expense Balance at 30 June 2019 Share-based payments expired and re-valued1) Share-based payments expense (refer to Note 15) Balance at 30 June 2020 Consolidated 2020 $ 2019 $ 3,462,495 3,462,495 3,336,136 3,336,136 Share-based payment reserve $ 3,310,340 25,796 3,336,136 (142,659) 269,018 3,462,495 1) On 28 June 2019, during the previous financial year, the Group had granted 2,325,000 Zepos as an equity incentive to employees of the Company, 1,675,000 of these Zepos expired during the financial year and a previously recognised amount of $130 was recycled through retained earnings. (b) Nature and purpose of Share-based payment reserve The share-based payment reserve is used to recognise the fair value of options issued as consideration for services provided. These amounts are accounting accruals required under accounting standards and have not actually been paid during the year, nor do they reflect the benefit (if any) that may ultimately be received. Refer to Note 15 to the financial statements for more information on options provided as part of remuneration to the Directors, key management personnel and employees. 56 Prodigy Gold Annual Report 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 12: FINANCIAL RISK MANAGEMENT The Group’s activities expose it to a variety of financial risks: market risk (including interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Risk management is addressed within an evaluative process at Board meetings. Market Risk - Interest rate risk Interest rate risk for the Group is considered to be minimal. The Group had no interest attracting debts at 30 June 2020 and assets are managed with a mixture of short term and at call investments. All other receivables are non-interest bearing. The Group’s exposure to interest rate risk relates primarily to the Group’s cash and cash equivalents as detailed in the table below. A sensitivity analysis has been determined based on the exposure to interest rates at reporting date with the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the possible change in interest rates. The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities, is as follows: Weighted Average Effective Interest Rate % Floating Interest Rate $ Fixed Interest Rate Maturing < 1 year $ 1 - 5 year $ > 5 years $ Non-Interest Bearing $ Total $ 30 June 2020 Financial Assets: Cash and bonds Receivables 1.44% 1,399,944 9,300,000 - - Total financial assets 1,399,944 9,300,000 Financial Liabilities: Payables Total financial liabilities 30 June 2019 Financial Assets: Cash and bonds Receivables - - - - 2.10% 4,106,062 2,250,000 - - Total financial assets 4,106,062 2,250,000 Financial Liabilities: Payables Total financial liabilities - - - - - - - - - - - - - - - - - - - - - - - - - 10,699,944 248,865 248,865 248,865 10,948,809 683,649 683,649 683,649 683,649 - 6,356,062 907,803 907,803 907,803 7,263,865 2,921,645 2,921,645 2,921,645 2,921,645 Based on the financial instruments held at 30 June 2020, should the interest rate weaken/strengthen by 100 basis points against the effective interest rate with all other variables held constant, post-tax loss for the year would have been $106,999 higher/$106,999 lower (2019: $63,561 higher/$63,561 lower). 57 Prodigy Gold Annual Report 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 12: FINANCIAL RISK MANAGEMENT cont’d Credit Risk Credit risk is managed on a Group basis. Credit risk is a risk of financial loss if the Group’s counterparties are failing to discharge their obligation in respect to the Group’s financial instruments held in those counterparties. Credit risk mainly arises from cash, cash equivalents, deposits with banks and receivables. The Group deposits its fund only with prudent banks with the minimum rating of “A”, and the management believes they are fully recoverable from the banks when due. The Group has provided for a total of $404,802 (2019: $0) for past due receivables past due (see Note 6 for details). Credit risk further arises in relation to financial guarantees given to certain parties (see Note 14 for details). The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as summarised in the table below. Cash at bank Bonds term deposit Receivables Bank guarantees Liquidity Risk Consolidated 2020 $ 2019 $ 10,699,944 2,427,490 248,865 2,427,490 6,356,062 2,427,490 907,803 2,427,490 The Group has prudent liquidity risk management which includes maintaining sufficient funds to meet operational and exploration expenditure when they are due for payment, and the availability of funding through an adequate amount of a committed fund sources. The Group and Parent Entity manage liquidity risk by continuously monitoring forecasts and actual cash flows. The Directors of the Group place high importance on capital raising strategies and investor relations. Strategies pursued include road shows, company presentation to fund managers and sophisticated investors and consideration of strategic partnerships. Maturities of financial liabilities < 6 months $ 6 - 12 months $ 1 - 2 years $ 2 - 5 years $ > 5 years $ Total Contractual Cash Flows $ Carrying Amount $ 30 June 2020 Non-derivatives Non-interest bearing 683,649 Interest bearing - Total non- derivatives 30 June 2019 Non-derivatives 683,649 Non-interest bearing 2,921,645 Interest bearing - Total non- derivatives 2,921,645 - - - - - - - - - - - - - - - - - - - - - - - - 683,649 683,649 - - 683,649 683,649 2,921,645 2,921,645 - - 2,921,645 2,921,645 58 Prodigy Gold Annual Report 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 12: FINANCIAL RISK MANAGEMENT cont’d The table above analyses the Group’s and the Parent Entity’s financial liabilities into relevant maturity periods based on the remaining period at balance date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. NOTE 13: AUDITOR’S REMUNERATION a) Audit services BDO Total remuneration of audit services b) Non-audit services BDO – Tax compliance services Total remuneration of non-audit services NOTE 14: CONTINGENCIES Environmental Consolidated 2020 $ 2019 $ 32,490 32,490 19,593 19,593 32,362 32,362 28,181 28,181 The Group provides for all known environmental liabilities. While the Directors believe that, based upon current information, its current provisions for the environmental rehabilitation are adequate, there can be no assurance that material new provisions will not be required as a result of new information or regulatory requirements with respect to known sites or identification of new remedial obligations at other sites. Bank guarantees totaling $2,275,504 (2019: $2,275,504) have been provided. Term deposits of $2,275,504 (2019: $2,275,504) and a cash deposit of $46,900 (2019: 46,900) with the Department of Primary Industry and Resources secure these guarantees. Per Note 9 a restoration provision of $1,686,230 (2019: $1,686,230) has been recognised for all known required restoration costs. NOTE 15: SHARE-BASED PAYMENTS Zero exercise price options (“Zepos”) During the reporting period ended 30 June 2020, the Group granted 15,000,000 Zepos as an equity incentive to Matt Briggs, which were issued on 29 November 2019 following approval by shareholders at the AGM. The final number of Zepos vesting is subject to KPI’s and Company performance criteria. The performance conditions attached to the Tranche 1 STI’s, are all subject to non-market conditions. The STI’s operate as follows: • • 1,250,000 Tranche 1A Zepos shall vest if Mr Briggs achieves a Board supported acquisition or project divestment between 1 July 2019 and 1 July 2020 (as assessed by the Board), as reduced by the EHS Multiplier; and 1,250,000 Tranche 1B Zepos shall vest if Mr Briggs delivers a budgeted work program between 1 July 2019 and 1 July 2020 (as assessed by the Board), as reduced by the EHS Multiplier. The performance conditions attached to the Tranche 2 LTI’s and Tranche 3 LTI’s means the achievement of KPIs, comprising the discovery and definition of a substantial new deposit of >1Moz JORC Resource, category inferred or better, within an optimised design and having an average cost of production of 5% of options on issue Matthew Briggs Thomas McKeith Samuel Ekins Pacific Road Capital Management Brett Smith 7. On-Market Buy Back The Company does not have a current on-market buy back. Number of Unlisted Options % Held of Unlisted Options 14,500,000 7,000,000 1,700,000 1,500,000 1,500,000 52.35% 25.27% 6.14% 5.42% 5.42% 74 Prodigy Gold Annual Report 2020 Level 1, 141 Broadway, Nedlands WA 6009 www.prodigygold.com.au 

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