RED 5 Limited
Annual Report 2023

Plain-text annual report

Annual Report 2023 Our vision is to be a successful multi-operational exploration and mining company, providing benefits to all stakeholders through the consistent application of technical excellence and responsible and sustainable industry practices. Corporate PROFILE Red 5 Limited (ABN 73 068 647 610) is mid-tier Australian gold producer with established mines located in the Leonora District of Western Australia. The Company is listed on the Australian Securities Exchange (Ticker: RED). Red 5 owns and operates the new long-life King of the Hills (KOTH) Gold Mine, located approximately 900 kilometres north-east of Perth and 25 kilometres north of Leonora in Western Australia. The KOTH Gold Mine comprises a centralised 5.5Mtpa processing hub, which is fed by three mines: 1. KOTH Open Pit 2. KOTH Underground 3. Darlot Underground, a satellite mine 100 kilometeres north of KOTH. KOTH has a Mineral Resource estimate of 4.5 Moz’s and an Ore Reserve of 2.5 Moz’s. Darlot has a Mineral Resource of 1.8 Moz’s and an Ore Reserve of 0.1 Moz’s. The Red 5 Group also holds a royalty interest in the Siana Gold Project in the Philippines, which recommenced gold production in 2023. CONTENTS 2023 Highlights Message from the Chairman Managing Director’s Report Environmental, Social and Governance Summary Resources and Reserves Statement Tenement Schedule Financial Report Directors’ Report Annual Financial Statements Notes to Financial Statements Director’ Declaration Independent Auditor’s Report Statement of Shareholders Corporate Directory 1 2 3 9 13 21 22 49 53 88 89 94 95 2023 ANNUAL REPORT 2023 Highlights 1 WESTERN AUSTRALIAN GOLD OPERATIONS King of the Hills (KOTH) Gold Mine FINANCIAL AND CORPORATE \ Red 5 incurred a net loss of the \ Positive safety performance, with Red 5’s 12-month Total Recordable Injury Frequency Rate (TRIFR) improving significantly year-on-year to 9.0 (20.2 at 30 June 2022). \ Commercial production declared at the King of the Hills (KOTH) gold mine on 16 December 2022. \ Total gold production for FY-23 of 162,883 ounces, including production of 102,574 ounces at an AISC of A$1,837/oz for 2H FY-23. \ Total gold sales for FY-23 of 164,974 ounces. \ KOTH processing plant now operating at an annualised throughput rate of 5.5Mtpa, significantly higher than the nameplate design of 4.0Mtpa. Exploration and resource development \ Updated Ore Reserve and Mineral Resource statement announced on 7 September 2023, which demonstrates the scale and potential of Red 5’s Leonora district operations reinforced with updated Mineral Resources of 6.2M ounces and Ore Reserves of 2.6M ounces. \ High-grade assays received from underground Resource extension and grade control drilling across key mining areas at KOTH, with results underpinning the FY-23 and FY-24 mine plans and confirming the potential to extend existing Resources. \ Strong assay results received from underground grade control and resource extension drilling across several key mining areas at the Darlot Gold Mine. Results confirm the FY-24 and FY-25 Darlot mine plan with new targets for Resource growth also identified. \ First-pass exploration drilling has delivered positive results at Yandal South, with air-core drilling intersecting multiple zones of gold mineralisation along a 1.2km strike. consolidated Group after income tax for the year ended 30 June 2023 of $8.7 million (30 June 2022: loss of $28.6 million). The FY-23 results include an unaudited underlying EBITDA of $96.1 million (2022: loss of $4.3 million). \ Two highly respected mining executives were appointed to the Red 5 Board as part of an ongoing Board renewal process, with Russell Clark appointed as Chair and Peter Johnston appointed as Non-Executive Director in July 2023. Mr Kevin Dundo retired from the Board during the year after 13 years of valued service to the Company. \ Capital raisings completed to support the ramp-up of production at KOTH and future growth opportunities. \ Publication of Red 5’s inaugural ESG Report for the 2022 financial year (FY-22), which provides a formal framework to articulate the Company’s future sustainability initiatives and goals. \ The Company’s net debt position improved significantly in the June 2023 Quarter, reducing by $44.5 million to $81.9 million on 30 June 2023. Cash and bullion were $45.9 million at 30 June 2023, with $127.8 million of gross debt outstanding at the end of the reporting period. 2 2023 ANNUAL REPORT Message to Shareholders FROM THE CHAIRMAN Dear Shareholders Having been appointed as the new Chair of Red 5 on 1 July As mining reached the main contact zone between the 2023, let me say at the outset that it is very exciting to have the granodiorite and ultramafic rock, where the majority of higher- opportunity to join a rapidly growing Australian gold company at grade gold mineralisation is located in the open pit, this helped a significant period in the Company’s history. I would firstly like to acknowledge my predecessor, Kevin Dundo, who provided strong leadership over a long period of drive a significant uplift in gold production. Four consecutive months of record gold production from March onwards underpinned a record 61,705 ounce June 2023 quarter. time and steered the Company through a major transformation, The processing plant is now operating at an annualised from being a gold producer in the Philippines to emerging as a throughput rate of 5.5 million tonnes per annum, almost 40 per new mid-tier Australian gold producer. From the perspective of a relative newcomer to the Red 5 story, FY 2023 has clearly been a year of two quite contrasting halves. cent above its nameplate design capacity. This firmly establishing it as the largest and most efficient processing hub in the Leonora district and provides a glimpse of the enormous scale and potential of the KOTH asset once operating at full Pleasingly, our safety performance improved significantly over capacity. the course of the year, reflecting a relentless focus by the team on enhancing safety outcomes as well as the transition to steady-state operations and a marked reduction in staff turnover over the course of the year. Red 5’s 12-month Total Recordable Injury Frequency Rate Thanks to the very strong June 2023 quarterly performance, the Company’s financial position significantly improved by year end. Red 5’s net debt position reduced by $44.5 million to $81.9 million on 30 June 2023. With cash and bullion of $45.9 million at financial year-end following the repayment of $22.0 million of dropped to 9.0 for the 2023 financial year, down from 20.2 as at debt in the June 2023 quarter, Red 5 will continue to focus on 30 June 2022, and there were nil lost-time injuries and nil rapidly reducing its debt in the year ahead and strengthening its restricted work injuries reported in the June 2023 quarter. This is balance sheet. an important result and one that we must all strive to maintain in the years ahead. Despite the seamless delivery of the $225 million King of the Corporately, the Company is continuing a process of board renewal, with highly respected mining executive Peter Johnston joining the Board as a Non-Executive Director from 10 July 2023 Hills (KOTH) gold mine on time and within budget last year, the shortly after my own appointment on 1 July 2023. first six months of project ramp-up proved challenging – due mainly to the impacts of the COVID-19 pandemic, severe labour shortages in the overheated Western Australian market and general cost inflation. These impacts, combined with the inevitable challenges and pitfalls that arise with the commissioning of any new large-scale mining project, delayed our ramp-up schedule and put short- term pressure on working capital, which prompted two capital raisings totalling $159 million during the year. The combination of these additional funds, together with an incredible amount of hard work and relentless focus – including a well-executed “catch-up” plan in the open pit , a strong collaboration with our contracting partners to address labour shortages and fine-tuning of the processing plant – have seen the operation well and truly hit its straps in the second half of the financial year, after commercial production was declared in December 2022. The Company has executed an impressive mine development and ramp-up program over the past 12 months that has positioned KOTH as one of the largest scale and longest life new gold mining operations delivered in Australia in recent history. In closing, I am truly excited about what lies ahead for Red 5. I would like to thank Mark Williams and the entire executive team, as well as the employees and contractors who are the lifeblood of our operations. Also, a very warm thank-you to all our shareholders for your continued support. The past 12 months has been at times challenging and frustrating, and the Company has well and truly turned the corner in 2023 – I look forward to what can be achieved in the years ahead. Russell Clark Chairman 18 September 2023 2023 ANNUAL REPORT 3 MANAGING DIRECTOR’S Report The 2023 financial year has seen Red 5 complete the ramp-up of production at our King of the Hills (KOTH) gold mine in the Eastern Goldfields region of Western Australia, with commercial production being declared on 16 December 2022. In addition, I am very pleased to report that the Company has also achieved a much-improved safety performance over the year, reducing our Total Recordable Injury Frequency Rate (TRIFR) at the end of the reporting period to 9.0, down from 20.2 at 30 June 2022. The ramp up was achieved despite the dual headwinds of intense labour shortages and rampant cost inflation and represents an outstanding outcome by both the Red 5 team and our contracting partners, MACA-Interquip and Macmahon Contractors. 250,000mE 300,000mE On the mining front, Red 5’s Eastern Goldfields operations delivered total gold production over the past year from KOTH and Darlot of 165,544 ounces, including production in the second half of the reporting period of 102,574 ounces at an all-in sustaining cost (AISC) of A$1,837 per ounce. Importantly, after overcoming the start-up issues that emerged during the initial commissioning and ramp-up phase, the Company was able to deliver four successive months of record production between March and June 2023, ending the reporting period with all mining and processing activities operating at or above expectations. 350,000mE NLGP 400,000mE 150km E a s t e r n G o l d fi e l d s G a s P i p e l i n e Bellevue Vivien Agnew Agnew 1.3 Mtpa Leinster Goldfields H i g h w a y Thunderbox RED 5 LIMITED Tenements ARDEA JV Tenements Gold Mine (operating, closed) Gold Project (developing) Mtpa Mill throughput (million tonnes/annum) Gold Prospects Greenstones Granites NORTH 25 Kilometers Western Australia Darlot Project King of the Hills Project Darlot 100km Darlot 1.0 Mtpa Thunderbox 6.0 Mtpa 50km Bundarra 6,950,000mN Duketon 2.5, 2.5 & 5 Mtpa Duketon 6,900,000mN 6,850,000mN Laverton Granny Smith 3.5 Mtpa Bannockburn King of the Hills King of the Hills 5 5. Mtpa Mt Morgans 2.8 Mtpa Gwalia Gwalia 1.5 Mtpa Leonora Cardinia Mt Morgans Granny Smith 6,800,000mN Apollo Hill Sunrise Dam Sunrise Dam 4.1 Mtpa Mt Ida Ulysses Darlot and KOTH locations, showing annual mill throughput from key gold deposits in the region. 4 2023 ANNUAL REPORT MANAGING DIRECTOR’S Report (cont.) HEALTH AND SAFETY The operational focus on safety leadership during the reporting period has contributed to an improved safety performance at both the KOTH and Darlot sites. The improvement in safety performance reflects our focus on stabilising the workforce and transitioning to steady-state operations. 0.50 (Lost Time Injury Frequency Rate) LTIFR (12-month) TRIFR (12-month) FY23 TRIFR Safety Statistics (12-month) 17.56 17.80 15.51 9.01 I R F R T h t n o m 2 1 20 15 10 5 0 9.01 (Total Recordable Injury Frequency Rate) September 2022 December 2022 March 2023 June 2023 2023 ANNUAL REPORT 5 MANAGING DIRECTOR’S Report (cont.) EASTERN GOLDFIELDS, WESTERN AUSTRALIA Red 5 holds an extensive 2,555km2 strategic tenement footprint in the world-class Leonora-Leinster mineral district in the northern goldfields of Western Australia, which includes the KOTH and Darlot gold mines. In addition to its operating gold mines, Red 5’s tenements also offer significant exploration upside, with active exploration programs being undertaken at both Darlot and KOTH during the year. WESTERN AUSTRALIAN GOLD OPERATIONS Table 1: Quarterly physicals and cost summary for FY-23 Units Sep 2022 Quarter Dec 2022 Quarter Mar 2023 Quarter Jun 2023 Quarter 2H FY23 Mining physicals KOTH OP Ore Mined KOTH OP Waste Mined KOTH OP Mined Grade KOTH UG Development KOTH UG Ore Mined KOTH UG Mined Grade Darlot UG Development Darlot UG Ore Mined Darlot UG Mined Grade Total Contained Gold Mined 3 KOTH processing physicals Ore Milled Head Grade Recovery Gold Produced Gold Sales for AISC Purposes Mt Mt g/t m Mt g/t m Mt g/t oz Mt g/t % oz oz Average Gold Price Achieved 4 A$/oz Costs Mining Cartage Processing G&A Ore Stockpile Movements Selling Costs (inc. by-product credits) Cash costs Royalties Sustaining Capital and Mine development Corporate Overheads Finished Goods & GIC Movements All-in Sustaining Costs All-in Sustaining Costs (AISC) A’000 A’000 A’000 A’000 A’000 A’000 A’000 A’000 A’000 A’000 A’000 A’000 A$/oz 0.68 8.19 0.47 1,205 0.168 1.01 1,512 0.174 2.55 0.63 8.60 0.65 1,325 0.175 1.40 1,336 0.180 2.13 1.20 6.59 0.85 1,248 0.201 1.58 598 0.165 2.37 1.57 5.26 0.96 1,173 0.266 1.70 509 0.183 2.87 2.77 11.85 0.92 2,421 0.467 1.65 1,107 0.349 2.64 33,375 1 33,364 55,681 75,015 130,696 0.879 0.93 91.2 24,049 30,005 2 $2,540 1.099 1.14 90.1 36,260 35,100 $2,348 1.044 1.32 92.1 40,869 40,907 $2,527 62,690 4,286 15,980 6,207 1.196 1.71 93.5 61,705 58,962 $2,668 67,803 4,853 24,297 6,268 (20,640) (14,003) (792) 67,731 3,966 5,774 4,370 1,923 83,764 2,048 (1,298) 87,920 6,048 5,508 4,093 (3,927) 99,642 1,690 2.240 1.53 92.8 102,574 99,869 $2,610 130,493 9,139 40,277 12,475 (34,643) (2,090) 155,651 10,014 11,282 8,463 (2,004) 183,406 1,837 (1) Total includes mined ounces from Great Western of 3,223oz (2) Gold sales include gold production from the Darlot process plant in July of 2,661 ounces (3) Totals may not sum due to rounding (4) Inclusive of hedges 6 2023 ANNUAL REPORT MANAGING DIRECTOR’S Report (cont.) EASTERN GOLDFIELDS, WESTERN AUSTRALIA (cont.) Production summary Darlot Underground A total of 165,544 ounces of gold was recovered for the 12 months to 30 June 2023, with ore sourced from the KOTH open pit, KOTH underground and Darlot underground mines. Gold sales for FY-23 totalled 165,544 ounces. Commercial production at KOTH was declared on 16 December 2022, with production for 2H FY-23 totalling 102,574 ounces at an all-in sustaining cost (AISC) of A$1,837/oz. Mining KOTH Open Pit The Darlot Underground has benefitted greatly from the investment in mine development (completed in January 2023), that has opened up a number of new high-grade areas including Middle Walters South. Since putting the Darlot process plant into care and maintenance in July 2022, there has been a successful focus on reducing costs to reposition Darlot as a low-cost satellite underground mine to KOTH. The Darlot Underground had a very strong June Quarter benefitting from current high gold prices, which if sustained, will likely see Darlot continue for a number of years. The KOTH open pit has now ramped up to full production, having completed the cutback of Stage 1 in February 2023. Initial mining was impacted by COVID-absenteeism, following the reopening of the WA borders, which delayed the completion of the Stage 1 cutback by a number of months. Since mining commenced on the primary ore body, there has been a significant step up in high-grade ore tonnes from large contiguous ore zones in the open pit. The open pit mining strategy is designed for the primary ore body to be always accessible and mined throughout the life of mine. ) s e n n o t 0 0 0 ‘ ( e r O 2,000 1,500 1,000 500 0 KOTH Open Pit Performance Darlot Underground Performance 2.55 2.13 2.38 2.87 174k 180k 165k 183k Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Ore tonnes Ore grade 4.0 3.0 2.0 1.0 0.0 ) u A t / g ( e d a r G ) s e n n o t 0 0 0 ‘ ( e r O 2,000 1,500 1,000 500 0 0.95 304k 330k 0.69 422k 270k 1.17 441k 1.23 517k 4,025 13,288 10,951 717k 1,049k Q4 FY23 1.6 1.2 0.8 0.4 0 ) u A t / g ( e d a r G Q1 FY23 Q2 FY23 Q3 FY23 HG Ore LG Ore High grade Low grade KOTH Open Pit quarterly tonnes and grade performance (HG >0.5g/t). KOTH Underground The KOTH underground ramped up to the expected productivity levels in the final four months of the financial year, following a difficult start up impacted by COVID-19 absenteeism and shortages of skilled underground miners. Development has now reached the Regal, West and East zones and mining is performing much more strongly in these new “fresh” areas. 4,000 3,000 2,000 1,000 ) s e n n o t 0 0 0 ‘ ( e r O 0 KOTH Underground Performance 1.58 1.70 1.40 1.01 168k 175k 201k 266k Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Ore tonnes Ore grade 2.0 1.5 1.0 0.5 0 ) u A t / g ( e d a r G KOTH Underground quarterly tonnes and grade performance. Darlot Underground quarterly tonnes and grade performance throughout FY23. Processing Following a period of commissioning and ramp up of the KOTH process plant in the first half of the financial year, commercial production was declared on 16 December 2023. Since June 2023, the KOTH process plant has been operating at an annualised throughput rate of 5.5Mtpa, 37.5% higher than the nameplate design of 4.0Mtpa, whilst maintaining gold recovery levels. ) s e c n u o 0 0 0 ‘ ( d o G l 100 75 50 25 0 KOTH Gold Production 1.71 1.32 1.14 0.93 26,710 36,260 40,869 61,705 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Gold produced Feed grade 2.0 1.5 1.0 0.5 0 ) u A t / g ( e d a r G FY23 KOTH Quarterly gold production and feed grade. 2023 ANNUAL REPORT 7 MANAGING DIRECTOR’S Report (cont.) EXPLORATION AND RESOURCE DEVELOPMENT KING OF THE HILLS DARLOT Darlot near-mine exploration Drilling at the Darlot gold mine during the period confirmed Ore Reserves underpinning the FY-23 and FY-24 mine plan and identified new targets for potential Resource extension. Encouraging results were recorded in a number of key areas, which have confirmed and in some instances, identified the potential to upgrade existing Resource estimates. In addition, exploration drilling has successfully generated new targets for Resource extension, with strong results received from hole CAX0075, drilled just 320m from the current development in the Lords South mining area. Surface grade control drilling at the St George open pit satellite deposit at Darlot also returned significant intersections including 3.0m at 2,999.3g/t from 41m (SGGC122) – equivalent to 105oz/ tonne – and 1.0m at 203.6g/t from 15m (SGGC007). The potential development of a satellite open pit at St George will be evaluated at a later date. Underground drilling at KOTH delivered positive results, further defining current Ore Reserves that underpin the FY-24 and FY-25 mine plans and identifying new targets for potential Resource extensions. Significant assay results were reported across several key mining areas in the KOTH underground mine, with these impressive drill results provide further support for our mine plan over for FY24 and FY25, as well as opening up potential new mining areas for the future. Drilling of Regal was targeting a major controlling structure within the granodiorite and along the eastern contact against the ultramafic that surrounds the granodiorite intrusion. The area is characterised by a series of moderately southwest dipping structures in combination with other anastomosing tension veins associated with the contact. Regal represents a significant mining area for the KOTH underground mine in FY-24, with capital development underway. Surface exploration Air-core drilling targeting the NW structure at Yandal South returned highly encouraging results, identifying multiple intervals of vein- hosted gold mineralisation across broad zones. Recently acquired passive seismic data has revealed a >1,000m depth extent to the NW structure with inversion modelling showing a possible thrust style geometry dominating the geological setting. Drill program access and pad preparation were completed in June 2023 for follow-up (Phase 2) exploration drilling at this emerging discovery, designed to follow up the best-observed areas down to 150 metres with a revised drill orientation and tighter line spacing (100 metres). 8 2023 ANNUAL REPORT MANAGING DIRECTOR’S Report (cont.) CORPORATE BOARD APPOINTMENTS In July 2023, mining executive Mr Russell Clark was appointed as Chair of the Company and Mr Peter Johnston was appointed as an independent Non-Executive Director. These appointments are part of an ongoing renewal of the Red 5 Board, as the Company embarks on its next chapter of growth as a leading mid-tier Australian gold producer. During the reporting period, Mr Kevin Dundo retired as Chair of the Board following 13 years of valued service to the Company and Ms Fiona Harris retired as Non-Executive Director. DEBT AND EQUITY FACILITIES The $175.0 million debt funding package supporting the construction and development of KOTH was fully drawn down in the prior year. Repayments of the debt funding package commenced in December 2022 and will be paid over four years. $47.3 million has been repaid in the current year with $127.8 million remaining at 30 June 2023 (net debt at 30 June 2023 was $81.9 million). Borrowing costs of $2.7 million were capitalised to the loan. To support the ramp up of the new KOTH operations, Red 5 undertook two capital raisings during the year. FINANCIAL Gold and silver sales for the reporting period totalled $422.7 million with 164,974 gold ounces sold at an average price of $2,542 per ounce (2022: $165.0 million with 64,315 gold ounces sold at an average price of $2,526 per ounce). SUMMARY AND OUTLOOK With the King of the Hills gold mine now operating at full capacity, the coming financial year is expected to be a positive period for the Company, focusing on delivering safe, consistent and profitable ounces from the KOTH processing hub, in order to cement our position as a new Australian mid-tier gold producer. This will also support our aim of continuing to de-leverage the balance sheet, with positive cash flow from operations enabling us to continue to improve our net debt position. On the exploration front, drilling programs will continue across our tenement holdings within the Eastern Goldfields, with the aim of de-risking the mine plan and identifying new mining areas. As always, these activities will be conducted with an unwavering commitment to the Company’s environment, social and governance principles. Backed by the robust, long-life KOTH mining operation, Red 5 is now in a strong position to deliver reliable and profitable gold production to drive value for shareholders and strong cash-flow to achieve our growth objectives. I would like to again acknowledge the outstanding efforts of the Red 5 team, including both staff and contractors, who have worked hard over the course of the year to achieve this result. I would also like to acknowledge and thank all our shareholders for your continued support. The Group recorded a net loss after income tax for the year ended 30 June 2023 of $0.5 million, in comparison to a net loss for the year ended 30 June 2022 of $28.6 million, after a gain on sale of discontinued operation (Siana Project in the Philippines) of $20.0 million. Mark Williams Managing Director 18 September 2023 Cost of sales for the period of $386.4 million comprised production costs, royalties, movement in stockpiles and depreciation charge. 2023 ANNUAL REPORT 9 ENVIRONMENTAL, SOCIAL AND GOVERNANCE Summary SUSTAINABILITY OUR APPROACH TO SUSTAINABILITY At Red 5, we are acutely aware of the unique challenges and responsibilities that come with operating in the mining industry. Our commitment to sustainability is not just a corporate slogan; it is a guiding principle that shapes our operations. The following outlines our Sustainability focus: Environmental Stewardship Recognising the potential impacts of our operations on the environment, we are committed to responsibly managing the land and resources on which we depend and share with our neighbours and future generations. We will continue to adopt approaches to minimise water usage, prevent contamination and ensure safe disposal of waste, prioritising the health of the surrounding environment and our stakeholders. MATERIALITY ASSESSMENT During FY23, we performed an internal review to determine if our material topics were still relevant and if any new topics should be reflected. The evaluation resulted in the reorganisation and renaming of several material topics. The updated topics aim to further develop the focus on our relevant ESG impacts, capturing the expectations of our stakeholders and provide a framework for measuring success. We recognise that our material topics will evolve over time as the business grows and as our sustainability performance matures, and the framework will be improved accordingly. The full list of material topics is presented below. Business Ethics Cultural Heritage Approvals & Compliance GHG Management Human Rights Water Management Occupational Health & Safety Waste Management Biodiversity Conservation Human Capital TSF Management Employee Engagement Biodiversity Community Relations Mine Closure & Land Rehabilitation It is important to note that the revision of our material topics considered the guidelines outlined by the Global Reporting Initiative (GRI) and the industry specific topics found within the SASB Metals and Mining standards. ESG PROGRESS REPORT The SASB framework has been chosen to ensure we maintain consistent improvement and our sustainability reporting continues down an appropriate scope. This decision was made based on the results of a gap analysis conducted during the year of the SASB standards. The applicability and comprehensiveness of the standards best suits our current maturity levels, but also provides room for continued improvement. In this report, we detail our performance in addressing our material topics by disclosing against the SASB reporting indicators. As the organisation matures, we aim to continue aligning our performance with the SASB standards. KEY ENVIRONMENT ACTIVITIES Greenhouse Gas (GHG) Management Effective GHG management will involve implementing renewable energy solutions and a reduction in the release of GHG emissions throughout our operations and assist in global decarbonisation efforts. Our organisation relies on the expertise of industry leaders to determine of emissions through the regular reporting through the national pollutions inventory (NPI) and the national greenhouse and energy reporting (NGER) process. In FY22, Red 5 was responsible for the production of approximately 66,800 tonnes of CO2-e between its mining, exploration and corporate operations. With the expanding activities at the KOTH operations this has increased to 145,781 tonnes in FY23. Having this precision of information allows the organisation to more fully assess and identify opportunities for improvement in carbon management. Our operations are designed to minimise disruptions to local ecosystems where possible. We actively engage in rehabilitation activities and promote initiatives to ensure that local biodiversity is investigated, understood and managed for the best outcomes. Greenhouse Gas Emissions Through continual improvement, we are actively working to reduce our carbon emissions generated thought our production pipeline. The adoption of renewable energy sources, energy- efficient technologies, and carbon capture and storage solutions are allowing us to develop an understanding of the technologies available to the industry and how to incorporate those into the future of our operations. Community Engagement We believe in fostering strong, positive and engaging relationships with the communities in which we operate. This involves regular consultations, transparent communication, and initiatives aimed at ensuring that local community’s benefit from our presence. Workplace Health and Safety The safety and well-being of our workforce are paramount. We have implemented rigorous safety protocols, regular training sessions, and health initiatives to ensure that our employees work in a safe and supportive environment. Ethical Governance and Anti-Corruption We operate with the highest standards of integrity and transparency. Our governance structures are designed to prevent bribery, corruption, and other unethical practices, ensuring that we remain accountable to our stakeholders. Economic Contributions Beyond our core operations, we are committed to contributing positively to the economies of the regions in which we operate. This includes providing fair wages, supporting local businesses and communities. Our operations will continue to develop, implement and maintain management systems centred on the responsible use of resources for future generations and with an appetite for continual improvement. 10 2023 ANNUAL REPORT ENVIRONMENTAL, SOCIAL AND GOVERNANCE Summary (cont.) ESG PROGRESS REPORT (cont.) KEY ENVIRONMENT ACTIVITIES (cont.) KOTH Power for the KOTH operation is sourced from an onsite hybrid gas-solar power station. The installation is a 2 MW solar farm feeding in the operation hub and solar arrays to power several of the more remote production groundwater bores with further options being evaluated to contribute to reduction in the operation’s carbon emissions. Water management We are committed to optimising our water usage through effective baseline monitoring, management, and routine reporting. It is our responsibility to conserve this finite resource, manage risks to water quality from our activities and to operate in respect to other local resource users. Darlot Since the decommissioning of the processing circuit, the Darlot operation has drastically decreased its water usage. In FY23 approximately 508 kL of water was abstracted from the underground to allow mining with 209 kL reused on site. The Darlot borefield is still used to provide water for the accommodation village including the ablutions, potable supply and some minor uses across the operation amounting to a further 108 kL during the same period. Additional water supply from the neighbouring British King has been placed in the care and maintenance but remains as a potential source if needed. KOTH KOTH mine dewatering and existing production bores around the pit provided the necessary water supply for the KOTH processing plant construction, commissioning and ramp up during FY22. In FY23 the re-commissioned Sullivan borefield, including four new production bores, mine dewatering and recycled tailings decant water continued to support operations. Approximately 2.6 million kL were abstracted across the three water licences at King of the Hills, much of this was used during the construction phase to build infrastructure such as tailings storage facilitate construction activities, fed into the processing circuit and is being used to manage dust across the operations as well as supplying the KOTH accommodation village. To improve our dust management at KOTH a dust management program was introduced in from Q3 FY23. This has seen a vast reduction in dust generated from vehicle operations on site roads. In Q1 FY24 we will commence trials on further opportunities to reduce dust from our operations. Waste Management Appropriate waste management and safe disposal is critical to our industry to minimise environmental impacts. We are committed to reducing our waste generation and implementing recycling and reusing practices where possible though the utilisation of the operational Waste Management Plan. Darlot Hydrocarbon wastes are all removed from site by a certified contractor, transporting the wastes to an appropriate facility where it is disposed of in accordance with State regulations. Metals recycling is ongoing at the operation along with specialised waste initiatives focussing on e-waste, HDPE pipe and decommissioned infrastructure. Waste Generation - Darlot Waste rock generated Metric tons (t) Hazardous waste generated Metric tons (t) Hazardous waste recycled Metric tons (t) 248,480 1,551,272 9,373 Waste related non-compliance incidents or violations Number 0 KOTH Disposal and recycling processes across the operation will continue to be refined and improved in collaboration with our business partners, which will include a new landfill, scrap storage/salvage and bioremediation area planned for construction in FY24. Waste Generation - KOTH Non-mineral waste generated Metric tons (t) Waste rock generated Metric tons (t) Hazardous waste generated Metric tons (t) 1,460 5,907,200 1,112,265 Waste related non-compliance incidents or violations Number 0 TSF Management Responsible tailings storage facility management includes designing and operating our TSFs according to best practice industry standards and conformance with regulations. These critical details are encapsulated in the TSF operating manuals of our sites and practiced through the inclusion of a full time TSF engineer championing the facilities. This ensures the safety of our workers and surrounding communities and minimise environmental impacts. Tailings Storage Facilities Unit KOTH Darlot Total weight of tailings produced metric tons (t) 4,218,065 34,608 Total mineral waste mined metric tons (t) 11,448,574 246,155 KOTH TSF 5 – pictured below 2023 ANNUAL REPORT 11 ENVIRONMENTAL, SOCIAL AND GOVERNANCE Summary (cont.) ESG PROGRESS REPORT (cont.) KEY ENVIRONMENT ACTIVITIES (cont.) Mine Closure and Land Rehabilitation Red 5 has made adequate financial provision for required mine closure activities and to support development of appropriate post-mining land uses. To facilitate understanding of what the ideal post-mining land uses will be, we will engage, discuss and listen to the values of our stakeholders and efforts will be made to accommodate where possible. The end goal of these provisions is to bring the land to a reusable state and provide value to the surrounding stakeholders including pastoral, heritage and local government groups. Updated Mine Closure Plans are due in FY24 for the operations and will be of a level reflecting the site maturity. Darlot being at an advanced level while KOTH will be more conceptual but will improve in detail as the operations progresses. Biodiversity Red 5 undertook a number of pest control activities to more fully control feral populations of cats, dogs and foxes. The sites also fall within the northern rangelands management group boundaries who strive to minimise and control the spread of opuntia cactus (prickly pear) in the northern goldfields. KEY SOCIAL ACTIVITIES Human Rights Respect for human rights is an essential aspect of any responsible business. Our commitment to human rights includes ensuring fair treatment of employees, avoiding discrimination, and promoting ethical practices throughout our operations and supply chain. We reviewed and implemented changes into our terms and conditions for contracting parties to further enhance our commitments. Diversity and Inclusion In alignment with the “Sexual Harassment on Women in the FIFO Mining Industry” report released by the Western Australian Parliament in 2022, we implemented a number of initiatives during the year which will continue into FY24 and beyond. These included a review of village operations to ensure that these are reflective of broader community standards and this culminated in the implementation of common policies at both our operations. Review of our security operations were ongoing through FY23 in partnership with an external provided and further enhancements in this area are scheduled for implementation in Q1 and Q2 FY24. Recruitment marketing was also improved with the creation of a recruitment micro-site for the King of Hills Project and extensive engagement via social media channels. Employee Engagement Primary focus in FY23 was to focus on improving our retention of employees. During the year we relocated our People and Culture team to being 100% site based to improve communication with the workforce and management ensuring that we were able to work with our employees in a timely and focused manner. We have a range of policies in place that promote an inclusive work environment free from discrimination and harassment. Our investigation processes are robust and have been developed to appropriately examine, explore, resolve and put in place control measures to protect our stakeholders. At Red 5, we recognise that we operate in a highly competitive industry and sector. As a result, we are focused on creating a supportive environment that appropriately recognises and rewards our employees for their positive contributions and efforts. Various arrangements are in place that help to promote a sense of commitment, belonging and satisfaction. These include retention bonuses, quarterly performance bonuses, and market salary reviews. Since the previous financial year, our turnover rate has decreased by 15%. Moving forward, we will continue to develop and implement initiatives that support a positive work environment and ensures strong employee relations. Our future objectives include: \ Undertaking an employee culture survey; \ Implementation of the CORRE Values Awards; \ Implementing mandatory Bullying and Harassment training; \ Introduction of a leadership development program. Workplace Health and Safety With implementation of the new Workplace Health and Safety legislation, regulations and codes of practices Red 5 commenced the alignment of its health and safety management system to these new requirements. The Implementation of new workplace behaviour complaint process was implemented during Q1 FY23. This will be further supported in FY24 as Red 5 rolls out additional training for supervisors. We have experience an overall improve in the lag indicators and the business continued to focus field leadership as a method to further improve our safety performance in FY24. Cultural heritage We operate in respect to the interests, customs, traditions, and cultures of local communities and Indigenous groups. We are committed to engaging and consulting with traditional owners to ensure protection of important cultural heritage values and to maintain a positive relationship. All of Red 5’s operations fall on land recognised under Indigenous Native Title. The Native Title Act 1993 (Cth) ensures the co- existence of our operations with the recognition and protection of Native Title. There were no non-compliance incidents or violations involving the rights of indigenous peoples throughout the year. The Darlot Native Title Claim was determined on 5 July 2022, and has seen the ongoing efforts to negotiation of an agreement with Red 5 continuing in FY24. The landscape of the region in which we operate holds special significance for local traditional owners. Surveys involving specialist archaeologists, anthropologists and the traditional owners have been undertaken at all areas of our operations. Sites of importance have been mapped and integrated into our mine planning process to avoid impact and ensure their preservation for generations to come. 12 2023 ANNUAL REPORT ENVIRONMENTAL, SOCIAL AND GOVERNANCE Summary (cont.) ESG PROGRESS REPORT (cont.) KEY SOCIAL ACTIVITIES (cont.) KEY GOVERNANCE ACTIVITIES Community relations Environmental Approvals and Compliance During FY23 Red 5 continued its support of the Leonora Gift and confirmed our support of the Leonora Blazers youth basketball team which attended the NAIDOC basketball tournament in July 2023. In FY24 we look forward to being able to support a range of community events and groups. We undertook a number of feral pest control programs at both KOTH and Darlot. Through our ownership of Melrose Pastoral Station we commenced a destocking program and will be investigating a range of programs in FY24 to further enhance the pastoral lease operations. During FY23, we conducted continuous routine monthly, quarterly, and annual compliance monitoring, sampling, and reporting across the operations during the year. Likewise, there were no fines or penalties imposed on the Company, no serious environmental incidents and no material environmental harm. In the reporting year, we further increased the precision of our monitoring system by improving the quality of the data management system and building the body knowledge of environmental requirements amongst the leadership teams at both KOTH and Darlot. Proactive engagements with the Environment Section have been undertaken at both sites where cooperation between operations and project teams have accorded a holistic approach to risk management relating to new projects. During the FY23 compliance and reporting requirements for both KOTH and Darlot associated with environmental approvals, compliance, care and maintenance and rehabilitation obligations at the Great Western operation have been achieved. Additionally, a care and maintenance plan has been completed and submitted to DMIRS for the Darlot Tailings Storage Facilities and Processing Plant. 2023 ANNUAL REPORT 13 MINERAL RESOURCES AND ORE RESERVES Statement WESTERN AUSTRALIAN GOLD OPERATIONS KING OF THE HILLS GOLD PROJECT The combined Mineral Resource for the King of the Hills (KOTH) Gold Project decreased by 3% for a reduction of 142koz, net after depletion since 30 June 2022. However, within the KOTH open pit, Measured ounces has increased by 185% through open pit grade control drilling. While the KOTH underground resource has increased Indicated ounces by 102%. The combined open-pit and underground Ore Reserve at KOTH, which includes regional open pit reserves, as at 30 June 2023 is 69.5Mt @ 1.1g/t for 2.46Moz of contained ounces. This represents a decrease of 2% or 56koz, net after depletion since 30 June 2022. The key catalyst for this decrease is the introduction of additional modifying factors for oxide and transitional material. During the 2023 financial year (FY23), Red 5 Limited (Red 5) has completed a total of 146,729 grade control drill metres in the KOTH open pit. This comprised of 137,031 metres drilled in Stage 1 and 9,698 metres drilled in Stage 2. For the KOTH underground, 75,365 drill metres were completed in FY23. The KOTH Gold Project Mineral Resource, as at 30 June 2023, is 96.5Mt @ 1.4g/t for 4.5Moz of contained ounces. This estimate includes historic stockpiles, ROM material and underground broken stocks. The KOTH Gold Project Mineral Resource and Ore Reserve estimates, net of mining depletion, as of 30 June 2023 are detailed on the next page. 14 2023 ANNUAL REPORT MINERAL RESOURCES AND ORE RESERVES Statement (cont.) WESTERN AUSTRALIAN GOLD OPERATIONS (cont.) King of the Hills Gold Project Mineral Resource as at 30 June 2023 Project Cut-off Au (g/t) Mining Method Classification Measured King of the Hills 0.4 OP Indicated Inferred Measured 1.0 UG Indicated Inferred Measured Variable All Indicated Inferred Indicated 0.6 OP Inferred Sub Total Indicated 0.4 OP Inferred Sub Total Indicated 0.5 OP Inferred Sub Total Indicated King of the Hills – Sub Total Rainbow Severn Centauri Cerebus-Eclipse 0.5 OP Inferred Regional Resources Variable OP Regional Resources – Sub Total King of the Hills and Regional Resources Variable OP Sub Total Indicated Inferred Measured Indicated Inferred Sub Total Measured Indicated Inferred Sub Total Indicated Measured Measured Measured 1.0 UG Variable Variable Variable OP UG UG Variable All Indicated Inferred King of the Hills Gold Project – Sub Total Stockpiles Broken stocks ROM Stockpiles – Sub Total King of the Hills Gold Project (as at 30th June 2023) Grand Total Tonnes (kt) Grade Au (g/t) Contained Au (koz) 4,056 55,658 9,009 37 11,901 4,622 4,092 67,559 13,630 85,282 1,380 200 1,580 480 440 920 1,390 320 1,710 2,160 650 2,810 5,410 1,610 7,020 4,056 61,068 10,619 75,742 37 11,901 4,622 16,560 92,302 1,682 18 2,543 4,244 6,654 74,651 15,240 96,545 1.1 1.3 1.2 2.3 2.4 2.0 1.1 1.5 1.5 1.5 1.3 1.4 1.3 1.7 1.5 1.6 1.5 1.3 1.5 1.3 1.1 1.2 1.4 1.3 1.4 1.1 1.3 1.2 1.3 2.3 2.4 2.0 2.3 1.5 0.4 1.7 0.5 0.5 0.9 1.5 1.5 1.4 142 2,375 359 3 911 297 145 3,286 657 4,087 58 9 67 27 21 48 68 13 81 89 23 112 242 66 308 142 2,617 425 3,184 3 911 297 1,211 4,395 24 1 43 68 189 3,552 723 4,463 2023 ANNUAL REPORT 15 MINERAL RESOURCES AND ORE RESERVES Statement (cont.) WESTERN AUSTRALIAN GOLD OPERATIONS (cont.) King of the Hills Gold Project Mineral Resource as at 30 June 2022 Project Cut-off Au (g/t) Mining Method Classification King of the Hills Gold Project Variable All King of the Hills Gold Project – Sub Total Stockpiles Broken stocks ROM Stockpiles – Sub Total King of the Hills Gold Project (as at 30th June 2022) Grand Total Variable Variable Variable OP UG UG Variable All King of the Hills Gold Project Mineral Resource - difference King of the Hills Gold Project Variable All Grand total - difference Production for FY23 Measured Indicated Inferred Indicated Measured Measured Measured Indicated Inferred Measured Indicated Inferred Tonnes (kt) 1,330 78,290 22,680 102,300 2,064 5 1,120 3,189 2,455 80,354 22,680 105,489 4,199 -5,703 -7,440 -8,944 4,861 Grade Au (g/t) Contained Au (koz) 1.2 1.4 1.6 1.4 0.4 1.2 0.6 0.5 0.9 1.4 1.6 1.4 0.0 0.1 -0.1 0.0 0.9 50 3,492 1,156 4,698 28 0.2 22 50 72 3,520 1,156 4,748 117 32 -434 -285 143 16 2023 ANNUAL REPORT MINERAL RESOURCES AND ORE RESERVES Statement (cont.) WESTERN AUSTRALIAN GOLD OPERATIONS (cont.) King of the Hills Gold Project Ore Reserve as at 30 June 2023 Project Cut-off Au (g/t) Mining Method Classification King of the Hills 0.4 OP King of the Hills – Sub Total Rainbow Centauri 1.4 UG 0.3 OP 0.3 OP Cerebus-Eclipse 0.3 OP Regional Resources – Sub Total Stockpiles Broken Stocks ROM Stockpiles – Sub Total King of the Hills Gold Project (as at 30 June 2023) Grand Total 0.0 Variable Variable OP UG All Variable All Proved Probable Sub Total Proved Probable Sub Total Proved Probable Sub Total Proved Probable Sub Total Proved Probable Sub Total Probable Proved Proved Proved Probable King of the Hills Gold Project Ore Reserve as at 30 June 2022 Project Cut-off Au (g/t) Mining Method Classification King of the Hills and Regional Resources Variable All King of the Hills and Regional Resources - sub total Stockpiles Broken Stocks ROM Stockpiles – sub-total King of the Hills Gold Project (as at 30 June 2022) Grand Total 0 Variable Variable OP UG All Variable All King of the Hills Gold Project Ore Reserve - difference King of the Hills Gold Project Variable All Grand Total - difference Production for FY23 Proved Probable Probable Proved Proved Proved Probable Proved Probable Tonnes (kt) 4,644 54,188 58,831 0 2,524 2,524 61,355 0 2,054 2,054 0 326 326 0 1,490 1,490 3,869 1,682 18 2,543 4,244 7,206 62,262 69,468 Tonnes (kt) 1,327 65,740 65,740 2,064 5 1,007 3,076 2,339 67,804 70,143 4,866 -5,542 -676 4,894 Grade Au (g/t) Contained Au (koz) 0.8 1.2 1.1 0.0 1.8 1.8 1.2 0.0 0.8 0.8 0.0 1.2 1.2 0.0 1.0 1.0 0.9 0.4 1.7 0.5 0.5 0.7 1.1 1.1 122 2,010 2,132 0 148 148 2,280 0 56 56 0 13 13 0 47 47 116 24 1 43 68 166 2,297 2,464 Grade Au (g/t) Contained Au (koz) 1.0 1.2 1.2 0.4 1.2 0.6 0.5 0.8 1.2 1.2 -0.1 0.0 -0.1 0.9 42 2,573 2,573 28 0 20 48 62 2,600 2,663 104 -303 -199 143 2023 ANNUAL REPORT 17 MINERAL RESOURCES AND ORE RESERVES Statement (cont.) WESTERN AUSTRALIAN GOLD OPERATIONS (cont.) DARLOT GOLD PROJECT The Mineral Resource for the Darlot Gold Project has decreased by 5koz, net after depletion since 30 June 2022. This decrease is the result of mining depletions and drilling focusing on grade control rather than resource definition during FY23. There was no change to the surface mining Mineral Resources. During FY23, a total of 11,180 underground drill metres was completed. The Darlot Gold Project Mineral Resource, as of 30 June 2023, which includes all stockpiles, ROM, and underground broken stocks, is 16.6Mt @ 3.3g/t for 1.8Moz of contained gold. The Ore Reserve for the Darlot Gold Project has increased by 117% for an increase of 61koz, net after depletion since 30 June 2022. The major contributor to the increase in Ore Reserve is the addition of new areas into the mine plan, namely Lower Burswood, Boon West, Chappell, Dar Cent, and Upper Oval. The Darlot Gold Project Ore Reserves as at 30 June 2023 is 1.4Mt @ 2.5g/t for 114koz of contained ounces. The Darlot Gold Project Mineral Resource and Ore Reserve estimates, net of mining depletion, as of 30 June 2023 are detailed below. Darlot Gold Project Mineral Resource as of 30 June 2023 Cut-off Au (g/t) Mining Method Classification Tonnes (kt) Grade Au (g/t) Contained Au (koz) Project Darlot 2.0 UG Great Western 1.5 UG Underground – Sub Total Darlot Region 0.5 OP Great Western 0.5 OP Open Pit – Sub Total Darlot Gold Project – Sub Total Broken stocks ROM Stockpiles – Sub Total Darlot Gold Project (as at 30 June 2023) Grand Total Variable Variable UG All Variable All Measured Indicated Inferred Measured Indicated Inferred Measured Indicated Inferred Measured Indicated Inferred Measured Measured Measured Indicated Inferred 2 7,170 4,541 0 57 142 11,912 100 810 3,508 6 83 97 4,604 16,516 12 39 51 159 8,120 8,288 16,567 7.4 4.2 3.9 0.0 4.0 3.1 4.1 1.0 1.2 1.5 2.8 2.7 1.9 1.4 3.3 2.9 2.3 2.4 1.6 3.9 2.8 3.3 1 971 568 0 7 14 1,561 3 31 166 1 7 6 214 1,775 1 3 4 8 1,017 754 1,779 18 2023 ANNUAL REPORT MINERAL RESOURCES AND ORE RESERVES Statement (cont.) WESTERN AUSTRALIAN GOLD OPERATIONS (cont.) Darlot Gold Project Mineral Resources as of 30 June 2022 Project Cut-off Au (g/t) Mining Method Darlot and Great Western 0.5 - 2.0 All Classification Measured Indicated Inferred Darlot Gold Project – Sub Total Broken stocks ROM Stockpiles – Sub Total Darlot Gold Project (as at 30 June 2022) Grand Total Variable Variable UG UG Measured Measured 0.5 - 2.0 All Darlot Gold Project Mineral Resources – difference Darlot Gold Project 0.5 - 2.0 All Grand Total - difference FY23 Production Darlot Gold Project Ore Reserve as at 30 June 2023 Measured Indicated Inferred Measured Indicated Inferred Proved Probable Proved Probable Proved Probable Proved Probable Cut-off Au (g/t) Mining Method 1.7 - 2.4 UG Classification Proved Probable Variable Variable UG UG Proved Proved Variable All Variable Variable UG UG Proved Proved Variable All Project Darlot Darlot Gold Project – Sub Total Broken Stocks ROM Stockpiles – Sub Total Darlot Gold Project (as at 30 June 2023) Grand Total Darlot Gold Project – Sub Total Broken stocks ROM Stockpiles – Sub Total Darlot Gold Project (as at 30 June 2022) Grand Total Darlot Gold Project Ore Reserve as at 30 June 2022 Darlot 1.7 – 2.4 UG Darlot Gold Project Ore Reserve – difference Darlot Gold Project Variable All Grand total - difference Production for FY23 Tonnes (kt) 108 8,099 8,593 16,800 16 251 267 375 8,099 8,593 17,067 -216 21 -305 -500 702 Tonnes (kt) 0 1,341 1,341 12 39 51 51 1,341 1,393 0 1,246 1,256 16 33 49 49 1,256 1,305 2 85 87 702 Grade Au (g/t) Contained Au (koz) 1.1 3.9 2.9 3.4 2.3 0.6 0.7 0.8 3.9 2.9 3.4 0.8 -0.1 0.0 0.0 2.5 4 1,032 798 1,834 1.0 5 6 10 1,032 798 1,840 -2 -15 -44 -61 56 Grade Au (g/t) Contained Au (koz) 0.0 2.6 2.6 2.9 2.3 2.4 2.4 2.6 2.5 0.0 2.6 2.6 2.3 1.6 1.8 1.8 2.6 2.6 0.6 -0.1 1.9 2.5 0 110 110 1 3 4 4 110 114 0 106 106 1 2 3 3 106 109 1 4 5 56 2023 ANNUAL REPORT 19 MINERAL RESOURCES AND ORE RESERVES Statement (cont.) PHILIPPINES OPERATIONS SIANA GOLD PROJECT During the 2022 financial year, the Group divested its interests in the Siana Gold Project located in the Philippines and retains a 3.25% Net Smelter Return royalty payable up to 619,000oz of gold produced. COMPETENT PERSON’S STATEMENT Accountabilities for compilation of the 2023 annual Mineral Resource and Ore Reserve estimates are summarised in the table below. COMPETENT PERSONS FOR JORC 2012 MINERAL RESOURCE AND ORE RESERVE Discipline Competent Person Role Project Mineral Resources Byron Dumpleton Ore Reserves Kevin Oborne Chief Geologist (Red 5 Limited) Group Technical Services Manager (Red 5 Limited) King of the Hills Darlot Great Western Regional Resources King of the Hills Darlot Regional Resources Professional Membership Membership Number AIG 1598 AusIMM 226591 Mineral Resource Ore Reserve Mr Byron Dumpleton confirms that he is the Competent Person for the Mineral Resources summarised in this report and Mr Dumpleton has read and understood the requirements of the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code, 2012 Edition). Mr Dumpleton is a Competent Person as defined by the JORC Code, 2012 Edition, having more than five years’ experience that is relevant to the style of mineralisation and type of deposit described in this report and to the activity for which he is accepting responsibility. Mr Dumpleton is a Member of the Australian Institute of Geoscientists, No. 1598. Mr Dumpleton is a full time employee of Red 5 Limited. Mr Dumpleton has reviewed this report and consents to the inclusion of the matters based on his supporting information in the form and context in which it appears. Mr Dumpleton verifies that the Exploration Results and Mineral Resource estimate section of this report is based on and fairly and accurately reflects in the form and context in which it appears, the information in his supporting documentation relating to Open Pit and Underground Mineral Resource estimates. Mr Kevin Oborne confirms that he is the Competent Person for the underground and open-pit Ore Reserve estimates summarised in this report and Mr Oborne has read and understood the requirements of the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code, 2012 Edition). Mr Oborne is a Competent Person as defined by the JORC Code, 2012 Edition, having more than five years’ experience that is relevant to the style of mineralisation and type of deposit described in the report and to the activity for which he is accepting responsibility. Mr Oborne is a Member of the Australasian Institute of Mining and Metallurgy, No. 226591. Mr Oborne is a full time employee of Red 5 Limited. Mr Oborne has reviewed this report and consents to the inclusion of the matters based on his supporting information in the form and context in which it appears. Mr Oborne verifies that the Ore Reserve section of this report is based on and fairly and accurately reflects in the form and context in which it appears, the information in his supporting documentation relating to the Ore Reserves. Red 5 confirms that it is not aware of any new information or data that materially affects the information included in the original ASX market announcements and that all material assumptions and technical parameters underpinning the estimates in the relevant ASX market announcements continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Persons findings are presented have not been materially modified from the original market announcements. 20 2023 ANNUAL REPORT MINERAL RESOURCES AND ORE RESERVES Statement (cont.) GENERAL NOTES Mineral Resources are quoted as inclusive of Ore Reserves and Ore Reserves are quoted as inclusive of Mineral Resources. Discrepancy in summation may occur due to rounding. Figures take into account mining depletion as at 30 June 2023. Figures also include ROM, stockpiles and underground broken stocks as at 30 June 2023. For information that relates to KOTH Gold Project Resources and Reserves, and Darlot Gold Project Resources and Reserves, refer to the ASX release dated 7 September 2023 and titled “Mineral Resources and Ore Reserves ”. KING OF THE HILLS GOLD PROJECT Mineral Resources: 1. KOTH open pit resource figures are based on a Measured, Indicated and Inferred pit optimisation shell. This shell was generated with a gold price of A$2,700/oz and with updated unit cost data and pit wall guidelines. 2. The information that relates to Centauri and Cerebus-Eclipse, which forms part of the KOTH Regional Resources, refer to ASX release dated 1 May 2019 titled “Maiden JORC open pit Resources defined for near-mine regional deposits at King of the Hills”. Ore Reserves: 1. KOTH Gold Project reserves are based on a gold price of A$2,400/oz. 2. Cut-off grades for KOTH open pit are 0.4g/t, KOTH underground are 1.3g/t, and regional reserves (Rainbow, Centauri, and Cerebus-Eclipse) are 0.4g/t. 3. KOTH Gold Project open pit reserves are generated with detailed pit designs. 4. Ore loss and mining dilution for all open-pit reserves were reflected in the SMU process. Additional mining dilution and ore loss is applied to weathered material. 5. Underground reserves have planned dilution varying between 5% to 15% with planned mining recovery between 90% to 95%. 6. KOTH Gold Project open pit reserves do not include any Inferred material. 7. KOTH underground reserves include a proportion of Inferred material that is entrained within the proved and probable stope designs. DARLOT GOLD PROJECT Mineral Resources: 1. For the Darlot open pit regional resources, Darlot Mining Company Pty Ltd (DMC) has a Joint Venture (JV) with PanAust Limited where DMC owns 84% and PanAust owns 16%. The resources under the JV are Waikato South, totalling 1,902kt @ 0.8g/t for 50koz of contained gold, and Cornucopia North, totalling 62kt @ 1.3g/t for 3koz of contained gold. For information that relates to these deposits refer to the ASX release dated 10 February 2020 titled “Red 5 Resource and Reserve growth at Darlot Gold Mine”. Ore Reserves: 1. Darlot Gold Project reserves are based on a gold price of A$2,400/oz. 2. Cut-off grades for the underground reserves are 2.4g/t Au. 3. Underground reserves have planned dilution varying between 10% to 20% with planned mining recovery between 90% to 95%. 4. Underground reserves include a proportion of Inferred material that is entrained within the proved and probable stope designs. GOVERANCE AND INTERNAL CONTROLS Mineral Resources and Ore Reserves are estimated either by suitably qualified consultants or internal personnel in accordance with the applicable JORC Code and using industry standard techniques and internal guidelines for the estimation and reporting of Mineral Resources and Ore Reserves. All data is collected in accordance with applicable JORC Code requirements. Ore Reserve estimates are based on pre-feasibility or feasibility studies which consider all material factors. The estimates and supporting data and documentation are reviewed by qualified Competent Persons (including estimation methodology, sampling, analytical and test data). 2023 ANNUAL REPORT 21 TENEMENT Schedule 2 August 2023 WESTERN AUSTRALIA Project Tenement number King of the Hills Gold Mine Darlot Gold Mine E37/1385, E37/1409, E37/1410, L37/0211, L37/0248, L37/0250, M37/0021, M37/0067, M37/0076, M37/0090, M37/0179, M37/0201, M37/0222, M37/0248, M37/0330, M37/0394, M37/0407, M37/0410, M37/0416, M37/0429, M37/0449, M37/0451, M37/0457, M37/0496, M37/0529, M37/0544, M37/0547, M37/0548, M37/0551, M37/0570, M37/0571, M37/0572, M37/0573, M37/0574, M37/0905, M37/1050, M37/1051, M37/1081, M37/1105, M37/1165, P37/9157, P37/9160, P37/9161, P37/9270, P37/9271, P37/9281, P37/9282, P37/9283, P37/9284, P37/9285, P37/9286, P37/9287, P37/9288, P37/9289, P37/9290, P37/9291, P37/9293, P37/9294, P37/9295, P37/9392, P37/9393, P37/9394, P37/9395, P37/9396, P37/9397, P37/9398, P37/9399, P37/9400, P37/9401, P37/9402, P37/9403, P37/9404, P37/9405, P37/9406, P37/9407, P37/9408, P37/9409, P37/9410, P37/9491, P37/9492 P37/9292, P37/9626 E36/0865, E36/0940, E36/0941, E36/0944, E36/0945, E36/0964, E36/0968, E36/0969, E36/0980, E36/0997, E36/0999, E36/1002, E37/1194, E37/1195, E37/1210, E37/1247, E37/1253, E37/1268, E37/1269, E37/1296, E37/1297, E37/1298, E37/1319, E37/1321, E37/1322, E37/1350, E37/1352, E37/1369, E37/1378, E37/1391, E37/1393, E37/1395, E37/1398, E37/1400, E37/1413, E37/1415, E37/1428, G37/0037, L37/0118, L37/0206, L37/0207, L37/0223, L37/0224, L37/0230, L37/0231, L37/0237, M37/0054, M37/0155, M37/0252, M37/0373, M37/0417, M37/0418, M37/0419, M37/0420, M37/0503, M37/0584, M37/0592, M37/0608, M37/0667, M37/0774, M37/0775, M37/1217, P36/1879, P36/1883, P36/1884, P36/1889, P36/1920, P36/1921, P37/8587, P37/8699, P37/8716, P37/8788, P37/8789, P37/9210, P37/9345 Red 5 interest 100% 100% (Applications pending) 100% E36/1027, E36/1044, E36/1051, E36/1056, E36/1072, E36/1073, E37/1512, E37/1521, L37/0238, P36/1931 100% (Applications pending) E37/1220 E37/1271, E37/1272, E37/1273, E37/1274, E39/1706, E39/1854, E39/1985 Right to explore and mine Sub-Lease Area Farm-in agreement to earn up to 80% M37/0552, M37/0631, M37/0709, M37/1045 M37/0246, M37/0265, M37/0320, M37/0343, M37/0345, M37/0393, M37/0776 30% 84% M37/0421, M37/0632 Montague Project M57/0429, M57/0485, E57/0793 100% with a portion of tenements at 30% via agreement 25% free carried Abbreviations M: Mining Lease P: Prospecting Licence E: Exploration Licence L: Miscellaneous Licence 22 2023 ANNUAL REPORT DIRECTORS’ Report The Directors of Red 5 Limited (“Red 5” or “parent entity”) present their report on the results and state of affairs of Red 5 and its subsidiaries (“the Group” or the “consolidated entity”) for the year ended 30 June 2023. 1. DIRECTORS AND COMPANY SECRETARY The names of the Directors of Red 5 in office during the course of the financial period and at the date of this report are as follows: Russell Clark (Chair, appointed 1 July 2023) Andrea Sutton (Acting chair, 13 March 2023 to 30 June 2023) Mark Williams (Managing Director) Peter Johnston (Non-Executive Director, appointed 10 July 2023) Ian Macpherson (Non-Executive Director) Colin Loosemore (Non-Executive Director) Steve Tombs (Non-Executive Director) Kevin Dundo (Chair, resigned 12 March 2023) Fiona Harris (Non-Executive Director, resigned 6 December 2022) In July 2023, Red 5 made two important Board appointments with the appointment of a new Chair, Mr Russell Clark, and non- executive Director, Mr Peter Johnston. Mr Clark and Mr Johnston are highly respected global mining executives who bring further significant mining and governance capability to the Red 5 Board of Directors. Unless otherwise indicated, all Directors held their position as a Director throughout the entire financial period and up to the date of this report. Other listed company directorships 1.1 INFORMATION ON DIRECTORS Russell Clark Non-Executive Chair (from 1 July 2023) Appointment date Qualifications Experience Other listed company directorships Non-executive Chair from July 2023. BSc Mineral Resources Eng. (Hons), GradDip FinInv, FAICD. Mr Clark is an internationally experienced mining professional and director with over 40 years of experience in senior corporate, operational and project development roles. During his career, Mr Clark served as Managing Director and CEO of Grange Resources for five years, as Group Executive of Operations for Newmont he managed the group’s Australian and New Zealand Operations including the KCGM mine in Kalgoorlie, and he held a number of mine general manager roles for Normandy Mining. Mr Clark is a qualified Mining Engineer and has worked across Australia, North and South America, Africa, Europe and the Asia Pacific. Chair of CZR Resources Ltd (since September 2021). Chair of Pearl Gull Iron Ltd (since July 2021). Non-executive director of Tungsten Mining NL (since February 2020). Andrea Sutton Non-Executive Director (Acting Chair from 13 March 2023 to 30 June 2023) Appointment date Non-executive Director since November 2020 and acting Chair from March 2023 to 30 June 2023. Special responsibilities Chair of the Sustainability Committee. Member of the Audit and Risk Committee. Member of the Remuneration and Nomination Committee. Qualifications B.Eng Chemical (Hons), GradDipEcon, GAICD. Experience Ms Sutton is a qualified Chemical Engineer and has over 25 years’ experience with Rio Tinto and ERA. Between 2013 and 2017, Ms Sutton was Chief Executive and Managing Director of ERA, then a Non-Executive Director from 2018 to 2020. Ms Sutton had extensive executive and operational leadership roles across Rio Tinto. This experience included Head of Health, Environment, Safety and Security; General Manager Operations at the Bengalla Mine and General Manager of Infrastructure, Iron Ore. Non-executive director of: - DDH1 Holdings Pty Ltd (since February 2021); - Iluka Resources Limited (since March 2021); and - Energy Resources of Australia Ltd (October 2018 to May 2020). Mark Williams Executive Director Appointment date Non-Executive Director from January 2014 and Managing Director since April 2014. Special responsibilities Managing Director Qualifications Dip CSM Mining, GAICD. Experience Other listed company directorships Mr Williams was previously General Manager of the Tampakan Copper-Gold Project in the southern Philippines from 2007 to 2013. He has over 26 years’ of mining experience operating within a diverse range of open cut, underground, quarrying and civil engineering environments across the developed markets of Australia, United Kingdom and New Zealand as well as the emerging markets of Philippines, Vietnam, Thailand and South Pacific. Mr Williams has not held directorships in any other listed companies in the past 3 years. 2023 ANNUAL REPORT 23 DIRECTORS’ Report (cont.) 1. DIRECTORS AND COMPANY SECRETARY (cont.) Peter Johnston Non-Executive Director Appointment date 10 July 2023 Qualifications BA, FAICD, FAusIMM. Experience Other listed company directorships Mr Johnston is a highly experienced Australian mining executive and Board Director who has more than 35 years of operational and project development experience. Mr Johnston’s distinguished career has seen him hold senior roles with major resource companies including Head of Global Nickel Assets for Glencore, Managing Director and Chief Executive Officer of Minara Resources and Executive General Manager at WMC Resources for Olympic Dam, the Nickel Division and the Copper and Fertilisers Division. Chair of Jervois Mining (since 2018). Non-Executive Director of: NRW Holdings Limited (since 2016); and Tronox (US) (since 2012). Ian Macpherson Non-Executive Director Appointment date Special responsibilities April 2014 Chair of the Audit Committee; and Member of the Remuneration and Nomination Committee. Qualifications B.Comm, CA. Experience Other listed company directorships Mr Macpherson is a Chartered Accountant with over 35 years’ experience in the provision of financial and corporate advisory services. He was a former partner at Arthur Andersen & Co managing a specialist practice providing corporate and financial advice to the mining and mineral exploration industry. Mr Macpherson established Ord Partners in 1990 (later to become Ord Nexia) and has specialised in the area of corporate advice with particular emphasis on capital structuring, equity and debt raising, corporate affairs and stock exchange compliance for publicly listed companies. Chair of RBR Group Limited (since October 2010). Colin Loosemore Non-Executive Director Appointment date Special responsibilities December 2014 Member of the Sustainability Committee. Member of the Audit Committee. Qualifications B.Sc.Hons., M.Sc., DIC., FAusIMM. Experience Mr Loosemore is a Geologist with over 40 years’ experience in multi-commodity exploration including over 30 years as a director of public exploration companies within Australia and overseas. He graduated from London University in 1970 and the Royal School of Mines in 1977. Mr Loosemore was most recently Managing Director of Archipelago Resources plc where he oversaw the development of the Toka Tindung Gold Mine in Sulawesi, Indonesia. Other listed company directorships Mr Loosemore has not held directorships in any other listed companies in the last 3 years. Steve Tombs Non-Executive Director Appointment date August 2018 Special responsibilities Chair of the Remuneration and Nomination Committee. Member of the Sustainability Committee. Qualifications B.Sc.Hons, FAusIMM. Experience Other listed company directorships Mr Tombs is a Mining Engineer with over 40 years’ experience in the mining industry in Australia and overseas. Mr Tombs graduated from Nottingham University in 1976 and was previously Red 5’s General Manager at Darlot and the Underground Project Manager at Siana. Mr Tombs previously held Senior Management positions at AngloGold Ashanti, Placer Dome and Newcrest. Mr Tombs has not held directorships in any other public companies in the last 3 years. 24 2023 ANNUAL REPORT DIRECTORS’ Report (cont.) 1. DIRECTORS AND COMPANY SECRETARY (cont.) 1.2 INFORMATION ON COMPANY SECRETARY Lisa Wynne Joint Company Secretary David Coyne CFO & Joint Company Secretary Appointment date 18 August 2023 Appointment date 4 September 2023 Qualifications B.Bus, CA, FGIA, MAICD. Qualifications B.Com, CPA, Grad. Dip, MAICD. Experience Experience Ms Wynne is a Chartered Accountant with over 18 years’ experience in finance, accounting, corporate governance, strategy, risk management and mergers & acquisitions. Ms Wynne has held senior roles as Chief Financial Officer, Company Secretary and Non-Executive Director for ASX-listed and not-for-profit companies. Mr Coyne is a CPA with over 30 years’ experience in the mining, and engineering and construction industries, both within Australia and internationally. He is experienced in debt and equity financing, corporate governance, risk management, accounting and acquisitions and divestments. In addition to previous company secretarial roles, Mr Coyne has also served as a director for ASX-listed mining companies in both executive and non-executive capacities. 1.3 DIRECTOR’S MEETINGS The number of meetings of the Board of Directors of Red 5 and of each Board committee held during the year ended 30 June 2023 and the number of meetings attended by each Director whilst in office are as follows: Board meetings Audit Committee Remuneration & Nomination Committee Risk, Environment & Sustainability Committee Health, Safety & Community Committee Director Eligible Attended Eligible Attended Eligible Attended Eligible Attended Eligible Attended Andrea Sutton Mark Williams Ian Macpherson Colin Loosemore Steven Tombs Kevin Dundo Fiona Harris 17 17 17 17 17 12 5 17 17 15 15 16 12 5 1 1 5 4 1 4 1 1 1 5 4 1 4 1 2 - 3 - 3 1 - 2 - 3 - 3 1 - 4 - 2 2 4 - - 4 - 2 2 3 - - 2 - - 2 1 1 - 2 - - 2 1 1 - 2. PRINCIPAL ACTIVITIES The principal activities of Red 5 and the consolidated entity (which includes associated entities of Red 5) during the financial period were gold mining and mineral exploration. 3. RESULTS OF OPERATIONS Red 5 incurred a net loss of the consolidated entity after income tax for the year ended 30 June 2023 of $8.7 million (30 June 2022: loss of $28.6 million after a gain from discontinued operation). The current year results include an unaudited underlying EBITDA(a) of $96.1 million (2022: loss of $4.3 million). Sales revenue Cost of sales (excluding depreciation) Other income Administration and other expenses (excluding depreciation) Exploration expenditure Underlying EBITDA 30 June 2023 30 June 2022 $’000 422,745 (311,875) 811 (8,419) (7,181) 96,081 $’000 164,962 (153,934) 208 (12,972) (2,522) (4,258) (a) Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) is an unaudited non - IFRS measure and is a common measure used to assess profitability before the impact of different financing methods, income taxes, depreciation of property, plant and equipment and amortisation of intangible assets, fair value movements. 2023 ANNUAL REPORT 25 DIRECTORS’ Report (cont.) 3. RESULTS OF OPERATIONS (cont.) The underlying EBITDA reconciles to the profit/(loss) before tax as follows: Underlying EBITDA Financing income Financing expenses Depreciation and amortisation Loss from continuing operations before income tax expense 30 June 2023 30 June 2022 $’000 96,081 61 $’000 (4,258) 8 (21,721) (2,815) (83,151) (42,514) (8,730) (49,579) 3.1 REVIEW OF OPERATIONS During the financial year, Red 5 completed the ramp-up to steady-state gold production at the King of the Hills (KOTH) mine, located in the Eastern Goldfields region of Western Australia, following the completion of its newly constructed processing plant in 2022. The KOTH process plant receives ore from the KOTH Open Pit mine, KOTH Underground mine and Darlot Underground satellite mine. Mining operations continued at the Darlot underground mine throughout the reporting period, with the Darlot processing plant going into care and maintenance on 28 July 2022. Commercial production was declared at KOTH on 16 December 2022. Following a delay in completing the cut back of the KOTH open pit due to the impacts of COVID-19, mining reached the primary zone of the ore body in February 2023, which resulted in access to large contiguous high-grade ore zones and a sustained improvement in the ore feed to the processing plant. Throughout the second half of FY2023, Red 5 has demonstrated a consistent improvement in results, month on month, with the June Quarter delivering sustained positive cashflows. The company delivered four consecutive months of record production since March 2023, underpinning total production for the second half of the year of 102,574 ounces, compared to the first half of 62,970 ounces. This paved the way for an all-in-sustaining-cost of $1,837 per ounce, placing the company in the upper end of production guidance and mid-range of cost guidance for the second half of FY2023. The KOTH process plant also achieved record throughput rates for the June 2023 quarter. In June, it has been operating at an annualised throughput rate of up to 5.5Mtpa – a significant increase from the original nameplate capacity of 4.0Mtpa, and this rate is expected to be maintained. Operations have been cash flow positive since March 2023, putting Red 5 in a solid position to continue to de-leverage and strengthen the balance sheet for the future. The Company’s Net Debt position improved by $56.6 million during the second half of the year to be $81.9 million at 30 June 2023. (a) Gold production A total of 165,544 ounces of gold were recovered at the KOTH and Darlot process plants for the 12 months to 30 June 2023, sourced from the three gold mine operations. The Darlot plant transitioned to care and maintenance in July 2022. A summary of key production statistics for the year ended 30 June 2023 and 30 June 2022 is provided below: Mined tonnes Mined grade Tonnes milled Average head grade Recovery Gold produced Gold sold Year ended Units 30 June 2023 30 June 2022 T g/t T g/t % Oz Oz 5,654,934 2,660,914 1.11 1.15 4,252,673 1,359,974 1.31 92.2 165,544 164,974 1.66 92.1 66,871 64,315 The Group delivered total gold production from its King of the Hills Open Pit, Underground and Darlot mines of 165,544 ounces for the year ended 30 June 2023, recovered from 4,252,673 tonnes of ore processed at an average head grade of 1.31g/t Au. Gold sales of 164,974 ounces for the year underpinned revenue of $422.7 million. The Group posted a gross operating profit of $28.1 million. Exploration and Resource Development At KOTH, drilling during the reporting period focused on grade control drilling of key mining areas and extensional drilling along the high-grade trend south of Regal from the East-West Link area. Assay results to date and visual inspection of the core indicate the potential for further future increases in the KOTH Mineral Resource estimate. Drilling at the Darlot Underground satellite mine has confirmed Ore Reserves underpinning the FY24 and FY25 mine plan and identified new targets for potential Resource extension. Encouraging results have been recorded in a number of key areas, which have confirmed and, in some instances, identified the potential to upgrade existing Resource estimates. Exploration drilling has also generated new targets for Resource extension at Darlot, with strong results received from a part- Government-funded Exploration Incentive Scheme (EIS) hole (CAX0075), drilled just 320m from the current development in the Lords South mining area. Surface grade control drilling at the St George open pit satellite deposit at Darlot also returned significant intersections, with the potential development of a satellite open pit at St George to be evaluated at a later date. Regional aircore drilling was undertaken at Mt Zephyr, Gale South and Yandal South. Soil sampling programs in the Darlot area focused on Great Southern, Taranaki Mag High, Mt Zephyr West, Yandal South, Bundarra, Yandal North and Darlot North, designed to in-fill gaps in existing datasets. 26 2023 ANNUAL REPORT DIRECTORS’ Report (cont.) 3. RESULTS OF OPERATIONS (cont.) 3.1 REVIEW OF OPERATIONS (cont.) Resource and Reserves at King of the Hills In September 2023, Red 5 reported a continued increase in Resource confidence at King of the Hills (KOTH), with a 185% increase in open pit Measured Resources and a 102% increase in underground Indicated Resources. A total of 75,365m of underground drilling and 137,031m of open pit grade control drilling was completed at KOTH during FY2023 with significant emphasis placed on grade control and Resource conversion, particularly in the KOTH underground where drilling focused on de-risking stoping areas within FY2024 and FY2025 mine plans. The updated KOTH Gold Project Mineral Resource estimate at 30 June 2023 comprising a total Measured, Indicated and Inferred Mineral Resource of 96.5Mt at 1.4g/t Au for 4.5Moz of contained gold. The updated KOTH Gold Project Ore Reserve estimate at 30 June 2023 comprising a total Proved and Probable Ore Reserve of 69.5Mt at 1.1g/t Au for 2.5Moz of contained gold, including 62.7Mt at 1.1g/t Au for 2.2Moz of contained gold for open pit Reserves. This includes a +191% increase in contained ounces in the Proved Reserve category. For the underground Reserve a total of 2.5Mt at 1.8g/t Au for 0.1Moz of contained gold, representing a +10% increase in contained ounces, post depletion, since the previous estimate at 30 June 2022. Stockpiles and underground Broken Stocks as at 30 June 2023 comprise a total of 4.2Mt at 0.5g/t Au for 0.1Moz of contained gold. 9,500N 10,000N 10,500N 11,000N 11,500N King of the Hills Open Pit Ore Reserves Stockpiles and ROM of 4.2Mt at 0.5g/t for 0.1Moz as at 30 June 2023 5,000 Elev STAGE 5 FY2028 to FY2037 Reserve (Mt) Grade (g/t) Contained Au Strip Ratio (W:O) 8.3 1.2 0.3 10.8 STAGE 1 Present to FY2026 Reserve (Mt) Grade (g/t) Contained Au (Moz) Strip Ratio (W:O) 7.8 1.0 0.2 3.7 NORTH 200m Current open pit and surface STAGE 2 Present to FY2031 Reserve (Mt) Grade (g/t) Contained Au (Moz) Strip Ratio (W:O) 16.6 1.0 0.6 5.4 STAGE 3 FY2025 to FY2034 Reserve (Mt) Grade (g/t) Contained Au (Moz) Strip Ratio (W:O) 11.7 1.2 0.5 5.7 1 Topography, designs and figures as at 30 June 2023. 2. Discrepency in summation may occur due to rounding. 3. Figures quoted for ‘Strip Ratio’ are derived from Life-of-Mine plan, which includes Inferred Mineral Resources. KOTH Open Pit Ore Reserves and Mining Inventory at 30 June 2023. Resources and Reserves at Darlot STAGE 4 FY2027 to FY2037 Reserve (Mt) Grade (g/t) Contained Au (Moz) Strip Ratio (W:O) 14.4 1.2 0.6 5.9 Red 5 delivered an updated Darlot Gold Project Mineral Resource estimate at 30 June 2023 comprising a total Measured, Indicated and Inferred Mineral Resource of 16.6Mt at 3.3g/t Au for 1.8Moz of contained gold. This includes the Darlot regional underground resources, open pit resources and stockpiles. The updated Darlot Gold Project Ore Reserve estimate at 30 June 2023 provided a total Proved and Probable Ore Reserve of 1.4Mt at 2.5g/t Au for 114koz of contained gold, including stockpiles and broken stocks. The updated Darlot Ore Reserves delivered a +117% increase in contained ounces, post depletion, since the previous estimate at 30 June 2022, reflecting grade control drilling and new mining areas at Lower Burswood, Boon West, Chappell, Dar-Cent and Upper Oval. JORC 2012 Mineral Resource and Ore Reserves Red 5 confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and that all material assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Persons findings are presented have not been materially modified from the original market announcements. 2023 ANNUAL REPORT 27 DIRECTORS’ Report (cont.) 3. RESULTS OF OPERATIONS (cont.) 3.1 REVIEW OF OPERATIONS (cont.) (b) Siana Gold Project, Philippines The Group divested its interests in the Philippine-affiliated company, Greenstone Resources Corporation (GRC), which holds the Siana Gold Project and the Mapawa Gold Project in the Philippines, in September 2021 to TVI Resource Development (Phils) Inc. As part of the transaction, the Group is due a Net Smelter Return royalty of 3.25% payable for up to 619,000 ounces of gold, with an estimated future face value of US$36.0 million (based on a US$1,800/oz gold price). As per the accounting standards, the royalty represents a variable consideration and is treated as a contingent asset until re-commencement of production at Siana. Siana restarted operations in FY23. The first royalty from Siana was received in the second half of FY23, amounting to $0.4 million, which is included in other income. (c) Corporate The $175.0 million debt funding package supporting the construction and development of King of the Hills was fully drawn down in the prior year. Repayments of the debt funding package commenced in December 2022 and will be paid over four years. $47.3 million was repaid in the current year. $127.8 million of debt is remaining at 30 June 2023, with net debt of $81.9 million at 30 June 2023. Borrowing costs of $2.7 million were capitalised to the loan. To support the ramp up of the new KOTH operations, Red 5 undertook two capital raisings during the year: 1. In October 2022, a $60.0 million two-tranche share placement and a $9.0 million Share Purchase Plan (SPP) for retail shareholders. 2. In March 2023, a $80.0 million two-tranche placement and $10.0 million SPP for retail shareholders. Two key executive appointments were made during the year: \ Richard Hay was appointed as Chief Operating Officer, taking over from Jason Greive. Mr Hay is a seasoned geologist and a highly experienced mining executive with previous senior management and operational leadership roles at Evolution Mining, Barrick Gold and Gascoyne Resources. Before the appointment, Mr Hay had been working for Red 5 for six months, assisting with Darlot’s transition to being a satellite underground mine to KOTH, allowing for a smooth transition. \ Patrick Duffy was appointed as Chief Financial Officer, taking over from John Tasovac. Mr Duffy is a Chartered Accountant with extensive commercial, financial and governance expertise having worked at Ernst & Young, Xstrata and Glencore. Mr Duffy was previously the Chief Corporate Development Officer of Red 5, and the roles were combined. In July 2023, Red 5 made two important Board appointments with the appointment of a new Chair, Mr Russell Clark, and non-executive Director, Mr Peter Johnston. Both Mr Clark and Mr Johnston are highly respected global mining executives that further significant mining and governance capability to the Red 5 Board of Directors. (d) Sustainability At Red 5, we are acutely aware of the unique challenges and responsibilities that come with operating in the mining industry. Our commitment to sustainability is not just a corporate slogan; it is a guiding principle that shapes our operations. The following outlines our Sustainability Policy: Environmental Stewardship Workplace Health and Safety The safety and well-being of our workforce are paramount. We have implemented rigorous safety protocols, regular training sessions, and health initiatives to ensure that our employees work in a safe and supportive environment. Recognising the potential impacts of our operations on the environment, we are committed to responsibly managing the land and resources on which we depend and share with our neighbours and future generations. We will continue to adopt approaches to minimise water usage, prevent contamination and ensure safe disposal of waste, prioritising the health of the surrounding environment and our stakeholders. Biodiversity Conservation Community Engagement We believe in fostering strong, positive and engaging relationships with the communities in which we operate. This involves regular consultations, transparent communication, and initiatives aimed at ensuring that local communities benefit from our presence. Ethical Governance and Anti-Corruption We operate with the highest standards of integrity and transparency. Our governance structures are designed to prevent bribery, corruption, and other unethical practices, ensuring that we remain accountable to our stakeholders. Our operations are designed to minimise disruptions to local ecosystems where possible. We actively engage in rehabilitation activities and promote initiatives to ensure that local biodiversity is investigated, understood and managed for the best outcomes. Greenhouse Gas Emissions Through continual improvement, we are actively working to reduce our carbon emissions generated through our production pipeline. The adoption of renewable energy sources, energy-efficient technologies, and carbon capture and storage solutions are allowing us to develop an understanding of the technologies available to the industry and how to incorporate those into the future of our operations. Economic Contributions Beyond our core operations, we are committed to contributing positively to the economies of the regions in which we operate. This includes providing fair wages, supporting local businesses, and investing in community development projects. Our operations will continue to develop, implement and maintain management systems centred on the responsible use of resources for future generations and with an appetite for continual improvement. 28 2023 ANNUAL REPORT DIRECTORS’ Report (cont.) 3. RESULTS OF OPERATIONS (cont.) 3.1 REVIEW OF OPERATIONS (cont.) (e) ESG Materiality During FY23, we performed an internal review to determine if our ESG material topics were still relevant and if any new topics should be reflected. The evaluation resulted in the reorganisation and renaming of several material topics. The updated topics aim to further develop the focus on our relevant Sustainability impacts, capturing the expectations of our stakeholders and providing a framework for measuring success. We recognise that our material topics will evolve over time as the business grows and as our sustainability performance matures, and the framework will be improved accordingly. The full list of material topics is presented below. Business Ethics Cultural Heritage Approvals & Compliance GHG Management Human Rights Water Management Occupational Health & Safety Waste Management Human Capital TSF Management (g) Regulations Red 5 is subject to significant environmental regulation in respect to its mineral exploration activities. These obligations are regulated under relevant government authorities within Australia. Compliance with environmental obligations is monitored by the Risk and Environment Committee. There have been no significant environmental breaches during the year ended 30 June 2023. 3.2 FINANCIAL REVIEW (a) Income statement Gold and silver sales for the reporting period totalled $422.7 million, with 164,974 gold ounces sold at an average price of $2,542 per ounce (2022: $165.0 million with 64,315 gold ounces sold at an average price of $2,526 per ounce). Cost of sales for the period of $394.6 million comprised of production costs, royalties, movement in stockpiles and depreciation charge. The Group recorded a net loss after income tax for the year ended 30 June 2023 of $8.7 million in comparison to a net loss for the year ended 30 June 2022 of $28.6 million which included a gain on the sale of discontinued operations of $20.0 million. Employee Engagement Biodiversity (b) Balance sheet Community Relations Mine Closure & Land Rehabilitation It is important to note that the revision of our material topics considered the guidelines outlined by the Global Reporting Initiative (GRI) and the industry-specific topics found within the SASB Metals and Mining standards. We aim to continue to build on our alignment with the SASB standards in the future. (f) Workplace Health and Safety The operational focus on safety field leadership during the reporting period has contributed to an improved safety performance at both the KOTH and Darlot sites. The continued improvement in safety performance reflects our focus on stabilising our workforce and transitioning to steady-state operations. LTIFR (12-month): TRIFR (12-month): 0.50 (Lost Time Injury Frequency Rate) 9.01 (Total Recordable Injury Frequency Rate) I R F R T h t n o m 2 1 20 15 10 5 0 FY23 TRIFR Safety Statistics (12-month) 17.56 17.80 15.51 9.01 September 2022 December 2022 March 2023 June 2023 Total assets increased by $93.1 million to $670.5 million at 30 June 2023. The increase in total assets was mainly driven by capitalised mine development and construction of Tailings Storage Facility 5 (TSF 5) at King of the Hills. Other movements included additional plant and equipment purchases, depreciation of operating assets and capitalised exploration costs. Cash and cash equivalents were $20.1 million which, together with restricted cash of $15.7 million and bullion receivable of $10.1 million, amount to a cash and bullion balance (non-IFRS) of $45.9 million at 30 June 2023. Total liabilities were $340.4 million, a decrease of $54.2 million from 30 June 2022. This was mainly driven by repayment of borrowings and a reduction in lease liabilities. (c) Cash flow During the year, cash and cash equivalents decreased by $12.4 million. Cash inflows from operating activities for the year were $46.7 million. Cash receipts of $420.0 million reflect the sale of gold and associated by-products. This was offset by other net operating cash outflows of $373.3 million, driven by higher payments to suppliers and employees resulting from increased operational costs. Net cash outflows from investing activities for the period were $126.2 million, reflecting expenditure of $95.8 million on development activities in all three mining operations, and purchases of property, plant and equipment amounting to $29.5 million, including the construction of TSF 5 at King of the Hills. Net financing inflows of $67.2 million are primarily from the net proceeds of equity raisings of $152.1 million, offset by the repayment of borrowings for the King of the Hills plant construction of $47.3 million, payments of interest of $12.0 million and lease liability payments of $25.6 million. 2023 ANNUAL REPORT 29 DIRECTORS’ Report (cont.) 4. DIVIDENDS No amounts were paid by way of dividends since the end of the previous financial year (2022: Nil). At the time of this report, the Directors do not recommend the payment of a dividend. 5. OPTIONS GRANTED OVER SHARES No options were granted during or since the end of the financial year. No person entitled to exercise the options has any right by virtue of the option to participate in any share issue of Red 5 or any other corporation. 6. PERFORMANCE RIGHTS At the date of this report, there were 57,029,435 performance rights convertible into ordinary fully paid shares. Vesting date: 31 December 2023 (STIP rights subject to retention period) Vesting date: 30 June 2023 (LTIP rights subject to performance conditions) Vesting date: 30 June 2023 (PIO rights subject to performance conditions) Vesting date: 30 June 2024 (LTIP rights subject to performance conditions) Vesting date: 30 June 2025 (LTIP rights subject to performance conditions) Total Number 2,343,313 7,945,729 11,550,613 18,410,000 16,779,780 57,029,435 A total of 7,945,729 performance rights (LTIP Rights) that were issued in 2021 to key management personnel, senior management and operating personnel are due to be cancelled following the non-achievement of performance conditions (being Total Shareholder Return outperformance against the All Ordinaries Gold Index and increases in ore reserves), measured over the three years ending 30 June 2023, and personnel exiting the company during the performance period. In addition, 11,550,613 performance rights (PIO Rights) were issued in 2022 to key management personnel, senior management and operating personnel. Upon vesting at 30 June 2023, 2,705,870 PIO Rights will be exercised into an equivalent number of ordinary fully paid shares in accordance with the terms of the Plan. The balance of the 8,844,743 PIO Rights will be forfeited due to factors including not achieving some PIO targets, Board discretion not to award all PIO rights and personnel exiting the company during the performance period. 7. INDEMNIFICATION AND INSURANCE OF DIRECTORS, OFFICERS The Company has made an agreement indemnifying all the Directors and officers of the Company against all losses or liabilities incurred by each Director or officer in their capacity as Directors or officers of the Company to the extent permitted by the Corporations Act 2001. The indemnification specifically excludes wilful acts of negligence. The Company paid insurance premiums in respect of Director’s and Officer’ Liability Insurance contracts for current officers of the Company, including officers of the Company’s controlled entities. The liabilities insured are damages and legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the Group. 8. EVENTS SUBSEQUENT TO THE END OF THE YEAR No events have arisen in the interval between the end of the reporting period and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company, in future financial years. 9. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS In the opinion of the Directors, the ramp up of the KOTH Gold Mine to steady state production during the financial year has repositioned the Company as a significant new Australian gold miner, with a large, long-life gold mine in central Western Australia. The Company’s focus in the short term is to maximise cash flow from the KOTH operations and to reduce its existing debt. Once a strong balance sheet is established, the Company will be in a stronger position to pursue growth initiatives at its operations and across its extensive tenement package, while beginning to consider non-organic growth opportunities. 30 2023 ANNUAL REPORT DIRECTORS’ Report (cont.) 10. BUSINESS STRATEGY AND PROSPECTS FOR FUTURE YEARS Business strategy (a) The Group’s business strategy is firmly anchored in the Company vision of being a successful multi-operational exploration and mining company, providing benefits to all stakeholders, through the consistent application of technical excellence and responsible and sustainable industry practices. With KOTH gold production now generating strong positive cash flows, the Company is looking forward to another transformational year as it takes further important steps to deliver on its strategy of becoming a substantial Australian gold producer. To achieve the strategy, the Company will focus on: \ Unlocking the full potential of the KOTH operation; \ Attracting and retaining an experienced leadership and operating team; and \ Enhancing balance sheet strength and scale to achieve growth through economic and commodity price cycles. The substantial KOTH mineral resource and reserves underpin the future of Red 5, with the large KOTH bulk open pit providing the primary feed to the KOTH process plant, complemented by the additional higher-grade ore sources from the KOTH and Darlot underground mines. The longer-term strategy at KOTH is to extend the mine lives at its three gold mines and evaluate additional processing capacity beyond the current 5.5Mtpa throughput. The business plans associated with the strategy are in place, and the LOM plans demonstrate very robust future cash flows. The positive cash flow generated over a ~15-year mine life will position the Company in the future to evaluate and undertake strategic acquisitions that align with the goal of becoming a major regional gold producer. (b) Material Business Risks Red 5’s business, operating and financial results and performance are subject to various risks and uncertainties, some of which are beyond the Company’s reasonable control. Set out below are matters that the Directors consider relevant and that have the potential to impact the achievement of the business strategies. The matters identified are not necessarily listed in order of importance and are not intended as an exhaustive list of all business risks and uncertainties. \ External economic drivers (including macroeconomic, metal prices and exchange rates) \ The Company is exposed to fluctuations in the Australian dollar gold price, which can impact future revenue streams. As a mitigation, the Company has a partial gold price hedging program to assist in offsetting variations in the Australian dollar gold price, providing price certainty over a fixed portion of future production. \ The Company is exposed to global inflationary pressures across a range of input costs such as oil and gas, operating and maintenance parts and consumables and labour. As a mitigation, the company collaborates with its suppliers to identify ways to manage these cost pressures. \ Reserves and Resources \ The Mineral Resources and Ore Reserves for the Group’s assets are estimates only in compliance with industry standards, and no assurance can be given that future production will achieve the expected tonnages and grades. \ Operational risks \ Drilling, mining and processing activities carry risk and as such, activities may be curtailed, delayed or cancelled as a result of a number of factors outside the Company’s control. These include geological conditions, technical difficulties, securing and maintaining tenements, weather, residue storage and tailings storage facility failures and construction of efficient processing facilities. The operation may be affected by force majeure, fires, labour disruptions and availability, landslides, the inability to obtain adequate machinery, engineering difficulties and other unforeseen events. As with most mines, reserves, resources and stockpiles are based on estimates of grade, volume and tonnage. The accuracy and precision of these estimates will depend upon drill spacing and other information such as continuity, geology, rock density, metallurgical characteristics, mining dilution and costs, etc. which evolve as the mine moves through different parts of the ore body. Red 5 endeavours to take appropriate action to mitigate these operational risks (including by properly documenting arrangements with counterparties and adopting industry best practice policies and procedures) or to insure against them, but the occurrence of any one or a combination of these events may have a material adverse effect on the Company’s performance and the value of its assets. \ Pandemics \ Red 5 has continued to manage the Company’s ongoing response to COVID-19 in cooperation with our contractors. The COVID-19 situation remains unpredictable, and the Company will continue to monitor and manage for potential impacts, particularly around labour availability. \ The Company is maintaining a range of measures across its business consistent with advice from State and Federal health authorities and commensurate with the community risk profile. These measures help ensure the health and welfare of our employees and their respective communities. \ Legal compliance and maintaining title \ The Company has systems and processes in place to ensure title to all its properties, but these can be subject to dispute or unforeseen regulatory changes. \ Climate Change \ Changes to climate-related regulations and government policy have the potential to impact our future financial results. These changes may include the imposition of a carbon tax on carbon output or the implementation of new regulatory requirements for diesel or other fossil fuel consumption used in Red 5’s operations. 2023 ANNUAL REPORT 31 DIRECTORS’ Report (cont.) 10. BUSINESS STRATEGY AND PROSPECTS FOR FUTURE YEARS (cont.) \ Capital and Liquidity \ The Company has processes in place to monitor and manage its liquidity and capital structure to ensure sufficient funds are available to meet the Group’s financial commitments. Red 5 has a single debt facility with external financiers. \ Health and Safety \ Red 5 has implemented management systems which promote a strong safety culture and support a genuine commitment to keep its people and stakeholders safe and healthy. The Company’s safety management practices are focused on a bottom-up approach supporting the organisational values. \ Environmental \ The Company has environmental liabilities associated with its tenements. The Company monitors its ongoing environmental obligations and risks and implements preventative, rehabilitation and corrective actions as appropriate. \ Community relations \ Red 5 has an established community relations function that includes principles, policies and procedures designed to provide a structured and consistent approach to community activities. Red 5 recognises that a failure to manage local community stakeholder expectations appropriately may lead to dissatisfaction, potentially disrupting production and exploration activities. 11. REMUNERATION REPORT LETTER FROM THE CHAIR OF BOARD Dear Shareholders, I am pleased to present Red 5’s Remuneration Report for the Financial Year to 30 June 2023 (FY23). FY23 Performance Summary The last 12 months have been significant for Red 5 with the establishment of King of the Hills as a major new gold processing hub in Western Australia, fed by three mines at King of the Hills and Darlot. For a significant portion of the year, the business has had to navigate the lasting impacts of the COVID pandemic, including related absenteeism, chronic labour skill shortages and supply chain delays. Despite these challenges, Red 5 has achieved significant milestones, including meeting the upper end of production guidance for the second half of the financial year. Remuneration Outcomes When determining the FY23 remuneration outcomes, the Board has carefully considered the achievements made over the year in combination with the unforeseen factors that have impacted the Company. The Board believes the remuneration outcomes are reasonable (as outlined below) providing appropriate alignment between executive performance, shareholder returns and recognition of executive retention criticality over the next business phase. Refer to Section 11.5 for further details. \ Total Fixed Remuneration (TFR): the TFR for the Managing Director increased by 5% (from $687,500 to $725,000) over the year. The other KMPs of CFO and COO were appointed during the current year. The KMP salaries were set to ensure market competitiveness based on external remuneration benchmarking analysis. \ Short Term Incentive Plan (STI): while the production gateway was not met, the Board exercised its discretion to award a 41% STI outcome to the COO to recognise his significant contribution during the year and the external factors which have contributed to the production gateway not being achieved. The STI to Mr Hay was settled in cash. No STI was awarded to the other KMPs. Refer to Section 11.5.2 for further details. \ Long Term Incentive Plan (LTI): Red 5 did not achieve either the total shareholder return or gold production performance gates for the three-year period ended 30 June 2023, resulting in a zero LTI remuneration outcome. \ Project Incentive Opportunity (PIO): Red 5 achieved 47% of the PIO outcomes, however the Board exercised its discretion in awarding a reduced PIO outcome to KMP’s and other executives. This was settled in cash and shares as per the incentive plan. Refer to Section 11.5.3 for further details. \ NED Fees: there were no increases to the NED fees in FY23. 32 2023 ANNUAL REPORT DIRECTORS’ Report (cont.) 11. REMUNERATION REPORT (cont.) LETTER FROM THE CHAIRMAN OF BOARD (cont.) Changes to the Remuneration Framework The Board regularly reviews our executive remuneration structure to ensure it continues to drive shareholder value and enables us to attract and retain the talent we need. Following a review undertaken in FY23, including input from external remuneration consultants, changes to the company’s remuneration framework in FY24 are outlined below. Refer to Section 11.7 for details. Removing the production gate for the STI: Based on a review of the current STI framework, including alignment with typical market practice, the Company has removed the STI production gateway for FY24. The Company recognises that production is a key business driver and contributor to shareholder value and currently applies an STI weighting of 20% to production targets. The Board is of the view that a production gateway for the entire STI programme is no longer appropriate. Modifying LTI relative total shareholder return assessment from an index to a peer group: The Company recognises that the S&P/ASX All Ordinaries Gold Index (Index) previously used for assessing LTI vesting includes a broad spectrum of companies within the gold sector. The Index can be significantly influenced by the share price performance of the largest constituents. To provide a stronger link between Company performance and executive reward, Red 5 has developed a list of peers which are considered directly comparable to Red 5 (e.g. based on size, stage of operations and geographical location of mines). It is the Board’s view that the adoption of a specific peer group, rather than the Index, will provide a stronger alignment between the relative performance of Executives and shareholder value. The Board is confident that Red 5’s current and planned remuneration policies continue to support the financial and strategic goals of the business as a leading gold producer. We are committed to transparency and an ongoing dialogue with shareholders on remuneration. To this end, we have made changes to the 2023 Remuneration Report to improve the overall format and flow of information. On behalf of the Board, I invite you to review the full report and thank you for your continued support of Red 5. Sincerely Russell Clark Chair TABLE OF CONTENTS This Remuneration Report (Report) outlines the remuneration arrangements in place for key management personnel (KMP) of Red 5 Limited (Red 5 or the Company) for the year ended 30 June 2023 (FY23) in accordance with the requirements of the Corporations Act 2001 and its Regulations. The Report contains the following main sections: 11.1 Who is covered by this Remuneration Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 11.2 Remuneration Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 11.3 Principles of Remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 11.4 Executive Remuneration Framework and Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 11.5 FY23 Executive Remuneration Outcomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 11.6 Non-Executive Directors’ Remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 11.7 Planned Remuneration Approach for FY24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 11.8 Details of Remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 11.9 Additional Remuneration Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 2023 ANNUAL REPORT 33 DIRECTORS’ Report (cont.) 11. REMUNERATION REPORT (cont.) 11.1 WHO IS COVERED BY THIS REMUNERATION REPORT For the purposes of this Report, KMP’s are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the consolidated entity, including any Director (whether Executive KMP or Non-Executive Director (NED) of Red 5. The following were the KMP’s of the Company at any time during the year ended 30 June 2023 and unless otherwise indicated, KMP for the entire period: Name Executive Director Mark Williams Current Executive KMP Richard Hay Patrick Duffy Jason Grieve John Tasovac Non-Executive Directors Andrea Sutton Ian Macpherson Colin Loosemore Steven Tombs Kevin Dundo Fiona Harris Position Managing Director Chief Operating Officer Chief Financial Officer Chief Operating Officer Chief Financial Officer Term as KMP Full year From 12 November 2022 From 1 September 2022 Until 11 November 2022 Until 31 August 2022 Acting Chair, Independent Non-Executive Director Full year, acting chair from 13 March 2023 Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Full year Full year Full year Chair, Independent Non-Executive Director Resigned 12 March 2023 Independent Non-Executive Director Resigned 6 December 2022 11.2 REMUNERATION GOVERNANCE KMP remuneration decision making is directed by Red 5’s remuneration governance framework as follows: Board Take an active role in the governance and oversight of Red 5’s remuneration policies and have overall responsibility for ensuring that the Company’s remuneration strategy aligns with Red 5’s short- and long-term business objectives and risk profile. Remuneration Committee (Committee) Responsible for reviewing the remuneration arrangements for KMP and make recommendations to the Board including: \ reviewing remuneration levels and other terms of employment on an annual basis having regard to relevant market conditions, qualifications and experience of the KMP, and performance against targets set for each year where applicable. \ advising the Board on the appropriateness of remuneration packages / structures of the Company, given trends in comparative peer companies both locally and internationally, with the overall objective of ensuring maximum stakeholder benefit from the retention of a high calibre Board and executive team. The Committee’s charter can be found on the Company’s website at: www.red5limited.com/site/about-red5/corporate-governance External Remuneration Consultants To ensure the Committee is fully informed when making remuneration decisions, it may seek external, independent remuneration advice on remuneration related issues. Share trading policy During the year, the Committee engaged a consultant, The Reward Practice Pty Ltd, to provide remuneration services in respect to external benchmarking and general insights for executive incentive arrangements. Fees of $37,750 were incurred for services by The Reward Practice Pty Ltd in relation to the current financial year. Red 5’s share trading policy prohibits a KMP (that are granted share-based payments as part of their remuneration) from entering into other arrangements that limit their exposure to losses that would result from share price decreases. Entering into such arrangements is also prohibited by law. 34 2023 ANNUAL REPORT DIRECTORS’ Report (cont.) 11. REMUNERATION REPORT (cont.) 11.3 PRINCIPLES OF REMUNERATION Four principles guide Red 5’s remuneration policies and practices: Remuneration quantum should target the middle to upper quartile of the market that Red 5 operates in to attract and retain the key talent required. At-risk reward should be based on the achievement of challenging targets over the short term (1 year) and long term (3+ years). Emphasis of reward programs should be to motivate and retain key talent over the long term. An appropriate mix of cash and equity awards so that over time executives and employees are aligned with the long-term interests of shareholders. Note - NEDs do not receive performance-related remuneration or participate in any incentive plans. 11.4 EXECUTIVE REMUNERATION FRAMEWORK AND COMPONENTS Executives receive fixed and variable remuneration consisting of short and long term incentive opportunities. Executive remuneration levels are reviewed annually by the Remuneration Committee with reference to the remuneration guiding principles and market movements. The following diagram presents a high-level summary of remuneration components for executive KMP’s for FY23: Fixed remuneration Base salary + superannuation + benefits Variable remuneration STI Plan LTI Plan Cash Service Rights (1 year) Rights (3 years) 50% financial performance 50% non-financial performance 70% relative TSR 30% growth in reserves In addition, various minimum gateways are in place that need to be achieved to be awarded the variable remuneration component. The following diagram sets out the mix for fixed and “at risk” remuneration for executive KMP at maximum opportunity level for FY23 based on the potential of a 100% vesting of STI and LTI. Note given the one-off nature of the PIO, it is excluded from the remuneration mix analysis. 2023 Rumuneration Mix (at Maximum Opportunity) Total at risk Managing Director 43% 24% 33% 57% Other KMP’s 54% 24% 22% 46% 0% 50% 100% Fixed STI (at risk) LTI (at risk) Fixed remuneration Fixed remuneration consists of base salary, superannuation and optional salary sacrifice benefits. It is designed to recognise the execution of business strategy and executives’ qualifications, experience and accountability. It is set with reference to comparable roles in similar companies. 2023 ANNUAL REPORT 35 DIRECTORS’ Report (cont.) 11. REMUNERATION REPORT (cont.) 11.4.1 STI The following table outlines the FY23 STI arrangements in detail: What is the purpose? \ Reward executive KMP for the achievement of Red 5’s annual targets linked to business strategy and shareholder value; \ Ensure that executives have commonly shared objectives related to the delivery of annual business plans; \ Encourage share ownership among senior roles; and \ Provide a component of remuneration to enable the Company to compete effectively for the calibre of talent required for it to be successful on a short to medium term basis. How is it paid? STI awards are paid in 50% cash and 50% equity following the conclusion of the performance period. The 50% equity component is to be satisfied in Service Rights (subject to 12 or 18 months continued service). What is the target incentive opportunity? The STI target opportunity is set as a percentage of TFR. Subject to performance, the MD was entitled to an STI of up to 60% and other executive KMP’s were entitled to an STI of up to 50%. What is the performance period? The STI is offered annually and is measured over a single financial year. How is performance assessed? An executive’s actual award is based on meeting KPIs set in advance of the financial year. The KPIs comprise financial and non-financial objectives which directly align the individual’s reward to the Company’s annual business plans. The KPIs set for the FY23 awards were: \ Company Financial: budgeted EBITDA (20%) \ Gold production: across both Darlot and KOTH (20%) \ Safety: assessed by Total Recordable Injury Frequency Rate (TRIFR) and no fatalities (20%) \ Cost management: via All-in-Sustaining-Cost (AISC) per ounce (20%) \ Individual effectiveness: measured by Board or Managing Director (where applicable) (20%) KPIs are set at threshold, target, and stretch levels resulting in payout at 50%, 100% and 200% of the target opportunity. What is the gateway? An overall gateway of 90% of budgeted gold production level must be achieved before any award is made under the STI. What vesting conditions / dealing restrictions apply to the equity components of the STI award? Service Rights are granted following the performance period based on KPI outcomes and are intended to prevent the equity being sold for a period of 12 or 18 months. They vest into shares 12 or 18 months after the grant date based on continued employment with the Company (no further restriction period applies following the vesting). The purpose of deferral / restrictions is to manage the risk of short-termism inherent in setting short term objectives, promote sustainable value creation and build further alignment with shareholder interest. 36 2023 ANNUAL REPORT DIRECTORS’ Report (cont.) 11. 11.4 REMUNERATION REPORT (cont.) EXECUTIVE REMUNERATION FRAMEWORK AND COMPONENTS (cont.) 11.4.2 LTI The following table outlines the FY23 LTI arrangements in detail: What is the purpose? \ To promote the alignment of interest between executives and shareholders through the holding of equity in the Company. As such, LTI awards are generally granted to executives and management who are able to influence the future of Red 5, and/or are in a position to contribute to shareholder wealth creation; \ Ensure that executives have commonly shared goals related to producing relatively high returns for shareholders; \ Encourage share ownership among senior roles; \ Provide a component of remuneration to enable the Company to compete effectively for the calibre of talent required for it to be successful on a long-term basis; and \ Help retain employees, thereby minimising turnover and providing a stable workforce. How is it paid? LTI awards are paid in Performance Rights for nil cash consideration. What is the LTI opportunity The LTI opportunity is set as a percentage of TFR. Subject to performance, the MD was entitled to an LTI of up to 60% and other executive KMP were entitled to an LTI of up to 45%. What is the performance period The LTI is considered annually and is measured over a 3-year performance period. How is performance assessed? LTI awards are granted at the beginning of the performance period and vest based on: \ Total Shareholder Return (TSR) compared to that of S&P/ASX All Ordinaries Gold Index (70%); and \ Growth of the Company’s proved and probable ore reserves (30%). Retesting after 12 months (following the end of the performance period) is available on the relative TSR hurdle. What is the gateway? The following gateway must be satisfied in order for the awards to vest: How the LTI vesting is determined? \ A positive TSR being achieved. LTI vesting is subject to the following sliding scale: Relative TSR (70%) Performance level to be achieved Percentage vesting =< S&P/ASX All Ordinaries Gold Index (Index) Target: Outperform the Index by 10% 0% 50% Performance between Target and Stretch Sliding scale vesting Stretch: Outperform the Index by 20% 100% Growth in ore reserves (30%) Performance level to be achieved Percentage vesting <15% Threshold =15% Target = 20% Stretch = > 35% 0% 25% 50% 100% What are the restrictions of the equity components of the LTI awards? There are no further restrictions to the vested awards following the end of the performance period. 2023 ANNUAL REPORT 37 DIRECTORS’ Report (cont.) 11. 11.5 REMUNERATION REPORT (cont.) FY23 EXECUTIVE REMUNERATION OUTCOMES The following table summarises key measures of Company performance for FY23 and the previous four financial years: Performance outcomes over the past five FYs ASX share price at year end Profit/(loss) after income tax attributable to owners of the company for continuing operations ($’000) Profit/(loss) after income tax attributable to owners of the company ($’000) Dividends paid ($’000) Underlying EBITDA(a) ($’000) (a) Underlying EBITDA is a non-IFRS measure that is unaudited. 11.5.1 Fixed remuneration outcomes FY23 $0.19 FY22 $0.25 FY21 $0.19 FY20 $0.20 FY19 $0.18 (8,730) (48,664) (9,478) 4,544 (3,030) (8,730) (28,615) (43,245) 4,544 (3,030) - - - - - 96,081 (4,258) 11,635 53,978 29,890 Following the review of executive remuneration levels against relevant market comparators (with the benchmarking analysis provided by The Reward Practice Pty Ltd), the following table outlines total fixed remuneration (TFR) changes for executive KMP’s in FY23: FY23 Executive KMP Fixed Remuneration Outcomes Mark Williams, Managing Director Richard Hay, Chief Operating Officer (from 12 November 2022) (a) Patrick Duffy, Chief Financial Officer (from 1 September 2022) (a) Jason Greive, Chief Operating Officer (resigned 11 November 2022) (a) John Tasovac, Chief Financial Officer (resigned 31 August 2022) (a) FY23 TFR $725,000 $356,596 $373,562 $219,616 $75,728 FY22 TFR $687,500 n/a n/a $550,000 $440,000 (a) The remuneration of KMP’s who were only a KMP for part of the year has been apportioned for the time that they were a KMP. The Board will continue to monitor remuneration levels based on the factors set out in the executive remuneration framework. 11.5.2 FY23 STI outcome Following the end of FY23, the gateway of 90% of budgeted gold production was not achieved due to several external factors that were not known when setting the STI targets. These factors include the continued disruptions by the COVID-19 pandemic on the Red 5 key operations and staffing levels, the increased labour market pressures across the WA gold mining industry, and the global breakdown in the supply chain of key parts and spares. Within the above context, the Board carefully assessed the FY23 performance against set targets and exercised its discretion to proceed with a 40% of STI outcome for the Chief Operating Officer (COO). Note the STI for the Managing Director and Chief Financial Officer did not have discretion applied and received no STI. The STI award to the COO will be fully satisfied in cash. The Board considered the exercise of discretion for the STI appropriate for the following reasons: \ Despite the unforeseen challenges in FY23, Red 5 had a solid year overall where the applicable Executives made significant contributions to meeting several important operational metrics (e.g. improvement in safety and turnaround in production in 2H FY23). \ As competition for executive talent within the mining industry remains extremely tight, the retention of key staff is considered a key priority for Red 5 over the coming years. The FY23 awards in Service Rights recognise executive achievement over the year whilst providing a retention mechanism to ensure the progression of key operational and strategic objectives in the following 12 months. 38 2023 ANNUAL REPORT DIRECTORS’ Report (cont.) 11. 11.5 REMUNERATION REPORT (cont.) FY23 EXECUTIVE REMUNERATION OUTCOMES (cont.) The following table outlines KPI performance outcomes for FY23: Threshold Target Stretch FY23 STI KPIs and Performance Outcomes FY23 Actual KPI KPI Weighting Performance Outcomes STI Outcomes Group EBITDA ($m) 20% Below threshold Gold production across Darlot and KOTH (oz) 20% Below threshold TRIFR and no fatalities 20% Achieved AISC ($) 20% Below threshold Individual effectiveness 20% Achieved 90% of budgeted gold production level Gateway Not satisfied STI performance outcomes (FY23 awards): $154.4m $172.0m $189.2m 170,100oz 189,000oz 207,900oz 16.5 15.0 13.5 $2,025/oz $1,841/oz $1,656/oz 50% 100% 200% - - 20% - 20% 40% Based on the above outcomes, the following provides further detail for the FY23 STI awards. FY23 Executive KMP STI Award Outcomes Target STI Opportunity $ STI awarded % STI outcomes $ Number of Service Rights awarded Mark Williams Richard Hay (commenced 12 November 2022) Patrick Duffy (commenced 1 September 2022) Jason Greive (resigned 11 November 2022) John Tasovac (resigned 31 August 2022) Total (a) Mr Hay’s STI award will be paid in cash. 435,000 215,123 168,475 - - 818,598 11.5.3 FY23 Project Incentive Opportunity (PIO) - 40% - - - - 86,049 (a) - - - 86,049 - - - - - - The Project Incentive Opportunity (PIO) was put in place in FY22 to be a 24 month plan focused on constructing and establishing Red 5’s KOTH Mining and Processing Hub operations. The following table outlines KPI performance outcomes for FY23: Threshold Target Stretch FY22-23 PIO Performance Hurdles and Outcomes FY23 Actual KPI KPI Weighting Performance Outcomes PIO Outcomes Gold ounces produced - combined Darlot and KOTH (oz) 50% Between Threshold and Target 225,000oz 250,000oz 275,000oz Ore processed (Kt) at KOTH 25% Below Threshold 5,220Kt 5,800Kt 6,380Kt Development metres completed at Darlot (m) Total: 25% Stretch Achieved 6,300m 7,000m 7,700m 22% - 25% 47% 2023 ANNUAL REPORT 39 DIRECTORS’ Report (cont.) 11. 11.5 REMUNERATION REPORT (cont.) FY23 EXECUTIVE REMUNERATION OUTCOMES (cont.) Whilst two of the three performance hurdles were met during the measurement period, the Board using its discretion capping the award for KMP’s and other Executives to a maximum cash award of $55,000 and share award of 200,000 shares. The capping of awards was due to the Company’s overall performance over the period, which in the Board’s opinion, resulted in a dilution of shareholder value. Based on the above outcomes the following provides further detail for FY23 PIO awards. FY23 Executive KMP PIO Award Outcomes Maximum PIO Opportunity $ PIO awarded % PIO outcomes $ Mark Williams Richard Hay (commenced 12 November 2022) (a) Patrick Duffy (commenced 1 September 2022) Jason Greive (resigned 11 November 2022) John Tasovac (resigned 31 August 2022) Total 687,500 194,446 338,000 500,000 400,000 2,119,946 16% 47% 33% - - 55,000 54,839 55,000 - - Shares awarded 200,000 129,186 200,000 - - 164,839 529,186 (a) Mr Hay was not part of the original PIO awards program due to commencing employment after PIO rights were granted. However due to Mr Hay’s significant contribution to the Company, he has been included in the PIO rights programme. 12.5.4 FY23 LTI outcome Following the assessment of relevant performance hurdles over the three years ended 30 June 2023, no rights granted at the start of FY21 vested as Red 5 did not satisfy the two performance gates of a positive TSR over the measurement period, and 90% of budgeted gold ounces over the measurement period. Threshold Target Stretch FY21-23 LTI Performance Hurdles and Outcomes FY23 Actual KPI Relative TSR (against the S&P/ASX All Ordinaries Gold Index) Growth in ore reserves excluding 50% of acquired ore reserves AISC (as a percentage of operating costs per ounce of AISC) Safety compliance criteria (no fatalities, maintenance of the ISO14001 and ISO 18001 certifications, and year on year improvement in safety) Gateways: \ Positive TSR; and \ 90% of budget gold production over the measurement period 1 July 2021 to 30 June 2023 KPI Weighting 50% Below threshold 20% Stretch met Performance Outcomes <=Index >10% >20% 16% 20% 36% 20% Below threshold 95% 90% 80% 10% Below threshold Threshold Target Stretch Gateway Both gateways not satisfied Total level of LTI vesting (FY21-23 awards): Vesting Outcomes 0% 0% 0% 0% 0% 0% 40 2023 ANNUAL REPORT DIRECTORS’ Report (cont.) REMUNERATION REPORT (cont.) FY23 EXECUTIVE REMUNERATION OUTCOMES (cont.) 11. 11.5 Executive KMP – FY21-23 LTI Awards Vesting Outcomes Executive KMP Mark Williams Richard Hay (a) Patrick Duffy (b) Jason Greive John Tasovac Total Maximum LTI Opportunity $ 292,249 Not eligible 90,652 72,864 105,024 560,789 Number of LTI Rights held 1,526,102 516,535 415,182 598,425 3,056,244 LTI Rights vested % - - - - - LTI Rights forfeited $ (292,249) Number of LTI Rights forfeited (1,526,102) (90,652) (72,864) (105,024) (560,789) (516,535) (415,182) (598,425) (3,056,244) (a) Mr Hay was appointed Chief Operating Officer on 11 November 2022, subsequent to the performance rights being issued in FY21. (b) Mr Duffy was awarded the performance rights while in his previous role as Chief Corporate Development Officer. 11.6 NON-EXECUTIVE DIRECTORS’ REMUNERATION In accordance with current corporate governance practices, the structure for the remuneration of NEDs and executive KMP is separate and distinct. Shareholders approve the maximum aggregate fees payable to NEDs, with the current limit being $850,000 per annum. 11.6.1 FY23 Non-Executive Director Fee Policy There were no increases to NED remuneration over FY23. The following table sets out the policy fee for NEDs for FY23 (exclusive of statutory superannuation of 10.5%). Chair Member Board and Committee Fees Board Audit Committee Remuneration and Nomination Committee Risk and Environment Committee Health, Safety and Community Committee FY23 $135,000 $15,000 $10,000 $10,000 $10,000 FY22 $135,000 $15,000 $10,000 $10,000 $10,000 FY23 $100,000 FY22 $100,000 Nil Nil Nil Nil Nil Nil Nil Nil The Board may approve any consultancy arrangements (at a rate) for NEDs providing additional services outside their Board and/or Committee duties. NEDs are not entitled to participate in performance-based incentive schemes. The Board may seek annual shareholder approval for a share plan, under which NEDs can elect to receive a portion of their fees in shares in Red 5. All Directors are entitled to have premiums on indemnity insurance paid by Red 5. The liabilities insured are for costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the consolidated entity. 2023 ANNUAL REPORT 41 DIRECTORS’ Report (cont.) 11. 11.6 REMUNERATION REPORT (cont.) NON-EXECUTIVE DIRECTORS’ REMUNERATION (cont.) 11.6.2 FY23 Non-Executive Director Statutory Remuneration Disclosures The following table outlines the fees paid to NEDs in FY23 as prepared in accordance with the requirements of the Corporations Act 2001 and the relevant Australian Accounting Standards. Base fees Committee Chair fees Consulting fees Superannuation NED Andrea Sutton, Acting Chair from 13 March 2023 Ian Macpherson, NED Colin Loosemore, NED Steven Tombs, NED Kevin Dundo, Chair until 12 March 2023 Fiona Harris, NED until 6 December 2022 TOTAL FY23 FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23 FY22 $ 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 94,125 135,000 43,207 6,319 537,332 541,319 $ 10,000 10,000 15,000 15,000 10,000 10,000 10,000 10,000 - - - - 45,000 45,000 $ - - - - - - - - - - - - - - $ 11,550 11,000 12,075 11,500 11,688 11,000 11,688 11,000 9,883 13,500 4,537 663 61,421 58,663 Total $ 121,550 121,000 127,075 126,500 121,688 121,000 121,688 121,000 104,008 148,500 47,744 6,982 643,753 644,982 11.7 PLANNED REMUNERATION APPROACH FOR FY24 During FY23, the Company’s executive remuneration framework was reviewed, considering shareholder feedback, market insights on incentive structure from external remuneration consultants and the Company’s circumstances. As a result, the following key changes to executive remuneration arrangements are planned for FY24 to ensure a strong alignment with business need, shareholder feedback and contemporary market practice. Further details will be provided in the FY24 Remuneration Report. Remuneration Element FY24 Approach TFR STI LTI \ As per the Red 5 Remuneration Framework, the Remuneration Committee will review TFR levels and recommend necessary adjustments to the Board for approval. \ Any remuneration changes for KMP’s during FY24 will consider independent market benchmarking outcomes, changes in executive responsibilities, and local trends in the market for executive talent. \ Remove production gateway: This change reflects the market practice of peers and provides an enhanced alignment between executive performance and reward. \ Change to the relative TSR assessment approach: The Board has considered alternative methodologies of measuring TSR performance and adopted a selected peer group of comparable gold companies for FY24 instead of an Index. \ A list of peers directly comparable to Red 5 (e.g. based on size, stage of operations and geographical location of mines) will provide a more substantial alignment between the relative performance of Executives and shareholder value. \ The vesting methodology for the relative TSR metric remains unchanged (e.g. threshold performance set at median level). 42 2023 ANNUAL REPORT DIRECTORS’ Report (cont.) 11. 11.8 REMUNERATION REPORT (cont.) DETAILS OF REMUNERATION The following table discloses details of the nature and amount of each element of the remuneration paid to executive KMP for the year ended 30 June 2023 and 30 June 2022. Short term Long term ) a ( y r a l a s h s a C $ s u n o b h s a C $ ) e ( s t h g i r e c i v r e s I T S $ n o i t a u n n a - r e p u S $ g n o l d n a l a u n n A e v a e l e c i v r e s $ d r a w a h s a c O I P $ s t h g i r e c n a m r o f r e P $ ) f ( e s n e p x e s t h g i r e c n a m r o f r e P $ ) g ( d e t i e f r o f l a t o T $ Executive remuneration Executive Director Mark Williams FY23 FY22 697,500 660,000 - - Executive KMP’s Richard Hay (b) Patrick Duffy (d) Jason Greive (b) John Tasovac (d) FY23 FY22 FY23 FY22 FY23 FY22 FY23 FY22 329,096 86,049 (c) - 346,062 - 205,037 522,500 68,750 - - - - - - 412,500 60,000 69,338 27,500 48,862 55,000 602,831 (515,872) 985,159 - - - 27,500 74,416 - 658,559 (155,908) 1,264,567 27,500 18,583 54,839 21,961 - - - - - - 538,028 - 46,277 27,500 14,097 55,000 255,958 (198,230) 546,664 - - - - - - - 14,579 10,889 27,500 38,701 6,978 5,128 27,500 32,978 - - - - - - - - 104,126 (414,561) (79,930) 286,147 - 874,848 40,749 (320,252) (198,647) 314,754 (63,856) 783,876 TOTAL FY23 1,646,445 86,049 115,615 104,057 97,559 164,839 1,025,625 (1,448,915) 1,791,274 FY22 1,595,000 60,000 - 82,500 146,095 - 1,259,460 (219,764) 2,923,291 (a) Includes salary and any superannuation contributions above the concessional cap that are expensed. (b) Mr Greive resigned as Chief Operating Officer on 11 November 2022. Mr Hay was appointed as Chief Operating Officer from 12 November 2022. His salary has been apportioned for this period and excludes his payroll prior to being a KMP. (c) Mr Hay received a discretionary award by the Board of Directors for his contribution to the ramp-up of the King of the Hills operations. (d) Mr Tasovac resigned as Chief Finance Officer on 31 August 2022. Mr Duffy was appointed as Chief Finance Officer from 1 September 2022. His salary has been apportioned accordingly for this period and excludes his payroll prior to being a KMP. (e) No service rights were granted to KMP’s for FY23 because the STI objectives were not achieved. However, service rights granted to KMP’s for FY22 have been expensed during the current year. (f) Relates to performance rights expense for the PIO, 2021, 2022 and 2023 series. The fair value at the grant date of Tranche A, which has market-based performance conditions, was estimated using a Monte Carlo simulation. The fair value at the grant date of Tranches B, C and D, which have market and non-market-based performance conditions, were valued using a single share price barrier model incorporating a Monte Carlo simulation. (g) Performance rights that were issued to key management personnel, senior management and operating personnel in FY21 have been forfeited following the non-achievement of performance conditions measured over the three years ended 30 June 2023. In addition, PIO performance rights that were issued to key management personnel, senior management and operating personnel in FY22 have been partially forfeited following the partial achievement of performance conditions measured over the two years ended 30 June 2023. 2023 ANNUAL REPORT 43 DIRECTORS’ Report (cont.) 11. 11.8 REMUNERATION REPORT (cont.) DETAILS OF REMUNERATION (cont.) The relative proportions of remuneration that are linked to performance and those that are fixed are as follows: Executive Director Mark Williams Non-Executive Directors Andrea Sutton Ian Macpherson Colin Loosemore Steven Tombs Kevin Dundo Fiona Harris Executives Richard Hay Patrick Duffy Jason Greive John Tasovac Fixed At risk – short term incentives At risk – long term incentives 2023 2022 2023 2022 2023 2022 79% 60% 7% 100% 100% 100% 100% 100% 100% 70% 71% 100% 100% 100% 100% 100% 100% 100% 100% - - 67% 60% - - - - - - 16% 8% - - - - - - - - - - - - 8% 14% 40% - - - - - - 14% 21% - - - - - - - - - - 33% 32% 11.9 ADDITIONAL REMUNERATION DISCLOSURES 11.9.1 Executive Service Contracts Remuneration and other terms of employment for executive KMP’s are formalised in service agreements. The service agreements specify the components of remuneration, benefits and notice periods. Participation in STI and LTI plans is subject to the Board’s discretion. Other major provisions of the agreements relating to remuneration are set out below: Position Terms of agreement TFR including superannuation effective July 2022 Executive KMP Mark Williams Richard Hay (a) Patrick Duffy (b) Jason Greive (a) Managing Director No fixed term Chief Operating Officer No fixed term Chief Financial Officer No fixed term Chief Operating Officer No fixed term John Tasovac (b) Chief Financial Officer No fixed term Notice period 3 months 3 months 3 months 3 months 3 months Termination benefit 12 months 3 months 3 months 3 months 6 months $725,000 $574,600 $450,000 $578,000 $442,000 (a) Mr Hay was appointed to the role of Chief Operating Officer effective from 12 November 2022 following the resignation of Mr Greive from the Company on 11 November 2022. (b) Mr Duffy was appointed to the role of Chief Financial Officer effective from 1 September 2022 following the resignation of Mr Tasovac from the Company on 31 August 2022. 11.9.2 Options granted to key management personnel No options over ordinary shares were held or granted during the year to executive officers of Red 5 as part of their remuneration. No shares were issued during the year as a result of the exercise of options granted as part of remuneration. 44 2023 ANNUAL REPORT DIRECTORS’ Report (cont.) 11. 11.9 REMUNERATION REPORT (cont.) ADDITIONAL REMUNERATION DISCLOSURES (cont.) 11.9.3 Shareholdings of directors and key management personnel The numbers of shares in Red 5 held during the financial year by key management personnel, including personally related entities, are set out below: 2023 Andrea Sutton Mark Williams Ian Macpherson Colin Loosemore Steven Tombs Kevin Dundo Fiona Harris Richard Hay Patrick Duffy Jason Greive John Tasovac Total Balance at previous year reporting date Received through vesting and exercise of PIO rights Received through vesting and exercise of service rights Other purchases/ disposals during the year Balance at reporting date - 15,860,891 1,580,000 10,108,190 2,719,579 1,905,249 - - 559,037 2,081,136 756,906 35,570,988 - - - - - - - - - - - - - - - - - - - - - - - - 500,000 187,500 467,500 - - - - - - - - 1,155,000 500,000 16,048,391 2,047,500 10,108,190 2,719,579 1,905,249 (a) - (a) - 559,037 2,081,136 (a) 756,906 (a) 36,725,988 (a) Balance held by the NED or KMP at the date that they left the Company. 12.9.4 Service rights held by KMP’s under the STI There were no new service rights awarded during the financial year due to the outcome not being achieved. Service rights held by KMP’s relating to the previous performance measurement period are set out below: KMP Mark Williams (a) Patrick Duffy (a) Grant Date Vesting Date Fair Value at Grant Date 25-Oct-22 31-Dec-23 $104,007 09-Aug-22 31-Dec-23 $83,848 Granted 671,013 274,912 Exercised up to reporting date Outstanding at reporting date - - 671,013 274,912 (a) Service Rights for Mr Williams and Mr Duffy were issued under the Red 5 FY22 Rights Plan. They have an 18 month service test and will vest on 31 December 2023 if they are still employees at that date. 11.9.5 Performance rights held by KMP’s under the LTI The number of performance rights in Red 5 held as at the date of this report by executive KMP’s are set out below: Received through issuing of LTI performance rights (a) LTI Performance rights vested and exercised (b) PIO rights vested and exercised (c) LTI Performance rights and PIO rights forfeited (d) Balance at prior year reporting date Balance at reporting date 5,303,575 2,358,712 2,187,963 2,887,709 2,576,447 993,684 - - 12,955,694 3,352,396 - - - - - (200,000) (2,837,091) 4,625,196 (200,000) (1,059,392) 1,922,255 - - (2,887,709) (2,576,447) - - (400,000) (9,360,639) 6,547,451 KMP Mark Williams Patrick Duffy Jason Greive (d) John Tasovac (d) Total (a) (b) (c) The following tables provide further details regarding Rights on foot. (d) Mr Greive and Mr Tasovac left the Company during the year and are not eligible to be awarded the performance rights. 2023 ANNUAL REPORT 45 DIRECTORS’ Report (cont.) 11. 11.9 (a) REMUNERATION REPORT (cont.) ADDITIONAL REMUNERATION DISCLOSURES (cont.) FY23 LTI Performance Rights– Managing Director and KMP (Expiry date: 30 June 2025) Managing Director Other KMPs: Patrick Duffy Value per right Valuation per tranche Condition criteria Tranche A 1,651,098 695,579 $0.142 $333,228 Tranche B 707,614 298,105 $0.159 $159,909 Total 2,358,712 993,684 $493,137 TSR ranking relative to TSR of S&P/ASX All Ordinaries Gold Total Return Index Growth in the Company’s Ore Reserves (proved and probable), excluding 50% of acquired Ore Reserves In addition, vesting of the performance rights is also conditional on a positive Company TSR for the measurement period. TSR > Index TSR +20% TSR > Index TSR +10% TSR < or equal to Index TSR 100% Stretch: 35% or over 100% 50% Target: 20% 50% nil Threshold: 15% 25% < 15% nil (a) The Tranche A Rights have been valued using a hybrid employee share option pricing model which incorporates a Monte Carlo simulation. It uses a correlated simulation that simultaneously calculates the TSR of the Company and the Index on a risk-neutral basis as at the vesting date with regards to the measurement period. The percentage by which the return on the stock exceeds the total return on the Index is calculated as at the vesting date and a vesting percentage is calculated from the vesting schedule. The forecast share price at the vesting date is then used to calculate the value of the Right. The price is adjusted based on the vesting percentage, then discounted to its present value. Tranche B Rights have non-market vesting conditions, but the inclusion of a positive TSR gate represents a market-based vesting condition, and as such, the Tranche B Rights have been valued using a hybrid single barrier option pricing model. The model incorporates a Monte Carlo simulation, which simulates the Company’s share price at the test date. The forecast share price at the test date is then used to calculate the value of the Tranche B Rights. The average value of the Monte Carlo iterations where the Company’s share price exceeds the barrier represents the value of the Tranche B Rights. (b) Rights with market based and non-market based vesting conditions can only be exercised following the satisfaction of their exercise conditions. In accordance with the terms of the Red 5 Rights Plan, performance rights were not issued to key management personnel and senior management due to non-achievement of performance conditions measured over the three years ended 30 June 2023 in respect of the LTI performance rights. (c) PIO Performance Rights are partially awarded as per the PIO Rights Plan. (d) Performance rights with unmet performance conditions will lapse and be forfeited. In addition, performance rights for employees who have resigned from the company will be forfeited. Share based payments expense for the shares issued, service and performance rights for KMP’s was $1,141,240 (2022: $1,259,460). The fair value is based on the observable market share price at the grant date. 46 2023 ANNUAL REPORT DIRECTORS’ Report (cont.) 11. 11.9 REMUNERATION REPORT (cont.) ADDITIONAL REMUNERATION DISCLOSURES (cont.) Details of the performance rights issued previously: FY22 LTI Performance Rights– Managing Director and KMP (Expiry date: 30 June 2024) Managing Director Other KMPs: Patrick Duffy Value per right Valuation per tranche Condition criteria Tranche A 1,586,539 650,000 $0.217 $485,329 Tranche B 679,945 278,571 $0.280 $268,384 Total 2,266,484 928,571 $753,713 TSR ranking relative to TSR of S&P/ASX All Ordinaries Gold Total Return Index Growth in the Company’s Ore Reserves (proved and probable), excluding 50% of acquired Ore Reserves In addition, vesting of the performance rights is also conditional on the following being exceeded: TSR > Index TSR +20% TSR > Index TSR +10% TSR < or equal to Index TSR 100% Stretch: 35% or over 100% 50% Target: 20% 50% nil Threshold: 15% 25% < 15% nil 1. A positive Company TSR for the measurement period; 2. 90% of budgeted gold production over the measurement period. 11.9.6 Transactions with Key Management Personnel and their related parties The NEDs Andrea Sutton, Kevin Dundo and Ian Macpherson invoiced for their directors’ fees through their private companies. They were not separate entities that provided consulting services to the Company. NEDs Colin Loosemore, Steven Tombs and Fiona Harris were paid directors fees through the Company’s payroll. Ms Sutton, Mr Dundo, Mr Macpherson, Mr Loosemore, Mr Tombs, and Ms Harris met the definition and maintained their status as independent NEDs, thus retaining objectivity and their ability to meet their oversight role. END OF AUDITED REMUNERATION REPORT 2023 ANNUAL REPORT 47 DIRECTORS’ Report (cont.) 12. NON-AUDIT SERVICES During the year, Red 5’s external auditors, KPMG, have provided other services in addition to their statutory audit function. Non audit services provided by the external auditors comprised $95,428 (2022: $44,546) for non-audit services. Further details of the remuneration of the auditors are set out in Note 27. The Board has considered the non-audit services provided during the year and is satisfied that the provision of those services is compatible with the general standard of independence for auditors imposed by the Corporations Act and did not compromise the auditor independence requirements of the Corporations Act, for the following reasons: \ All non-audit services were subject to the corporate governance guidelines adopted by Red 5; \ Non-audit services have been reviewed by the audit committee to ensure that they do not impact the impartiality or objectivity of the auditor; and \ The non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity, acting as an advocate for Red 5 or jointly sharing economic risks and rewards. 13. AUDITOR’S INDEPENDENCE DECLARATION A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act is included immediately following the Directors’ Report and forms part of the Directors’ Report. 14. ROUNDING The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in accordance with that instrument, all financial information has been rounded to the nearest thousand dollars, unless otherwise stated. Signed in accordance with a resolution of the Directors. Ian Macpherson Audit Committee Chair Perth, Western Australia 29 August 2023 48 2023 ANNUAL REPORT AUDITOR’S Independence Declaration Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of Red 5 Limited I declare that, to the best of my knowledge and belief, in relation to the audit of Red 5 Limited for the financial year ended 30 June 2023 there have been: i. ii. No contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and No contraventions of any applicable code of professional conduct in relation to the audit. KPMG Jane Bailey Partner Perth 29 August 2023 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 2023 ANNUAL REPORT 49 Consolidated Statement of PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the year ended 30 June 2023 CONSOLIDATED 30 June 2023 30 June 2022 Sales revenue Cost of sales Gross profit/(loss) Other income and expenses Other income Administration and other expenses Exploration expenditure Financing income Financing expenses Total other income and expenses (Loss)/profit before income tax expense Income tax benefit/(expense) Net (loss)/profit from continuing operations Note 4(a) 4(b) 4(c) 4(d) 12 5(a) 5(b) Profit/(loss) from discontinued operation (net of tax) 23 Net (loss)/profit after income tax for the year Other comprehensive income/(loss) Items that are or may be reclassified subsequently to profit or loss: Foreign currency translation differences Reclassified to profit or loss on sale of subsidiary Cashflow hedge movements Total comprehensive profit for the year Net (loss)/profit after income tax attributable to: Non-controlling interest Members of parent entity Total comprehensive profit attributable to: Non-controlling interest Members of parent company (Loss)/profit per share attributable to shareholders Basic and diluted earnings/(loss) per share Basic and diluted earnings/(loss) per share – continuing operations 6 6 $’000 422,745 (394,620) 28,125 811 (8,825) (7,181) 61 (21,721) (36,855) (8,730) - (8,730) - (8,730) (54) - - (8,784) - (8,730) (8,730) - (8,784) (8,784) Cents (0.31) (0.31) $’000 164,962 (196,049) (31,087) 208 (13,371) (2,522) 8 (2,815) (18,492) (49,579) 915 (48,664) 20,049 (28,615) 631 (26,504) (1,444) (55,932) (86) (28,529) (28,615) (83) (55,849) (55,932) Cents (1.21) (2.06) The accompanying notes form part of these financial statements. 50 2023 ANNUAL REPORT Consolidated Statement of FINANCIAL POSITION as at 30 June 2023 CONSOLIDATED 30 June 2023 30 June 2022 Note $’000 $’000 Assets Current Assets Cash and cash equivalents Trade and other receivables Inventories Total Current Assets Non-Current Assets Property, plant and equipment Mine properties Exploration and evaluation assets Trade and other receivables Inventories Intangible assets Total Non-Current Assets Total Assets Liabilities Current Liabilities Trade and other payables Financial liability Provisions Employee benefits Lease liabilities Total Current Liabilities Non-Current Liabilities Financial liability Provisions Employee benefits Lease liabilities Total Non-Current Liabilities Total Liabilities Net Assets Equity Contributed equity Other equity Reserves Accumulated losses Total Equity Attributable to Equity Holders of the Company Non-controlling interests Total Equity 7 8 9 10 11 12 8 9 13 17 14 15 16 17 14 15 16 21 21 22 20,112 28,973 76,550 125,635 289,329 228,498 10,767 8,168 7,911 169 544,842 670,477 63,683 21,854 447 7,130 18,557 111,671 104,286 59,239 797 64,413 228,735 340,406 330,071 596,668 930 8,168 (275,678) 330,088 (17) 330,071 32,526 19,025 41,415 92,966 303,378 131,416 41,133 8,180 - 292 484,399 577,365 64,174 19,376 1,296 8,316 18,490 111,652 152,894 47,681 739 81,604 282,918 394,570 182,795 443,160 930 6,918 (268,196) 182,812 (17) 182,795 The accompanying notes form part of these financial statements. 2023 ANNUAL REPORT 51 Consolidated Statement of CHANGES IN EQUITY for the year ended 30 June 2023 ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT ENTITY l a t i p a c d e u s s I d e t a l u m u c c A s e s s o l y t i u q e r e h t O e v r e s e r n o i t a l s n a r t y c n e r r u c n g i e r o F e v r e s e r g n i g d e H d e s a b - e r a h S s t n e m y a p g n i l l o r t n o c - n o N t s e r e t n i l a t o T $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Balance at 1 July 2022 443,160 (268,196) 930 Net profit/(loss) for the year Foreign currency translation Other comprehensive (loss)/ income for the period Total comprehensive income/ (loss) for the period Issue of ordinary shares Share issue expenses Vested performance rights (LTI) Service and deferred rights (STI) converted to ordinary shares Performance rights (LTI) forfeited Share based payments (LTI & STI) - - - - 158,904 (6,838) 1,367 75 - - (8,730) - - (8,730) - - - - 1,248 - - - - - - - - - - - 433 - (54) - (54) - - - - - - Balance at 30 June 2023 596,668 (275,678) 930 379 - - - - - - - - - - - - 6,485 (17) 182,795 - - - - - - (1,367) (75) (1,248) 3,994 7,789 - - - - - - - - - - (8,730) (54) - (8,784) 158,904 (6,838) - - - 3,994 (17) 330,071 Balance at 1 July 2021 442,626 (239,797) 930 26,309 1,444 3,274 (3,910) 230,876 Net profit/(loss) for the year Other comprehensive (loss)/ income for the period Foreign currency translation differences Reclassified to profit or loss Ineffective portion of cash flow hedges transferred to profit or loss Total comprehensive income/ (loss) for the period Vested performance rights (LTI) converted to ordinary shares Service and deferred rights (STI) converted to ordinary shares Performance rights (LTI) forfeited Share based payments (LTI & STI) Transfer from reserves Disposal of subsidiary - - - - - 449 85 - - - - (28,529) - - - (28,529) - - - - 130 - - - - - - - - - - - - - 628 (26,504) - - - - (1,444) (25,876) (1,444) - - - - - - - - - - - - - - - - - - (449) (85) (296) 4,171 (130) (86) (28,615) 3 - - 631 (26,504) (1,444) (83) (55,932) - - - - - - - (296) 4,171 - - 3,976 3,976 6,485 (17) 182,795 Balance at 30 June 2022 443,160 (268,196) 930 433 The accompanying notes form part of these financial statements. 52 2023 ANNUAL REPORT Consolidated Statement of CASH FLOWS for the year ended 30 June 2023 CONSOLIDATED 30 June 2023 30 June 2022 Note $’000 $’000 Cash flows from operating activities Cash received from customers Payments to suppliers and employees Payments for exploration and evaluation Sundry receipts Interest received Interest paid Net operating cash flows used in discontinued operations Net cash from/(used in) operating activities Cash flows from investing activities Payments for property, plant equipment and intangibles Payments for mine development Payments for exploration and evaluation Disposal of discontinued operation, net of cash Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Payments for share issue transaction costs Proceeds from borrowings Repayment of loans Receipt from restricted cash Payments of borrowing costs and interest Payments of lease liabilities Net cash from financing activities 23 7 23 17 17 Net (decrease)/increase in cash and cash equivalents Cash at the beginning of the period Effect of exchange rate fluctuations on cash held Cash and cash equivalents at the end of the period 7 420,013 (366,325) (7,181) 473 61 (376) - 46,665 (29,499) (95,786) (880) - (126,165) 158,904 (6,838) - (47,250) - (12,021) (25,616) 67,179 (12,321) 32,526 (93) 20,112 158,606 (157,055) (2,522) 223 8 (791) (828) (2,359) (94,844) (82,729) (3,998) 21,467 (160,104) - - 175,000 - 13,000 (2,730) (8,409) 176,861 14,398 17,415 713 32,526 The accompanying notes form part of these financial statements. 2023 ANNUAL REPORT 53 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 SECTION Page SECTION CORPORATE INFORMATION AND BASIS OF PREPARATION 53 CAPITAL STRUCTURE AND FINANCIAL RISK MANAGEMENT Page 69 17. Financial liability 18. Fair value measurement 19. Financial instruments 20. Financial risk management 21. Contributed equity 22. Reserves OTHER DISCLOSURES 75 Income tax and deferred tax Investments in controlled entities 23. Discontinued operation 24. 25. Related parties 26. Share-based payment arrangements 27. Auditor’s remuneration 28. 29. Deed of cross guarantee 30. Parent entity disclosures 31. Capital commitments 32. Contingent liabilities 33 Subsequent events 34. New accounting standards and interpretations 2.3 FUNCTIONAL AND PRESENTATION CURRENCY The consolidated financial report is presented in Australian dollars, which is the Group’s presentation currency. The functional currency of the Parent Company and the Australian subsidiaries in which the Group holds its Australian assets is Australian dollars, and the functional currency of the Company’s legacy foreign subsidiaries is Philippine pesos. The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. 2.4 ROUNDING The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in accordance with that instrument, all financial information has been rounded to the nearest thousand dollars, unless otherwise stated. 2.5 REMOVAL OF PARENT ENTITY FINANCIAL STATEMENTS The Group has applied amendments to the Corporations Act 2001 that remove the requirement for the Group to lodge parent entity financial statements. Parent entity financial statements have been replaced by the specific parent entity disclosures in Note 30. 1. Reporting entity 2. Basis of preparation FINANCIAL PERFORMANCE 56 3. Segment information 4. Revenue and expenses 5. Finance income and expenses 6. Earnings per share OPERATING ASSETS AND LIABILITIES 60 Inventories 7. Cash and cash equivalents 8. Trade and other receivables 9. 10. Property, plant and equipment 11. Mine properties 12. Exploration and evaluation 13. Trade and other payables 14. Provisions 15. Employee benefits 16. Lease liabilities CORPORATE INFORMATION AND BASIS OF PREPARATION 1. REPORTING ENTITY Red 5 Limited (“parent entity” or “the Company”) is a for profit company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The Consolidated Financial Report for the year ended 30 June 2023 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”) and the Group’s interest in associates and jointly controlled entities. The Group is primarily involved in the exploration and mining of gold. 2. BASIS OF PREPARATION 2.1 STATEMENT OF COMPLIANCE The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRSs) adopted by the International Accounting Standards Board (IASB). The consolidated financial statements were authorised for issue by the Board of Directors on 29 August 2023. 2.2 BASIS OF MEASUREMENT The consolidated financial statements have been prepared on the historical cost basis, except for derivative financial instruments and certain other financial assets and liabilities which are required to be measured at fair value. Share based payments are measured at fair value. The methods used to measure fair values of share based payments are discussed further in the Note 26. Rehabilitation provisions are based on net present value and are discussed in Note 14. 54 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 2. BASIS OF PREPARATION (cont.) 2.6 PRINCIPLES OF CONSOLIDATION The consolidated financial report incorporates the assets and liabilities of all entities controlled by the Company as at 30 June 2023 and the results of all controlled entities for the year then ended. The Company and its controlled entities together are referred to in this financial report as the consolidated entity. The financial statements of controlled entities are prepared for the same reporting period as the parent entity, using consistent accounting policies. Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Where control of an entity is obtained during a financial period, its results are included only from the date upon which control commences. Where control of an entity ceases during a financial period, its results are included for that part of the period during which control existed. Non-controlling interests in equity and results of the entities which are controlled by the consolidated entity are shown as a separate item in the consolidated financial statements. 2.7 FOREIGN CURRENCIES Foreign currency transactions: Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the statement of financial position date are translated to Australian dollars at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Statement of Profit or Loss and Other Comprehensive Income. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Australian dollars at foreign exchange rates ruling at the dates the fair value was determined. 2.8 BUSINESS COMBINATIONS The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured, and settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit or loss. 2.9 IMPAIRMENT At each reporting date, the consolidated entity reviews and tests the carrying value of assets when events or changes in circumstances indicate that the carrying amount may not be recoverable. Where an indicator of impairment exists, the consolidated entity makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognised in the Statement of Profit or Loss and Other Comprehensive Income unless the asset has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through the Statement of Profit or Loss and Other Comprehensive Income. The following significant exchange rates have been applied: Calculation of recoverable amount Average rate Year-end spot rate AUD Philippine Peso USD 2023 37.55 0.67 2022 37.19 0.72 2023 36.83 0.66 2022 37.91 0.69 Financial statements of foreign operations: Each entity in the consolidated entity determines its functional currency, being the currency of the primary economic environment in which the entity operates, reflecting the underlying transactions, events and conditions that are relevant to the entity. The functional currency of the Australian entities is the Australian dollar and the functional currency of the Philippine entities is the Philippine Peso. The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated from the entity’s functional currency to the consolidated entity’s presentation currency of Australian dollars at foreign exchange rates ruling at reporting date. The revenues and expenses of foreign operations are translated to Australian dollars at the exchange rates approximating the exchange rates ruling at the date of the transactions. Foreign exchange differences arising on translation are recognised directly in a separate component of equity. Recoverable amount is the greater of fair value less costs of disposal and value in use. It is determined for an individual asset, unless it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash- generating unit to which the asset belongs. The estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. 2.10 KEY ESTIMATES AND JUDGEMENTS The preparation of the Consolidated Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities at the date of the consolidated financial statements. Estimates and assumptions are continually evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 2023 ANNUAL REPORT 55 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 2. BASIS OF PREPARATION (cont.) 2.10 KEY ESTIMATES AND JUDGEMENTS (cont.) Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. In particular, the Group has identified a number of areas where significant judgements, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described with the associated accounting policy note within the related qualitative and quantitative note. The selection and disclosure of the consolidated entity’s critical accounting policies and estimates and the application of these policies, estimates and judgements is the responsibility of the Board of Directors. The estimates and judgements that may have a significant impact on the carrying amount of assets and liabilities are discussed below. \ Inventories: refer note 9 \ Mine properties: refer note 11 \ Rehabilitation and mine closure provisions: refer note 11 \ Reserves and resources: refer note 11 \ Capitalised exploration and evaluation assets: refer note 12 \ Discontinued operations and assets held for sale: refer note 23 \ Share based payment transactions: refer note 26 Impairment of Assets: At each reporting date, the Group makes an assessment for impairment of all assets if there has been an impairment indicator by evaluating conditions specific to the Group and to the particular assets that may lead to impairment. The recoverable amount of Property, Plant & Equipment and Mine Development Expenditure is determined as the higher of value-in-use and fair value less costs of disposal. Value-in-use is generally determined as the present value of the estimated future cash flows. Present values are determined using a risk adjusted discount rate appropriate to the risks inherent in the asset. Given the nature of the Group’s mining activities, future changes in assumptions upon which these estimates are based may give rise to a material adjustment to the carrying value. This could lead to the recognition of impairment losses in the future. The inter-relationship of the significant assumptions upon which estimated future cash flows are based is such that it is impracticable to disclose the extent of the possible effects of a change in a key assumption in isolation. Future cash flow estimates are based on expected production volumes and grades, gold price and exchange rate estimates, budgeted and forecasted development levels and operating costs. Management is required to make these estimates and assumptions which are subject to risk and uncertainty. As a result, there is a possibility that changes in circumstances may alter these projections, which could impact on the recoverable amount of the assets. In such circumstances, some or all of the carrying value of the assets may be impaired. Impairment losses are recognised in the Statement of Profit or Loss unless the asset has previously been revalued. Going concern: A key assumption underlying the preparation of the financial statements is that the Group will continue as a going concern. An entity is a going concern when it is considered to be able to pay its debts as and when they are due, and to continue in operation without any intention or necessity to liquidate or otherwise wind up its operations. The Directors believe it is appropriate to prepare the consolidated financial report on a going concern basis, which contemplates the continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The Group’s principal cash flow generating assets is the King of the Hills (KOTH) Gold Mine (including the Darlot Underground satellite mine), which operate as a single cash generating unit. The new KOTH process plant declared commercial production on 16 December 2022, and is now operating well above design throughput levels. The development of the KOTH Project was partly funded via a Project Financing Facility provided by Macquarie Bank, BNP Paribas and Hongkong Shanghai Banking Corporation. Operations has been cash flow positive since March 2023, putting Red 5 in a solid position to continue to de-leverage and strengthen the balance sheet for the future. The Company’s current asset position improved by $64.1 million during the second half of the year. Management has prepared a cash flow forecast for the next twelve months, which anticipates that the Group will be able to pay its debts as and when they fall due during that period. Risk factors that may affect the going concern assumption are adverse fluctuations in the gold price, rising operational costs, and difficulties in achieving the budgeted throughput of the mill. Production start date: The Group assesses the stage of each mine under development/ construction to determine when a mine moves into the production phase, this being when the mine is substantially complete and ready for its intended use. The criteria used to assess the start date are determined based on the unique nature of each mine development/construction project, such as the complexity of the project and its location. The Group considers various relevant criteria to assess when the production phase is considered to have commenced. Some of the criteria used to identify the production start date include, but are not limited to: \ Level of capital expenditure incurred compared with the original construction cost estimate \ Completion of a reasonable period of testing of the mine plant and equipment \ Ability to produce metal in saleable form (within specifications) \ Ability to sustain ongoing production of metal When a mine development project moves into the production phase, the capitalisation of certain mine development costs ceases and costs are either regarded as forming part of the cost of inventory or expensed, except for costs that qualify for capitalisation relating to mining asset additions or improvements, underground mine development or mineable reserve development. It is also at this point that depreciation/amortisation commences. 56 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) FINANCIAL PERFORMANCE 3. SEGMENT INFORMATION The Group is managed primarily on the basis of its production, development and exploration assets in Australia. Operating segments are therefore determined on the same basis. In the prior year, Red 5 disposed of its previous Philippine assets. Unless otherwise stated, all amounts reported to the Board of Directors as the chief decision maker with respect to operating segments are determined in accordance with accounting policies that are consistent to those adopted in the consolidated annual financial statements of the Group. (i) Segment performance Year ended 30 June 2023 Revenues (c) Segment result before tax Included within the segment result: Other income Interest income Finance expenses Exploration costs expensed Depreciation and amortisation Year ended 30 June 2022 Revenues (c) Australia (a) $’000 Philippines (discontinued) $’000 422,745 422,745 9,480 445 9 (8,549) (7,181) (82,820) 164,962 164,962 - - - - - - - - - - Other (b) $’000 - - Total $’000 422,745 422,745 (18,210) (8,730) 366 52 (13,172) - (331) - - 811 61 (21,721) (7,181) (83,151) 164,962 164,962 Segment result before tax (38,089) 20,049 (11,490) (29,530) Included within the segment result: Other income Interest income Finance expenses Exploration costs expensed Depreciation and amortisation Profit/(loss) from discontinued operation (ii) Segment Assets As at 30 June 2023 Segment assets Additions to non-current assets: Plant and equipment expenditure Mine properties As at 30 June 2022 Segment assets Additions to non-current assets: Plant and equipment expenditure Mine properties Intangible assets 208 2 (1,797) (2,522) (42,188) - 648,311 31,007 95,786 546,992 198,540 82,729 14 - - - - - 20,049 - - - - - - - - 6 (1,018) - (326) - 208 8 (2,815) (2,522) (42,514) 20,049 22,166 670,477 81 - 31,088 95,786 30,373 577,365 4 - 103 198,544 82,729 117 2023 ANNUAL REPORT 57 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 3. SEGMENT INFORMATION (cont.) (iii) Segment liabilities As at 30 June 2023 Segment liabilities As at 30 June 2022 Segment liabilities Australia (a) $’000 204,028 215,484 Philippines (discontinued) $’000 - - Other (b) $’000 Total $’000 136,378 340,406 179,086 394,570 (a) Australia segment consists of the King of the Hills operation and Darlot gold mining satellite operation. (b) Includes corporate costs of the group and inter-company transactions. (c) Revenue is attributable to four customers. 4. REVENUE AND EXPENSES ACCOUNTING POLICY Gold sales: The Group recognises revenue when control has passed to the buyer; the Company has no significant continuing involvement; and the amount of revenue and costs incurred or costs to be incurred in respect of the transaction can be measured reliably. The Group’s assessment is that this occurs when the sales contract has been entered into and the customer has physical possession of the gold as this is the point at which the customer obtains the ability to direct the use and obtains substantially all of the remaining benefits of ownership of the asset. The transaction price is determined based on the agreed upon price and the number of ounces delivered. Payment is due upon delivery into the sales contract. Gold forward contracts: As part of the risk management policy, the Group enters into gold forward contracts to manage the gold price of a proportion of anticipated gold sales. The counterparty to the gold forward contracts is BNP Paribas, Australia Branch, the Hongkong and Shanghai Banking Corporation Limited, Sydney Branch and Macquarie Bank Limited (“MBL”) (the counterparties). It is management’s intention to settle each contract through physical delivery of gold and as such, the gold forward sale contracts disclosed below do not meet the criteria of financial instruments for accounting purposes. This is referred to as the “normal purchase/sale” exemption. Accordingly, the contracts will be accounted for as sale contracts with revenue recognised once the gold has been delivered to the counterparties. (a) Revenue Gold and silver sales Realised gains/(losses) on cash flow hedges (b) Cost of sales Operating costs Depreciation and amortisation mine assets (1) CONSOLIDATED YEAR ENDED 30 June 2023 30 June 2022 $’000 $’000 422,745 - 422,745 (311,875) (82,745) (394,620) 162,899 2,063 164,962 (153,934) (42,115) (196,049) (1) 2022: With Darlot underground transitioning to a satellite mine providing ore to King of the Hills, accelerated depreciation and impairments for the Darlot Process Plant (in care and maintenance) were booked during the prior year totalling $22.6 million. 58 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 4. REVENUE AND EXPENSES (cont.) ACCOUNTING POLICY (cont.) (c) Other income Royalty income Other income (d) Administration and other expenses Employee and consultancy expenses Share based-payments expense Corporate costs Depreciation Legal fees Property and other indirect tax expenses Travel and accommodation Foreign exchange (losses)/gains Other expenses CONSOLIDATED YEAR ENDED 30 June 2023 30 June 2022 $’000 $’000 366 445 811 (2,873) (3,994) (750) (406) (224) (217) (134) (26) (201) - 208 208 (5,750) (4,171) (1,547) (399) (379) (931) (205) 647 (636) (8,825) (13,371) FINANCE INCOME AND EXPENSES 5. Accounting policy Finance income comprises interest income on funds invested. Interest income is recognised as it accrues, using the effective interest rate method. Finance expenses comprise interest expense on borrowings and amortisation of loan borrowing costs. Loan borrowing costs are amortised using the effective interest rate method. Interest incurred on loans for the construction of a qualifying asset is capitalised to the qualifying asset. (a) Finance income Interest income (b) Finance expenses Interest expense on borrowings and leases Amortisation of borrowing costs Unwinding of discount on rehabilitation provision CONSOLIDATED YEAR ENDED 30 June 2023 30 June 2022 $’000 $’000 61 61 (18,881) (1,120) (1,720) (21,721) 8 8 (1,867) (90) (858) (2,815) 2023 ANNUAL REPORT 59 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 6. EARNINGS PER SHARE Accounting policy Earnings per share (“EPS”) is the amount of post-tax profit or loss attributable to each share. The Group presents basic and diluted EPS data for ordinary shares. Basic earnings per share is determined by dividing net operating results after income tax attributable to members of the parent entity, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year. Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to potential ordinary shares, being unlisted employee performance and service rights on issue. Net (loss)/gain after income tax from continuing operations attributable to members of the parent company Net gain after income tax from discontinued operations Net (loss)/profit after income tax attributable to members of the parent company Weighted-average number of ordinary shares (basic): Opening issued ordinary shares (‘000) Effect of shares issued 4 July 2022 Effect of shares issued 28 August 2022 Effect of shares issued 10 October 2022 Effect of shares issued 2 November 2022 Effect of shares issued 28 November 2022 Effect of shares issued 2 March 2023 Effect of shares issued 13 April 2023 Effect of shares issued 18 April 2023 Effect of shares issued 21 August 2021 Effect of shares issued 7 September 2021 CONSOLIDATED 30 June 2023 30 June 2022 $’000 (8,730) - (8,730) $’000 (48,578) 20,049 (28,529) CONSOLIDATED Weighted average number of shares 2023 2022 2,356,359 2,346,322 409 4,535 256,279 36,746 12,179 138,876 16,032 35,210 - - - - - - - - - - 8,353 266 Weighted average number of ordinary shares at 30 June (basic) 2,856,625 2,354,941 (i) Weighted-average number of ordinary shares (basic): 2,856,625 2,354,941 Effect of performance rights contingently issuable Effect of service rights contingently issuable - - - - Weighted average number of ordinary shares at 30 June (diluted) 2,856,625 2,354,941 Earnings per share (cents per share) Basic and diluted (loss)/profit per share Basic and diluted (loss)/profit per share – continuing operations (0.31) (0.31) (1.21) (2.06) For fully diluted (loss)/profit per share, the weighted average number of ordinary shares on issue is adjusted to assume conversion of dilutive potential ordinary shares. The Group’s potentially dilutive securities consist of performance and service rights. Since the Group has a net loss after tax for the period, potentially dilutive securities amounting to 36,229,340 have not been taken into account because their effect would be anti-dilutive. 60 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) OPERATING ASSETS AND LIABILITIES 7. CASH AND CASH EQUIVALENTS Accounting policy Cash and cash equivalents in the balance sheet comprise cash at bank and in hand. Cash at bank earns interest at floating rates based on bank deposit rates. Cash at bank (a) Cash on hand CONSOLIDATED 30 June 2023 30 June 2022 $’000 20,111 1 20,112 $’000 32,525 1 32,526 (a) The Group is required to maintain a minimum cash balance of $7.5 million in its account at Hongkong and Shanghai Bank Corporation Limited. Prior year cash at bank also included $13.0 million funds for the construction of the tailings storage facility at King of the Hills which the financiers required to be set aside for this purpose. Reconciliation of profit after income tax to net cash flow from operating activities: CONSOLIDATED 30 June 2023 30 June 2022 Operating (loss)/profit after income tax Profit on sale discontinued operation Amortisation and depreciation Ineffective portion of cashflow hedges Deferred tax Share based payment Interest expenses Write down of obsolete inventory Write down of gold-in-circuit inventory Non-cash stockpile movements Unwinding of asset retirement obligation Amortisation of borrowing costs Other Changes in operating assets and liabilities: (Increase)/decrease in inventories (Increase)/decrease in receivables Increase/(decrease) in payables (Decrease)/increase in provisions Net cash flow from operating activities $’000 (8,730) - 83,151 - - 3,994 19,257 769 2,133 (12,610) 1,720 1,120 741 (35,135) (9,948) 2,238 (2,035) 46,665 $’000 (28,615) (21,225) 42,514 (2,063) (915) 3,875 326 4,699 7,934 (522) 858 90 861 (14,843) (1,664) 7,192 (861) (2,359) 2023 ANNUAL REPORT 61 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) TRADE AND OTHER RECEIVABLES 8. Accounting policy Trade and other receivables are carried at amortised cost. Trade receivables are non-interest bearing. CONSOLIDATED 30 June 2023 30 June 2022 Current assets Trade debtors (a) Restricted cash (b) Prepayments GST receivable Sundry debtors Interest receivable Non-current assets Security deposits (c) VAT receivable $’000 10,933 7,500 5,273 4,656 611 - 28,973 8,162 6 8,168 $’000 8,158 7,500 988 2,138 240 1 19,025 8,177 3 8,180 (a) Trade debtors includes amounts receivable for 3,563 ounces sold on 30 June 2023, equivalent to $10.1 million (30 June 2022: 2,794 ounces equivalent to $7.4 million). (b) Restricted cash is made up of $7.5 million of funds in a debt service reserve account which may be utilised for syndicate loan repayments. (c) Security deposits mainly includes a bank guarantee in place over a leased asset. INVENTORIES 9. Accounting policy Gold in circuit, bullion on hand and ore stockpiles are physically measured or estimated and valued at the lower of cost and net realisable value. Cost represents the weighted average cost and comprises direct material, labour, and an appropriate portion of fixed and variable production overhead expenditure on the basis of normal operating capacity, including depreciation and amortisation incurred in converting materials to finished products. Inventories of consumable supplies and spare parts expected to be used in production are valued at the lower of cost and net realisable value. Any provision for obsolescence or damage is determined by reference to specific stock items identified. The carrying value of those items identified, if any, is written down to net realisable value. CONSOLIDATED 30 June 2023 30 June 2022 Current inventory Stores, spares and consumables at cost Provision for slow-moving stores, spares and consumables (a) Run of mine stockpiles at net realisable value (2022: net realisable value) (b) Gold in circuit at net realisable value (2022: net realisable value) (b) Crushed ore stockpile at cost (2022: net realisable value) (b) Gold Bullion at cost Non-current inventory Run of mine stockpiles at net realisable value $’000 20,810 (6,151) 14,659 52,236 6,326 3,329 - 76,550 7,911 7,911 $’000 12,641 (5,382) 7,259 22,245 9,816 1,943 152 41,415 - - (a) During the period the provision for slow-moving stores, spares and consumables inventory at the Darlot mine was increased to $0.6 million (30 June 2022: $5.4 million). (b) Net realisable value adjustments of $5.9 million were made during the year (30 June 2022: $5.9 million). 62 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 10. PROPERTY, PLANT AND EQUIPMENT Accounting policy Property, plant and equipment includes land and buildings, plant and equipment, fixtures and fittings, right-of-use assets and assets under construction. All assets acquired are initially recorded at their cost of acquisition, being the fair value of the consideration provided plus incidental costs directly attributable to the acquisition. Land and buildings are measured at cost less accumulated depreciation on the buildings. Buildings are depreciated on a straight-line basis over the life of mine. Plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Items of plant and equipment are depreciated using a combination of units of production, straight line and diminishing value methods, commencing from the time they are installed and ready for use, or in respect of internally constructed assets, from the date the asset is completed and ready for use. Depreciation of the processing plant is based on life of mine. The expected useful lives of plant and equipment are between 3 and 13 years. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Fixtures and fittings include office equipment and computer hardware and are depreciated on a straight-line basis over their expected useful lives between 3 and 13 years. Right-of-use assets are measured at cost less accumulated depreciation and any accumulated impairment losses. They are depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term, or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use assets are depreciated over the useful life of the underlying asset. Intangible assets mainly comprise capitalised software. Intangible assets are initially recorded at cost of acquisition, being the fair value of the consideration provided plus incidental costs directly attributable to the acquisition. Capitalised software is amortised on a straight-line basis over three years commencing when it is available for use. Land and buildings Plant and equipment (a) Fixtures and fittings Right of use assets Assets under construction $’000 $’000 $’000 $’000 $’000 Cost Balance at 1 July 2022 Additions (a) Transfer from assets under construction 35,170 240 - 215,975 27,849 6,237 Balance at 30 June 2023 35,410 250,061 Balance at 1 July 2021 Additions (a) Transfer from assets under construction Balance at 30 June 2022 Accumulated depreciation Balance at 1 July 2022 Depreciation for the period Balance at 30 June 2023 Balance at 1 July 2021 Depreciation for the year (b) Balance at 30 June 2022 Carrying amounts At 1 July 2021 At 30 June 2022 At 30 June 2023 10,648 24,315 207 35,170 (7,507) (3,543) (11,050) (5,830) (1,677) (7,507) 4,818 27,663 24,360 48,902 70,859 96,214 215,975 (49,286) (20,402) (69,688) (31,082) (18,204) (49,286) 17,820 166,689 180,373 677 126,639 1,639 - 128,278 27,156 99,473 6,576 1,360 (6,244) 1,692 102,281 3,595 Total $’000 385,037 31,088 - 416,125 189,356 198,544 (2,863) 10 (99,300) 126,639 6,576 385,037 (24,578) (21,031) (45,609) (15,407) (9,171) (24,578) 11,749 102,061 82,669 - - - - - - (81,659) (45,137) (126,796) (52,542) (29,117) (81,659) 102,281 6,576 1,692 136,814 303,378 289,329 - 7 684 369 302 6 677 (288) (161) (449) (223) (65) (288) 146 389 235 (a) During the year ended 30 June 2023 additions includes sustaining capital and the newly constructed tailing storage facility at KOTH. (b) With the Darlot underground transitioning to a satellite mine to provide ore to KOTH, and the Darlot process plant being placed into care and maintenance in July 2022, accelerated depreciation of $10.0 million was recognised in FY22. 2023 ANNUAL REPORT 63 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 11. MINE PROPERTIES Accounting policy Production stripping costs and Other mine development: Pre-Production: Costs incurred in the development of a mine before production commences are capitalised as part of the mine development costs, with the exception of any costs relating to the pre-production sale of products which is expensed to the Statement of Profit or Loss. These include pre-strip costs which are costs incurred in open pit mining operations, to remove overburden and waste materials to access the ore. The Group capitalises stripping costs incurred during the development of a mine as part of the investment in constructing the mine. All capitalised development costs incurred within that area of interest are carried at cost. They are amortised from the commencement of commercial production over the productive life of the project according to the mine plan, on a units-of-production basis, where the unit of account is tonnes of ore mined. Post-Production: Costs incurred in developing further areas of the mine are capitalised as part of the mine development costs and are amortised over the productive life of the project on a unit-of-production basis, based on reserves. Deferred waste mining costs: Stripping costs incurred after the commencement of production are generally considered to create two benefits, being either the production of inventory or improved access to the ore to be mined in the future. Where the benefits are realised in the form of inventory produced in the period, the production stripping costs are accounted for as part of the cost of producing those inventories. Where the benefits are realised in the form of improved access to ore to be mined in the future, the costs are capitalised, if the following criteria is met: \ Future economic benefits (being improved access to the ore body) are probable; \ The component of the ore body for which access will be improved can be accurately identified; and \ The costs associated with the improved access can be reliably measured. If all the criteria are not met, the production stripping costs are charged to profit or loss as they are incurred. Depreciation of the stripping activity asset is determined on a unit of production basis over the life of the asset based on reserves for each area of interest. Asset retirement obligation: Asset retirement obligation represents the estimated future cost of closure and rehabilitation of the mine site. It is amortised over the life of the mine. Changes in the asset retirement obligation (also referred to as a rehabilitation provision, refer note 14) resulting from changes in the size or timing of the cost or from changes in the discount rate are also recognised as part of the asset cost. Mineral rights: Mineral rights comprise identifiable exploration and evaluation assets, mineral resources and ore reserves, which are acquired as part of a business combination or joint venture acquisition and are recognised at fair value at the date of acquisition. Where possible, mineral interests are attributable to specific areas of interest and are classified within mine properties and are amortised over the life of the mine. 64 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 11. MINE PROPERTIES (cont.) Production stripping costs Other mine development Asset retirement obligation Mineral rights $’000 $’000 $’000 $’000 Total $’000 Cost Balance at 1 July 2022 Additions Transfer from exploration and evaluation Rehabilitation cost estimate change Rehabilitation economic variables change 53,348 76,165 - - - 91,018 19,621 31,246 - - Balance at 30 June 2023 129,513 141,885 19,106 30,717 194,189 - - 9,765 (1,874) 26,997 - - - - 95,786 31,246 9,765 (1,874) 30,717 329,112 Balance at 1 July 2021 Additions Transfer from assets under construction Rehabilitation change in cost estimate Balance at 30 June 2022 Accumulated depreciation Balance at 1 July 2022 Amortisation Balance at 30 June 2023 Balance at 1 July 2021 Amortisation Balance at 30 June 2022 Carrying amounts At 1 July 2021 At 30 June 2022 At 30 June 2023 Key estimates and judgements Stripping costs: - 53,348 - - 53,348 (79) (20,638) (20,717) - (79) (79) - 53,269 108,796 58,944 29,381 2,693 - 91,018 (39,370) (13,208) (52,578) (27,961) (11,409) (39,370) 30,982 51,648 89,307 22,965 30,717 - - (3,859) 19,106 (3,190) (2,724) (5,914) (1,756) (1,434) (3,190) 21,209 15,916 21,083 112,626 82,729 2,693 (3,859) - - - 30,717 194,189 (20,134) (1,271) (62,773) (37,841) (21,405) (100,614) (19,883) (251) (20,134) 10,834 10,583 9,312 (49,600) (13,173) (62,773) 63,025 131,416 228,498 The Group capitalises mining costs incurred during the production stage of its operations in accordance with the accounting policy described above. Once it has identified its production stripping for each surface mining operation, it identifies the separate components of the ore bodies for each of its mining operations. An identifiable component is a specific volume of the ore body that is made more accessible by the stripping activity. Significant judgement is required to identify and define these components, and also to determine the expected volumes (e.g. in tonnes) of waste to be stripped and ore to be mined in each of these components. These assessments are undertaken for each individual mining operation based on the information available in the mine plan. The mine plans and, therefore, the identification of components, will vary between mines for a number of reasons. These include, but are not limited to, the type of commodity, the geological characteristics of the ore body, the geographical location and/or financial considerations. Judgement is also required to identify a suitable production measure to be used to allocate production stripping costs between inventory and any stripping activity asset(s) for each component. The Group considers that the ratio of the expected volume (e.g. in tonnes) of waste to be stripped for an expected volume (e.g., in tonnes) of ore to be mined for a specific component of the ore body, is the most suitable production measure. 2023 ANNUAL REPORT 65 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 11. MINE PROPERTIES (cont.) Reserves and resources: The Group determines and reports ore reserves under the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves Code (“JORC”) as revised December 2012 JORC for underground reserves and the JORC 2012 edition for open pit reserves. The JORC code requires the use of reasonable investment assumptions to calculate reserves. Reserves determined in this way are taken into account in the calculation of depreciation of mining plant and equipment (refer to note 10), amortisation of capitalised development expenditure (refer to note 11 above), and impairment relating to these assets. Changes in reported reserves may affect the Group’s financial results and financial position in a number of ways, including: \ Asset carrying values may be impacted due to changes in estimated cash flows \ Depreciation and amortisation charged in the statement of profit or loss and other comprehensive income may change where such charges are calculated using the units of production basis \ Deferred waste amortisation, based on estimates of reserve to waste ratios \ Decommissioning, site restoration and environmental provisions may change where changes in estimated reserves alter expectations about the timing or cost of these activities. 12. EXPLORATION AND EVALUATION Accounting policy Exploration and evaluation assets are accumulated at cost in respect of each identifiable area of interest. Costs incurred in respect of generative, broad scale exploration activities are expensed in the period in which they are incurred, other than costs relating to acquisitions. Costs incurred for each area of interest where a resource or reserve estimated in accordance with JORC guidelines has been identified, are capitalised. The costs are only carried forward to the extent they are expected to be recouped through the successful development of the area, or where further work is to be performed to provide additional information. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. When production commences, the accumulated costs for the relevant area of interest will be reclassified to mine properties and amortised over the life of the area according to the rate of depletion of reserves. No amortisation is charged during the exploration and evaluation phase. Accumulated costs in relation to an abandoned area will be written off in full to the Statement of Profit or Loss and Other Comprehensive Income in the year in which the decision to abandon the area is made. Opening balance Exploration and evaluation expenditure incurred in current period (a) Exploration expenditure transferred to profit or loss (b) Exploration expenditure transferred to mine development (c) Closing balance CONSOLIDATED 30 June 2023 30 June 2022 $’000 41,133 8,061 (7,181) (31,246) 10,767 $’000 37,135 6,520 (2,522) - 41,133 (a) During the period exploration costs at Darlot of $3.2 million (2022: $2.5 million) were incurred. In addition, $4.0 million for drilling and elated costs at King of the Hills gold project were capitalised (2022: $0.8 million). (b) The carrying value of exploration costs totalling $7.2 million were expensed (2022: $2.5 million). These costs were associated with drilling and studies at the KOTH and Darlot gold project where no further work will be performed in those particular areas. (c) Capitalised exploration costs relating to drilling for the KOTH processing plant feasibility study were transferred to Mine Development during the year. 66 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 12. EXPLORATION AND EVALUATION (cont.) Key estimates and judgements Capitalised exploration and evaluation assets: The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. Factors which could impact the future recoverability include the level of proved, probable and inferred mineral resources, future technological changes which could impact the cost of mining, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices. To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, this will reduce profits and net assets in the period in which this determination is made. In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. To the extent that it is determined in the future that this capitalised expenditure should be written off, this will reduce profits and net assets in the period in which this determination is made. 13. TRADE AND OTHER PAYABLES Accounting policy Trade and other payables are recognised at the value of invoices received from suppliers. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. They are non-interest bearing and are normally settled in 15 to 45 day terms. Current Creditors and accruals Royalties and other indirect taxes Other creditors 14. PROVISIONS Accounting policy CONSOLIDATED 30 June 2023 30 June 2022 $’000 56,527 6,666 490 63,683 $’000 60,069 1,663 2,442 64,174 A provision is recognised in the Statement of Financial Position when the consolidated entity has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at the pre-tax rate that reflects current market assessments of the time value of money and where appropriate, the risk specific to the liability. Rehabilitation and mine closure provisions: A provision for rehabilitation costs is made based on the net present value of the Group’s estimated cost of restoring the environmental disturbance that has occurred up to the balance date. Increases due to additional environmental disturbances are capitalised to the asset retirement obligation (refer note 11) and amortised over the remaining lives of the operations where they have future economic benefit, otherwise they are expensed. These increases are accounted for on a net present value basis. A change in the estimate was recorded in the current year to reflect an increase in the contingency applied to estimated future rehabilitation costs. Annual increases in the provision relating to the change in the net present value of the provision and inflationary increases are accounted for in the Statement of Profit and Loss as a finance expense. The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in legislation, technology or other circumstances. In the case of provisions for assets which remain in use, adjustments to the carrying value of the provision are offset by a change in the carrying value of the related asset. Where the provisions are for assets no longer in use or for obligations arising from the production process, the adjustment is reflected directly in the Statement of Profit or Loss. 2023 ANNUAL REPORT 67 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 14. PROVISIONS (cont.) Key estimates and judgements The discounted value reflects a combination of the Group’s assessment of the costs of performing the work required, the timing of the cash flows and the discount rate. A change in any, or a combination, of the three key assumptions used to determine the provisions could have a material impact to the carrying value of the provision. Risks that could affect the cost of the work required are unforeseen changes in regulations, changes in levels of contamination or changes in the risk-free rate of the applicable government bond being used as the discount rate. Opening balance Provisions made Provisions utilised Change in estimate of rehabilitation disturbance cost Change in economic variables of rehabilitation estimate Unwinding of discount Transferred from accounts payable Closing balance Current Non-current CONSOLIDATED Rehabilitation provision Other provisions (a) $’000 47,681 - - 9,765 (1,873) 1,720 - 57,293 - 57,293 57,293 $’000 1,296 1,461 (2,310) - - - 1,946 2,393 447 1,946 2,393 Total $’000 48,977 1,461 (2,310) 9,765 (1,873) 1,720 1,946 59,686 447 59,239 59,686 (a) Other provisions: Includes provision for Mine Rehabilitation Fund (MRF) Levy. 15. EMPLOYEE BENEFITS Accounting policy Provision for employee entitlements represents the amount which the consolidated entity has a present obligation to pay resulting from employees’ service provided up to the balance date. Liabilities arising in respect of employee benefits expected to be settled within twelve months of the balance date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled. All other employee benefit liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the balance date. Obligations for contributions to defined contribution superannuation funds are recognised as an expense in the Statement of Profit or Loss and Other Comprehensive Income as incurred. Provision for employee entitlements Provision for annual leave Provision for long-service leave Provision for incentive payments Current Non-current CONSOLIDATED 30 June 2023 30 June 2022 $’000 3,823 1,690 2,414 7,927 7,130 797 7,927 $’000 3,436 1,589 4,030 9,055 8,316 739 9,055 68 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 16. LEASE LIABILITIES Accounting policy At the inception of a contract the Group assesses whether the contract is or contains a lease. A contract is, or contains, a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group recognises it as a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: \ fixed payments (including in-substance fixed payments), less any lease incentives receivable \ variable lease payments that are based on an index or a rate \ amounts expected to be payable by the lessee under residual value guarantees \ the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and \ payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever: \ The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate; \ The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which case the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used); \ A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification. The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses. Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under AASB 137. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories. Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease. The Group applies AASB 136 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the ‘Property, Plant and Equipment’ policy (as outlined in the financial report for the annual reporting period). Variable rents that do not depend on an index or rate are not included in the measurement the lease liability and the right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are included in profit or loss. As a practical expedient, AASB 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Group has not used this practical expedient. For a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. 2023 ANNUAL REPORT 69 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 16. LEASE LIABILITIES (cont.) Future minimum lease payments 2023 $’000 24,393 56,772 23,190 2022 $’000 25,289 73,581 29,282 104,355 128,152 24,393 79,962 104,355 25,289 102,863 128,152 CONSOLIDATED Interest Present value of minimum lease payments 2023 $’000 5,836 12,155 3,394 21,385 5,836 15,549 21,385 2022 $’000 6,799 16,012 5,247 28,058 6,799 21,259 28,058 2023 $’000 18,557 44,617 19,796 82,970 18,557 64,413 82,970 2022 $’000 18,490 57,569 24,034 100,094 18,490 81,604 100,094 Less than one year Between one and five years Five years and later Current Non-current Lease liabilities include electricity and gas power plants, vehicles and equipment. Ownership of the vehicles and equipment will revert to the Company at the end of the leases at no additional cost. The Company’s obligations under the leases are secured by the lessor’s title to the leased assets. They expire between October 2023 and April 2032 and bear interest at rates between 2.3% and 8.4%. Variable lease payments on right-of-use assets amounted to $164.4 million for the year (2022: $27.3 million). CAPITAL STRUCTURE AND FINANCIAL RISK MANAGEMENT 17. FINANCIAL LIABILITY Nominal Interest Rate Loan Term Carrying Value Current Non-current Bank syndicate debt facility 30 June 2023 $’000 30 June 2022 $’000 BBSY bid rate + 4.5% BBSY bid rate + 4.0% 69 months 69 months 126,140 21,854 104,286 126,140 172,270 19,376 152,894 172,270 Red 5 has a $175.0 million debt facility commitment which was entered into in the prior year with a syndicate comprising BNP Paribas, Australia branch, The Hongkong and Shanghai Banking Corporation Limited, Sydney Branch and Macquarie Bank Limited. The terms of the debt facility were adjusted in December 2022. The key terms of the project financing facilities include: \ A$160.0 million senior secured project loan facility; \ A$15.0 million cost overrun and working capital facility; \ Loan term of 5.75 years, maturing on 30 September 2026; \ An interest rate in respect of the senior secured project loan facility of BBSY-bid plus a margin of 4.0% - 4.5% p.a.; \ Certain financial covenants; and \ Guaranteed and secured on a first-ranking basis over all Australian assets of Red 5, Greenstone Resources (WA) Pty Ltd, Opus Resources Pty Ltd and Darlot Mining Company Pty Ltd. The first draw-down on the debt facility took place in July 2021 and $47.3 million has been repaid to 30 June 2023. Loan acquisition costs of $2.7 million have been offset against the $175.0 million drawn down. Under the Syndicated Facility Agreement which governs the long-term debt, the Company is subject to amended covenants from the March 2023 quarter for which it has to report on a quarterly basis or in the event of a default. The Company has been compliant under those amended financial covenants in FY23. 70 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 18. FAIR VALUE MEASUREMENT The fair values of financial assets and financial liabilities carried at amortised cost approximate their carrying value. The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique. Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities Level 2 - Valuation techniques for which the lowest - level input that is significant to the fair value measurement is directly or indirectly observable Level 3 - Valuation techniques for which the lowest - level input that is significant to the fair value measurement is unobservable The following financial assets and liabilities are classified as level 2: \ Financial liabilities - borrowings of $126.1 million (30 June 2022: $172.3 million) 19. FINANCIAL INSTRUMENTS Accounting policy Non-derivative financial instruments: Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other creditors. Non-derivative financial instruments are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured as described below. Trade and other receivables are carried at amortised cost. Trade receivables are non-interest bearing. Loans and borrowings are measured at amortised cost using the effective interest method, less any impairment losses. Liabilities for trade creditors and other amounts are carried at amortised cost. Trade payables are non-interest bearing and are normally settled on 30 day terms. For trade receivables, the Group uses the simplified approach to recognise impairments based on the lifetime expected credit loss. For other receivables, the Group applies the general approach and recognises impairments based on a 12-month expected credit loss. Impairment allowances are based on a forward-looking expected credit loss model. Where there has been a significant increase in credit risk, a loss allowance for lifetime expected credit losses is required. Exposures are grouped by external credit rating and security options and an expected credit loss rate is calculated accordingly. Where applicable, actual credit loss experience is also taken into account. For remaining receivables without an external credit rating or security option, a rating of BB (Standard and Poor’s) is used, on the basis that there is no support that it is investment grade, nor is there any evidence of default. For the purposes of the statement of cash flows, cash includes deposits at call which are readily convertible to cash on hand and which are used in the cash management function on a day to day basis, net of outstanding bank overdrafts. Derivative financial instruments: Derivative financial instruments are recognised initially at fair value; any attributable transaction costs are recognised in profit and loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value. Cashflow hedges: When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and accumulated in the hedging reserve. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss. It is management’s intention to settle each contract through physical delivery of gold and as such, the gold forward sale contracts entered into by the Company do not meet the criteria of financial instruments for accounting purposes which is referred to as the “normal purchase/sale” exemption. Accordingly, the contracts will be accounted for as sale contracts with revenue recognised once the gold has been delivered to the counterparty. 2023 ANNUAL REPORT 71 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 20. FINANCIAL RISK MANAGEMENT Overview This note presents information about the consolidated entity’s exposure to credit, liquidity and market risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and manages the financial risks relating to the operations of the consolidated entity through regular reviews of the risks. Credit risk Credit risk is the risk of financial loss to the consolidated entity if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the consolidated entity receivables from customers and investment securities. For the Company it arises from receivables due from subsidiaries. Presently, the consolidated entity undertakes exploration, mining and gold production activities. The Group sells gold to four customers in Australia and has managed its exposure to credit risk by analysing the creditworthiness of the customers. Cash and cash equivalents The consolidated entity limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have an acceptable credit rating. Any excess cash and cash equivalents are maintained in short term deposits with more than one major Australian commercial bank at interest rates maturing over 30 to 120 day rolling periods. Trade and other receivables The Group’s trade and other receivables relate mainly to gold sales and sales tax refunds. The Group has determined that its exposure to trade receivable credit risk is low, given that it sells gold bullion to a single reputable refiner with short contractual payment terms and sales tax refunds are due from Government tax bodies namely the Australian Tax Office and the Philippines Bureau of Internal Revenue. Exposure to credit risk The carrying amount of the consolidated entity’s financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: Cash and cash equivalents Trade and other receivables Non-current receivables Liquidity risk CONSOLIDATED Carrying amount 30 June 2023 30 June 2022 $’000 20,112 28,973 8,168 $’000 32,526 19,025 8,180 Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as they fall due. The consolidated entity approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the consolidated entity. The consolidated entity manages liquidity risk by maintaining adequate cash reserves from funds raised in the market and by continuously monitoring forecast and actual cash flows. 72 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 20. FINANCIAL RISK MANAGEMENT (cont.) The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements: Carrying amount $’000 63,683 82,970 126,140 272,793 64,174 100,094 172,270 336,538 CONSOLIDATED Contractual cash flows Less than one year Between one and five years More than five years $’000 $’000 $’000 $’000 (63,683) (104,355) (150,638) (63,683) (24,393) (32,961) - (56,772) (117,677) - (23,190) - (318,676) (121,037) (174,449) (23,190) (64,174) (128,152) (194,598) (64,174) (25,288) (27,830) - (73,582) (166,768) - (29,282) - (386,924) (117,292) (240,350) (29,282) As at 30 June 2023 Trade and other payables Lease liabilities Financial liabilities As at 30 June 2022 Trade and other payables Lease liabilities Financial liabilities Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and commodity prices will affect the consolidated entity income or the value of its holdings of financial instruments. Changes in the market gold price will affect the derivative valuation at each reporting date. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Hedge accounting The Group’s risk management policy is to hedge gold sales in local currency as and when appropriate, subject to the terms of the Syndicated Facility Agreement. At 30 June 2023, there were commitments over future sales of gold from the King of the Hills operation (refer to note 31). These are accounted for using the normal purchase/sale exemption and are not regarded as financial instruments. Gold price sensitivity Derivative financial instruments valued using valuations models with inputs such as forward gold prices, are sensitive to gold price fluctuations. Currently there are no derivative financial instruments because the Group accounts for gold hedges using the normal purchase/sale exemption (2022: nil). Currency risk The consolidated entity is exposed to currency risk on investments and purchases that are denominated in a currency other than the respective functional currencies of the subsidiaries within the consolidated entity being Australian Dollar (A$) and Philippine Pesos. The currencies in which these transactions primarily are denominated are United States dollars (US$). The consolidated entity has not entered into any derivative financial instruments to hedge such transactions. The Company’s investments in its subsidiaries are not hedged as those currency positions are considered to be long term in nature. Interest rate risk The consolidated entity is exposed to interest rate risk, primarily on its borrowings and on its cash and cash equivalents. This is the risk that a financial instrument’s value will fluctuate as a result of changes in the market interest rates on interest-bearing financial instruments. The consolidated entity does not currently use derivatives to mitigate these exposures. For cash and cash equivalents, the consolidated entity adopts a policy of ensuring that any excess cash is utilised to pay down long term debt under the terms of the Syndicated Facility Agreement. 2023 ANNUAL REPORT 73 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 20. FINANCIAL RISK MANAGEMENT (cont.) At the reporting date the interest rate profile of the consolidated entity’s interest-bearing financial instruments was: Cash and cash equivalents Restricted cash Security deposits Borrowings CONSOLIDATED Carrying amount 30 June 2023 30 June 2022 $’000 20,112 7,500 8,162 (126,140) (90,366) $’000 32,526 7,500 8,177 (172,270) (124,067) Cash flow sensitivity analysis for variable rate instruments An increase of 200 basis points or decrease of 200 basis points in interest rates at the reporting date would have increased/(decreased) equity and profit or loss by the amounts shown below: CONSOLIDATED Profit or loss Equity 200pb increase 200bp decrease 200bp increase 200bp decrease $’000 (1,807) $’000 1,807 $’000 (1,807) $’000 1,807 (1,421) 1,241 (1,421) 1,241 30 June 2023 Variable rate instruments 30 June 2022 Variable rate instruments (a) (a) Effect of 100 basis point changes in FY22 Net fair values The carrying value of financial assets and liabilities equates to their fair value. Capital management The consolidated entity’s objective when managing capital is to safeguard its ability to continue as a going concern, so as to maintain a strong capital base sufficient to maintain future exploration and development of its projects. In order to maintain or adjust the capital structure, the consolidated entity may return capital to shareholders, issue new shares or sell assets to reduce debt. Risk management is facilitated by regular monitoring by and reporting to the Board and key management personnel. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. 74 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 21. CONTRIBUTED EQUITY Accounting policy Ordinary shares are classified as equity. They entitle the holder to participate in dividends and proceeds on the winding up of the parent entity in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. (a) Share capital 3,211,739,220 (30 June 2022: 2,356,360,652) ordinary fully paid shares 596,668 443,160 CONSOLIDATED 30 June 2023 30 June 2022 $’000 $’000 (b) Movements in ordinary share capital On issue at 30 June 2021 Service rights vested Performance rights vested and converted to shares On issue at 30 June 2022 On issue at 1 July 2022 Capital raising for cash Performance rights vested and converted to shares Service rights vested and converted to shares Share issue costs On issue at 30 June 2023 (c) Other equity On issue at 30 June 2022 (a) On issue at 30 June 2023 CONSOLIDATED Thousand shares $’000 2,346,323 328 9,710 2,356,361 2,356,361 1,097,319 5,391 412 - 3,459,483 581 581 442,626 85 449 443,160 443,160 158,904 1,367 75 (6,838) 596,668 930 930 (a) Red 5 provided for 581,428 shares to be issued at a value of $930,285 to settle the outstanding tax liability in relation to the acquisition of Merrill Crowe Corporation (MCC) in a previous financial year. 22. RESERVES Foreign currency translation reserve (a) Share-based payment reserve (b) CONSOLIDATED 30 June 2023 30 June 2022 $’000 379 7,789 8,168 $’000 433 6,485 6,918 (a) The foreign currency translation reserve comprises foreign exchange differences arising from the translation of the financial statements of foreign operations where the functional currency is different to the presentation currency of the reporting entity. (b) The share-based payment reserve includes performance rights, service and deferred rights reserve. It arises on the granting and vesting of equity instruments. 2023 ANNUAL REPORT 75 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) OTHER DISCLOSURES 23. DISCONTINUED OPERATION Accounting policy A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which: \ represents a separate major line of business or geographic area of operations; \ is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or \ is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale. When an operation is classified as a discontinued operation, the comparative statement of profit or loss and Other Comprehensive Income is re-presented as if the operation had been discontinued from the start of the comparative year. Assets held for sale: Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use. Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets or deferred tax assets which continue to be measured in accordance with the Group’s other accounting policies. Impairment losses on initial classification as held-for-sale or held-for-distribution and subsequent gains and losses on remeasurement are recognised in profit or loss. Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortised or depreciated, and any equity-accounted investee is no longer equity accounted. Sale of Siana Gold Mine (Philippines) During the previous year (FY2022) the Group sold its interests in the Philippine affiliated company Greenstone Resources Corporation (GRC), which holds both the Siana Gold Project (Siana) and the Mapawa Gold Project, to TVI Resource Development (Phils.) Inc. (TVIRD), the Philippine affiliate of the Canadian-listed TVI Pacific Inc. The divestment included the process plant and all other infrastructure at Siana. A royalty of 3.25% payable for up to 619,000 ounces of gold is payable to the Group from first gold from the restart of the Siana processing plant. Completion of the closing conditions of the agreement, which included certain Philippine regulatory approvals, took place in September 2021. In FY2021 the Group received gross proceeds of US$19.0 million (approximately A$25.3 million) through the repayment of outstanding shareholder advances due from its Philippine-affiliated company, Red 5 Asia Inc, which was a shareholder of GRC. The divestment of its interests in Siana is consistent with Red 5’s strategy to focus on its King of the Hills and Darlot gold mines in Western Australia, with the aim of becoming a substantial mid-tier Australian gold producer. (a) Results of discontinued operation Disposal consideration net of costs to sell Net assets disposed of Non-controlling interest Foreign currency translation reserve Gain on sale of discontinued operation (i) Care and maintenance costs Profit from discontinued operation CONSOLIDATED 30 June 2023 30 June 2022 $’000 - - - - - - - $’000 22,076 (22,580) (3,976) 25,704 21,224 (1,175) 20,049 (i) Gain on sale of discontinued operation is mainly derived from the release of the foreign currency translation reserve associated with the disposal of the discontinued operation’s net assets. There were no tax consequences on the sale consideration due to available tax losses in the Philippines. 76 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 23. DISCONTINUED OPERATION (cont.) (b) Effect of disposal of discontinued operation on the financial position of the Group Plant, property and equipment Mine properties Inventory Trade and other receivables Cash and cash equivalents Total assets disposed of Trade and other payables Provisions Net liabilities disposed of Net assets disposed of (c) Cash flows (used in)/ from discontinued operation Net cash used in operating activities Net cash from investing activities Net cash from financing activities Net cash flow for the year CONSOLIDATED 30 June 2023 30 June 2022 $’000 - - - - - - - - - - $’000 16,740 960 6,014 639 609 24,962 (18) (2,364) (2,382) 22,580 CONSOLIDATED 30 June 2023 30 June 2022 $’000 - - - - $’000 (828) 21,467 - 20,639 INCOME TAX AND DEFERRED TAX 24. Accounting policy Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at reporting date, and any adjustment to tax payable in respect of previous years. Deferred income tax is provided using the balance sheet liability method on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised. A deferred income tax asset is not recognised where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax to be utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted at the balance date. Income taxes relating to items recognised directly in equity are recognised in equity and not in the Statement of Profit or Loss and Other Comprehensive Income. 2023 ANNUAL REPORT 77 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) INCOME TAX AND DEFERRED TAX (cont.) 24. Tax consolidation Red 5 Limited resolved to form a tax consolidated group incorporating all its Australian subsidiaries, with an effective date of 1 November 2017. In accordance with the tax consolidation legislation, the head entity of the Australian tax consolidated group, will assume the deferred tax assets and liabilities initially recognised by wholly owned members of the tax consolidated group. CONSOLIDATED 30 June 2023 30 June 2022 $’000 $’000 Current income tax Current income tax charge Adjustment for prior period Deferred income tax Deferred income tax credit Adjustment for prior period Income tax benefit/(charge) A reconciliation between income tax charge and the profit/(loss) before income tax at the applicable income tax rate is as follows: (Loss)/profit before income tax At statutory income tax rate of 30% (2022: 30%) Temporary difference not recognised / (recognised) Items not allowable for income tax purposes: Non-deductible expenses Utilisation of carry forward tax losses not brought to account Current year losses for which deferred tax asset is not recognised Prior period adjustment Income tax benefit benefit/(charge) - - - 1,018 (1,018) - - (8,730) 2,619 59 (1,256) - (404) (1,018) - - - - 842 73 915 915 (49,579) 14,874 2,458 (1,266) - (15,224) 73 915 Tax losses and temporary differences not brought to account (tax effected): Tax losses 17,930 16,326 A portion of the tax losses and deductible temporary differences have not been recognised as a deferred tax asset at 30 June 2023 because the Directors do not presently believe that their realisation can be regarded as probable, except to the extent that they offset deferred tax liabilities. 78 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) INCOME TAX AND DEFERRED TAX (cont.) 24. Movement in deferred tax balances: Property, plant and equipment and intangible assets Exploration and evaluation assets Inventories Provisions and employee benefits Leases Other items Tax losses recognised Property, plant and equipment and intangible assets Exploration and evaluation assets Inventories Provisions and employee benefits Derivative financial instruments Leases Other items Tax losses recognised Net balance at 1 July 2022 $’000 (71,074) (11,941) 3,994 17,000 (460) 2,029 60,452 - Net balance at 1 July 2021 $’000 (22,463) (9,561) - 18,771 - 1,584 (278) 10,414 (1,533) Recognised in other comprehensive income $’000 - - - - - - - - Recognised in other comprehensive income $’000 - - - - 618 - - - 618 Recognised in profit or loss Net balance at 30 June 2023 $’000 (21,309) 8,974 126 1,742 1,246 (227) 9,448 - $’000 (92,383) (2,967) 4,120 18,742 786 1,802 69,900 - Recognised in profit or loss Net balance at 30 June 2022 $’000 (48,611) (2,380) 3,994 (1,771) (618) (2,044) 2,307 50,038 915 $’000 (71,074) (11,941) 3,994 17,000 - (460) 2,029 60,452 - 25. RELATED PARTIES The following were key management personnel of the consolidated entity at any time during the reporting period and unless otherwise indicated, were key management personnel for the entire reporting period: Executive Directors Mark Williams – Managing Director Non-Executive Directors Andrea Sutton Ian Macpherson Colin Loosemore Steve Tombs Kevin Dundo (resigned 12 March 2023) Fiona Harris (resigned 6 December 2022) Other executives Richard Hay – Chief Operating Officer Patrick Duffy – Chief Financial Officer Jason Greive – previous Chief Operating Officer John Tasovac – previous Chief Financial Officer 2023 ANNUAL REPORT 79 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 25. RELATED PARTIES (cont.) Compensation of key management personnel A summary of the compensation of key management personnel is as follows: CONSOLIDATED 30 June 2023 30 June 2022 $ $ 2,012,948 104,057 97,559 (423,290) 1,791,274 2,241,301 141,130 146,095 1,039,696 3,568,273 Key management personnel Short term benefits including service rights Post-employment benefits Long term benefits Share based payments (a) (a) Includes share based payments expensed and cancelled. Loans to key management personnel There were no loans to key management personnel during the period. Transactions with related parties in the wholly owned group During the financial year, unsecured loan advances were made between the parent entity and its controlled entities. All such loans were interest-free. Intra entity loan balances have been eliminated in the financial report of the consolidated entity. The ownership interests in related parties in the wholly owned group are set out in Note 28. 26. SHARE-BASED PAYMENT ARRANGEMENTS Accounting policy The consolidated entity may provide benefits to employees (including Directors) and other parties as necessary in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (“equity settled transactions”). The cost of these equity settled transactions with employees is measured by reference to the fair value at the date they are granted. The value is determined using a Monte Carlo model or equivalent valuation technique. The cost of equity settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“vesting date”). The cumulative expense recognised for equity settled transactions at each reporting date until vesting date reflects the extent to which the vesting period has expired and the number of awards that, in the opinion of the Directors, will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award. 80 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 26. SHARE-BASED PAYMENT ARRANGEMENTS (cont.) The following is the movement in performance rights during the period: For the year ended 30 June 2023: Performance rights Series: 2023 Series 2023 PIO Series 2024 Series 2025 Series Total For the year ended 30 June 2022: Performance rights Series: 2022 Series 2023 Series 2023 PIO Series 2024 Series Total Balance at 1 July 2022 No. rights 7,945,729 11,550,613 18,410,000 Granted (a) No. rights Vested (b) Forfeited (c) No. rights No. rights - - - - - - - - - - - - - Balance at 30 June 2023 No. rights 7,945,729 11,550,613 18,410,000 16,779,780 54,686,122 - 16,779,780 37,906,342 16,779,780 Balance at 1 July 2022 No. rights 10,442,031 7,945,729 Granted (a) No. rights - - - - 11,550,613 18,410,000 Vested (b) Forfeited (c) Balance at 30 June 2023 No. rights No. rights No. rights (5,576,211) (4,865,820) - - - - - - - 7,945,729 11,550,613 18,410,000 18,387,760 29,960,613 (5,576,211) (4,865,820) 37,906,342 (a) Performance rights granted during the year ended 30 June 2023: LTIP Performance rights were granted to the Managing Director, Key Management Personnel, Senior Management and other operational employees during the period. The performance rights are split into two tranches based on different performance conditions measured over a period commencing 1 July 2022 to the vesting date which is 30 June 2025 if the conditions are met. Details of the performance rights granted during the period are summarised below: FY23 LTI Performance Rights 2025 Series (Expiry date: 30 June 2025) Total performance rights Value per right Valuation per tranche Condition criteria Tranche A 11,745,853 $0.142 $1,667,911 Tranche B 5,033,927 $0.159 $800,394 Total 16,779,780 $2,468,305 TSR ranking relative to TSR of S&P/ASX All Ordinaries Gold Total Return Index. Growth in the Company’s Ore Reserves (proved and probable). In addition, vesting of the performance rights is also conditional on the following being exceeded: TSR > Index TSR +20% TSR > Index TSR +10% 100% 50% TSR < or equal to Index TSR nil Stretch: 35% or over 100% - a positive Company TSR for the measurement period. Target: 20% Threshold: 15% 50% 25% < 15% nil 2023 ANNUAL REPORT 81 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 26. SHARE-BASED PAYMENT ARRANGEMENTS (cont.) Model inputs Grant date Value of the underlying security at grant date Exercise price Dividend yield Risk free rate Volatility Performance period (years) Commencement of measurement period Vesting date Remaining performance period (years) Weighted average fair value per right Number of performance rights Total Valuation LTIP Rights (2025 Series) 24 November 2022 $0.185 nil nil 3.29% 70% 3.00 1 July 2022 30 June 2025 2.82 $0.147 16,779,780 $2,468,305 (b) Performance rights vested during the year ended 30 June 2023: In accordance with the terms of the Red 5 Rights Plan, the PIO series performance rights that were issued to key management personnel and senior management in respect of performance conditions measured over the two years ended 30 June 2023, have been partially achieved. 2,588,111 PIO rights will vest and be converted to shares. (c) Performance rights forfeited during the year ended 30 June 2023: 7,945,729 performance rights relating to the 2023 LTI Series and 8,962,502 performance rights relating to the PIO series have lapsed and have been forfeited due to unmet performance conditions. These will be cancelled. Shares issued, Service and Deferred Rights Grant date Vesting date Fair value at grant date Granted Exercised Outstanding at 30 June 2023 Service rights issued and vested: Mark Williams (b) John Tasovac (b) Patrick Duffy (b) Jason Greive (b) Other employees (b) 19-Aug-22 31-Dec-23 19-Aug-22 31-Dec-23 19-Aug-22 31-Dec-23 19-Aug-22 31-Dec-23 19-Aug-22 31-Dec-23 $206,250 $100,000 $84,500 $125,000 $204,517 671,016 325,340 274,912 406,674 665,374 - - - - - 671,016 325,340 274,912 406,674 665,374 (a) Service rights for Mr Greive issued under the Red 5 FY21 Rights Plan. They have a 12 month service test and vested on 1 July 2022 because Mr Greive was still an employee at that date. (b) Service rights for Mr Williams, Mr Tasovac, Mr Duffy, Mr Greive and certain other employees issued under the Red 5 FY22 Rights Plan. They have an 18 month service test and will vest on 1 January 2024 if the holder of the rights are still employed at Red 5 on 31 December 2023. At reporting date, Mr Greive and Mr Tasovac had resigned. Their unvested service rights will therefore be cancelled. Share based payments expense for the shares issued, service and deferred rights was $0.279 million, (2022: nil). The fair value is based on observable market share price at the date of grant. Key estimates and judgements Share based payment transactions: The Group measures the cost of equity settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using Monte Carlo modelling. This estimate also requires determination of the most appropriate inputs to the valuation model, including the expected life of the equity instrument, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in the note above. 82 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 27. REMUNERATION OF THE AUDITOR During the year the following fees were paid or payable for services provided by the auditor of the parent entity and its related practices: Amounts paid or due and payable to the auditor for: Auditing and reviewing financial reports - KPMG Australia - KPMG Australia fee from prior year - Overseas KPMG firms Taxation advisory services - KPMG Australia CONSOLIDATED 30 June 2023 30 June 2022 $ $ 219,900 - - 95,428 315,328 195,900 40,000 4,445 44,546 284,891 INVESTMENTS IN CONTROLLED ENTITIES 28. The Group’s subsidiaries at the end of the year are set out below: Name of controlled entity: Bremer Resources Pty Ltd Estuary Resources Pty Ltd Greenstone Resources (WA) Pty Ltd Oakborough Pty Ltd Opus Resources Pty Ltd Red 5 Philippines Pty Ltd Red 5 Mapawa Pty Ltd Red 5 Dayano Pty Ltd Darlot Mining Company Pty Ltd Red 5 Mapawa Inc Red 5 Dayano Inc Red 5 Asia Inc Surigao Holdings and Investments Corporation (a) Country of incorporation Class of shares 2023 % 2022 % Equity holding Australia Australia Australia Australia Australia Australia Australia Australia Australia Philippines Philippines Philippines Philippines Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary 100 100 100 100 100 100 100 100 100 100 100 100 40 100 100 100 100 100 100 100 100 100 100 100 100 40 (a) The Company holds a 40% direct interest in Surigao Holdings and Investments Corporation (SHIC) voting stock. Agreements are in place which deals with the relationship between Red 5 and other shareholders of these entities. In accordance with Australian accounting standard, AASB 10 Consolidated Financial Statements, Red 5 has consolidated these companies in these financial statements. 2023 ANNUAL REPORT 83 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 29. DEED OF CROSS GUARANTEE Pursuant to ASIC Corporations (Wholly owned Companies) Instrument 2016/785, the wholly owned subsidiaries listed below are relieved from the Corporations Act 2001 requirements for the preparation, audit and lodgement of financial reports and Directors’ Reports. It is a condition of the Instrument that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee. The effect of the Deed is that the Company guarantees each creditor payment in full of any debt in the event of the winding up of any of the subsidiaries under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Act, the Company will only be liable in the event that, after six months, any creditor has not been paid in full. The subsidiaries have also given similar guarantees in the event that the Company is wound up. The subsidiaries subject to the Deed are: \ Opus Resources Pty Ltd \ Darlot Mining Company Pty Ltd \ Greenstone Resources (WA) Pty Ltd Opus Resources Pty Ltd and Darlot Mining Company Pty Ltd both became parties to the Deed of Cross Guarantee on 30 June 2018. Greenstone Resources (WA) Pty Ltd became a party to the Deed of Cross Guarantee on 30 June 2021. A consolidated statement of comprehensive income and a consolidated statement of financial position, comprising of the Company and controlled entities which are party to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, for the year ended 30 June 2023, is set out as follows: Statement of Comprehensive Income: Sales revenue Cost of sales Gross profit/(loss) Other income and expenses Other income Administration and other expenses Exploration expenditure Operating profit/(loss) Financing income Financing expenses Net financing expense Profit/(loss) income tax expense Income tax benefit/(expense) CLOSED GROUP YEAR ENDED 30 June 2023 30 June 2022 $’000 422,745 (394,620) 28,125 446 (8,514) (7,181) 12,876 61 (21,722) (21,661) (8,785) - $’000 164,962 (196,049) (31,087) 208 (13,547) (2,522) (46,948) 8 (126,388) (126,380) (172,328) 915 Net (loss)/profit after income tax from continuing operations (8,785) (172,413) Other comprehensive income/(loss) Cashflow hedge movements - (1,444) Total comprehensive profit/(loss) for the year (8,785) (173,857) 84 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 29. DEED OF CROSS GUARANTEE (cont.) Statement of Financial Position: CLOSED GROUP YEAR ENDED 30 June 2023 30 June 2022 Assets Cash and cash equivalents Trade and other receivables Inventories Total current assets Property, plant and equipment Mine properties Exploration and evaluation assets Trade and other receivables Inventories Intangible assets Investments Total non-current assets Total assets Liabilities Trade and other payables Employee benefits Borrowings Lease liabilities Total current liabilities Employee benefits Provisions Borrowings Lease liabilities Total non-current liabilities Total liabilities Net assets Equity Contributed equity Other equity Reserves Accumulated losses Total equity $’000 20,075 28,456 76,550 125,081 289,329 228,498 10,767 7,499 7,911 168 658 544,830 669,911 63,564 7,130 21,854 18,557 111,105 797 59,239 104,286 64,413 228,735 339,840 330,071 598,919 930 38,491 (308,269) 330,071 $’000 32,474 18,880 41,415 92,769 303,378 131,273 41,133 7,380 - 291 658 484,113 576,882 64,987 8,316 19,376 18,490 111,169 739 47,681 152,894 81,604 282,918 394,087 182,795 445,411 930 35,938 (299,484) 182,795 2023 ANNUAL REPORT 85 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 30. PARENT ENTITY DISCLOSURES The following details information relating to the parent entity, Red 5 Limited: Financial position of the parent entity: Assets Current assets Non-current assets Liabilities Current liabilities Non-current liabilities Equity Contributed equity Other equity Reserves Accumulated losses Result of the parent entity: Profit / (loss) for the year Other comprehensive income Total comprehensive profit / (loss) for the year Financial commitments of the parent entity: Low value and short term leases: Not later than one year Total financial commitments PARENT ENTITY YEAR ENDED 30 June 2023 30 June 2022 $’000 $’000 20,641 396,202 416,843 29,329 106,483 135,812 596,668 930 7,789 (324,356) 281,031 28,849 292,988 321,837 25,340 153,263 178,603 443,160 930 6,485 (307,341) 143,234 PARENT ENTITY YEAR ENDED 30 June 2023 30 June 2022 $’000 (18,263) - (18,263) - - $’000 (172,413) (1,444) (173,857) - - Contingent liabilities of the parent entity: The parent entity did not have any contingent liabilities at 30 June 2023 (2022: $nil). The parent entity has entered into a Deed of Cross Guarantee with the effect that the Company guarantees debts in respect of certain subsidiaries. Further details of the Deed of Cross Guarantee and the subsidiaries subject to the deed are disclosed in Note 29. 86 2023 ANNUAL REPORT Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 31. CAPITAL COMMITMENTS Capital expenditure commitments Contracted but not provided for: - not later than one year Contractual sale commitments Sale commitments: (a) - not later than one year - later than one year but not later than two years - later than two years but not later than five years Contractual expenditure commitments Non-capital expenditure commitments: - not later than one year Tenement expenditure commitments: - not later than one year - later than one year but not later than two years CONSOLIDATED 30 June 2023 30 June 2022 $’000 $’000 - - 247,005 257,302 286,728 791,035 267 267 6,493 - 6,493 15,413 15,413 125,072 184,419 100,533 410,024 904 904 3,291 2,931 6,222 (a) New gold forward contracts were entered into during the year, amounting to 196,389 ounces of gold produced at the King of the Hills operation. The new hedge contracts are priced at $2,797 per ounce for the period from January 2023 to September 2026. Total gold forward contracts in place at 30 June 2023 amount to 313,119 ounces (2022: 189,650) of gold produced at the King of the Hills amounting to $791.0 million (2022: $410.0 million) at an average price of A$2,526 per ounce (2022: $2,154 per ounce) and settle between July 2023 and September 2026. It is management’s intention to settle each contract through the physical delivery of gold and, accordingly, are accounted for as sale contracts with revenue recognised once the gold has been delivered to the purchaser or agent. 32. CONTINGENT LIABILITIES The consolidated entity had no material contingent liabilities as at the reporting date and as at the end of the year. 33. SUBSEQUENT EVENTS There has not arisen in the interval between the end of the reporting period and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company, in future financial years. 2023 ANNUAL REPORT 87 Notes to the CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2023 (cont.) 34. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS Certain new accounting standards and interpretations have been published that are not effective for the 30 June 2023 reporting period. Except for the amendment to AASB 16 Property, Plant and Equipment, the Group has not elected to early adopt any other new standards. The other new standards do not have a material effect on the Group’s financial statements. Amendment to AASB 116 Property, Plant and Equipment: The Group has elected to early adopt the amendment in AASB 116 Property, Plant and Equipment, effective for annual periods beginning on or after 1 January 2022. The amendment to AASB 116 prohibits an entity from deducting from the cost of an item of property, plant or equipment any proceeds received from selling items produced while the entity is preparing the asset for its intended use. The effect of adopting the amendment in AASB 116 is to recognise in profit or loss the proceeds from sales of gold ore produced by the Group’s King of the Hills operation while it is still in pre-production phase. Prior to the amendment pre-production sales proceeds were recognised as a credit against the cost of the asset. Effect of pre-production sales from King of the Hills: Gold and silver sales (a) Costs of goods sold (b) Effect on gross profit CONSOLIDATED 30 June 2023 30 June 2022 $’000 - - - $’000 3,205 (7,644) (4,439) (a) Pre-production gold ounces sold that were produced by King of the Hills processing plant amounted to 1,205 ounces in the prior year. This excludes ore fed into the plant sourced from the Great Western operation. (b) Costs of producing the gold ounces sold by King of the Hills during the pre-production phase were allocated to the cost of goods sold on the basis of the inventory value of the finished goods sold, along with an allocation of administrative overheads. 88 2023 ANNUAL REPORT DIRECTORS’ Declaration In the opinion of the Board of Directors of Red 5 Limited: (a) the consolidated financial statements, accompanying notes and the remuneration disclosures that are contained in the Remuneration Report in the Directors’ Report are in accordance with the Corporations Act 2001, including: \ giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its performance for the financial year ended on that date; and \ complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; (b) the financial report also complies with International Financial Reporting Standards as disclosed in note 2.1; and (c) there are reasonable grounds to believe that the Group will be able to pay its debts as and when they fall due. (d) At the date of the declaration, the Company is within the class of companies affected by ASIC Corporations (Wholly owned Companies) Instrument 2016/785. The nature of the deed of cross guarantee is such that each company which is party to the deed guarantees to each creditor payment in full of any debt in accordance with the deed of cross guarantee. The Board of Directors has received the declaration by the Managing Director and Chief Financial Officer required by Section 295A of the Corporations Act 2001, for the year ended 30 June 2023. Signed in accordance with a resolution of the Directors. Ian Macpherson Audit Committee Chair Perth, Western Australia 29 August 2023 2023 ANNUAL REPORT 89 Independent AUDITOR’S REPORT KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s Report To the shareholders of Red 5 Limited Report on the audit of the Financial Report Opinion We have audited the Financial Report of Red 5 Limited (the Company). In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: •Giving a true and fair view of the Group’sfinancial position as at 30 June 2023 and ofits financial performance for the year endedon that date; and•Complying with Australian AccountingStandards and the Corporations Regulations2001.The Financial Report comprises: •Consolidated statement of financial position asat 30 June 2023;•Consolidated statement of profit or loss andother comprehensive income, Consolidatedstatement of changes in equity, andConsolidated statement of cash flows for theyear then ended;•Notes including a summary of significantaccounting policies; and•Directors’ Declaration.The Group consists of the Company and the entities it controlled at the year-end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with these requirements. 90 2023 ANNUAL REPORT Independent AUDITOR’S REPORT (cont.) Key Audit Matters The Key Audit Matters we identified are: •Sales revenue; and•Rehabilitation provision.Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period. These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Sales Revenue ($422.745 million) Refer to Note 4(a) to the Financial Report The key audit matter How the matter was addressed in our audit Existence and accuracy of sales revenue is a key audit matter due to its significance to the consolidated financial statements combined with the incremental audit effort assessing the application of relevant accounting standards. Gold sales revenue from the Group’s King of the Hills (KOTH) operations was the most significant item in the consolidated statement of profit or loss. We focused on the following judgements the Group applied in determining sales revenue: Assessing the revenue recognised againstthe requirements of AASB 15 Revenuefrom Contracts with Customers;Judgements made by the Group in therecognition and measurement of revenueand the level of audit effort required by usin assessing the Group’s assumptionsunderlying the timing of its recognitionbased on the terms of the relevantagreements; andDetermination of gold receivable from orpayable to the refiner at year end and theassociated impact to revenue recognised.The application of the “normal purchase/sale” exemption for gold forward contracts. Our procedures included: We evaluated the Group’s accounting policiesfor the recognition of sales revenue againstthe requirements of AASB 15 and ourunderstanding of the business;For gold sales recognised during the year weobtained the sales invoice and compared thequantity sold against third party statementsfrom the refinery and cash received in thebank;For a sample of sales recorded close to yearend, we tested against the recognition criteriaof AASB 15 checking control had passed tothe customer. Where revenue was recognizedbased on a provisional outturn, we inspectedthe final outturn received subsequent to year-end, tracing gold payable to third partystatements from the refinery and quotedcommodity prices; andFor gold forward contracts where “normalpurchase/sale” exemption was applied, wechecked the gold forward contracts, comparedto the Group’s gold production forecasts andinquired with finance and operationalpersonnel as to the intention to deliverphysical gold into those contracts inaccordance with the requirements of theaccounting standards to apply the own-useexemption.We evaluated the adequacy of the disclosures made in the financials against the requirements of the accounting standards. 2023 ANNUAL REPORT 91 Independent AUDITOR’S REPORT (cont.) Rehabilitation provision ($57.923m) Refer to Note 14 to the Financial Report The key audit matter How the matter was addressed in our audit The rehabilitation provision is considered to be a key audit matter. This is due to the additional audit effort from the: Inherent complexity in the Groupestimating future environmentalrestoration and rehabilitation costs; andSignificant judgement applied by theGroup, and effort for us, in gatheringpersuasive audit evidence on the costs,particularly for those costs to be incurredseveral years in the future.The estimate of the rehabilitation provision is influenced by: The complexity in current environmentaland regulatory requirements, and theimpact to completeness of therehabilitation provision;The expected environmentalmanagement strategy of the Group andthe nature of the costs incorporated intothe rehabilitation provision; andThe expected timing of expenditurewhich is planned to occur several yearsinto the future, and the associatedinflation and discounting of costs in thepresent value calculation of therehabilitation provision.The Group uses third party and internal experts when assessing their obligations for restoration and rehabilitation activities and associated estimates of future costs. Our procedures included: Comparing the basis for recognition andmeasurement of the rehabilitation provision forconsistency with environmental and regulatoryrequirements and criteria in the accountingstandards;Evaluating the methodology applied by theGroup’s internal and third-party experts indetermining the nature and extent ofrehabilitation activities by comparison toindustry practice;Obtaining the Group’s rehabilitation provisionestimation, and critically evaluated by:oComparing the nature and extent ofactivities costed to a sample of theGroup’s rehabilitation plans and relevantregulatory requirements;oInvolving our sustainability closurespecialists, we tested key environmental-related assumptions incorporated into thefinancial modelling of closure costactivities against environmental laws andregulations and industry guidelines;oAssessing the planned timing ofrehabilitation activities through comparisonto the Group’s strategy and plans forcommencement and completion ofrehabilitation activities;oAssessing the competence, scope andobjectivity of the Group’s internal and thirdparty experts used in the determination ofthe rehabilitation provision estimate; andoWorking with our valuation specialists,comparing inflation rate and discount rateassumptions in the Group’s rehabilitationprovision determination to external marketdata for Australian bond rates andAustralian inflation targets.Evaluating the completeness of therehabilitation provision against the Group’sanalysis of where disturbance requiresrehabilitation and comparing to ourunderstanding of the Group’s operations. Wedid this by each operating location; and92 2023 ANNUAL REPORT Independent AUDITOR’S REPORT (cont.) Assessing the disclosures in the financial reportusing our understanding obtained from ourtesting against the requirements of theaccounting standard. This included evaluatingthe current and non-current rehabilitationprovision disclosure for consistency to theplanned timing of the rehabilitation expenditure.Other Information Other Information is financial and non-financial information in Red 5 Limited’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information. The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’ report and the Corporate Directory. The Chairman’s Review, Managing Director’s Report, Environmental Social and Governance Summary, Resources and Reserves Statement, Tenement Schedule and Statement of Shareholders are expected to be made available to us after the date of the Auditor's Report. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Financial Report The Directors are responsible for: •Preparing the Financial Report that gives a true and fair view in accordance with AustralianAccounting Standards and the Corporations Act 2001;•Implementing necessary internal control to enable the preparation of a Financial Report that givesa true and fair view and is free from material misstatement, whether due to fraud or error; and•Assessing the Group and Company’s ability to continue as a going concern and whether the useof the going concern basis of accounting is appropriate. This includes disclosing, as applicable,matters related to going concern and using the going concern basis of accounting unless theyeither intend to liquidate the Group and Company or to cease operations, or have no realisticalternative but to do so.2023 ANNUAL REPORT 93 Independent AUDITOR’S REPORT (cont.) Auditor’s responsibilities for the audit of the Financial Report Our objective is: •To obtain reasonable assurance about whether the Financial Report as a whole is free frommaterial misstatement, whether due to fraud or error; and•To issue an Auditor’s Report that includes our opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our Auditor’s Report. Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of Red 5 Limited for the year ended 30 June 2023 complies with Section 300A of the Corporations Act 2001. Directors’ responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001. Our responsibilities We have audited the Remuneration Report included in pages 31 to 46 of the Directors’ report for the year ended 30 June 2023. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG Jane Bailey Partner Perth 29 August 2023 94 2023 ANNUAL REPORT Statement of SHAREHOLDERS as at 15 August 2023 DISTRIBUTION OF SHARE AND RIGHTS HOLDERS 1 1,001 5,001 10,001 100,001 - - - - 1,000 5,000 10,000 100,000 and over Including holdings of less than a marketable parcel (based on a market share price of $0.215 per share) CLASSES OF SHARES AND VOTING RIGHTS Number of holders Fully paid shares Unlisted rights 720 2,555 1,606 5,311 1,914 12,106 1,514 - - - 16 106 122 At meetings of members or classes of members, each member entitled to vote may vote in person or by proxy or attorney. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote, and on a poll, every person present in person or by proxy has one vote for each ordinary share held. TWENTY LARGEST HOLDERS OF FULLY PAID SHARES Shareholder 1. 2. 3. 4. 5. 6. 7. 8. 9. HSBC Custody Nominees (Australia) Limited JP Morgan Nominees Australia Pty Limited Citicorp Nominees Pty Limited BNP Paribas Noms Pty Ltd HSBC Custody Nominees (Australia) Limited - A/C 2 BNP Paribas Nominees Pty Ltd VBS Exchange Pty Ltd National Nominees Limited VBS Exchange Pty Ltd 10. Gannet Capital Pty Ltd 11. 12. 13. 14. 15. 16. 17. 18. 19. VBS Exchange Pty Ltd Broadgate Investments Pty Ltd VSG Resources Pty Ltd UBS Nominees Pty Ltd VBS Exchange Pty Limited VBS Exchange Pty Ltd Gary B Branch Pty Limited HSBC Custody Nominees (Australia) Limited BNP Paribas Noms Pty Ltd 20. Neweconomy Com Au Nominees Pty Limited Shares 730,105,154 532,640,404 341,217,293 126,725,701 116,304,857 104,752,433 72,273,918 55,703,005 50,000,000 44,965,868 40,000,000 34,187,439 29,477,504 23,674,517 21,300,917 20,697,674 16,958,649 15,275,786 13,698,281 12,699,498 % 21.10 15.40 9.86 3.66 3.36 3.03 2.09 1.61 1.45 1.30 1.16 0.99 0.85 0.68 0.62 0.60 0.49 0.44 0.40 0.37 2,402,658,898 69.45 2023 ANNUAL REPORT 95 Statement of SHAREHOLDERS as at 15 August 2023 (cont.) SUBSTANTIAL SHAREHOLDERS The following shareholders have lodged a notice of substantial shareholding in the Company. Shareholder VBS Exchange Pty Ltd Franklin Resources Inc UNQUOTED SECURITIES The following classes of unquoted securities are on issue: Number of shares 448,712,634 338,757,320 % 12.97 9.79 Security Number on issue Name of holder Number Performance Rights (2024) Service Rights Performance Rights (2025) 18,410,000 2,343,313 16,779,780 - - Mark Williams 671,013 - - % - 28.6 - Holders of greater than 20% of each class of security CORPORATE GOVERNANCE STATEMENT The Company’s 2022 corporate governance statement can be viewed at https://www.red5limited.com/site/about-red5/corporate-governance CORPORATE Directory BOARD OF DIRECTORS SHARE REGISTRY Automic Pty Ltd Level 5 191 St Georges Terrace Perth WA 6000 Telephone: 1300 288 664 E-mail: hello@automicgroup.com.au Web-site: www.automicgroup.com.au BANKERS Hongkong and Shanghai Banking Corporation Limited Macquarie Bank Limited BNP Paribas Russell Clark (Chairman) Mark Williams (Managing Director) Ian Macpherson (Non-Executive Director) Colin Loosemore (Non-Executive Director) Steven Tombs (Non-Executive Director) Andrea Sutton (Non-Executive Director) Peter Johnston (Non-Executive Director) COMPANY SECRETARY Lisa Wynne David Coyne REGISTERED OFFICE Level 2 35 Ventnor Avenue West Perth Western Australia 6005 Telephone: (61-8) 9322 4455 E-mail: info@red5limited.com Web-site: www.red5limited.com AUDITORS KPMG SOLICITORS HopgoodGanim STOCK EXCHANGE LISTING Australian Securities Exchange Trading code: RED ABN 73 068 647 610 www.red5limited.com 

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