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2023 ReportCritical minerals for a secure future 0 2 0 2 t r o p e r l a u n n a d e t i m i L s e c r u o s e R r o c s a n e R 1 Renascor Resources Limited annual report 2020 financial statements Renascor Resources is an emerging critical minerals company with assets in South Australia. It’s key projects include the Siviour Graphite and Battery Anode Material Project and the Carnding Gold Project. -28° S O U TT HH A U S T R AA LL I A -30° Challenger Prominent Hill Olympic Dam Marree Carnding Carrapateena -32° Olary Eastern Eyre Arno Bay Siviour Port Adelaide Proposed battery anode material operation 136° 138° 140° Renascor project -34° RNU: Siviour Graphic Project Major project Railway / major roads 0 200 km 134° Competent Persons Statement Exploration Results The information in this document that relates to exploration activities and exploration results is based on information compiled and reviewed by Mr G.W. McConachy who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr McConachy is a director of the Company. Mr McConachy has sufficient experience relevant to the style of mineralisation and type of deposits being considered to qualify as a Competent Person as defined by the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code, 2012 Edition). Mr McConachy consents to the inclusion in the report of the matters based on the reviewed information in the form and context in which it appears. Mineral Resource The information in this document that relates to Mineral Resources is based upon information compiled by Mrs Christine Standing who is a Member of the Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Mrs Standing is an employee of Optiro Pty Ltd and has sufficient experience relevant to the style of mineralisation, the type of deposit under consideration and to the activity undertaken to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Ore Reserve The information in this document that relates to Ore Reserves is based on information complied and reviewed by Mr Ben Brown, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Brown is an employee of Optima Consulting and Contracting Pty Ltd and a consultant to the Company. Mr Brown has sufficient experience relevant to the type of deposit under consideration to qualify as a Competent Person as defined by the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code, 2012 Edition). This report may contain forward-looking statements. Any forward-looking statements reflect management’s current beliefs based on information currently available to management and are based on what management believes to be reasonable assumptions. It should be noted that a number of factors could cause actual results, or expectations to differ materially from the results expressed or implied in the forward-looking statements. 2 Contents Chairman’s letter Directors’ Report Auditor’s Independence Declaration Financial Statements Directors’ Declaration Independent Auditor’s Report Shareholder’s information 4 6 19 21 57 58 61 Corporate directory inside back cover ‘Siviour: a world-class graphite project’ 3 3 Renascor has responded to these challenges by maintaining the steady advancement of our flagship Siviour Graphite and Battery Anode Material Project, while concurrently creating additional opportunities to build on our shareholder’s investments through the development of near-term discovery prospects in minerals with favourable commodity price outlooks. At Siviour, we have achieved several breakthroughs that confirm the project as among the leading graphite developments globally, with strong prospects to benefit for the growing lithium-ion battery market and advance into a profitable long- term producer of high quality graphite products. From the Chairman Dear Shareholder, I am very pleased to present Renascor’s annual report for the twelve-month period ending 30 June 2020. The past year has presented an unprecedented set of challenges, with COVID-19 having wide-ranging impacts on nearly all aspects of society. For ASX-listed exploration and development companies like Renascor, this has required both prudence and flexibility in light of changes in operational and market norms. 4 Key achievements have included: • Siviour Definitive Feasibility Study (DFS). The Siviour DFS confirms Siviour’s potential as a long- life graphite concentrate project with amongst the lowest operating costs of any graphite development globally. Whilst graphite as a mineral occurrence is relatively common, the Siviour DFS establishes Siviour as particularly unique as a low cost source of high quality graphite located in Australia, amongst the most favourable mining jurisdictions in the world. • Siviour Mineral Ore Reserve. Work undertook during the year resulted in an updated Mineral Reserve estimate for Siviour that confirms it as the second largest Proven Reserve of graphite in the world and the largest Ore Reserve of graphite outside of Africa. • Eco-Friendly Battery Anode Material. Using a purification technology that avoids the use of potentially harmful hydrofluoric acid, Renascor has successfully produced battery-grade anode material from Siviour graphite. The use of this more ecologically-friendly method firmly establishes Renascor’s commitment to responsible environmental management of resources. • Battery Anode Material Study. Following the DFS, Renascor completed a study assessing an integrated battery anode material operation to produce Purified Spherical Graphite for lithium-ion battery anodes. By leveraging off the comparatively low cost of Siviour graphite concentrates and co-locating a downstream anode material manufacturing operation in South Australia, the study confirms the globally competitive nature of the project. The steady progress Renascor achieved at Siviour during the past year puts Renascor in an excellent position to take the project through development and create the first vertically integrated battery anode material operation outside of China. Significantly, the focus on the production of Purified Spherical Graphite aligns the project with potential offtake partners in the growing lithium-ion battery market. In addition to our progress at Siviour, Renascor also advanced earlier-stage exploration prospects, including our Carnding Gold Project in South Australia’s Central Gawler Craton. Carnding, which we acquired in 2012, is part of a pipeline of highly prospective early-stage exploration projects. At Carnding, we identified multiple prospects for near-surface, high-grade gold. As the gold price has risen considerably, the Central Gawler region has seen an increasing focus on gold, and Renascor is pleased to offer shareholders the potential to benefit from this renewed interest through near-term discovery opportunities in projects like Carnding. We are particularly grateful of the support offered by shareholders during the year, notwithstanding difficult market conditions and subdued equity prices. With the work undertaken last year, together with work programs for the current year including a focus on the development of Siviour, as well as gold exploration, we believe there is strong potential for a re-rating of Renascor by the equity markets. On behalf of the Board and my fellow shareholders, I thank our Managing Director David Christensen and the entire Renascor team for their dedicated work during an exciting year. I also offer my sincere thanks to you, our shareholders, for your continued support. Yours sincerely, Dick Keevers, Chairman 5 Renascor Resources Limited annual report 2020 financial statements Directors’ Report Business objectives Siviour Graphite Project Renascor Resources is an Australian-based company focused on the development of economically viable minerals. Renascor has an extensive tenement portfolio, holding interests in key mineral provinces of South Australia. Its projects include the Siviour graphite project near Arno Bay, South Australia. The principal activity of the Group during the financial year was mineral exploration, development and evaluation. Corporate Governance Statement The board of directors of the Company (“Board”) is responsible for the corporate governance of the Company. The board guides and monitors the business affairs of the Company on behalf of its shareholders by whom they are elected and to whom they are accountable. The Company believes that good corporate governance enhances investor confidence and adds value to stakeholders. The Board continually monitors and reviews its policies, procedures and charters with a view to ensure its compliance with the ASX Corporate Governance Council’s “Corporate Governance Principles and Recommendations, 3rd Edition” to the extent considered appropriate for the size of the Company and its scale of its operations. The Company’s Corporate Governance Statement is available on the Company’s website. www.renascor.com.au/corporate-governance The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the ‘Group’) consisting of Renascor Resources Limited (referred to hereafter as the ‘Company’ or ‘parent entity’) and the entities it controlled at the end of, or during, the year ended 30 June 2020. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Review of operations Company overview Renascor Resources Limited (Renascor) is an ASX-listed, Australian-based company focused on the development of economically viable deposits containing graphite, gold, copper and other minerals. Renascor’s activities during the past financial year were primarily directed at developing the Siviour Graphite and Battery Anode Material Project (Siviour). Significant activities undertaken on the Siviour Project during the year included: • The completion of the Siviour Definitive Feasibility Study (DFS) in November. The DFS positively confirmed Siviour’s potential as a low cost, long- life graphite project that can achieve consistently attractive profit margins. • Advancement of an integrated battery anode material operation in South Australia to produce Purified Spherical Graphite (PSG) for lithium-ion batteries. • In December 2019 the company entered into a joint development agreement with battery anode company Sicona Battery Technologies (Sicona) to jointly develop battery anode material. Other projects In addition to its activities at the Siviour Graphite Project, Renascor has maintained a strong exploration portfolio, identifying and maintaining a strong pipeline of targets for development of gold, copper, nickel, cobalt and other mineral assets. To limit non-essential exposure, Renascor has also relinquished tenements considered less prospective. Corporate and financial For the year ended 30 June 2020 the loss for the Group after providing for income tax amounted to $1,072,575 (2019: $1,321,558). This included an impairment write down of capitalised exploration and evaluation expenditure of $274,109 (2019: $387,751). To support the Group’s exploration activities and developing the Siviour Graphite Project, the Company raised $1,796,468 (after capital raising costs) via placements to professional and sophisticated investors and a Share Purchase Plan (“SPP”) during the year. On 12 August 2019 the Company announced the results of purification tests using a more eco-friendly caustic roasting technique that successfully produced battery- grade spherical graphite from Siviour. The caustic roasting method offers environmental advantages over the traditional hydrofluoric purification technique. On 11 November 2019 the Company announced the completion of the DFS. The Siviour DFS confirmed Siviour’s potential as a low cost, long-life graphite project that can achieve consistently attractive profit margins. 6 Directors’ Report 30 June 2020 On 18 December 2019 the Company announced that it had entered into a non-binding memorandum of understanding (MOU) with Sicona to jointly develop battery anode material. Under the terms of the MOU, the Company and Sicona will collaborate in the development of the next-generation anode material by combining Renascor’s expertise in the production of purified spherical graphite and Sicona’s expertise in the development of silicon-based anodes. On 3 March 2020 the company received a Letter of Support from the Australian government Export Finance Agency (EFA), the official Export Credit Agency (ECA) of the Australian Government. The EFA has conducted a preliminary review of the Siviour Project, and subject to further due diligence it will consider providing finance. ECA cover typically supports favourable debt financing terms, including competitive margin and increased loan tenor. On 24 June 2020 the company announced that that it has engaged a European investment bank, ABG Sundal Collier to manage the proposed debt financing for the integrated Siviour Graphite and Battery Anode Material Project. Significant changes in the state of affairs During the financial year Renascor took steps to manage the impact of COVID-19, focusing on the health of its staff and the communities in which the Company works, while seeking to preserve shareholder funds and limit the financial impact on Renascor and its stakeholders. Work programs were designed to permit them to continue with minor disruptions due to travel restrictions and shipping delays. Where practicable, laboratory and desktop activities were accelerated to ensure delays would be minimised when more normal operations can be undertaken. There were no other significant changes in the state of affairs of the Group during the financial year. Matters subsequent to the end of the financial year On 1 July 2020 the company announced the results of a study assessing an integrated battery anode material operation in South Australia to produce PSG for lithium-ion battery anodes. The study confirms that the integration of a PSG processing operation with Siviour creates significant added value and aligns the company with end-users of PSG seeking supply chain security through the world’s first integrated, in-country mine and battery anode material operation outside of China. On 14 July 2020 the company announced the results of independent purification tests that confirmed that Siviour is able to produce PSG through a more environmentally-friendly caustic roast purification method. On 21 July 2020 an updated Mineral Ore Reserve estimate was announced confirming Siviour as the largest reported total Ore Reserve outside of Africa, and the second largest reported Proven Reserve of graphite in the world. This estimate provides additional confidence in the size and quality of the Siviour deposit as a consistent source of high-quality graphite supporting a mine life of over 40 years. On 4 August 2020 the Company announced high-grade, shallow gold drill intercepts at the Carnding Project in South Australia’s Central Gawler Craton. The results include over 16 g/t Au at the Soyuz prospect. On 10 August 2020 the Company announced an expansion to the Carding Project, with the approval of an exploration licence application over an area immediately north of the Soyuz propsect. On 12 August 2020 independent qualification tests undertaken by a German graphite specialist confirmed that Siviour PSG meets product specifications required for integration of PSG into lithium-ion battery anodes. On 28 August 2020 Renascor confirmed multiple untested, shallow gold targets along-strike from the company’s Soyuz (Carnding) prospect in South Australia’s Gawler Craton. On 18 September 2020 the company announced that it has received firm commitments from professional and sophisticated investors to raise approximately $3.6 million (before expenses) at 1.1cents per share with one attaching option for every two shares issued. The funds raised will be used to advance the Siviour Project and Carnding Gold Project. No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years. Likely developments and expected results of operations The Company will continue activities in the exploration, evaluation, development and acquisition of viable projects with the objective of establishing a significant production business. Environmental regulation and performance The directors have put in place strategies and procedures to ensure that the Group manages its compliance with environmental regulations. The directors are not aware of any breaches of any applicable environmental regulations. 7 Renascor Resources Limited annual report 2020 financial statements Information on directors David Christensen Managing Director Richard (Dick) Keevers Non-Executive Chairman Experience and expertise: Experience and expertise: David Christensen is an experienced mining executive, with recent successful experience managing exploration, mining and marketing operations. Prior to founding the Company, David served as Chief Executive Officer of Adelaide-based companies, Heathgate Resources Pty Ltd and Quasar Resource Pty Ltd. While at Heathgate and Quasar, his responsibilities included overseeing Australian operations, including the Beverley uranium mine, as well as the expansion into new projects with the discovery and development of the Four Mile deposit and numerous joint ventures. David’s experience also includes serving as President of Nuclear Fuels Corporation, a trading and marketing company, where he managed a multi-million dollar uranium portfolio and was responsible for developing sales strategy, executing trades and swaps and negotiating all contracts. David commenced his career as an attorney in California and London offices of international law firm Latham & Watkins, where he advised on corporate finance and mergers and acquisitions. David was educated at Cornell University (BA, Economics and Classical Civilizations), the University of California, Los Angeles (JD) and the Universitá di Bologna (Fulbright Fellow). Other current directorships: None Former directorships (last 3 years): None Interests in shares: 23,064,637 Interests in rights: 12,000,000 Dick Keevers’ experience includes advancing multiple producing mines from discovery phase through development, including the Telfer gold and copper mine, the Phosphate Hill phosphate mine and the Baal Gammon copper mine. Dick also was a substantial shareholder of and served as an executive director for Pembroke Josephson Wright Limited, an Australian share brokerage firm. Dick has served on boards of several ASX-listed resource and industrial companies, and he is currently a non-executive director of Santana Minerals Limited. Prior to joining the Renascor board, Dick served as chairman of unlisted Eyre Peninsula Minerals Proprietary Limited (EPM). Other current directorships: Santana Minerals Limited Former directorships (last 3 years): None Interests in shares: 47,265,810 Stephen Bizzell Non-Executive Director Experience and expertise: Stephen Bizzell is Chairman of boutique corporate advisory and funds management group Bizzell Capital Partners. He has over 25 years corporate finance and public company management experience in the resources sector in Australia and Canada. Stephen was previously an Executive Director of Arrow Energy from 1999 until its acquisition in 2010 by Royal Dutch Shell and PetroChina for $3.5 billion. Stephen was instrumental in Arrow’s corporate and commercial success and its growth from a junior explorer to a large integrated energy company. Stephen spent his early career in the corporate finance division of Ernst & Young and the tax division of Cooper & Lybrand and qualified as a Chartered Accountant. He is also a former director of Queensland Treasury Corporation. Other current directorships: Laneway Resources Limited, Armour Energy Limited, and Strike Energy Limited Former directorships (last 3 years): Stanmore Coal Limited (2009 to 2020), UIL Energy Limited (2014 to 2018) Interests in shares: 38,122,982 8 Directors’ Report 30 June 2020 Geoffrey McConachy Non-Executive Director Experience and expertise: Geoffrey McConachy is an accomplished geologist with over thirty years of Australian and international experience in the mining industry assessing a wide range of commodities. Prior to joining the Company, Geoffrey worked for Heathgate Resources Pty Ltd and Quasar Resources Pty Ltd, where his roles included Managing Director, Exploration. While at Heathgate and Quasar, Geoffrey led the exploration and development team in the discovery, definition and evaluation of four uranium deposits including the Four Mile deposit, for which he was co-honoured with the Prospector of the Year award from the Australian Association of Mining & Exploration Companies. His experience includes instrumental roles in the discovery of the Fosterville gold deposit in Victoria and the Potosi base metal deposit in New South Wales. Geoffrey is a fellow of the Australasian Institute of Mining and Metallurgy and a former Director of the Uranium Information Centre. Other current directorships: None Former directorships (last 3 years): None Interests in shares: 9,704,244 Other current directorships quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. Company secretary Pierre van der Merwe is an accountant of more than 30 years’ experience with extensive knowledge in the provision of corporate secretarial and accounting services to ASX listed companies. He also has experience as CFO and was a Partner from 2004 to 2016 in HLB Mann Judd, an Australasian and International accountancy and business advisory group. During this time, he headed the Corporate Team in Adelaide which provides corporate secretarial and accounting services to a host of ASX listed companies in various industries, specialising in exploration and mining entities. Pierre was company secretary of the following ASX listed companies, amongst others: • Bondi Mining Ltd (ASX ‘BOM’) which changed it’s name to World Titanium Resources Ltd • Papyrus Australia Ltd (ASX ‘PPY’) • Terramin Australia Ltd (ASX ‘TZN’) during its transition from exploration to mining at its Strathalbyn site He spent part of 2016 and 2017 assisting an unlisted public company, 1414 Degrees Ltd, as company secretary with its preparation for IPO on the ASX (Listed 10 September 2018 at market capitalisation of $46m – ASX ‘14D’). Meetings of directors The number of meetings of the Company’s Board of Directors (‘the Board’) held during the year ended 30 June 2020, and the number of meetings attended by each director were: Full Board Audit & Risk Committee Attended Held Attended Held Richard Keevers David Christensen Geoffrey McConachy Stephen Bizzell 5 5 5 5 5 5 5 5 2 2 2 2 2 2 2 2 Held: represents the number of meetings held during the time the director held office. 9 Renascor Resources Limited annual report 2020 financial statements Remuneration report (audited) The remuneration report details the key management personnel remuneration arrangements for the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations. The Board is responsible for managing: Their objective is to ensure that remuneration policies and structures are fair and competitive and aligned with the long-term interests of the Group. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors. The remuneration report is set out under the following main headings: • Principles used to determine the nature and amount of remuneration • Details of remuneration • Service agreements • Share-based compensation • Additional information • Additional disclosures relating to key management personnel Principles used to determine the nature and amount of remuneration The objective of the Group’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors (‘the Board’) ensures that executive reward satisfies the following key criteria for good reward governance practices: • competitiveness and reasonableness • acceptability to shareholders • performance linkage / alignment of executive compensation • transparency The Board carried out the functions of the Nomination and Remuneration Committee and is responsible for determining and reviewing remuneration arrangements for its directors and executives. The performance of the Group depends on the quality of its directors and executives. The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel. • non-executive director fees; • executive remuneration (directors and other executives); and • the over-arching executive remuneration framework and incentive plan policies. 10 Relationship between remuneration and Group performance: During the financial year, the Group has generated losses as its principal activity was developing the Siviour Graphite Project and exploration for graphite, copper, gold and other minerals within South Australia. As the Group is still in the development, exploration and evaluation stage, the link between remuneration, Group performance and shareholder wealth is sometimes tenuous. Share prices are subject to the influence of metals prices, market sentiment towards the sector and the global economy and as such increases or decreases may occur quite independent of executive performance or remuneration. In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is separate. Non-executive directors remuneration Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non- executive directors’ fees and payments are reviewed periodically by the Board. The chairman’s fees are determined independently to the fees of other non- executive directors based on comparative roles in the external market. The chairman is not present at any discussions relating to the determination of his own remuneration. Non-executive directors do not receive any performance-based pay. ASX listing rules require the aggregate non-executive directors’ remuneration be determined periodically by a general meeting. The most recent determination was at the Annual General Meeting held on 5 August 2010, where the shareholders approved a maximum annual aggregate remuneration of $350,000. Retirement allowances for non-executive directors In line with guidance from the ASX Corporate Governance Council on non-executive director’s remuneration, no retirement allowances are provided for non-executive directors. Superannuation contributions required under the Australian superannuation guarantee legislation continue to be made as required and are deducted from the directors’ overall fee entitlements. Directors’ Report 30 June 2020 Executive remuneration The objective of the Group’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders, and conforms to market practice for delivery of reward. The Board ensures that executive reward satisfies the following key criteria for good reward governance practices: • acceptability to shareholders; • performance linkage/alignment of executive compensation; • transparency; and • capital management. The Group has structured an executive remuneration framework that is market competitive and complementary to the reward strategy of the organisation. Alignment to shareholders’ interests: • has economic profit as a core component of plan design; • focuses on sustained growth in shareholder wealth; • delivering constant return on assets as well as focusing the executive on key non-financial drivers of value; and • attracts and retains high calibre executives. Alignment to program participants’ interests: • rewards capability and experience; • reflects competitive reward for contribution to growth in shareholder wealth; • provides a clear structure for earning rewards; • provides recognition for contribution; and • competitiveness and reasonableness. The framework provides a mix of fixed and long- term incentives. The Board carried out the functions of the Remuneration and Nominations Committees and is responsible for reviewing and negotiating compensation arrangements of senior executives. It assesses the appropriateness of the nature and amount of remuneration of such officers on a periodic basis by relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and executive team. The board manages remuneration and incentive policies and practices and remuneration packages and other terms of employment for executive directors, other senior executives and non-executive directors. The Board ensures that executive reward satisfies the following key criteria for good reward governance practices: • base pay and benefits, including superannuation; • short-term performance incentives through a cash bonus may be determined by the Board; and • long-term incentives through the issue of share options and performance rights. The combination of these comprises the executive’s total remuneration. Base pay and benefits Base pay and benefits are structured as a total employment cost package which may be delivered as a combination of cash and prescribed non-financial benefits, at the executive’s discretion and subject to board approval. Executives are offered a competitive base pay that comprises the fixed component of pay and rewards to ensure base pay is set to reflect the market for a comparable role. Base pay for executives is reviewed periodically to ensure the executive’s pay is competitive with the market. There is no guaranteed base pay increase included in any of the executives’ contracts. Consolidated entity performance and link to remuneration Remuneration for certain individuals is directly linked to the performance of the Group. A portion of any cash bonus and incentive payments are at the discretion of the Nomination and Remuneration Committee. Refer to the “additional information” section below for details of the earnings and total shareholders return for the last five years. The Nomination and Remuneration Committee is of the opinion that the results can be attributed in part to the adoption of performance based compensation and is satisfied that this improvement will continue to increase shareholder wealth if maintained over the coming years. Voting and comments made at the Company’s 20 November 2019 Annual General Meeting (‘AGM’) At the 20 November 2019 AGM, 99.2% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2019. The Company did not receive any specific feedback at the AGM regarding its remuneration practices. 11 Renascor Resources Limited annual report 2020 financial statements Remuneration report (audited) Details of remuneration Amounts of remuneration Details of the remuneration of key management personnel of the Group are set out in the following tables. Short-term benefits Post-employment benefits Long-term benefits Share-based payment Cash salary and fees $ 34,000 46,576 34,000 2020 Non-Executive Directors: Stephen Bizzell* Richard Keevers* Geoffrey McConachy* Executive Directors: Non- monetary Superannuation $ $ Long service Performance NEDSP & Rights director’s $ shares $ leave $ Total $ - - - - 4,945 - - - - - - - 4,000 38,000 5,479 57,000 4,000 38,000 David Christensen** 269,760 9,706 21,003 6,840 70,259 3,840 381,408 Other Key Management Personnel: Pierre van der Merwe*** 123,345 - - - - - 123,345 507,681 9,706 25,948 6,840 70,259 17,319 637,753 * ** From 1 April 2020 the Non- Executive directors agreed to a temporary 20% reduction in their directors fees to support the Company through the economic uncertainty caused by the COVID-19 pandemic. Short term benefits paid to Mr Christensen includes $24,000 in annual leave entitlements paid during the year. Mr Christensen also accrued $6,840 in unpaid long service leave entitlements during the year. *** From 1 April 2020 Mr van der Merwe agreed to a temporary 17% reduction in his Company Secretarial and CFO fees to support the Company through the economic uncertainty caused by the COVID-19 pandemic. The NEDSP plan approved by shareholders in the November 2014 AGM was reinstated. Commencing on 1 April 2020, 50% of the non-executive director fees have been paid, with 50% of the fees ($2,000 per month in the case of the Chairman and $1,333 per month in the case of other non-executive directors) withheld by the Company pursuant to the NEDSP. At 30 June 2020, NEDSP shares for the period 1 April 2020 to 30 June 2020 had not been issued. Commencing 1 May 2020, 10% of Mr Christensen’s fees ($2,080 per month) were withheld by the Company to be paid via the issue of share capital subject to shareholder approval. At 30 June 2020, the shares for the period 1 May 2020 to 30 June 2020 had not been issued. 12 Directors’ Report 30 June 2020 Short-term benefits Post-employment benefits Long-term benefits Share-based payment 2019 Non-Executive Directors: Chris Anderson Stephen Bizzell Richard Keevers Cash salary and fees $ 19,058 40,000 54,795 Geoffrey McConachy* 202,022 Executive Directors: Non- monetary Superannuation $ $ Long service Performance NEDSP & Rights director’s $ shares $ leave $ Total $ - - - - - - 5,205 - - - 11,190 47,841 - - - - - - - 19,058 40,000 60,000 - 261,053 David Christensen** 273,600 9,663 20,531 6,840 177,675 - 488,309 Other Key Management Personnel: Pierre van der Merwe 118,009 - - - - - 118,009 707,484 9,663 36,926 54,681 177,675 - 986,429 * ** Mr McConachy became a non-executive director on the 5th of January 2019. Short term benefits paid to Mr McConachy includes $42,310 in annual leave entitlements paid during the year. Short term benefits paid to Mr Christensen includes $24,000 in annual leave entitlements paid during the year. Mr Christensen also accrued $6,840 in unpaid long service leave entitlements during the year. The proportion of remuneration linked to performance and the fixed proportion are as follows: Name Non-Executive Directors: Chris Anderson Stephen Bizzell Richard Keevers Geoffrey McConachy Executive Directors: David Christensen* Fixed remuneration At risk - STI At risk - LTI 2020 2019 2020 2019 2020 2019 - 100% 100% 100% 100% 100% 100% 100% 81% 63% - - - - - - - - - - - - - - - - - - 19% 37% * During the year ended 30 June 2019 shareholders granted approval for the issue of performance rights to Mr David Christensen. Further information pertaining to the Performance Rights can be found in Note 30. “Share Based Payments”. The total value of performance-related bonuses paid to key management personnel and executives during the year was $70,259 (2019: $177,675). Key management personnel and executives were not paid cash bonuses during the years ended 30 June 2020 and 2019. 13 Renascor Resources Limited annual report 2020 financial statements Remuneration report (audited) Service agreements Share-based compensation Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows: David Christensen, Managing Director Term of agreement: Indefinite term, subject to six- month’s notice or a termination payment of six months. Details: Per annum rate of $249,600, exclusive of superannuation. In addition, David is also entitled to private health insurance. Pierre van der Merwe, Chief Financial Officer and Company Secretary Term of agreement: The agreement may be terminated by either party on one months’ notice. Details: Services are provided at a rate of $10,000 per month plus GST plus expenses. However, at 1 April 2020 it was agreed that during the COVID-19 pandemic the fee for services provided would be temporarily reduced to $8,333 per month for an indefinite period of time. Key management personnel have no entitlement to termination payments in the event of removal for misconduct. Issue of shares During the period 1 April to 30 June 2020, 50% of non- executive director fees totaling $13,479 were withheld by the Company pursuant to the Non-Executive Director Share Plan (“NEDSP”) (2019: Nil). As at 30 June 2020 the shares pertaining to the the period 1 April 2020 to 30 June 2020 had not been issued. During the period 1 April to 30 June 2020 executive director fees totaling $3,840 were withheld by the Company to be issued as shares at a later date when shareholder approval is obtained (2019: Nil). As at 30 June 2020 the shares pertaining to the the period 1 April 2020 to 30 June 2020 had not been issued. Options There were no options over ordinary shares issued to directors and other key management personnel as part of compensation that were outstanding as at 30 June 2020. 14 Directors’ Report 30 June 2020 Performance rights The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: Grant date Expiry date Share price hurdle for vesting Fair value per right at grant date Tranche A 3 September 2018 Vested during the year Tranche B 3 September 2018 3 September 2022 Tranche C 3 September 2018 3 September 2022 $0.00 $0.00 $0.06 $0.020 $0.020 $0.008 Performance rights granted carry no dividend or voting rights. Details of performance rights over ordinary shares granted, vested and lapsed for directors and other key management personnel as part of compensation during the year ended 30 June 2020 are set out below: Name Grant date Number of rights granted Number of rights vested $ Value of rights granted $ Value of rights expensed in the period $ Number of rights lapsed Value of rights lapsed David Christensen 3 September 2018 - 6,000,000 - 70,259 - - Further information regarding the Performance Rights can be found in Note 30 “Share Based Payments”. Additional information Refer to the sections below for details of the earnings and total shareholders return for the last five years: The earnings of the Group for the five years to 30 June 2020 are summarised below: 2020 $ 2019 $ 2018 $ 2017 $ 2016 $ (Loss) for the year attributable to owners ($) (1,072,575) (1,321,558) (3,434,543) (1,085,492) (890,079) Increase/(decrease) in share price (%) (52%) 5% 25% (25%) - The factors that are considered to affect total shareholders return (‘TSR’) are summarised below: Share price at financial year end (cents) Basic earnings per share (cents per share) 2020 1.0 (0.1) 2019 2018 2017 2.1 (0.1) 2.0 (0.5) 1.6 (0.2) 2016 2.0 (0.4) 15 Renascor Resources Limited annual report 2020 financial statements Remuneration report (audited) Additional disclosures relating to key management personnel Shareholding The number of shares in the Company held during the financial year by each director and other members of key management personnel of the Group, including their personally related parties, is set out below: Ordinary shares Stephen Bizzell David Christensen Richard Keevers Geoffrey McConachy Option holding Balance at the start of the year Performance rights vested & exercised Additions Other Balance at the end of the year 28,122,982 - 10,000,000 16,064,637 6,000,000 1,000,000 46,265,810 9,249,699 - - 1,000,000 454,545 - - - - 38,122,982 23,064,637 47,265,810 9,704,244 99,703,128 6,000,000 12,454,545 - 118,157,673 The number of options over ordinary shares in the Company held during the financial year by each director and other members of key management personnel of the Group, including their personally related parties, is set out below: Options over ordinary shares Stephen Bizzell David Christensen Richard Keevers Geoffrey McConachy Balance at the start of the year 6,250,000 150,000 7,834,399 235,294 14,469,693 Acquired Exercised Lapsed Balance at the end of the year - - - - - - - - - - (6,250,000) (150,000) (7,834,399) (235,294) (14,469,693) - - - - - Performance rights holding The number of performance rights over ordinary shares in the Company held during the financial year by each director and other members of key management personnel of the Group, including their personally related parties, is set out below: Performance rights over ordinary shares David Christensen Balance at the start of the year Granted Vested & exercised Expired/ forfeited/ other Balance at the end of the year 18,000,000 18,000,000 - - (6,000,000) (6,000,000) - - 12,000,000 12,000,000 16 Directors’ Report 30 June 2020 Other transactions with key management personnel and their related parties Mr G W McConachy and Mr C Anderson are directors of Euro Exploration Services Pty Ltd (Euro). Euro has provided the company with exploration services, geochemical sampling services as well as the provision of geological personnel services during the year. The services provided are based on normal commercial terms and conditions. During the financial year the Company incurred costs of $24,376 (2019: $203,768) from Euro. An amount of $2,677 (2019: $7,384) was owing to Euro at 30 June 2020. Mr G W McConachy provided the company with exploration consulting services during the year. The services provided are based on normal commercial terms and conditions. During the financial year the Company incurred costs of $4,287 (2019: $Nil) from GW McConachy & Co Pty Ltd. No amount was owing to GW McConachy & Co Pty Ltd at 30 June 2020 (2019: $Nil). Mr C Anderson (resigned as a director 12 October 2018) is a director of Pondray Pty Ltd trading as CG Anderson & Associates (CGAA). CGAA has provided geophysical services to the company. During the financial year the Company incurred no expenses (2019: $7,700) from CGAA. No amount was owing to CGAA at 30 June 2020 (2019: $Nil). Mr S Bizzell is a director of Bizzell Capital Partners Pty Ltd (BCP). BCP has provided corporate advisory and underwriting services to the company in relation to its capital raising. The services provided are based on normal commercial terms and conditions. During the financial year the Company did not incur any non- director’s fees costs from BCP (2019: $Nil). An amount of $5,867 of director’s fees was owing to BCP at 30 June 2020 (2019: $3,667). Mr D Christensen had incurred expenses throughout year on behalf of the company. At 30 June 2020 a reimbursement to Mr Christensen of $5,509 was outstanding (2019: $Nil). This concludes the remuneration report, which has been audited. Shares under option There were no unissued ordinary shares of Renascor Resources Limited under option outstanding at the date of this report. Shares under performance rights Unissued ordinary shares of Renascor Resources Limited under performance rights at the date of this report are as follows: Grant date Expiry date Exercise price Number under rights 03/09/2018 03/09/2022 $0.00 12,000,000 No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate in any share issue of the Company or of any other body corporate. Shares issued on the exercise of options There were no ordinary shares of Renascor Resources Limited issued on the exercise of options during the year ended 30 June 2020 and up to the date of this report. Shares issued on the exercise of performance rights The following ordinary shares of Renascor Resources Limited were issued during the year ended 30 June 2020 and up to the date of this report on the exercise of performance rights granted: Date performance rights granted Exercise Number of price shares issued 08/11/2019 $0.00 6,000,000 Indemnity and insurance of officers The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. 17 Renascor Resources Limited annual report 2020 financial statements Directors’ Report 30 June 2020 Indemnity and insurance of auditor The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor. During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity. Officers of the Company who are former partners of BDO Audit (SA) Pty Ltd There are no officers of the Company who are former partners of BDO Audit (SA) Pty Ltd. Auditor’s independence declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors’ report. Proceedings on behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. Auditor BDO Audit (SA) Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001. This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the directors David Christensen, Director 29 September 2020 Non-audit services Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 21 to the financial statements. The directors are satisfied that the provision of non- audit services during the financial year, by the auditor (or by another person or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are of the opinion that the services as disclosed in note 21 to the financial statements do not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons: • all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and • none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards. 18 Auditor’s independence declaration Tel: +61 8 7324 6000 Fax: +61 8 7324 6111 www.bdo.com.au Level 7, BDO Centre 420 King William Street Adelaide SA 5000 GPO Box 2018, Adelaide SA 5001 AUSTRALIA DECLARATION OF INDEPENDENCE BY ANDREW TICKLE TO THE DIRECTORS OF RENASCOR RESOURCES LIMITED As lead auditor of Renascor Resources for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Renascor Resources Limited and the entities it controlled during the period. Andrew Tickle Director BDO Audit (SA) Pty Ltd Adelaide, 29 September 2020 BDO Audit (SA) Pty Ltd ABN 33 161 379 086 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (SA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 19 Renascor Resources Limited annual report 2020 financial statements Financial statements Statement of profit or loss and other comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements Directors’ declaration Independent auditor’s report to the members of Renascor Resources Limited Shareholder information 22 23 24 25 26 57 58 63 20 Statement of financial position for the year ended 30 June 2020 General information The financial statements cover Renascor Resources Limited as a Group consisting of Renascor Resources Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Renascor Resources Limited’s functional and presentation currency. Renascor Resources Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: 36 North Terrace Kent Town SA 5067 Phone: + 61 8 8363 6989 Email: info@renascor.com.au Website: www.renascor.com.au A description of the nature of the Group’s operations and its principal activities are included in the directors’ report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 29 September 2020. The directors have the power to amend and reissue the financial statements. 21 Renascor Resources Limited annual report 2020 financial statements Statement of profit or loss and other comprehensive income Revenue Interest revenue Boosting cashflow payment Total revenue Expenses Administration and consulting Depreciation and amortisation expense Employee benefits expense Office accommodation Impairment of exploration expenditure Legal fees Other expenses Total expenses Loss before income tax expense Income tax expense Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Basic earnings per share Diluted earnings per share Consolidated 2020 $ 2019 $ Note 19,598 94,818 100,000 - 119,598 94,818 4 5 (362,327) (287,837) (2,065) (2,236) (364,391) (435,483) (30,388) (30,596) (274,109) (387,751) (6,384) (26,996) 6 (152,509) (245,477) (1,192,173) (1,416,376) (1,072,575) (1,321,558) - - (1,072,575) (1,321,558) - - (1,072,575) (1,321,558) Cents Cents (0.1) (0.1) (0.1) (0.1) 7 17 29 29 22 Statement of financial position for the year ended 30 June 2020 Statement of financial position Assets Current assets Cash and cash equivalents Other receivables Prepayments Total current assets Non-current assets Other receivables Property, plant and equipment Exploration and evaluation Development asset Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Provisions Total current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity The above statement of financial position should be read in conjunction with the accompanying notes Note 8 9 9 10 11 12 Consolidated 2020 $ 2019 $ 1,855,784 2,877,843 206,675 32,598 13,566 28,655 2,076,025 2,939,096 30,000 20,000 3,679 4,662 2,850,654 15,034,092 13,534,752 - 16,419,085 15,058,754 18,495,110 17,997,850 13 14 231,476 516,450 100,677 112,595 332,153 629,045 332,153 629,045 18,162,957 17,368,805 15 16 17 34,114,480 32,210,012 (1,277,856) 407,903 (14,673,667) (15,249,110) 18,162,957 17,368,805 23 Renascor Resources Limited annual report 2020 financial statements Statement of changes in equity Contributed equity Share-based Business Payments Combination Reserve Reserve Accumulated losses Total equity Consolidated $ $ $ $ $ Balance at 1 July 2018 28,752,262 1,648,018 (1,417,790) (13,927,552) 15,054,938 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year - - - Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 15) 3,457,750 - - - - Share-based payments (note 30) - 177,675 - - - - - (1,321,558) (1,321,558) - - (1,321,558) (1,321,558) - - 3,457,750 177,675 Balance at 30 June 2019 32,210,012 1,825,693 (1,417,790) (15,249,110) 17,368,805 Consolidated $ $ $ $ $ Balance at 1 July 2019 32,210,012 1,825,693 (1,417,790) (15,249,110) 17,368,805 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Lapse of options (note 30) - - - - - - - (1,579,734) Performance rights vested (note 30) 108,000 (108,000) Transfer of historical performance rights - (68,284) Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 15) 1,796,468 - Share-based payments (note 30) - 70,259 - - - - - - - - (1,072,575) (1,072,575) - - (1,072,575) (1,072,575) 1,579,734 - 68,284 - - - - - 1,796,468 70,259 Balance at 30 June 2020 34,114,480 139,934 (1,417,790) (14,673,667) 18,162,957 The above statement of changes in equity should be read in conjunction with the accompanying notes 24 Statement of financial position for the year ended 30 June 2020 Statement of cash flows Cash flows from operating activities Payments to suppliers and employees (inclusive of GST) (1,248,298) (1,452,201) Consolidated 2020 $ 2019 $ Note Receipts from Goods & Services Tax paid Interest received Research & Development tax concession Other revenue Net cash used in operating activities Cash flows from investing activities Payments for property, plant and equipment Payments for exploration and evaluation Payments for development assets Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Share issue transaction costs Net cash from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year 197,313 498,735 19,598 94,818 - 212,358 8,724 - 28 (1,022,663) (646,290) (1,925) (2,145) (437,427) (4,662,552) (1,356,512) - (1,795,864) (4,664,697) 15 1,883,000 (86,532) 1,796,468 - - - (1,022,059) (5,310,987) 2,877,843 8,188,830 Cash and cash equivalents at the end of the financial year 8 1,855,784 2,877,843 The above statement of cash flows should be read in conjunction with the accompanying notes 25 Renascor Resources Limited annual report 2020 financial statements Notes to the financial statements 30 June 2020 1. Significant accounting policies Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IASB’). Historical cost convention The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of available-for- sale financial assets, financial assets and liabilities at fair value through profit or loss, and equipment and derivative financial instruments. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2. The principal accounting policies adopted in the preparation of the financial statements are set out either in the respective notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. The following Accounting Standards and Interpretations are most relevant to the Group: AASB 16 Leases The Group has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 ‘Leases’ and for lessees eliminates the classifications of operating leases and finance leases. The company has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low- value assets. Lease payments on these assets are expensed to profit or loss as incurred. The application of this new standard has had no material impact on the disclosures or amounts recognised in the consolidated financial statements. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2020. The Group has not yet assessed the impact of these new or amended Accounting Standards and Interpretations. 26 Notes to the financial statements for the year ended 30 June 2020 1. Significant accounting policies continued Going concern The Directors believe it is appropriate to prepare the consolidated financial report on a going concern basis, which contemplates realisation of assets and settlement of liabilities in the normal course of business. As disclosed in the financial report, the group has incurred a loss after tax for the year of $1,072,575 (2019: $1,321,558) and net operating cash outflow of $1,022,663 (2019: $646,290). At 30 June 2020, the Group had net current assets of $1,743,872 (30 June 2019: $2,310,051). The consolidated entity’s ability to continue as a going concern is contingent on raising additional capital and/or the successful exploration and subsequent exploitation of its areas of interest through sale or development. The matters set out above indicate the existence of a material uncertainty that may cast significant doubt about the entity’s ability to continue as a going concern and therefore the entity may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include any adjustments that may be necessary if the consolidated entity is unable to continue as a going concern. Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary information about the parent entity is disclosed in note 25. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Renascor Resources Limited (‘Company’ or ‘parent entity’) as at 30 June 2020 and the results of all subsidiaries for the year then ended. Renascor Resources Limited and its subsidiaries together are referred to in these financial statements as the ‘Group’. Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. 27 Renascor Resources Limited annual report 2020 financial statements 1. Significant accounting policies continued Revenue recognition Income tax The Group recognises revenue as follows: Revenue from contracts with customers Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the ‘expected value’ or ‘most likely amount’ method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability. Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: • When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or • When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. 28 Notes to the financial statements for the year ended 30 June 2020 1. Significant accounting policies continued Renascor Resources Limited (the ‘head entity’) and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the ‘separate taxpayer within group’ approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group. In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity. R & D Tax Incentives R&D tax incentives are considered more akin to government grants because they are not conditional upon earning taxable income and the group accounts for any R&D Tax incentives received as government grants under AASB 120 Accounting for Government Grants and Disclosure of Government Assistance. Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group’s normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in the Group’s normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. Impairment of non-financial assets Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash- generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit. Goods and Services Tax (‘GST’) and other similar taxes Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. 29 Renascor Resources Limited annual report 2020 financial statements 1. Significant accounting policies continued Provisions Share-based payment transactions Provisions for legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. The Group has obligations to restore and rehabilitate certain areas where drilling has occurred on exploration tenements. These obligations are currently being met as the drilling is completed and as such no provision has been recognised. 2. Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. 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 either the Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share- based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Details of share based payment transactions are presented in Note 30. Exploration and evaluation costs Exploration and evaluation costs have been capitalised on the basis that the Group will commence commercial production in the future, from which time the costs will be amortised in proportion to the depletion of the mineral resources. Key judgements are applied in considering costs to be capitalised which includes determining expenditures directly related to these activities and allocating overheads between those that are expensed and capitalised. In addition, costs are only capitalised that are expected to be recovered either through successful development or sale of the relevant mining interest. Factors that could impact the future commercial production at the mine include the level of reserves and resources, future technology changes, which could impact the cost of mining, future legal changes and changes in commodity prices. To the extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the period in which this determination is made. Details of capitalised exploration and evaluation costs are presented in Note 11. Development assets Critical estimates and judgments are disclosed in Note 12. 30 Notes to the financial statements for the year ended 30 June 2020 3. Operating segments The Group has identified its operating segments based on the internal reports that reviewed and used by the Managing Director (Chief Operating Decision Maker ‘CODM’) and the board of directors in assessing performance determining the allocation of resources. The Group is managed primarily on a geographic basis, that is, the location of the respective areas of interest (tenements) in Australia. Operating segments are determined on the basis of financial information reported to the board which is at the consolidated level. The Group does not have any products or services it derives revenue from. Accordingly, management currently identifies the Group as having only one reportable segment, being the development of the Siviour Graphite Project and the exploration for graphite, copper, gold, uranium and other minerals in Australia. There have been no changes in the operating segments during the year. Accordingly, all significant operating decisions are based upon analysis of the Group as one segment. The financial results from this segment are equivalent to the financial statements of the Group as a whole. Accounting policy for operating segments Operating segments are presented using the ‘management approach’, where the information presented is on the same basis as the internal reports provided to the CODM. The CODM is responsible for the allocation of resources to operating segments and assessing their performance. 4. Employee benefits expense Employee benefits expense Employee share-based payment expense Defined contribution superannuation expense Consolidated 2020 $ 2019 $ 260,966 216,007 70,259 177,675 33,166 41,801 364,391 435,483 Employee share-based payment expense comprises of Performance Rights granted to Mr David Christensen. Further information pertaining to the Performance Rights can be found in Note 30 “Share Based Payments”. Not included in the totals above is the employee benefits expenditure that has been capitalised as part of Exploration and evaluation assets (note 11) and Development assets (note 12). The total amount of employee benefits expenditure capitalised in the year ended 30 June 2020 is $229,460 (2019: $352,266). The total amount remunerated to employees during the year is $593,851 (2019: $787,749). 31 Renascor Resources Limited annual report 2020 financial statements 5. Office accommodation Operating lease expense Short term lease expense 6. Other expenses Business development & marketing Investor and public relations Travel Other expenses 7. Income tax expense Numerical reconciliation of income tax expense and tax at the statutory rate Loss before income tax expense Tax at the statutory tax rate of 27.5% Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Share-based payments Boosting Cashflow Payment Current year temporary differences not recognised Income tax expense Consolidated 2020 $ 2019 $ - 30,596 30,388 - 30,388 30,596 Consolidated 2020 $ 2019 $ 17,942 108,853 36,766 66,998 17,794 48,392 80,007 21,234 152,509 245,477 Consolidated 2020 $ 2019 $ (1,072,575) (1,321,558) (294,958) (363,428) 19,321 61,236 (27,500) - (303,137) (302,192) 303,137 302,192 - - The Group has tax losses arising in Australia of $22,840,659 (2019: $19,996,118) that may be available and may be offset against future taxable profits. In addition, these tax losses can only be utilised in the future if the continuity of ownership test is passed, or if failing that, the same business test is passed. The Group had nil franking credits in its franking account at 30 June 2020 (2019: Nil). No deferred tax liability has been recognised for expenditure pertaining to exploration and evaluation. The amount of $4,547,640 is fully offset by the company’s deferred tax assets (2019: $3,195,869). No deferred tax asset has been recognised because it is not likely future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised. 32 Notes to the financial statements for the year ended 30 June 2020 8. Cash and cash equivalents Current assets Cash on hand Cash at bank Consolidated 2020 $ 2019 $ 100 100 1,855,684 2,877,743 1,855,784 2,877,843 Cash at bank accounts are interest bearing attracting normal market interest rates. As funds are held with AA/AA1 to A/A1 credit rated financial institutions (as per S&P/Moody’s ratings) there is minimal counterparty credit risk of funds held. Accounting policy for cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short- term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. The carrying amount for cash and cash equivalents equals the fair value. 9. Other receivables Current assets GST refundable Sundry receivables Research and development tax concession Non-current assets Other receivables Consolidated 2020 $ 2019 $ 5,207 23,874 50,000 8,724 151,468 - 206,675 32,598 30,000 20,000 236,675 52,598 33 Renascor Resources Limited annual report 2020 financial statements 9. Other receivables continued Allowance for expected credit losses The Group has recognised a loss of $Nil (2019: $Nil) in profit or loss in respect of the expected credit losses for the year ended 2020. The ageing of the receivables and allowance for expected credit losses provided for above are as follows: Expected credit loss rate Carrying amount Allowance for expected credit losses Consolidated Not overdue 2020 % - 2019 % 2020 $ 2019 $ - 206,675 32,598 2020 $ - 2019 $ - Accounting policy for trade and other receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. 10. Property, plant and equipment Non-current assets Computer equipment Less: Accumulated depreciation Office equipment Less: Accumulated depreciation Consolidated 2020 $ 2019 $ 24,385 41,570 (20,921) (37,248) 3,464 3,407 4,322 4,444 (3,192) (4,104) 215 3,679 340 4,662 34 Notes to the financial statements for the year ended 30 June 2020 10. Property, plant and equipment continued Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Consolidated Balance at 1 July 2018 Additions Depreciation expense Balance at 30 June 2019 Additions Write off of assets Depreciation expense Balance at 30 June 2020 Computer equipment $ Office equipment $ 4,287 2,146 (2,111) 4,322 1,923 (841) (1,940) 3,464 464 - (124) 340 - - (125) 215 Total $ 4,751 2,146 (2,235) 4,662 1,923 (841) (2,065) 3,679 Accounting policy for property, plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. The cost of an item of plant and equipment also includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred. Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows: Plant and equipment 3-10 years The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. 35 Renascor Resources Limited annual report 2020 financial statements 11. Exploration and evaluation Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Consolidated Balance at 1 July 2018 Expenditure during the year Other tenements $ Siviour Project $ Total $ 3,216,535 237,660 4,153,389 7,369,924 4,424,893 4,662,553 Acquisition of Ausmin Development Pty Ltd - 3,412,750 3,412,750 Impairment of assets (387,751) - (387,751) R & D tax refund offset against capitalised exploration and evaluation # Balance at 30 June 2019 Expenditure during the year - (23,384) (23,384) 3,066,444 11,967,648 15,034,092 58,319 1,074,089 1,132,408 Payment for option to purchase land - 225,000 225,000 Impairment of assets (274,109) - (274,109) Reclassification to development asset in November 2019 - (13,266,737) (13,266,737) Balance at 30 June 2020 2,850,654 - 2,850,654 Accounting policy for exploration and evaluation assets Exploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure are current is carried forward as an asset in the statement of financial position where it is expected that the expenditure will be recovered through the successful development and exploitation of an area of interest, or by its sale, or exploration activities are continuing in an area and activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of economically recoverable reserves. Where a project or an area of interest has been abandoned, the expenditure incurred thereon is written off in the year in which the decision is made. Exploration and evaluation expenditure comprises of net direct costs and includes an appropriate portion of related salaries & wages expenditure associated with each area of interest. During the financial year the Group has allocated $229,460 of internal personnel costs (2019: $352,266) which form part of the exploration expenditure for the year. # Note: Refundable tax incentives (Research and development tax concession) are accounted for as government grants under AASB 120 Accounting for Government Grants and Disclosure of Government Assistance and offset against capitalised exploration and evaluation expenditure. 36 Notes to the financial statements for the year ended 30 June 2020 12. Development asset Non-current assets Siviour project - at cost Reconciliations Consolidated 2020 $ 2019 $ 13,534,752 - Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Consolidated Balance at 1 July 2018 Balance at 30 June 2019 Reclassification from exploration and evaluation asset in November 2019 (see note 11) Expenditure after reclassification Research and Development Tax Incentive # Balance at 30 June 2020 Siviour Project $ - - Total $ - - 13,266,737 13,266,737 419,483 419,483 (151,468) (151,468) 13,534,752 13,534,752 In November 2019 the Company received the results from the Definitive Feasibility Study (DFS) for its Siviour Graphite Project. The DFS confirms Siviour’s potential as a low cost, long life graphite project. The asset has been reclassified as a development asset to appropriately reflect the likelihood of future development. # Note: Refundable tax incentives (Research and development tax concession) are accounted for as government grants under AASB 120 Accounting for Government Grants and Disclosure of Government Assistance and offset against capitalised development asset. 37 Renascor Resources Limited annual report 2020 financial statements 12. Development asset continued Assessing impairment on reclassification The development asset had been assessed for impairment on reclassification from exploration and evaluation expenditure. In determining the recoverable amount of the asset, estimates were made regarding the present value of future cashflows. These estimates require significant management judgments and assumptions and are subject to risk and uncertainty that may be beyond the control of the Group. The recoverable amount estimate is most sensitive to assumptions regarding the long-term forecasts of production capacity, graphite prices and discount rates. The Company has considered market conditions and changes to these estimates and is satisfied that there is no impairment to the carrying value of the development asset. The main estimates and assumptions used are as follows: • Production: the model is based on staged development with average production of 80ktpa during the first 4 years, before expansion to 144ktpa in years 5 to 10. • Graphite prices: prices are based on the latest internal forecasts taking into account expected demand and supply, benchmarked with external sources of information. • Discount rate: a discount rate 10% has been used for financial modelling. Accounting policy for development asset Expenditure is transferred from ‘Exploration and evaluation assets’ to ‘Development asset’ once the work completed to date supports the future development of the property and such development receives appropriate approvals. After transfer of the exploration and evaluation assets, all subsequent expenditure on the construction, installation or completion of infrastructure facilities is capitalised in ‘development asset’. Development expenditure is net of proceeds from the sale of ore extracted during the development phase to the extent that it is considered integral to the development of the asset. Any costs incurred in the testing of assets to determine if they are functioning as intended, are capitalised, net of any proceeds received from selling any product produced while testing. Where these proceeds exceed the cost of testing, any excess is recognised in the statement of profit or loss and other comprehensive income. After production starts, all assets included in “Development asset’ are then transferred to ‘Producing mine’. 38 Notes to the financial statements for the year ended 30 June 2020 13. Trade and other payables Current liabilities Trade and other payables Sundry creditor and accrued expenses Consolidated 2020 $ 2019 $ 170,265 462,331 61,211 54,119 231,476 516,450 Accounting policy for trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. 14. Provisions Current liabilities Annual leave Long service leave Consolidated 2020 $ 2019 $ 25,262 45,376 75,415 67,219 100,677 112,595 Accounting policy for employee benefits Short-term employee benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. Amounts not expected to be settled within the next 12 months The current provision for employee benefits includes all unconditional entitlements where employees have completed the required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. The entire amount is presented as current, since the Group does not have an unconditional right to defer settlement. However, based on past experience, the Group does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. 39 Renascor Resources Limited annual report 2020 financial statements 15. Issued capital Consolidated 2020 Shares 2019 Shares 2020 $ 2019 $ Ordinary shares - fully paid 1,330,606,165 1,153,424,340 34,114,480 32,210,012 Movements in ordinary share capital Details Balance Date Shares Issue price $ 1 July 2018 961,327,113 28,752,262 Issue of Ordinary Shares as consideration for marketing services provided Issue of Ordinary Shares as consideration for the acquisition of Ausmin Development Pty Ltd 22 November 2018 2,500,000 $0.02 45,000 22 November 2018 189,597,227 $0.02 3,412,750 Balance 30 June 2019 1,153,424,340 32,210,012 Shares issued on vesting of performance rights 8 November 2019 6,000,000 $0.02 108,000 Conditional placement to professional & sophisticated investors Conditional placement to professional & sophisticated investors Issue of Ordinary Shares pursuant to Share Purchase Plan Issue of Ordinary Shares pursuant to Share Purchase Plan Less: Transaction costs arising on share issues, net of tax 12 December 2019 110,454,528 $0.01 1,215,000 19 December 2019 2,818,200 $0.01 31,000 13 January 2020 45,454,552 $0.01 500,000 6 May 2020 12,454,545 $0.01 137,000 - $0.00 (86,532) Balance 30 June 2020 1,330,606,165 34,114,480 Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Share buy-back There is no current on-market share buy-back. 40 Notes to the financial statements for the year ended 30 June 2020 15. Issued capital continued Capital risk management The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current Company’s share price at the time of the investment. The Group is not actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies. The Group is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year. The capital risk management policy remains unchanged from the 30 June 2019 Annual Report. Accounting policy for issued capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. 16. Reserves Options reserve Performance rights reserve Business combination reserve Consolidated 2020 $ 2019 $ - 1,579,734 139,934 245,959 (1,417,790) (1,417,790) (1,277,856) 407,903 Share-based payments reserve The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services. Business combination The reserve is used to recognise the difference between the value of consideration paid to acquire the non- controlling interests and value of the non-controlling interest. 41 Renascor Resources Limited annual report 2020 financial statements 16. Reserves continued Movements in reserves Movements in each class of reserve during the current and previous financial year are set out below: Consolidated Options reserve Performance rights reserve $ Business combination reserve $ Total $ Balance at 1 July 2018 1,579,734 68,284 (1,417,790) 230,228 Performance rights expensed over vesting period Balance at 30 June 2019 Performance rights expensed over vesting period Performance rights vested Performance rights lapsed - 1,579,734 - - - 177,675 245,959 70,259 (108,000) (68,284) Options lapsed (1,579,734) - - 177,675 (1,417,790) 407,903 - - - - 70,259 (108,000) (68,284) (1,579,734) Balance at 30 June 2020 - 139,934 (1,417,790) (1,277,856) 17. Accumulated losses Accumulated losses at the beginning of the financial year Loss after income tax expense for the year Transfer from options reserve Transfer from performance rights reserve Consolidated 2020 $ 2019 $ (15,249,110) (13,927,552) (1,072,575) (1,321,558) 1,579,734 68,284 - - Accumulated losses at the end of the financial year (14,673,667) (15,249,110) 18. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. 42 Notes to the financial statements for the year ended 30 June 2020 19. Financial instruments Financial risk management objectives The Group’s activities expose it to a variety of financial risks: market risk (including price risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The board is responsible for managing the Group’s finance facilities. The Group does not currently undertake hedging of any kind and is not directly exposed to currency risk. The Group holds the following financial instruments: Financial assets at amortised cost Cash and cash equivalents Other receivables Total financial assets Financial liabilities at amortised cost Trade and other payables Sundry creditors & accrued expenses Total financial liabilities at amortised cost Market risk Price risk The Group is not exposed to any significant price risk. Consolidated 2020 $ 2019 $ 1,855,784 2,877,843 236,675 52,598 2,092,459 2,930,441 170,265 462,331 61,211 54,119 231,476 516,450 Interest rate risk As at 30 June 2020 and 30 June 2019, the Group had no borrowings. As such the group is not exposed to any significant interest rate risk. At the reporting date, the Company is exposed to changes in market interest rates through its bank deposits, which are subject to variable interest rates. The following table illustrates the sensitivity of the net result for the year and equity to a reasonably possible change in interest rates of +0.5% and -0.5% (2019: +0.5%/-0.5%), with effect from the beginning of the year. These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on the cash and cash equivalents held at the beginning of each reporting period. All other variables are held constant. 43 Renascor Resources Limited annual report 2020 financial statements 19. Financial instruments continued Basis points increase Basis points decrease Basis points Effect on profit before tax change Effect on equity Basis points Effect on profit before tax change Effect on equity 50 14,389 14,389 (50) (14,389) (14,389) 50 40,944 40,944 (50) (40,944) (40,944) Consolidated 2020 Cash and cash equivalents Consolidated 2019 Cash and cash equivalents Credit risk Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted. The majority of cash and cash equivalents is held with a single financial institution. Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group does not hold any collateral to mitigate this risk. The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all customers of the Group based on recent sales experience, historical collection rates and forward-looking information that is available. Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year. The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates: Cash and cash equivalents Minimum rating of A Liquidity risk Consolidated 2020 $ 2019 $ 1,855,784 2,877,843 Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and close out market positions. At the end of each reporting period the Group held deposits at call of $1,855,784 (2019: $2,877,843) that are expected to readily generate cash inflows for managing liquidity risk. The Group has sufficient funds to finance its operations and exploration activities and to allow for reasonable contingencies. 44 Notes to the financial statements for the year ended 30 June 2020 19. Financial instruments continued Remaining contractual maturities The following tables detail the Group’s remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Remaining Between 2 contractual and 5 years Over 5 years maturities $ $ $ Consolidated 2020 Non-derivatives Non-interest bearing Trade payables Other payables Total non-derivatives - - 170,265 61,211 231,476 Consolidated 2019 % $ Non-derivatives Non-interest bearing Trade payables Other payables Total non-derivatives - - 462,331 54,119 516,450 - - - $ - - - - - - $ - - - - - - $ - - - 170,265 61,211 231,476 $ 462,331 54,119 516,450 The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. Fair value of financial instruments Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. 45 Renascor Resources Limited annual report 2020 financial statements 20. Key management personnel disclosures Compensation The aggregate compensation made to directors and other members of key management personnel of the Group is set out below: Short-term employee benefits Post-employment benefits Long-term benefits Performance rights NEDSP & director’s shares Consolidated 2020 $ 2019 $ 517,387 717,147 25,948 36,926 6,840 54,681 70,259 177,675 17,319 - 637,753 986,429 Details of the remuneration of each director of the Company and each of the other key management personnel of the Group, including their personally related entities, are set out in the remuneration report. Other transactions with key management personnel Mr G W McConachy and Mr C Anderson are directors of Euro Exploration Services Pty Ltd (Euro). Euro has provided the company with exploration services, geochemical sampling services as well as the provision of geological personnel services during the year. The services provided are based on normal commercial terms and conditions. During the financial year the Company incurred costs of $24,376 (2019: $203,768) from Euro. An amount of $2,677 (2019: $7,384) was owing to Euro at 30 June 2020. Mr G W McConachy provided the company with exploration consulting services during the year. The services provided are based on normal commercial terms and conditions. During the financial year the Company incurred costs of $4,287 (2019: $Nil) from GW MCConachy & Co Pty Ltd. No amount was owing to GW MCConachy & Co Pty Ltd at 30 June 2020 (2019: $Nil). Mr C Anderson (resigned as a director 12 October 2018) is a director of Pondray Pty Ltd trading as CG Anderson & Associates (CGAA). CGAA has provided geophysical services to the company. During the financial year the Company incurred no expenses (2019: $7,700) from CGAA. No amount was owing to CGAA at 30 June 2020 (2019: $Nil). Mr S Bizzell is a director of Bizzell Capital Partners Pty Ltd (BCP). BCP has provided corporate advisory and underwriting services to the company in relation to its capital raising. The services provided are based on normal commercial terms and conditions. During the financial year the Company did not incur any non- director’s fees costs from BCP (2019: $Nil). An amount of $5,867 of director’s fees was owing to BCP at 30 June 2020 (2019: $3,667). Mr D Christensen had incurred expenses throughout year on behalf of the company. At 30 June 2020 a reimbursement to Mr Christensen of $5,509 was outstanding (2019: $Nil). 46 Notes to the financial statements for the year ended 30 June 2020 21. Remuneration of auditors During the financial year the following fees were paid or payable for services provided by BDO Audit (SA) Pty Ltd, the auditor of the Company: Audit services - BDO Audit (SA) Pty Ltd Audit or review of the financial statements Other services Amounts paid/payable to a related practice of the auditor for tax compliance for the entity or any entity in the Group Amounts paid/payable to a related practice of the auditor for advisory services for the entity or any entity in the Group Consolidated 2020 $ 2019 $ 33,000 32,000 3,030 4,243 7,169 10,199 348 4,591 43,199 36,591 22. Contingent liabilities Renascor has entered into an agreement with a service provider under which the service provider agreed to contribute $1 million of services towards early project works on the basis that they may subsequently be awarded the engineering procurement and construction contract for the Siviour project. Renascor subsequently entered into contract with this service provider to provide services in relation the Siviour Definitive Feasibility Study (DFS), with the parties agreeing that the $1 million early project works commitment would apply toward the DFS. In performing work in the DFS, the service provider incurred costs exceeding the $1 million contribution amount. Renascor may be liable to reimburse, in cash or equity, amounts due to this service provider pursuant to the agreement relating to the DFS. 23. Commitments In order to maintain current rights to tenure to exploration tenements, the Group is required to perform minimum exploration work to meet the minimum expenditure requirements specified by various State governments. These amounts are subject to renegotiation when application for a mining lease is made and at other times. These amounts, which are not provided for in the financial report and are expected to be capitalised as incurred but not recognised as liabilities, are as follows: Consolidated 2020 $ 2019 $ Exploration and mining lease commitments Commitments in relation to exploration and mining leases held at the end of each reporting period but not recognised as liabilities, payable: Within one year 2,004,500 1,792,500 To keep tenements in good standing, work programs should meet certain minimum expenditure requirements. If the minimum expenditure requirements are not met, the Company has the option to negotiate new terms or relinquish the tenements. The Company also has the ability to meet expenditure requirements by joint venture or farm-in agreements. 47 Renascor Resources Limited annual report 2020 financial statements 23. Commitments continued Exploration and mining lease contingent liabilities The Group has previously entered into Asset Sale Agreements with Hillment Pty Ltd to acquire tenement EL 4570 and a similar agreement with Hiltaba Gold Pty Ltd for EL4707. Under each agreement, the company has granted a 1% royalty of the Net Smelter Return. The timing and amount of any financial effect relating to these agreements are dependent on the successful exploration and subsequent exploitation of the associated tenements. Operating Lease Commitments The office lease expired on 30 November 2013. The company continues to occupy the office with rent payable monthly in advance on a month to month basis. 24. Related party transactions Parent entity Renascor Resources Limited is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 26. Key management personnel Disclosures relating to key management personnel are set out in note 20 and the remuneration report included in the directors’ report. Transactions with related parties There were no transactions with related parties during the current and previous financial year, aside from those set out in note 24. Receivable from and payable to related parties There were no trade receivables from or trade payables to related parties at the current and previous reporting date, aside from those set out in note 24. Loans to/from related parties There were no loans to or from related parties at the current and previous reporting date. 48 Notes to the financial statements for the year ended 30 June 2020 25. Parent entity information Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Loss after income tax Total comprehensive income Statement of financial position Total current assets Total assets Total current liabilities Total liabilities Equity Issued capital Options reserve Performance rights reserve Accumulated losses Total equity Parent 2020 $ 2019 $ (1,047,558) (3,280,494) (1,047,558) (3,280,494) Parent 2020 $ 2019 $ 2,075,925 2,938,998 18,495,114 17,997,850 332,157 629,045 332,157 629,045 34,114,480 32,210,012 - 1,579,734 139,934 245,959 (16,091,457) (16,666,900) 18,162,957 17,368,805 Guarantees entered into by the parent entity in relation to the debts of its subsidiaries The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2020. Contingent liabilities In the year ended 30 June 2017 the Parent Entity had entered into Asset Sale Agreements with Hillment Pty Ltd to acquire tenement EL4570 and a similar agreement with Hiltaba Gold Pty Ltd for EL4707. Under each agreement, the company has granted a 1% royalty of the Net Smelter Return. Capital commitments - Property, plant and equipment The parent entity had no capital commitments for property, plant and equipment as at 30 June 2020. Significant accounting policies The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 1, except for the following: • Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. • Investments in associates are accounted for at cost, less any impairment, in the parent entity. • Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment. 49 Renascor Resources Limited annual report 2020 financial statements 26. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1: Name Kulripa Uranium Pty Ltd Astra Resources Pty Ltd Sol Jar Property Pty Ltd Principal place of business/ country of incorporation Australia Australia Australia Eyre Peninsula Minerals Pty Ltd Australia Ausmin Development Pty Ltd Australia 27. Events after the reporting period Ownership interest 2020 % 2019 % 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% On 1 July 2020 the company announced the results of a study assessing an integrated battery anode material operation in South Australia to produce Purified Spherical Graphite (“PSG”) for lithium-ion battery anodes. The study confirms that the integration of a PSG processing operation with Siviour creates significant added value and aligns the company with end-users of PSG seeking supply chain security through the world’s first integrated, in-country mine and battery anode material operation outside of China. On 14 July 2020 the company announced the results of independent purification tests that confirmed that Siviour is able to produce PSG through the more environmentally-friendly caustic roast purification method. On 21 July 2020 an updated Mineral Ore Reserve estimate was announced confirming Siviour as the largest reported total Ore Reserve outside of Africa, and the second largest reported proven reserve of graphite in the world. This estimate provides additional confidence in the size and quality of the Siviour deposit as a consistent source of high-quality graphite supporting a mine life of over 40 years. On 4 August 2020 the Company announced high-grade, shallow gold drill intercepts at the Carnding Project in South Australia’s Central Gawler Craton. The results include over 16 g/t Au at the Soyuz prospect. On 10 August 2020 the Company announced an expansion to the Carding Project, with the approval of an exploration licence application over an area immediately north of the Soyuz prospect. On 12 August 2020 independent qualification tests undertaken by a German graphite specialist confirmed that Siviour PSG meets product specifications required for integration of PSG into lithium-ion battery anodes. On 28 August 2020 an induced polarization survey confirmed multiple untested, shallow gold targets along- strike from the company’s Soyuz (Carnding) prospect in South Australia’s Gawler Craton. On 18 September 2020 the company announced that it has received firm commitments from professional and sophisticated investors to raise approximately $3.6 million (before expenses) at 1.1cents per share with one attaching option for every two shares issued. The funds raised will be used to advance the Siviour Project and Carnding Gold Project. No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years. 50 Notes to the financial statements for the year ended 30 June 2020 28. Reconciliation of loss after income tax to net cash used in operating activities Loss after income tax expense for the year (1,072,575) (1,321,558) Consolidated 2020 $ 2019 $ Adjustments for: Depreciation and amortisation Write off of non-current assets Share-based payments Write off exploration Change in operating assets and liabilities: Increase/(decrease) in provisions Increase/(decrease) in trade and other payables (Increase)/decrease in other receivables (Increase)/decrease in other operating assets Net cash used in operating activities Non-cash financing and investing activities Shares issued to vendors of Ausmin Development Pty Ltd for no cash consideration in respect of the acquisition of Ausmin Development Pty Ltd 2,065 2,236 841 - 70,259 222,675 291,157 387,751 (11,918) (110,197) (284,972) (94,392) (7,520) 284,856 (10,000) (17,661) (1,022,663) (646,290) 2020 $ 2019 $ - (3,412,750) 51 Renascor Resources Limited annual report 2020 financial statements 29. Earnings per share Loss after income tax Basic earnings per share Diluted earnings per share Weighted average number of ordinary shares used in calculating basic earnings per share Weighted average number of ordinary shares used in calculating diluted earnings per share Consolidated 2020 $ 2019 $ (1,072,575) (1,321,558) Cents Cents (0.1) (0.1) (0.1) (0.1) Number Number 1,242,788,242 1,077,638,036 1,242,788,242 1,077,638,036 Options and performance rights are considered anti-dilutive as the Group is loss making. At 30 June 2020 there were no anti-dilutive options (2019: 129,761,096) and 12,000,000 performance rights (2019: 18,000,000). Accounting policy for earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of Renascor Resources Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings per share 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 dilutive potential ordinary shares. 52 Notes to the financial statements for the year ended 30 June 2020 30. Share-based payments Directors and executives share based payments During the period 1 April to 30 June 2020, 50% of non-executive director fees totaling $13,479 were withheld by the Company pursuant to the Non-Executive Director Share Plan (“NEDSP”) (2019: Nil). As at 30 June 2020 the shares pertaining to the the period 1 April 2020 to 30 June 2020 had not been issued. During the period 1 April to 30 June 2020 executive director fees totaling $3,840 were withheld by the Company to be issued as shares at a later date when shareholder approval is obtained (2019: Nil). As at 30 June 2020 the shares pertaining to the the period 1 April 2020 to 30 June 2020 had not been issued. There are no options that have been granted to directors and senior management as part of their remuneration (2019: Nil). There was no amount of the equity settled share-based payment recognised in the current period in respect of options granted to directors and executives (2019: $Nil). During the year the amount of the equity settled share-based payment recognised in the current period in respect of options granted to consultants was $Nil (2019: $Nil). These options were issued as consideration for capital raising services provided. Exploration and evaluation share based payments The amount of the equity settled share-based payment recognised in the current period in respect of the ordinary shares issued is $Nil (2019: $3,412,750). Amounts previously recognised have been included as exploration and evaluation expenditure within the non-current assets in the statement of financial position. There were no options granted during the year in respect of exploration and evaluation activities (2019: $Nil). Share based payments to consultants During the period the amount of the equity settled share-based payment recognised in the current period in respect of shares issued to consultants was $Nil (2019: $45,000). During the year there were no equity settled share-based payments recognised in the current period in respect of options granted to consultants (2019: $Nil). Set out below are summaries of the granted options: 2020 Grant date Expiry date Exercise price Balance at the start of the year Granted Exercised 05/12/2016 05/12/2019 $0.00 15,000,000 28/11/2017 31/10/2019 $0.00 25,000,000 40,000,000 2019 05/12/2016 05/12/2019 $0.05 15,000,000 28/11/2017 31/10/2019 $0.03 25,000,000 40,000,000 - - - - - - - - - - - - Expired forfeited/ other Balance at the end of the year (15,000,000) (25,000,000) (40,000,000) - - - - 15,000,000 - 25,000,000 - 40,000,000 Weighted average exercise price $0.04 $0.00 $0.00 $0.00 $0.04 53 Renascor Resources Limited annual report 2020 financial statements 30. Share-based payments continued Grant date Expiry date 05/12/2016 05/12/2019 28/11/2017 31/10/2019 2020 Number 2019 Number - - - 15,000,000 114,761,096 129,761,096 The weighted average remaining contractual life of options outstanding at the end of the financial year was 0 years (2019: 0.3 years). Performance rights granted to directors and senior management At the Extraordinary General Meeting held on 3 September 2018 Shareholders of the Company granted approval for the issue of performance rights to Mr David Christensen. Details of the performance rights are in the Notice of Extra Ordinary General Meeting dated 1 August 2018. However the vesting conditions are outlined below: Tranche A Performance Rights. 6,000,000 Performance Rights will vest upon the completion of a positive Definite Feasibility Study in respect of the production of graphite concentrates. Tranche B Performance Rights. 6,000,000 Performance Rights will vest upon the commencement of construction of a commercial graphite concentrate production facility Tranche C Performance Rights. 6,000,000 Performance Rights will vest upon (i) the share price of Renascor ordinary shares having achieved a closing price of in excess of $0.055 for five consecutive days after the issue date of such Performance Rights, and (ii) the date that is two and one-half years after the issue date of such Performance Rights. The Performance Rights are expensed over the expected vesting period. The total value of Performance Rights recognised in the current period is $70,259 (2019: $177,675). The performance rights were valued as outlined below: Tranche A Tranche B Tranche C Total Total value at grant date $ 108,000 108,000 45,600 261,600 Expensed during the year $ - 52,710 17,549 70,259 The tranches were valued using the Black Scholes pricing model that takes into account the term of the Performance Rights, the vesting and performance criteria (if applicable), the non-tradable nature of the rights (if applicable), the share price at grant date, expected price volatility of the underlying share, the expected dividend yield, the probability that the Performance Rights will issue and the risk free interest rate for the term of the Performance Right. The probability that the Tranche C rights will vest (38%) was determined using the Monte Carlo simulation. This model takes into account the randomness of the share price movements and the volatility of the underlying share. 54 Notes to the financial statements for the year ended 30 June 2020 30. Share-based payments continued Set out below are summaries of performance rights granted to directors and senior management: 2020 Grant date Expiry date Exercise price Balance at the start of the year Granted Vested Expired forfeited/ other Balance at the end of the year 22/11/2018 22/11/2022 $0.00 6,000,000 22/11/2018 22/11/2022 $0.00 6,000,000 22/11/2018 22/11/2022 $0.00 6,000,000 18,000,000 - - - - (6,000,000) - - (6,000,000) 2019 22/11/2018 22/11/2022 $0.00 22/11/2018 22/11/2022 $0.00 22/11/2018 22/11/2022 $0.00 - - - - 6,000,000 6,000,000 6,000,000 18,000,000 - - - - - - - - - - - - - 6,000,000 6,000,000 12,000,000 6,000,000 6,000,000 6,000,000 18,000,000 Set out below are the performance rights exercisable at the end of the financial year: Grant date Expiry date 22/11/2018 22/11/2022 22/11/2018 22/11/2022 22/11/2018 22/11/2022 2020 Number 2019 Number - 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 12,000,000 18,000,000 The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was 2.4 years (2019: 3.4 years). Fair value of performance rights granted: The assessed fair value at grant date of performance rights is allotted equally over the period from grant date to vesting date. The fair value was independently determined using a Black Scholes option pricing model. that takes into account the exercise price, the term of the option, the vesting and performance criteria (if applicable), the impact of dilution, the non-tradable nature of the option (if applicable), the share price at grant date, expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. Historical volatility of a group of comparable companies has been the basis of determining expected share price volatility, as it is assumed that this is indicative of future movements. No adjustment has been made to the life of the option based on no past history regarding expected exercise or any variation of the expiry date. Accordingly, the expected life of the options has been taken to the full period of time from grant date to expiry date, which may fail to eventuate in the future. The valuation model input also assumes no dividend yield on the Performance Shares. 55 Renascor Resources Limited annual report 2020 financial statements Notes to the financial statements for the year ended 30 June 2020 30. Share-based payments continued Accounting policy for share-based payments Share-based compensation benefits are provided to directors, executives and consultants through the granting of share options and performance rights. Options and performance rights are granted for no cash consideration. When these share options and performance rights are granted, the fair value of the options and performance rights issued are recognised as an employee benefits expense with a corresponding increase in equity. The amount recognised as an expense is adjusted to reflect the number of share options and performance rights for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of share options and performance rights that meet the related service and non-market performance conditions at the vesting date. The fair value of share options and performance rights are measured using an appropriate pricing model. Measurement inputs include the share price on measurement date, exercise price of the instrument, expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option and performance rights. Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value. Upon the exercise of options and performance rights, the balance of the share-based payments reserve relating to those options and performance rights is transferred to share capital. Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification. 56 Directors’ declaration In the directors’ opinion: • the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; • the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the financial statements; • the attached financial statements and notes give a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for the financial year ended on that date; and • there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. The directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors ___________________________ David Christensen, Director 29 September 2020 57 Renascor Resources Limited annual report 2020 financial statements Independent auditor’s report to the members of Renascor Resources Limited Tel: +61 8 7324 6000 Fax: +61 8 7324 6111 www.bdo.com.au BDO Centre Level 7, 420 King William Street Adelaide SA 5000 GPO Box 2018 Adelaide SA 5001 Australia INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RENASCOR RESOURCES LIMITED Report on the Audit of the Financial Report Opinion We have audited the financial report of Renascor Resources Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) (ii) Giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial performance for the year ended on that date; and Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material uncertainty related to going concern We draw attention to Note 1 in the financial report which describes the events and/or conditions which give rise to the existence of a material uncertainty that may cast significant doubt about the group’s ability to continue as a going concern and therefore the group may be unable to realise its assets and discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this matter. BDO Audit (SA) Pty Ltd ABN 33 161 379 086 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (SA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 58 Independent auditor’s report to the members of Renascor Resources Limited Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report 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. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. Impairment assessment on reclassification of Siviour development assets Key audit matter How the matter was addressed in our audit As disclosed in Note 12, costs in relation to the Siviour Our audit procedures, amongst others, included: project were reclassified from exploration and evaluation assets to development assets during the financial year as technical feasibility and commercial viability were demonstrable. Evaluation of the accuracy of management’s calculation of the net present value of the Siviour Project over its expected life. Carrying out a sensitivity analysis over key Under AASB 6 Exploration for and Evaluation of Mineral inputs used to calculate the net present value Resources when an exploration and evaluation asset is of the Siviour Project reclassified in these circumstances, the asset shall be Critically assessing the assumptions used assessed for impairment within the net present value calculation for appropriateness. The impairment assessment is a key audit matter due to the size of the recorded asset, $13,266,737 at reclassification and the degree of estimate and assumptions required to be made by the Group, specifically concerning future discounted cash flows. Note 12 discloses the assumptions used by the Group in testing these assets for impairment Other information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2020, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 59 Renascor Resources Limited annual report 2020 financial statements Independent auditor’s report to the members of Renascor Resources Limited Responsibilities of the directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. 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 on the Remuneration Report We have audited the Remuneration Report included in pages 10 to 17 of the directors’ report for the year ended 30 June 2020. In our opinion, the Remuneration Report of Renascor Resources Limited, for the year ended 30 June 2020, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit (SA) Pty Ltd Andrew Tickle Director Adelaide, 29 September 2020 60 Shareholder information The shareholder information set out below was applicable as at 14 September 2020. Distribution of equitable securities Analysis of number of equitable security holders by size of holding: Ordinary shares 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and over Holding less than a marketable parcel Equity security holders 50 18 59 821 1,057 2,005 412 Twenty largest quoted equity security holders: The names of the twenty largest security holders of quoted equity securities are listed below: Kabininge Nominees Pty Ltd Mr David Vigolo Mr Richard Edward Keevers Bnp Paribas Nominees Pty Ltd Rookharp Capital Pty Ltd Dr Leon Eugene Pretorius Bizzell Capital Partners Pty Ltd David Christensen HSBC Custody Nominees (Australia) Limited Mr Douglas Young Mrs Tracey Ann Mezzino JP Morgan Nominees Australia Pty Ltd Pontifex Wines Pty Ltd CPS Control Systems Pty Ltd Maja Nominees Pty Ltd Mr Gregory Michael Josephson & Mrs Mary Margaret Josephson Rmvic Pty Ltd Canceler Pty Ltd Mr Malcolm John McClure Mr Timothy John Nixon Binney & Mrs Dianne Pamela Binney Ordinary shares Number held % of total shares issued 126,014,646 55,100,000 41,855,328 32,273,296 26,500,000 21,000,000 16,802,322 15,761,241 15,060,350 14,482,148 13,500,000 12,671,071 11,466,111 11,291,112 11,000,000 10,000,000 9,500,000 9,500,000 9,000,471 9,000,000 9.47 4.14 3.15 2.43 1.99 1.58 1.26 1.18 1.13 1.09 1.01 0.95 0.86 0.85 0.83 0.75 0.71 0.71 0.68 0.68 471,778,096 35.45 61 Renascor Resources Limited annual report 2020 financial statements Shareholder information Performance rights over ordinary shares Performance rights over ordinary shares % of total Number held 12,000,000 issued 100.00 Ordinary shares Number held 126,014,646 % of total shares issued 9.47 David Christensen Unquoted equity securities There are no unquoted equity securities. Substantial holders Substantial holders in the Company are set out below: Kabininge Nominees Pty Ltd Voting rights The voting rights attached to ordinary shares are set out below: Ordinary shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Restricted Securities No restricted securities were on issue at 14 September 2020. There are no other classes of equity securities. Interests in tenements at 31 August 2020 Description Malbrom Lipson Cove Verran Malbrom West Dutton Bay Willouran Flat Hill (Callanna) Witchelina Outalpa Cutana Iron Baron Old Wartaka Carnding Tarcoola Siviour Project 62 Tenement number Interest owned % EL 6197 EL 6423 EL 6469 EL 5714 EL 6032 EL 6170 EL 5586 EL 6403 EL 6450 EL 6451 EL 5822 EL 6191 EL 5856 ELA 2020/00110 ML 6495 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Corporate directory Directors Richard Keevers, Non-Executive Chairman David Christensen, Managing Director Geoffrey McConachy, Non-Executive Director Stephen Bizzell, Non-Executive Director Company secretary Pierre van der Merwe Registered office & principal place of business 36 North Terrace Kent Town SA 5069 Telephone : + 61 8 363 6989 Email: info@renascor.com.au Website: www.renascor.com.au Share register Link Market Services Limited ANZ Building Level 15, 324 Queen Street Brisbane QLD 4000 Phone: + 61 2 8280 7454 Fax: + 61 2 9287 0303 Auditor BDO Audit (SA) Pty Ltd Stock exchange listing Renascor Resources Limited shares are listed on the Australian Securities Exchange (ASX code: RNU) ASX code: RNU www.renascor.com.au 0 2 0 2 t r o p e r l a u n n a d e t i m i L s e c r u o s e R r o c s a n e R 63 64
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