Resource Mining Corporation Limited
Annual Report 2022

Plain-text annual report

ANNUAL REPORT 2022 RESOURCE MINING CORPORATION LIMITED ABN 97 008 045 083 TABLE OF CONTENTS Corporate Directory ...................................................................................................................................... 1 Chairman’s Letter ......................................................................................................................................... 2 Directors’ Report ........................................................................................................................................... 3 Financial Statements .................................................................................................................................. 18 Notes to the Consolidated Financial Statements ....................................................................................... 22 Directors’ Declaration ................................................................................................................................. 43 Independent Auditor’s Report to the Members........................................................................................... 44 Independent Auditor’s Independence Declaration ..................................................................................... 48 Additional Information ................................................................................................................................. 49 RMC ANNUAL REPORT 2022 CORPORATE DIRECTORY ABN Directors 97 008 045 083 Asimwe Kabunga (Executive Chairman and Executive Director) Trevor Matthews (Non-Executive Director) David Round (Non-Executive Director) Noel O’Brien (Non-Executive Director) Company Secretaries Deborah Ho Registered Office Principal Place of Business Ground Floor 16 Ord Street WEST PERTH, WESTERN AUSTRALIA 6005 Ground Floor 16 Ord Street WEST PERTH, WESTERN AUSTRALIA 6005 Share Registry Auditor Bankers Securities Exchange Listing Telephone: +61 8 9482 0500 Website: www.resmin.com.au Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace PERTH, WESTERN AUSTRALIA 6000 Telephone Within Australia: 1300 850 505 Outside Australia: +61 3 9415 4000 www.investorcentre.com/contact BDO Audit (WA) Pty Ltd Level 9 Mia Yellagonga Tower 2 5 Spring Street PERTH, WESTERN AUSTRALIA 6000 Telephone: +61 8 6382 4600 Facsimile: +61 8 6382 4601 Westpac Bank 116 James Street NORTHBRIDGE, WESTERN AUSTRALIA 6000 Resource Mining Corporation Limited shares are listed on the Australian Securities Exchange (Home Exchange – Perth) ASX Code: Shares RMI RMC ANNUAL REPORT 2022 1 CHAIRMAN’S LETTER Dear Shareholders, On behalf of the Board of Directors, it is with pleasure that I present to you Resource Mining Corporation Limited’s (RMC or Company) Annual Report for the year ended 30 June 2022. This has been a transformative year for RMC with the divestment of the Wowo Gap Nickel Laterite Project in PNG completed, and a shift in focus towards Nickel, Cobalt, and Lithium projects including the Kabulanywele Nickel Project – majority owned by the Company – and announced acquisitions of futher projects in both Tanzania and Finland at varying stages of progression. Milestones we have achieved over the past twelve months include: • Completion of the Wowo Gap Project divestment in October 2021; • Initial exploration at Kabulanywele Nickel Project resulting in soil and rock samples delineating a Ni and Co anomaly with a strike length of 2km coincident with a historically mapped Ni laterite deposit – with rock chip and soil samples returning a maximum value of 1.27% Ni 0.85% Ni respectively; • Reaching agreements with major debtholders to eliminate all debt in the Company – for the first time in many years (subject to shareholder approval); • Commencing the process of seeking shareholder approval for the acquisition of the Massive Nickel project portfolio – including a number of prospecting licences in Tanzania which complement the Company’s Kabulanywele Nickel Project; • Commencing maiden drilling at our Kabulanywele Nickel Project with assay results due to be received in the coming month; • Securing an exclusive option and conducting due diligence on a further acquisition of Nickel and Lithium projects in Finland – in one of Europe’s most prospective regions. Although there have been a number of changes to the composition of your Board, the Board and Management Team that I lead today is well placed and highly motivated to further realise the value of our current and future asset portfolio. From a capital management perspective, we are in a strong position having finally secured agreements to become debt free (subject to shareholder approval) and have received strong support from new and existing investors in recent equity capital raising activities, totalling $2.32 million in the past 12 months. We are also pleased to see a total comprehensive profit for the year, predominantly due to the sale of the Company’s Wowo Gap Project in Papua New Guinea. Your Board is looking forward to the exciting few months to come as we further expand our footprint in Tanzania and grow our portfolio of attractive high quality projects globally. Yours sincerely Asimwe Kabunga Chairman RMC ANNUAL REPORT 2022 2 DIRECTORS’ REPORT Your Directors present their report for the financial year ended 30 June 2022. DIRECTORS The following persons were Directors of Resource Mining Corporation Limited during the whole of the financial year and up to the date of this report, unless otherwise stated: Asimwe Kabunga Trevor Matthews David Round Noel O’Brien William Mackenzie Warwick Davies Jason Livingstone Zhang Chi PRINCIPAL ACTIVITIES Chairman and Director (Executive) (Executive) Director (Non-Executive) Director (Non-Executive) Technical Director (Non-Executive) Chairman (Non-Executive) Managing Director (Executive Director) Director (Non-Executive) Director (Non-Executive) Appointed Director 9 May 2022 and Chairman 16 June 2022 Appointed 22 November 2021 Appointed 23 March 2022 Appointed 20 June 2022 Resigned 4 April 2022 Resigned 23 March 2022 Resigned 20 June 2022 Resigned 22 November 2021 The principal activity of the Group during the year was mineral exploration in Tanzania. Summary of Financial Position, Asset Transactions and Corporate Activities A summary of key financial indicators for the Group, with prior period comparison, is set out in the following table: Cash and cash equivalents held at year end Net profit/(loss) for the year after tax Included in profit/loss for the year: Finance gain – fair value adjustment of loans Finance costs – implicit interest on fair value adjustment of loans Exploration costs Exploration acquisition costs Basic earnings/(loss) per share (cents) from continuing operations Net cash (used in) operating activities Net cash (used in) investing activities Net cash from financing activities During the year: Year 30 June 2022 $ 1,728,598 2,913,126 Year 30 June 2021 $ 43,060 (744,820) - (319,174) (574,324) - 0.75 (555,420) (34,321) 2,282,659 650,125 (419,884) (219,417) (474,025) (0.24) (303,655) - 307,822 • • • • In August 2021 there was a divestment of the Wowo gap project. RMI’s subsidiary, Resource Exploration Pty Ltd (REX) signed a binding but conditional Share Purchase Agreement with Regency Mines Australasia Pty Ltd to sell 100% of the issued share capital in REX’s subsidiary, Niugini Nickel Pty Ltd (NN). NN owns 100% of the Wowo Gap Nickel Laterite Project in Papua New Guinea. Regency Mines Australasia Pty Ltd is a wholly owned subsidiary of Corcel plc. As consideration for the sale, Corcel plc is releasing all liabilities and obligation in connection with its AUD4,761,087 of loans owing by RMI. In December 2021 RMI successfully raised $500,000 before costs, from a share placement to fund preparation work for exploration programs for the 2022 field season at the Kabulwanyele Nickel Project in Tanzania. Funds used for debt servicing and working capital. In May 2022 RMI made a share placement to raise $0.62million before costs for a new sophisticated investor. The funds raised are to advance the next phase of exploration activities at the Kabulanywele Nickel Project in Tanzania, complete the acquisition of MNPL and its Tanzanian nickel projects, and general working capital. In June 2022 the Company entered into an exclusive option to acquire one Nickel and two Lithium projects in Finland. The option deed has a four month option term with due diligence and final negotiations to occur during term. The Company issued 2.5million shares for the exclusive option. RMC ANNUAL REPORT 2022 3 DIRECTORS’ REPORT (continued) • Also in June 2022, the Company completed a $1.2million (before costs) share placement for an existing shareholder and new sophisticated investors. The funds raised will be used for the due diligence program for Nickel and Lithium projects in Finland and for general working capital. The Company also commenced its maiden 1,000m RC drilling program at its Kabulwanyele Nickel Project in Tanzania. • In September 2022, the Company obtained shareholder approval to acquire 100% of the issued capital of Massive Nickel Pty Ltd which indirectly holds a quality portfolio of Tanzanian nickel exploration assets. MNPL holds 99% of the issued capital of Massive Nickel Tanzania Limited (MNTL). MNTL holds a 100% interest in prospecting licences that are granted or in application, that complement the Company’s existing Kabulanywele Nickel Project. Consideration for the acquisition will be the issue of 75 million RMI shares and the grant of a net smelter return royalty. REVIEW OF OPERATIONS Kabulanywele Nickel Project The Kabulanywele Nickel Projectis located in the Mpanda District of Tanzania, approximately 35km from the eastern shore of Lake Tanganyika, with the area forming part of the western limb of the East African Rift systems. In 2021, the Company conducted a sampling program that included a systematic collection of 254 soil samples and 19 rock chip samples from all tenements at the Project. This program delivered highly encouraging nickel and cobalt results and delineated a Nickel-Cobalt anomaly with a strike length of 2km as illustrated in Figure 1, which is broadly coincident with a historically mapped nickel laterite. All samples collected from this anomaly returned grades equal to, or exceeding, 500ppm Ni and 200ppm Co, with grades of up to 1.27% Ni tested in a rock sample, and up to 0.85% Ni in soils . Figure 1: Nickel assay results for soil and rock samples at the Kabulwanyele Nickel Project.1 1 Please refer to ASX Announcement dated 18 November 2021 titled “Kabulwanyele Nickel Deposit – Encouraging Nickel and Cobalt Assay Results Received.” RMC ANNUAL REPORT 2022 4 DIRECTORS’ REPORT (continued) Kabulwanyele is a lateritic occurrence overlying a mafic-ultramafic layered intrusion. The nature of the mineralisation present confirms the potential for both a possible lateritic nickel zone as well as an underlying nickel-enriched source within the serpentinite. Evidence for sulphide mineralization is supported by gossan-type box work structures seen within the serpentinite rock units (See Figure 2 below) and further field mapping will be used to define the extent of this gossanic feature. Figure 2: Ferruginous silicious boulder with boxwork structures within the serpentinite unit Following the highly encouraging findings from the 2021 field season, the Company announced a maiden drill program on a systematic grid of 200m by 800m. The drill program aimed at testing for the presence of massive sulphides underlying the laterite cover, increasing the geological understanding of the area. This drilling program completed in July 2022 and comprised 19 drilled holes for a total of 799m. Geological logging of the RC chips has identified a lateritic profile comprising intercepts of ferruginous layers, highly weathered rocks (saprolite) and saprolitic rocks. The thickness of the ferruginous layer combined with saprolite layers ranges between 5 to 50m. Most of the holes ended in fresh rocks. The drill holes to the north have generally not ended in fresh rock due to groundwater inundation that the RC rig is unable to clear through increased air pressure – so those holes have ended predominantly in saprock. The samples collected from the drilling program have been dispatched to Nesch Mintek Mwanza for preparation before being shipped to the ALS Chemex South Africa for analysis. The assay results are expected soon. A gravity survey program has been proposed to assess the potential for a deeply buried mafic-ulframafic intrusive that may have been altered to form the identified nickel laterite anomalies. The generated gravity targets will then be followed up by a ground Electromagnetic (EM) survey. An EM survey will help identify any conducting sulphide layers that may exist at depth. Any combination of targets identified by Gravity and EM would then be tested using deeper diamond drilling. RMC ANNUAL REPORT 2022 5 DIRECTORS’ REPORT (continued) Figure 3: Map showing the completed drilling program over previous mapping and sampling. Massive Nickel Project Portfolio Proposed Acquisition In May 2022, the Company conditionally agreed to acquire 100% of the issued capital of Massive Nickel Pty Ltd which indirectly holds a quality portfolio of Tanzanian nickel exploration assets comprising: • • • the Kabanga North Nickel Project: along strike from Kabanga Nickel’s ‘Kabanga Project’ which is host to a total mineral resource of 58mt @ 2.62% Ni (prevailing in-situ nickel equivalent grade is 3.14% including cobalt and copper)2; the Kapalagula Nickel Project: complementing the Company’s existing Kabulwanyele Nickel Project with ultramafic lithologies noted to host Nickel, along with platinum group elements and copper mineralisation3; the Southern Projects: including Mbinga, Liparamba and Kitai which all host ultramafic lithologies over considerable strike lengths with noted Nickel anomalism confirmed4. The Company held a General Meeting on 29 September 2022 where a resolution was passed by shareholders on a poll to approve the acquisition of Massive Nickel Pty Ltd. 2 Refer to the Company’s ASX Announcement dated 9 May 2022 and must be read in conjunction with the Competent Persons Statement at the end of that announcement. 3 Refer to the Company’s ASX Announcement dated 9 May 2022 and must be read in conjunction with the Competent Persons Statement at the end of that announcement. 4 Refer to the Company’s ASX Announcement dated 9 May 2022 and must be read in conjunction with the Competent Persons Statement at the end of that announcement. RMC ANNUAL REPORT 2022 6 DIRECTORS’ REPORT (continued) Figure 4: RMC Nickel Project and Proposed ‘Massive Nickel’ Acquisition Target Projects Finland Nickel and Lithium Projects – Exclusive Option In June 2022, the Company secured an exclusive option to acquire a portfolio of Nickel and Lithium projects in Finland, and has since commenced an extensive due diligence process to assess the prospectivity of these projects. This due diligence exercise included the commissioning of a report from Skapto reviewing historical data purchased from the Geological Survey of Finland (GTK). The portfolio comprises5: • Ruossakero (Nickel): The Ruossakero Ni Project (named after the deposit it contains) is 283.72km² in size and is situated on the north western edge of Finland, near the Swedish border. The Ruossakero NiS deposits are hosted by Archean aged komatiitic ultramafic bodies and are considered to be of the ‘Contact- type’ Ni-Cu-PGE mineralisation. The largest of the occurrences is 4 km in length and 0.1 to 1.5 km in width. The thickness is at least 400 m. The Ruossakero Ni occurrence is at the basal contact zone of an NW- trending komatiitic cumulate sequence. Historic intersections include 14m @ 1.03% Ni (Ruossakero, Hole ID M183483R404). 5 Refer to the Company’s ASX Announcement dated 9 May 2022 and must be read in conjunction with the Competent Persons Statement at the end of that announcement. RMC ANNUAL REPORT 2022 7 DIRECTORS’ REPORT (continued) • Hirvikallio (Lithium): The Hirvikallio Lithium reservation is located in the Somero-Tammela area, Southern Finland. The Finnish Geological Survey GTK considers it one of the most promising lithium pegmatite provinces in Finland. It is within a geological setting that has known Li bearing pegmatites and does support significant more opportunity for discovery. Historic intersections include 5m @ 2.30% Li2O (Hirvikallio, Hole ID M202458R1). • Kola (Lithium): The Kola Lithium reservation is located in the Kaustinen district. The geology of the Keliber Oy lithium project extends into the Kola reservation. According to GTK data, abundant spodumene- containing pegmatite boulders were observed in the reservation area, especially directly south of the major Syväjärvi and Rapasaari deposits of Keliber. The Company has an exclusive option to acquire these projects until 15 November 2022 and expects to make a decision as to its intentions and negotiate terms with the Vendors following further due diligence over the coming weeks. PARTICULARS OF DIRECTORS AND COMPANY SECRETARY Asimwe Kabunga Chairman and Director (Executive) Qualifications: Bachelor of Science, Mathematics and Physics Term: Executive Director since 9 May 2022 and Executive Chairman since 16 June 2022 Experience: Mr Kabunga is a Tanzanian-born Australian entrepreneur with extensive technical and commercial experience in Tanzania, Australia, the United Kingdom and the United States. Mr Kabunga has extensive experience in the mining industry, logistics, land access, tenure negotiation and acquisition, as well as a developer of technology businesses. Mr Kabunga has been instrumental in establishing the Tanzanian Community of Western Australia Inc., and served as its first President. He was also a founding member of Rafiki Surgical Missions and Safina Foundation, both NGO’s dedicated to helping children in Tanzania. Interest in Shares and Options in Resource Mining Corporation Limited: 56,965,053 ordinary shares held directly and 15,200,000 ordinary shares held by related parties. Special Responsibilities: Mr Kabunga is Executive Chairman and Director. Directorships held in other listed entities current or last 3 years: Current Non-Executive Chairman of Volt Resources Limited, and Executive Chairman of Lindian Resources Limited. Trevor Matthews Director (Non-Executive) Qualifications: Bachelor of Commerce Degree, Post-Graduate Diploma in Applied Finance and Investment Term: Chairman and Director since 22 November 2021 Experience: Mr Matthews has an accounting and finance background with over 35 years’ experience in the Resources industry, including roles with diversified resources companies North and WMC Resources in executive-level positions. His current role is Managing Director for Volt Resources Limited, and Executive Chairman of Victory Goldfields Limited. Previous roles included Managing Director for MZI Resources (2012-16) and Murchison Metals (2005-12). During his career, Trevor has gained considerable experience managing many nascent greenfields resource projects through to production. Consequently, he has extensive executive management experience of feasibility studies, project planning/development, coordination and leveraging capital markets effectively to secure the appropriate mix of debt/equity funding, to successfully develop a mining project. Interest in Shares and Options in Resource Mining Corporation Limited: Nil. Special Responsibilities: Mr Matthews is a Non-Executive Director. Directorships held in other listed entities current or last 3 years: Current Managing Director for Volt Resources Limited, and current Executive Chairman of Victory Goldfields Limited. RMC ANNUAL REPORT 2022 8 DIRECTORS’ REPORT (continued) David Round Director (Non-Executive) Qualifications: Chartered Accountant, MBA Term: Director since 23 March 2022 Experience: Mr Round is an experienced finance professional with nickel and graphite operational experience within Africa and internationally. He is a qualified accountant and holder of an MBA and is currently an Executive Director of BlackEarth Minerals NL and previously Head of Finance, Sales and Marketing at Australian graphite producer, Bass Metals Ltd where he led a large team in the development of a successful mine operation with supplies of critical minerals worldwide. Prior roles held by Mr. Round include CFO of Nickel producer, Albidon Ltd, and Ironbark Zinc Ltd and formerly a senior executive at Ernst & Young and KPMG (London) Interest in Shares and Options in Resource Mining Corporation Limited: Nil. Special Responsibilities: Mr Round is a Non-Executive Director. Directorships held in other listed entities current or last 3 years: Current Executive Director of BlackEarth Minerals NL. Noel O’Brien Technical Director (Non-Executive) Qualifications: Bachelor’s degree in Metallurgical Engineering from the University of Melbourne, an MBA from the University of the Witwatersrand and is a Fellow of the AusIMM. Term: Director since 20 June 2022 Experience: Mr O’Brien is a metallurgist with wide international and corporate experience. After a career spanning 40 years in Australia and Africa he established Trinol Pty Ltd, a Perth based consultancy, to provide process and project development services over a broad range of commodities. Mr O’Brien has been actively involved with projects containing manganese, iron ore, gold, base metals, and battery metals including lithium, graphite and cobalt. He has served on the board of a number of ASX listed companies over the past 9 years and is currently a technical advisor to several listed companies with early to advanced stage projects. Interest in Shares and Options in Resource Mining Corporation Limited: Nil. Special Responsibilities: Mr O’Brien is a Non-Executive Director. Directorships held in other listed entities current or last 3 years: Current Independent Non-Executive Director of Galileo Mining Limited. Previously Non-Executive Director of Mali Lithium from 1 December 2017 to 6 April 2020 and Metals Tech Limited from 17 June 2019 to 6 July 2020. William (Bill) Mackenzie Chairman (Non-Executive) Qualifications: Bachelor of Engineering (Mining); MBA; M AusIMM Term: Chairman and Director from 19 December 2008 to 4 April 2022 Experience: Mr Mackenzie is a mining engineer with over 40 years of experience in the resources sector with involvement in the assessment, development and operation of mineral projects both within Australia and overseas. Mr Mackenzie's experience has included direct operating, senior project management and executive roles with responsibility for business development, project and business unit management of various Australian and offshore ventures and from 2001 was Principal of a consulting group that provided specialised, independent technical and commercial advice to boards, banks and investors involved in the development of resources, energy and infrastructure projects worldwide. He served as a non-executive Director of ASX listed OM Holdings Limited from 2005 till 2007 and as Managing Director of a privately owned diversified Australian resource development company from 2007 till 2013. Since 2015, he has been a director of an Australian subsidiary of a privately owned international investment group. Interest in Shares and Options in Resource Mining Corporation Limited: 4,000,000 ordinary shares Special Responsibilities: Mr Mackenzie was a Non-Executive Chairman. Directorships held in other listed entities current or last 3 years: None. RMC ANNUAL REPORT 2022 9 DIRECTORS’ REPORT (continued) Warwick Davies Managing Director Qualifications: Bachelor of Arts (Economics) and has a Certificate of Chemistry. Term: Director from 12 August 2004 to 23 March 2022. Experience: Mr Davies has over fifty years’ industry experience in the mining, exploration and manufacturing industries. He has held a variety of leadership roles in both technical and commercial positions during his extensive career with BHP, Hamersley Iron, Robe River Mining Co and RMC. As an independent mining industry consultant since 2001, Mr Davies has worked on a wide variety of assignments initially in the Iron Ore Industry and more recently in the Non-Ferrous industry with specific emphasis on China. He brings to the Company, considerable practical and international experience, a strong technical background and an extensive potential customer contact network. Over the past 10 years, Mr Davies has developed detailed knowledge of the conduct of business in Papua New Guinea as well as the Nickel and emerging Battery Minerals industry. Interest in Shares and Options in Resource Mining Corporation Limited: 1,679,437 ordinary shares held directly and 2,655,945 ordinary shares held by related parties. Special Responsibilities: Mr Davies was responsible for the day-to-day operations of the Group and in particular Metallurgy, Marketing and Infrastructure. Directorships held in other listed entities current or last 3 years: Fenix Resources Limited. Jason Livingstone Director (Non-Executive) Qualifications: Member of the Australian Institute of Geoscientists, BSc Mineral Exploration and Mining Geology Term: Director from 4 April 2022 to 20 June 2022. Experience: Mr Livingstone commenced his career in Kalgoorlie over 20 years ago. He is a graduate of the WA School of Mines BSc Mineral Exploration and Mining Geology, as well as the Curtin Graduate School of Business MBA and the Australian Institute of Company Directors, Company Directors Course. Mr Livingstone has worked in Australia, Africa, China and Panama, including managing exploration and resource definition programs in Tanzania. His commodity experience includes gold, copper, nickel, lead, zinc, iron ore, graphite and vanadium. Interest in Shares and Options in Resource Mining Corporation Limited: Nil. Special Responsibilities: Mr Livingstone was a Non-Executive Director. Directorships held in other listed entities current or last 3 years: Current Executive Director of Metalicity Limited. Zhang Chi (Andy) Director (Non-Executive) Qualifications: Mr Zhang has an economics degree from Renmin University in China. Term: Director from April 2006 to 22 November 2021 Experience: Mr Zhang is Managing Director of Sinom (Hong Kong) Limited and has very extensive experience in the Iron and Steel Industry in China. Prior to becoming involved in Sinom (Hong Kong) Limited, Mr Zhang held several positions with the BaoSteel Group, (China’s largest steel maker). Interest in Shares and Options in Resource Mining Corporation Limited: Nil. Special Responsibilities: Mr Zhang was a Non-Executive Director. Directorships held in other listed entities current or last 3 years: None RMC ANNUAL REPORT 2022 10 DIRECTORS’ REPORT (continued) Deborah Ho Company Secretary Qualifications: AGIA Term: Company Secretary appointed 21 March 2022 Experience: Ms Deborah Ho is employed by Ventnor Capital Pty Ltd and acts as Company Secretary to several other ASX listed and private companies. Ms Ho is an Associate Member of the Governance Institute of Australia and has over seven years of experience in company secretarial, corporate compliance and financial accounting matters. Amanda Sparks Company Secretary (Resigned 21 March 2022) Qualifications: B.Bus, CA, F.Fin Term: Company Secretary from August 2016 to 21 March 2022 Experience: Ms Amanda Sparks is a Chartered Accountant with over 30 years of resources related financial experience, both with explorers and producers. Ms Sparks has extensive experience in financial management, corporate governance and compliance for listed companies. MEETINGS OF DIRECTORS The following table sets out the number of meetings of the Company’s Directors held during the year ended 30 June 2022, and the number of meetings attended by each Director. Asimwe Kabunga Trevor Matthews David Round Noel O’Brien Warwick Davies William Mackenzie Zhang Chi Jason Livingstone Board Meetings Number eligible to attend - 4 4 - 3 3 2 3 Number attended - 4 3 - 3 3 - 3 During the year, the Board held various discussions via phone calls and informal meetings, rather than formal Board meetings. In addition, circular resolutions were used to resolve important matters. LIKELY DEVELOPMENTS AND EXPECTED RESULTS The Group intends to continue its exploration activities with a view to the commencement of mining operations when practical. Refer to the Subsequent Events section in this Director’s Report. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS In the opinion of the Directors, there were no significant changes in the state of affairs of the Group that occurred during the financial year under review not otherwise disclosed in this report or in the consolidated accounts. DIVIDENDS No dividends were paid or declared during the year. The Directors do not recommend payment of a dividend. ENVIRONMENTAL REGULATIONS The Group has conducted exploration activities on its mineral tenement. The right to conduct these activities is granted subject to environmental conditions and requirements. The Group aims to ensure a high standard of environmental care is achieved and, as a minimum, to comply with relevant environmental regulations. There have been no known breaches of any of the environmental conditions. RMC ANNUAL REPORT 2022 11 DIRECTORS’ REPORT (continued) OPERATING AND FINANCIAL REVIEW SHARE OPTIONS As at the date of this report, the following unlisted options over unissued ordinary shares in the Resource Mining Corporation Limited have been issued. Number of Options Option Exercise Price A$ Option Expiry 2,000,000 8,000,000 5,000,000 $0.08 $0.10 $0.15 20/05/2025 25/05/2025 22/06/2025 REMUNERATION REPORT (Audited) The Directors present the 2022 Remuneration Report, outlining key aspects of Resource Mining Corporation’s remuneration policy and framework, together with remuneration awarded this year. The report is structured as follows: A. Key management personnel (KMP) covered in this report B. Remuneration policy, link to performance and elements of remuneration C. Contractual arrangements of KMP remuneration D. Remuneration of key management personnel E. Equity holdings and movements during the year F. Other transactions with key management personnel G. Use of remuneration consultants H. Voting of shareholders at last year’s annual general meeting A. KEY MANAGEMENT PERSONNEL (KMP) COVERED IN THIS REPORT For the purposes of this report key management personnel of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any Director (whether Executive or otherwise). Key Management Personnel during the Year Non-Executive Directors Trevor Matthews David Round Noel O’Brien William Mackenzie Zhang Chi Jason Livingstone Executive Directors Asimwe Kabunga Warwick Davies – – – – – – – – Non-Executive Director (from 22 November 2021) Non-Executive Director (from 23 March 2022) Non-Executive Director (from 20 June 2022) Non-Executive Chairman (until 4 April 2022) Non-Executive Director (until 22 November 2021) Non-Executive Director (from 4 April 2022 until 20 June 2022) Executive Director and Chairman (from 9 May 2022) Managing Director (until 23 March 2022) B. REMUNERATION POLICY, LINK TO PERFORMANCE AND ELEMENTS OF REMUNERATION The Board’s policy is to remunerate Directors, officers and employees at market rates for companies of similar size and industry, for time, commitment and responsibilities. The Board determines payment to the Directors and reviews their remuneration as required, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of Directors’ fees that can be paid is subject to approval by shareholders in general meeting, from time to time. Fees for Non-Executive Directors are not linked to the performance of the Group. However, to align Directors’ interests with shareholders’ interests, the Directors are encouraged to hold securities in the Company. RMC ANNUAL REPORT 2022 12 DIRECTORS’ REPORT (continued) The remuneration of Non-Executive Directors is set by reference to payments made by other companies of similar size and industry, and by reference to the Director’s skills and experience, and for the Reporting Period included a consideration of the financial restrictions in place on the Company. Remuneration policy and framework The Company's policy on remuneration clearly distinguishes the structure of Non-Executive Directors’ remuneration from that of executive Directors and senior executives. Given the financial restrictions placed on it, the Company may consider it appropriate to issue unlisted options to Non-Executive Directors, subject to obtaining the relevant approvals. The Remuneration Policy is subject to annual review. The maximum aggregate amount of fees (including superannuation payments) that can be paid to Non-Executive Directors is subject to approval by shareholders at general meeting. The maximum aggregate Directors' fees payable to non-executive Directors is $250,000 per annum as approved by the shareholders at the 2020 AGM on 11 December 2020 (stated in section 14.8 of the constitution adopted at that meeting). Executive pay and rewards may consist of a base salary and performance incentives. Long term performance incentives may include options granted at the discretion of the Board and subject to obtaining the relevant approvals. The grant of options, when made, are designed to recognise and reward efforts as well as to provide additional incentive and may be subject to the successful completion of performance hurdles. Executives are offered a competitive level of base pay at market rates (for comparable companies) and are reviewed to ensure market competitiveness. There are no termination or retirement benefits for Non-Executive Directors (other than superannuation). Relationship between remuneration and the Group’s performance The Company does not pay any performance-based component of salaries. C. CONTRACTUAL ARRANGEMENTS OF KMP REMUNERATION On appointment to the board, all non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the board policies and terms, including compensation, relevant to the office of director. Remuneration and other terms of employment for the executive directors and the other key management personnel are formalised in service agreements. Executive Directors Mr Asimwe Kabunga, Executive Chairman and Director, is responsible for the day-to-day operations of the Group. The Group has an agreement with Kabunga Holdings Pty Ltd* to provide the services of Mr Kabunga to the Company in relation to its activities on normal commercial terms and conditions, which are detailed as follows: Terms of Agreement Remuneration excluding GST Termination benefit Agreement commenced 16 June 2022 Fixed monthly fee of $20,833.33 per calendar month 3 months notice *Mr Kabunga is a Director and shareholder of Kabunga Holdings Pty Ltd. From the period 1 July 2021 to 23 March 2022, Mr Warwick Davies was Managing Director and was responsible for the day-to-day operations of the Group. The Group had an agreement with Fairstone Holdings Pty Ltd* to provide the services of Mr Davies to the Company in relation to its activities on normal commercial terms and conditions, which are detailed as follows: Terms of Agreement Remuneration excluding GST Termination benefit Agreement commenced 31 August 2011 for 3 years, extended to 31 March 2016. Services continue to be provided under this agreement since 31 March 2016. $14,400 per calendar month based on a minimum of 216 business days per annum plus $100 per hour there-after. However, to assist in reducing costs, Mr Davies has not invoiced the minimum monthly amount, and instead charged his time at $100/hour, which has resulted in a significantly lower monthly cost for the Company. During the year, Mr Davies was paid a total of $65,420 in consulting fees. 3 months notice *Mr Davies is a Director and shareholder of Fairstone Holdings Pty Ltd. RMC ANNUAL REPORT 2022 13 DIRECTORS’ REPORT (continued) D. REMUNERATION OF KEY MANAGEMENT PERSONNEL The total remuneration paid to Key Management Personnel is summarised below: 2022 Name A Kabunga1 T Matthews2 D Round3 N O’Brien W Mackenzie4 W Davies Zhang C J Livingstone Salary and Fees Cash Bonus Short-term benefit Non- Monetary Benefit $ - - - - - - - - - Consulting/ Other $ 65,698 - 2,600 - - 65,420 - 13,313 147,031 $ - - - - - - - - - Post- employment Benefits Super- annuation Share- based payments Shares $ $ - - - - 3,409 - - - 3,409 - - - - - - - - Total $ 106,507 24,644 13,868 1,636 37,500 65,420 - 21,757 271,333 $ 40,809 24,644 11,268 1,636 34,091 - - 8,444 Totals 120,894 1. Mr Kabunga’s fees and consulting fees for 9 May 2022 to 30 June 2022 are unpaid as at 30 June 2022 (total $106,507). 2. Mr Matthews’ fees from 22 November 2021 to 30 June 2022 are unpaid as at 30 June 2022 (total $24,444). 3. Mr Round’s consulting fees for June 2022 are unpaid as at 30 June 2022 (total $2,600 excluding GST). 4. Mr Mackenzie’’ fees for the period January 2022 to March 2022 are unpaid as at 30 June 2022 (total $12,500). Non-Executive Directors’ Remuneration Non-Executive Directors’ remuneration consists of base fees (inclusive of superannuation) and is currently set at $48,000 per annum. The Directors are entitled to reimbursement of out-of-pocket expenses incurred whilst on Company business. 2021 Short-term benefit Name Salary and Fees Cash Bonus W Mackenzie1 W Davies2 Zhang C3 Totals $ 50,000 106,957 - 156,957 $ - - - - Non- Monetary Benefit $ - - - - Post- employment Benefits Super- annuation Share- based payments Shares $ $ - - - - - - - - Total $ 50,000 106,957 - 156,957 1. Mr Mackenzie’s fees for the period July 2016 to June 2021 are unpaid as at 30 June 2021 (total $300,000). 2. Mr Davies’ fees for the period May 2015 to June 2021 are unpaid as at 30 June 2021 (total $622,400 excluding GST). 3. Mr Zhang Chi elected not to receive any Director’s fees effective 1 July 2014. Long term benefits and termination benefits paid for the year were nil (2021: nil). During the year, no share-based payments were made (2021: none). The Company issued $50,000, with a fair value on issue date of $37,076 worth of fully paid ordinary shares to previous Director Mr William Mackenize in lieu of $300,000 accrued directors’ fees for the period July 2015 to June 2021. In lieu of the $300,000 worth of accrued directors’ fees owed, Mr Mackenzie agreed to forgive $245,000 of the $300,000 worth of accrued directors’ fees, and to receive $50,000 worth of RMI fully paid ordinary shares plus $5,000 of statutory superannuation. RMC ANNUAL REPORT 2022 14 DIRECTORS’ REPORT (continued) E. EQUITY HOLDINGS AND MOVEMENTS DURING THE YEAR Share holdings of key management personnel (Includes shares held directly, indirectly and beneficially) Balance At the beginning of the Year Granted as Remuneration On-market Purchase/(Sale) Balance 30 June 2022 Directors W Davies W Mackenzie1 Zhang C J Livingstone T Matthews D Round A Kabunga2 N O’Brien Totals 4,335,382 2,092,847 136,793,768 - - - - - 143,221,997 - - - - - - - - - - 1,907,153 (136,793,768) - - - 56,965,053 - 4,335,382 4,000,000 - - - - 56,965,053 - (77,921,562) 65,300,435 1. For the period July 2015 to June 2021, $300,000 of Director fees accrued to Mr Mackenzie, and in lieu of this unpaid remuneration he agreed to receive $50,000 worth of RMI shares plus $5,000 of statutory superannuation. 2,153,995 shares were issued to Mr Mackenzie on 3 February 2022, and this number was determined by dividing $50,000 by the volume weighted average sale price of RMI shares sold on ASX during the 20 consecutive trading days prior to the date of the Annual General Meeting held on 21 January 2022. 2. On 3 February 2022 the Company issued 34.375 million fully paid ordinary shares to a related party of the Executive Chairman, Kabunga Holdings Pty Ltd, as consideration for the repayment of a $550,000 debt owing to Kabunga Holdings Pty Ltd. There are no option holdings of key management personnel as at year end (2021: nil). F. OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL Office Usage Warwick Davies is a previous Director, is also shareholder and Director of Fairstone Holdings Pty Ltd (Fairstone). During the year Fairstone provided office usage to the Company amounting to $1,439 for the year ended June 2022 (2021: $4,080). Advances from Previous Managing Director These advances were interest free and unsecured. Mr Davies had agreed not to call for the outstanding payable balances prior to 30 September 2022 unless Resource Mining Corporation Limited is in a position to repay the amounts. During the 2021/2022 year, the Managing Director made $66,059 worth of advances to the Company which were repaid in December 2021 (2021: advances made to the Company $18,953, and $29,234 repaid). Director Fees Forgiven For the period July 2015 to June 2021, $300,000 of remuneration for previous RMI Director, Mr William Mackenzie has accrued, but not been paid. Mr Mackenzie agreed to receive $50,000 worth of RMI fully paid ordinary shares plus $5,000 of statutory superannuation in lieu of $300,000 in unpaid remuneration for the period July 2015 to June 2021. The actual number of shares issue was determined by dividing $50,000 by the volume weighted average sale price of share sold on ASX during the 20 consecutive trading days prior to the date of the Annual General Meeting held on 21 January 2022. The fair value of the shares on issue date was $37,076. Kabunga Holdings loan On 3 February 2022 the Company issued 34.375 million fully paid ordinary shares to a related party of the Executive Chairman, Kabunga Holdings Pty Ltd, as consideration for the repayment of a $550,000 debt owing to Kabunga Holdings Pty Ltd. As at 30 June 2022, the Company owes a $649,186 debt to Kabunga Holdings Pty Ltd. The original debtholders assigned their debt to Kabunga Holdings Pty Ltd as follows: • • $475,000 which was borrowed by the Company from Sinom (Hong Kong) Limited. Sinom is an entity controlled by previous Company Director Zhang Chi. $724,186 is owing by the Company to Fairstone Holdings Pty Ltd, and entity controlled by previous Company Director Warwick Davies. The Company held a General Meeting on 29 September 2022 where shareholders approved the issue of 10,470,742 Shares and 2,094,118 Options with an expiry date of 20 May 2025 and an exercise price of $0.08 to Kabunga Holdings Pty Ltd by way of repayment of the $649,186 debt. RMC ANNUAL REPORT 2022 15 DIRECTORS’ REPORT (continued) Other transactions There were no other transactions with key management personnel during the year. G. USE OF REMUNERATION CONSULTANTS No remuneration consultants were engaged by the Company during the year. H. VOTING OF SHAREHOLDERS AT LAST YEAR’S ANNUAL GENERAL MEETING The Company received 100% of ‘yes’ votes for its remuneration report for the 2021 financial year and did not receive any specific feedback at the AGM or throughout the year on its remuneration practices. This is the end of audited remuneration report. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company does not have insurance for Directors and Officers of the Company. CORPORATE GOVERNANCE In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Resource Mining Corporation Limited support and adhere to the principles of corporate governance. Please refer to the Company’s website for details of corporate governance policies: http://resmin.com.au/corporate/corporate- governance/. AUDITOR BDO Audit (WA) Pty Ltd was appointed as auditors in November 2012 in accordance with section 327 of the Corporations Act 2001. NON-AUDIT SERVICES The Board of Directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the services disclosed below did not compromise the external auditor’s independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. BDO Corporate Finance (WA) Pty Ltd were paid fees for non-audit services totalling $41,550 during the year ended 30 June 2022 (2021: nil). AUDITOR’S INDEPENDENCE DECLARATION The Auditor’s Independence Declaration is included after the Auditor’s Report in this annual report. MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR Subsequent to year end, the following occurred: • On 14 July 2022, the Chairman, Asimwe Kabunga made an off-market share acquisition of 13,746,883 fully paid ordinary shares for a non-cash consideration with a deemed value of $0.10 per share. • On 29 September 2022 the Company held a General Meeting and all resolutions were passed on a poll. Amongst other resolutions passed, shareholders approved of the Massive Nickel Pty Ltd acquisition, and the issue of 10,470,742 Shares and 2,094,118 Options with an expiry date of 20 May 2025 and an exercise price of $0.08 to Kabunga Holdings Pty Ltd by way of repayment of the Company’s $649,186 debt to Kabunga Holdings Pty Ltd. There are no other matters or circumstances that have arisen since 30 June 2022 that have or may significantly affect the operations, results, or state of affairs of the Group in future financial years. RMC ANNUAL REPORT 2022 16 DIRECTORS’ REPORT (continued) Signed in accordance with a resolution of the Directors Asimwe Kabunga Executive Chairman and Director Dated at Perth 30th day of September 2022 RMC ANNUAL REPORT 2022 17 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the year ended 30 June 2022 Other Income Sale of subsidiary Director Fees Forgiven Finance Income – fair value adjustment of loans Interest income Total other income Expenses Administration and corporate expenses Share based payment expense Exploration expenditure Exploration expenditure – acquisition costs Borrowing costs Total expenses PROFIT/(LOSS) BEFORE INCOME TAX Note 2 12(c) 3(a) 18 3(b) 3(c) 3(d) Consolidated 2022 $ 4,856,783 245,000 - 40 5,101,823 (713,654) (546,400) (574,324) - (354,320) 2021 $ - - 650,125 - 650,125 (280,433) - (219,417) (474,025) (421,070) (2,188,697) (1,394,945) 2,913,126 (744,820) INCOME TAX BENEFIT / (EXPENSE) 5 - - PROFIT/(LOSS) AFTER INCOME TAX FOR THE YEAR 2,913,126 (744,820) Total profit/(loss) is attributable to: Owners of Resource Mining Corporation Limited Non-Controlling Interests OTHER COMPREHENSIVE INCOME/(LOSS) Items that maybe re-classified to profit or loss Exchange translation difference 16 2,960,669 (47,543) 2,913,126 (733,705) (11,115) (744,820) 15 (185,577) (16,601) OTHER COMPREHENSIVE INCOME/(LOSS) (185,577) (16,601) TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR 2,775,092 (761,421) Total comprehensive income/(loss) is attributable to: Owners of Resource Mining Corporation Limited Non-Controlling Interests 2,822,635 (47,543) 2,775,092 (750,306) (11,115) (761,421) PROFIT/(LOSS) PER SHARE FOR THE YEAR ATTRIBUTABLE TO THE MEMBERS OF RESOURCE MINING CORPORATION LIMITED Basic and diluted earnings/(loss) per share (cents per share) 4 0.82 (0.24) The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. RMC ANNUAL REPORT 2022 18 CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June 2022 CURRENT ASSETS Cash and cash equivalents Receivables and other current assets Total Current Assets NON CURRENT ASSETS Plant and equipment Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Interest bearing liabilities Non-interest bearing liabilities Provisions Total Current Liabilities TOTAL LIABILITIES Note Consolidated 30 June 2022 $ 30 June 2021 $ 6 8 9 10 11 12 13 1,728,598 42,589 1,771,187 - - 43,680 22,097 65,777 75,014 75,014 1,771,187 140,791 559,935 1,767 649,186 - 1,098,212 2,854 4,901,075 33,655 1,210,888 6,035,796 1,210,888 6,035,796 NET ASSETS / (NET ASSET DEFICIENCY) 560,298 (5,895,005) EQUITY Issued capital Reserves Accumulated losses Capital and reserves attributable to owners of Resource Mining Corporation Limited Non-controlling interests 14 15 16 66,921,753 651,415 (66,954,214) 618,954 (58,656) 63,768,599 262,392 (69,914,883) (5,883,892) (11,113) TOTAL EQUITY / (DEFICIENCY IN EQUITY) 560,298 (5,895,005) The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. RMC ANNUAL REPORT 2022 19 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2022 Group Issued Capital Accumulated Losses Reserves $ $ $ Non- controlling Interests $ Total $ Year ended 30 June 2022 Balance at 1 July 2021 Profit/(Loss) for the year Other comprehensive loss for the year Total comprehensive profit/(loss) for the year Transactions with owners in their capacity as owners Shares issued Cost of share issues Exercise of options Options issued to Corporate Advisor 63,768,599 - (69,914,883) 2,960,669 262,392 - (11,113) (47,543) (5,895,005) 2,913,126 - - (185,577) - (185,577) 63,768,599 (66,954,214) 76,815 (58,656) (3,167,456) 3,291,875 (178,721) 40,000 - - - - - - - - 574,600 - - - - 3,291,875 (178,721) 40,000 574,600 560,298 Balance at 30 June 2022 66,921,753 (66,954,214) 651,415 (58,656) Group Issued Capital Accumulated Losses Reserves $ $ $ Non- controlling Interests $ Total $ Year ended 30 June 2021 Balance at 1 July 2020 Loss for the year Other comprehensive loss for the year Total comprehensive profit/(loss) for the year Transfer of convertible notes reserve to accumulated losses Transactions with owners in their capacity as owners Shares issued Fair value adjustment to related party borrowings 63,294,571 - (69,576,673) (733,705) 585,555 - - (11,115) (5,696,547) (744,820) - - - - (16,601) - (16,601) (733,705) 395,495 (16,601) (395,495) (11,115) - (761,421) - 474,028 - - - - 88,933 2 - 474,030 88,933 Balance at 30 June 2021 63,768,599 (69,914,883) 262,392 (11,113) (5,895,005) The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. RMC ANNUAL REPORT 2022 20 CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 30 June 2022 Note Consolidated 2022 $ 2021 $ CASH FLOWS FROM OPERATION ACTIVITIES Payments to suppliers and employees Interest income received Other income received, including GST refunds Interest expense/finance costs paid Net Cash Utilised In Operating Activities 7(a) CASH FLOWS FROM INVESTING ACTIVITIES Cash disposed on sale of subsidiary Net Cash Utilised In Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Proceeds from borrowings and advances Repayment of borrowings and advances Cost of issue of shares Net Cash From Financing Activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of exchange rate changes on cash and cash equivalents 7(b) 7(b) (578,376) 40 23,687 (771) (555,420) (34,321) (34,321) 2,360,000 145,747 (129,909) (93,179) 2,282,659 1,692,918 43,680 (8,000) Cash and cash equivalents at the end of the year 6 1,728,598 (320,195) - 17,726 (1,186) (303,655) - - - 337,056 (29,234) - 307,822 4,167 43,962 (4,449) 43,680 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. RMC ANNUAL REPORT 2022 21 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES These consolidated statements and notes represent those of Resource Mining Corporation Limited (“Company”) and controlled entities (the “Group”). Resource Mining Corporation Limited is a listed public company, incorporated and domiciled in Australia. The financial report was authorised for issue on 30th September 2022 by the Board of Directors. (a) Basis of Preparation and Accounting Policies The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The Group is a for profit entity for financial reporting purposes under Australian Accounting Standards. The financial report has also been prepared on a historical cost basis. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied to all years presented, unless otherwise stated. The consolidated financial statements are presented in Australian dollars. The functional currency of Resource Mining Corporation Limited and its subsidiaries is Australian dollars, except for Eastern Nickel Tanzania whose functional currency is Tanzanian Shillings. (b) Statement of Compliance The financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board and International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. (c) Going Concern The financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activities and the realisation of assets and settlement of liabilities in the normal course of business. As disclosed in the financial statements, the Group incurred a profit of $2,913,126 and had net cash outflows from operating activities of $555,420. At 30 June 2022, the Company had $1,728,598 in cash and cash equivalents. For the Group to continue to carry out its exploration activities, meet its expenditure requirements and continue as a going concern it is dependent on securing additional funding. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern. For the Group to be able to continue to carry out its exploration activity and to have sufficient working capital, it is dependent on the financial support from its shareholders to fund its working capital requirements and/or successfully raising capital. The Directors are satisfied they will be able to raise additional working capital as required and thus it is appropriate to prepare the financial statements on a going concern basis. In arriving at this position, the Directors have considered the following matters: • Ongoing financial support from shareholders; • Successfully raising funds through debt and/or equity. The Group had successfully raised $2,141,279 (before costs) via Placements, and raised $40,000 via the exercise of unlisted options during the year, which supports the Group’s ability to raise capital if required; and • The ability to reduce expenditure, where required. In the event that funding of an amount required to meet the future budgeted operational and investing activities of the Company is unavailable, the Directors would undertake steps to scale down its operations and reduce its discretionary expenditure in order to curtail cash outflows. The Directors have assessed the cash flow requirements for the 12-month period from the date of approval of the financial statements and its impact on the Group and believe there will be sufficient funds to meet the Group’s working capital requirements. Should the Group not be able to continue as a going concern, it may be required to realise its assets and discharge its liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements and that the financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or liabilities that might be necessary should the Group not continue as a going concern. RMC ANNUAL REPORT 2022 22 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES - continued (d) New and Amended Accounting Standards and Interpretations Early adoption of accounting standards The Group has not elected to apply any pronouncements before their operative date in the annual reporting year beginning 1 July 2021. A number of new or amended standards became applicable for the current reporting period for which the Group has adopted. None of these standards had a material effect on the Group. New and amended standards not yet adopted by the Group 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 2022. The Group’s assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out below. AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current AASB 2020-1 makes amendments to AASB 101 Presentation of Financial Statements to clarify requirements for the presentation of liabilities in the statement of financial position as current or noncurrent. A liability is classified as current if the entity has no right at the end of the reporting period to defer settlement for the liability for at least 12 months after the reporting period. The AASB recently issued amendments at AASB 101 to clarify the requirements for classifying liabilities as current. Specifically: • clarifying that the classification of a liability as either current or non-current is based on the entity’s rights at the end of the reporting period; • stating that management’s expectations around whether they will defer settlement or not does not impact the classification of the liability; • adding guidance about lending conditions and how these can impact classification; and • including requirements for liabilities that can be settled using an entity’s own instruments. This new standard is not expected to impact the Group’s reporting. There are no other material new or amended standards not yet adopted by the Group. (e) Significant Accounting Estimates and Judgements Estimates and judgements incorporated into the financial report are continually evaluated and are based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. Commitments - Exploration The Group has certain minimum exploration commitments to maintain its right of tenure to its’ exploration permits. These commitments require estimates of the cost to perform exploration work required under this permit. Discount rate on borrowings As some of the Company’s borrowings are on interest-free terms, present value calculations have been performed on the basis of an implied 14% discount rate as determined by the Directors. Coronavirus (COVID-19) Pandemic Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the Group based on known information. Currently there is no significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the Group unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic. Share based payment transactions The Company 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 an internal valuation using a Black-Scholes option pricing model, using the assumptions detailed in Note 18. For equity transactions with consultants and other employees, the fair value reflects the value attributable to services where applicable. Where there is no quantifiable value of services the value of options is calculated using the Black and Scholes option pricing model, or the quoted bid price where applicable. RMC ANNUAL REPORT 2022 23 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES - continued (f) Principles of Consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Resource Mining Corporation Limited (“Company” or “Parent Entity”) as at 30 June each year and the results of all subsidiaries for the year then ended. Resource Mining Corporation Limited and its subsidiaries together are referred to in these financial statements as the “Group”. Subsidiaries are all entities (including structured entities) over which the Company has control. The Company controls an entity when the Company 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 deconsolidated from the date that control ceases. All inter-group balances and transactions between entities in the Group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity. Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated Statement of Profit or Loss and other Comprehensive Income, Statement of Changes in Equity and Statement of Financial Position respectively. (g) Foreign Currency Transaction and Balances Functional and presentation currency The functional currency of each of the entities in the Group is measured using the currency of the primary economic environment in which the entity operates. The Group’s financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency. Transaction and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Exchange differences arising on the transaction of monetary items are recognised in the Statement of Profit or Loss and Other Comprehensive Income, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange differences are recognised in the Statement of Profit or Loss and Other Comprehensive Income. Controlled entities The financial results and position of foreign operations whose functional currency is different from the presentation currency are translated as follows: • • • assets and liabilities are translated at year-end exchange rates prevailing at that reporting date; income and expenses are translated at average exchange rates for the period; and retained earnings are translated at the exchange rates prevailing at the date of transaction. Exchange differences arising on translation of foreign operations are transferred directly to the foreign currency translation reserve in the Statement of Financial Position. These differences are recognised in the Statement of Profit or Loss and Other Comprehensive Income in the period in which the operation is disposed of. 2. SALE OF SUBSIDIARY On 12 August 2021, the Company’s subsidiary, Resource Exploration Pty Ltd (REX), signed a Share Purchase Agreement (SPA) with Regency Mines Australasia Pty Ltd (Purchaser) to sell 100% of the issued share capital in REX’s subsidiary, Niugini Nickel Pty Ltd (NN). NN owns 100% of the Wowo Gap Nickel Laterite Project in Papua New Guinea. Regency Mines Australasia Pty Ltd is a wholly owned subsidiary of unrelated party, Corcel plc. As consideration for the sale, Corcel released all liabilities and obligations in connection with its $4,761,087 of loans owing by the Company. The Company obtained the approval of its Shareholders at a Shareholder meeting held on 8 October 2021. On 18 October 2021, the sale was completed. RMC ANNUAL REPORT 2022 24 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 2. SALE OF SUBSIDIARY - continued A gain of $4,856,783 on sale of the subsidiary has been realised in the profit or loss for the period ended 30 June 2022. Consideration received – value of loan released Carrying amount of net liabilities/(assets) of subsidiary sold held by the group Currency translation differences Total gain from disposal of subsidiary 3. EXPENSES Exploration and Evaluation Expenditure 18 October 2021 $ 4,761,087 (74,235) 169,931 4,856,783 Exploration expenditure is expensed to the profit or loss statement as and when it is incurred and included as part of cash flows from operating activities. Acquisition costs are expensed to the profit or loss statement as and when it is incurred and included as part of cash flows from investing activities. Restoration, rehabilitation and environmental costs necessitated by exploration and evaluation activities are expensed as incurred and treated as exploration and evaluation expenditure. The Group has two tenements in Tanzania. Borrowing Costs Refer to the accounting policy notes under Interest Bearing Liabilities and Non-Interest Bearing Liabilities. RMC ANNUAL REPORT 2022 25 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 3. EXPENSES - continued (a) Administration and Corporate Expenses Compliance and regulatory expenses Consultants Non-Executive Directors’ fees Legal fees Travel and accommodation Executive Directors’ fees Other expenses Occupancy Insurance Superannuation (b) Exploration Expenditure Depreciation – exploration equipment Other exploration and project costs Consolidated 2022 $ 132,715 269,770 80,932 100,278 41,876 40,809 18,039 14,573 12,389 2,273 713,654 - 574,324 574,324 2021 $ 75,597 105,398 50,000 16,923 - - 2,083 23,265 7,167 - 280,433 9,348 210,069 219,417 (c) Exploration expenditure – acquisition costs Acquisition of Tanzanian project - 474,025 (d) Borrowing costs Finance costs - implicit interest on fair value adjustments of Sinom loans – refer note 12(b) Finance costs – implicit interest on fair value adjustments of Corcel loans – refer note 12(c) Loss on settlement of debt Finance charges on insurance funding 4. EARNINGS/(LOSS) PER SHARE 68,777 250,397 319,174 34,375 771 354,320 20,156 399,728 419,884 - 1,186 421,070 Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Company, 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 year. Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. Basic and diluted earnings/(loss) per share (cents per share) Earning/(loss) used in the calculation of weighted average basic and diluted loss per share Weighted average number of ordinary shares outstanding during the period used in the calculation of basic and diluted loss per share 2022 0.82 2021 (0.24) 2,913,126 (733,705) Number of shares Number of shares 357,164,321 307,549,857 RMC ANNUAL REPORT 2022 26 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 5. INCOME TAX The charge for current income tax expenses is based on the profit for the year adjusted for any non-assessable or disallowable items. It is calculated using tax rates that have been enacted or are substantively enacted by the reporting date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amount in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the Statement of Profit or Loss and Other Comprehensive Income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary difference can be utilised. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. (a) Income Tax Expense A reconciliation of income tax (benefit) / expense applicable to accounting profit before income tax at the statutory income tax rate to income tax expense at the Company’s effective income tax rate is as follows: Profit/(loss) before tax Prima facie income tax (benefit) @ 30% Add: Non deductible expenses Temporary differences and losses not recognised Non-assessable income Tax differential Income tax (benefit) / expense attributable to operating loss Consolidated 2022 $ 2021 $ 2,913,126 873,938 309,494 259,773 (1,443,205) - - (744,820) (223,446) 22,567 235,388 - (34,509) - Tax Consolidation The Company and its 100% owned subsidiaries have formed a tax consolidated group. Under the tax consolidation regime, all members of a tax consolidated group are jointly and severally liable for the tax consolidated group’s income tax liabilities. The head entity of the tax consolidated group is Resource Mining Corporation Limited. (b) Net Deferred Tax Assets Not Recognised Relate to the Following: Unrecognised deferred tax assets / (liabilities): Deferred Tax Assets/(Liabilities) – Other Timing Differences, net Deferred Tax Assets – Business related costs – P&L Deferred Tax Assets - Capital losses Deferred Tax Assets - Tax losses – Australia* Deferred Tax Assets - Tax losses –Tanzania * Deferred Tax Assets – Exploration tax losses - PNG** Consolidated 2022 $ 7,725 9,545 4,955,390 6,620,512 67,234 - 2021 $ 6,900 - 465,432 6,416,790 12,965 7,048,272 11,660,406 13,950,359 * The tax losses do not expire under current legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Company can utilise the benefits. ** Includes all carry forward Exploration Expenditure for PNG (these losses expire 20 years after being incurred). RMC ANNUAL REPORT 2022 27 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 6. CASH AND CASH EQUIVALENTS Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and less bank overdraft, if any. Cash at bank and on hand 7. NOTES TO THE STATEMENT OF CASH FLOWS (a) Reconciliation from net profit/(loss) after tax to the net cash flow from operating activities Profit/(loss) after income tax Non-Cash Items: Sale of subsidiary Share based payment expense Finance income – fair value adjustment of loans Finance costs – implicit interest on fair value adjustment of loans Depreciation Acquisition of Tanzanian project Loss on settlement of debt Foreign exchange Movement in assets and liabilities Increase in trade and other receivables Decrease in trade and other payables Decrease in interest bearing liabilities Net cash used in operating activities Non-cash financing and investing activities: Note Note 12(c) 3(d) 3(c) Consolidated 2022 $ 1,728,598 2021 $ 43,680 Consolidated 2022 $ 2021 $ 2,913,126 (744,820) (4,859,481) 574,600 - 319,174 - - 34,375 2,698 (35,775) 496,950 (1,087) (650,125) 419,884 9,348 474,025 - - (3,371) 194,506 (3,102) (555,420) (303,655) On 3 February 2022, the Company repaid $550,000 worth of debt owing to Kabunga Holdings Pty Ltd through the issue of 34,375,500 shares to Kabunga Holdings Pty Ltd. The shares were valued at $584,375 based on an issue price of $0.0017 per share, the same price as placement shares issued on 31 January 2022. Refer to note 12. On 3 February 2022 2,153,995 shares were issued to the previous Chairman Mr William Mackenzie in lieu of $50,000 worth of Director fees owed. Refer to note 14. On 13 June 2022 2,500,000 shares were issued as consideration for an exclusive 120 day due option secured to acquire one nickel and two lithium projects in Finland. The fair value of this consideration is based on the closing share price on 13 June 2022 of $0.135. Refer to note 14. On 12 August 2021, Resource Exploration Pty Ltd (REX), signed a Share Purchase Agreement (SPA) with Regency Mines Australasia Pty Ltd (Purchaser) to sell 100% of the issued share capital in REX’s subsidiary, Niugini Nickel Pty Ltd (NN). As consideration for the sale, Corcel released all liabilities and obligations in connection with its $4,761,087 of loans owing by the Company. Refer to note 2. RMC ANNUAL REPORT 2022 28 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 7. NOTES TO THE STATEMENT OF CASHFLOWS - continued Net borrowings and advances at 1 July Cash flows: Sale of subsidiary Proceeds from borrowings and advances Repayment of borrowings and advances Loan assigned from trade and other payables Repayment via share issue Net (gain)/loss on measurement of loans fair value through equity Net (gain)/loss on measurement of loans fair value through profit or loss Finance costs – implicit interest on fair value adjustments of loans Net borrowings and advances as at 30 June 8. RECEIVABLES AND OTHER CURRENT ASSETS Note 12 2 12(d) 12(d) 12(b) 12(c) 3(d) 12 Consolidated 2022 $ 4,901,075 2021 $ 4,912,427 (4,761,087) 145,747 (129,909) 724,186 (550,000) - - 319,174 649,186 337,056 (29,234) - - (88,933) (650,125) 419,884 4,901,075 Receivables are initially recognised at fair value and subsequently measured at amortised cost, less provision for doubtful debts. Current receivables for GST are due for settlement within 30 days (Australian GST) and 12 months for PNG GST, and other current receivables within 12 months. Cash on deposit is not due for settlement until rights of tenure are forfeited or performance obligations are met. Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office in Australia and the Internal Revenue Commission in Papua New Guinea. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expenses. Receivables and payables are shown inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables. 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 taxation authority, are presented as operating cash flows. Current Secured cash Prepayments GST receivables Other receivables Fair Value and Risk Exposures: Consolidated 2022 $ - - 42,589 - 42,589 2021 $ 3,547 984 17,510 56 22,097 (i) Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value. (ii) The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security. (iii) Other receivables generally have repayments between 30 and 90 days. Receivables do not contain past due or impaired assets as at year end (2021: none). RMC ANNUAL REPORT 2022 29 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 9. PLANT AND EQUIPMENT Each class of plant and equipment is carried at cost, less where applicable, any accumulated depreciation and impairment losses. Plant and equipment: Plant and equipment are measured on historical cost basis less depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. 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 consolidated benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Profit or Loss and Other Comprehensive Income during the financial period in which they are incurred. Depreciation: The depreciable amount of all fixed assets is depreciated on a reducing balance commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Depreciation Rate Plant and Equipment 10 – 50% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the Consolidated Statement of Profit or Loss and Other Comprehensive Income. Cost Accumulated depreciation Movement in carrying amounts: Opening balance Disposals Depreciation expense Currency translation differences Closing balance Consolidated 2022 $ 3,052 (3,052) - 2021 $ 221,825 (146,811) 75,014 75,014 (75,014) - - - 95,531 - (9,348) (11,169) 75,014 The property, plant and equipment at cost opening balances of $75,014 related to the 100% owned subsidiary Niugini Nickel Ltd. This subsidiary was sold on 15 October 2021 as part of the divestment of the Wowo Gap Project. 10. TRADE AND OTHER PAYABLES These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 60 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. RMC ANNUAL REPORT 2022 30 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 10. TRADE AND OTHER PAYABLES - continued Trade payables Other payables and accruals Included in the above are related party payables: Consolidated 2022 $ 559,935 649,186 2021 $ 679,478 418,734 1,209,120 1,098,212 Trade payables and accruals – related parties – refer note 17(b) 147,616 994,810 Fair Value and Risk Exposures (i) Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value. (ii) Trade and other payables are unsecured, non-interest bearing and usually paid within 60 days of recognition, except for payables to Directors and their related entities for remuneration. 11. INTEREST BEARING LIABILITIES Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised costs. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit of loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan, capitalised as a prepayment and amortised over the period of the facility to which it relates. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Current Insurance premium funding 12. NON-INTEREST BEARING LIABILITIES Current Advances from previous Managing Director Unsecured loans and advances – Sinom (discounted) Unsecured loans and advances – Corcel (discounted) Unsecured loans and advances – Kabunga Holdings (undiscounted) Other loan Note 12(a) 12(b) 12(c) 12(d) 12(e) Consolidated 2022 $ 1,767 2021 $ 2,854 Consolidated 2022 $ - - - 649,186 - 2021 $ 66,059 296,223 4,510,690 - 28,103 649,186 4,901,075 (a) Advances from previous Managing Director These advances were repaid in December 2021 and were interest free and unsecured. During the 2021/2022 year, the previous Managing Director advanced a total of $11,000 (interest free) and $77,059 was repaid by the Company during the year (2021: advances made to the Company $18,953, and $29,234 repaid). (b) Unsecured loans and advances due to Sinom Sinom has also provided additional interest free unsecured advances to the Company. During the year these advances totalled $110,000 (2021: $290,000). These advances were unsecured with no set repayment date. Sinom agreed not to call for repayment of these advances unless the Company is in a position to repay the amounts. RMC ANNUAL REPORT 2022 31 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 12. NON-INTEREST BEARING LIABILITIES - continued In the prior year, for accounting purposes the value of loans due to Sinom were discounted by applying a market interest rate of 14% with an assumed repayment date of 31 December 2022. The measurement of the loans at fair value resulted in a gain of $88,933 recorded in equity to the Capital Contribution Reserve for the year ended 30 June 2021. As a result of the effective interest calculation, $68,777 of finance costs were recorded during the year ended 30 June 2022 (2021: $20,156). In November 2021, the unsecured loans due to Sinom were assigned to Kabunga Holdings Pty Ltd. As at 30 June 2022 the undiscounted unsecured loans and advances due to Sinom are nil. (2021: $365,000). Movement - Unsecured loans and advances due to Sinom Opening balance New loan to repay convertible notes Assignment of loans to Corcel plc Other advances Net (gain)/loss on measurement of loans at fair value through equity as an increase in Capital Contribution Reserve Finance costs – implicit interest on fair value adjustments of loans Assignment of loans to Kabunga Holdings Pty Ltd Closing balance – discounted Sinom loans and advances Movement - Unsecured loans and advances due to Sinom Opening balance New loan to repay convertible notes Assignment of loans to Corcel plc Other advances Assignment of loans to Kabunga Holdings Pty Ltd Consolidated 2022 $ 2021 $ 296,223 - - (73,211) - 68,778 (291,790) - 365,000 110,000 (475,000) 1,126,087 2,000,000 (3,051,087) 290,000 (88,933) 20,156 - 296,223 1,126,087 2,000,000 (3,051,087) 290,000 - Closing balance - undiscounted Sinom loans and advances - 365,000 (c) Unsecured loans due to Corcel plc For accounting purposes, the value of loans due to Corcel have been discounted by applying a market interest rate of 14%. The measurement of the loans at fair value resulted in a nil (loss)/gain (2021: $650,125) through profit or loss. As a result of the effective interest calculation, finance costs of $250,397 were recorded during the year ended 30 June 2022 (2021: $399,728). The unsecured loans due to Corcel plc were repaid in October 2021. Movement - Unsecured loans due to Corcel Opening balance Assignment of loans by Sinom Loan repayment Net (gain)/loss on measurement of loans at fair value on assignment through profit or loss Finance costs – implicit interest on fair value adjustments of loans Closing balance – discounted Corcel loans The undiscounted underlying loan balances are as follows: Loans A & B – repayable no earlier than 30/9/2021* Loan C – repayable no earlier than 30/9/2021* Loan D – repayable no earlier than 14/01/2022 Closing balance – undiscounted Corcel loans RMC ANNUAL REPORT 2022 Consolidated 2022 $ 4,510,690 - (4,761,087) - 250,397 - - - - - 2021 $ 1,710,000 3,051,087 - (650,125) 399,728 4,510,690 1,710,000 1,051,087 2,000,000 4,761,087 32 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 12. NON-INTEREST BEARING LIABILITIES (continued) The key terms agreed are as follows: • • • The loans are unsecured. The loans are interest free. The loans are repayable at any time on or following the dates in the table above forthwith on demand by Corcel. Corcel must give RMC at least thirty days’ notice prior to any requested repayment date for loans C and D. RMC may repay the loans, in whole or in part, at any time prior to Corcel providing notice of the requested repayment date. * On 6 September 2021, the Company announced that Corel agreed to extend the repayment dates of debt tranches A to C to 31 October 2021 to allow the Company time to obtain Shareholder approval for the divestment of the Wowo Gap Project. Corcel plc is an unrelated UK company listed on AIM. (d) Unsecured loans due to Kabunga Holdings Pty Ltd In November 2021, the following parties assigned their debt to Kabunga Holdings Pty Ltd: • • $475,000 which was owing by the Company to Sinom (Hong Kong) Limited (Sinom). Sinom is an entity controlled by previous Director Zhang Chi. During the year Sinom advanced $110,000 to the Company, and $724,186 which was owing by the Company to Fairstone Holdings Pty Ltd (Fairstone). Fairstone is an entity controlled by previous Director Mr Warwick Davies. This amount was previously included in trade creditors. Kabunga is unrelated to the Company and is owned and controlled by Executive Chairman Asimwe Kabunga. In addition, Kabunga holds 25% of the issued capital in Resource Mining Corporation Limited’s subsidiary, Eastern Nickel Pty Ltd, and Asimwe Kabunga is a director if that subsidiary. On 3 February 2022, the Company issued 34,375,000 shares to Kabunga to repay $550,000 of debt. The balance owing as at the date of this report amounts to $649,186. The Company proposed to issue 10,470,742 Shares and 2,094,118 Options with an expiry date of 20 May 2025 and an exercise price of $0.08 to Kabunga Holdings Pty Ltd by way of repayment of the $649,186 debt. This was approved by shareholders at the General Meeting held on 29 September 2022. (e) Other loan In the prior year, the other loan is a facility of USD 30,000 provided by Leticia Kabunga (the 1% shareholder of Eastern Nickel Tanzania Limited). As at 30 June 2021 A$28,103 had been drawn down. The loan was unsecured, interest free interest free with the principal to be repaid at 110% of the loan amount. The maturity date was 23 October 2021. 13. PROVISIONS Compensation Provision Obligations associated with compensation are recognised when the Group has an obligation which is probable, and the provision can be measured reliably. The provision is measured at the estimated value of the future expenditure. The determination of the provision requires judgement in terms of the best estimate of the costs of the compensation required. Current Provision for compensation Consolidated 2022 $ - 2021 $ 33,655 The movement during the year was due to the sale of Niugini Nickel Pty Ltd. Refer to note 2. 14. CONTRIBUTED EQUITY Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. Issued and fully paid 2022 Number 418,173,077 2021 Number 325,894,082 2022 $ 66,921,753 2021 $ 63,768,599 RMC ANNUAL REPORT 2022 33 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 14. CONTRIBUTED EQUITY - continued Movement in ordinary share capital of the Company: Opening balance Issued – acquisition of Eastern Nickel Pty Ltd Issued - placements Issued – settlement of debt Issued – Director fees Issued - option conversion Issued – Finnish due diligence Cost of issues Closing balance Note (a) (b) (c) (d) (e) Year ended 30 June 2022 Number of Shares $ 325,894,082 - 63,768,599 - Year ended 30 June 2021 Number of Shares 296,267,347 29,626,735 63,294,571 474,028 $ 51,250,000 34,375,000 2,153,995 2,000,000 2,500,000 - 418,173,077 2,320,000 584,375 50,000 40,000 337,500 (178,721) 66,921,753 - - - - - - 325,894,082 - - - - - - 63,768,599 (a) On 9 December 2021 14,375,000 shares were issued at 1.6c per share. On 31 January 2022 16,875,000 shares were issued at 1.6c per share. On 20 May 2022 10,000,000 shares were issued at 6.2c per share. On 24 June 2022 10,000,000 shares were issued at 12c per share. (b) On 3 February 2022 34,375,000 shares were issued as consideration for repayment of $550,000 of debt owing to Kabunga Holdings Pty Ltd. (c) On 3 February 2022 2,153,995 shares were issued to the previous Chairman Mr William Mackenzie in lieu of $50,000 worth of Director fees owed. (d) On 20 May 2022 2,000,000 options were exercised at an exercise price of 2c. (e) On 13 June 2022 2,500,000 shares were issued as consideration for an exclusive 120 day due option secured to acquire one nickel and two lithium projects in Finland. The fair value of this consideration is based on the closing share price on 13 June 2022 of $0.135. Options As at 30 June 2022, the following unlisted options were on issue (2021: nil): Number of Options Option Exercise Price A$ Option Expiry 2,000,000 8,000,000 5,000,000 $0.08 $0.10 $0.15 20/05/2025 25/05/2025 22/06/2025 Voting and dividend rights Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. Capital management When managing capital, management's objective is to ensure the entity continues as a going concern as well as maintains optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity. Management may in the future adjust the capital structure to take advantage of favourable costs of capital and issue further shares in the market. There are no plans to distribute dividends in the next year. Dividends The Group did not pay nor declare dividends in the last financial year (2021: nil). RMC ANNUAL REPORT 2022 34 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 15. RESERVES Foreign currency reserve Capital contributions reserve Convertible notes reserve Share based payment reserve (a) Foreign currency reserve Balance at the beginning of the year Currency translation differences arising during the period Balance at the end of the year Note (a) (b) (c) (d) Consolidated 2022 $ (12,118) 88,933 - 574,600 651,415 173,459 (185,577) (12,118) 2021 $ 173,459 88,933 - - 262,392 190,060 (16,601) 173,459 The foreign currency translation reserve is used to record exchange differences arising on translation of the Group entities that do not have a functional currency of Australian dollars and have been translated into Australian dollars for presentation purposes. (b) Capital contributions reserve Balance at the beginning of the year Net (gain)/loss on measurement of loans at fair value through equity as an increase in Capital Contribution Reserve 12(b) Balance at the end of the year 88,933 - 88,933 - 88,933 88,933 The capital contributions reserve is used to record the fair value adjustments of loans from shareholders who have provided the Company interest free loans and advances. (c) Convertible notes reserve Balance at the beginning of the year Transfer to accumulated losses upon redemption of the notes Balance at the end of the year (d) Share based payments reserve Balance at the beginning of the year Options issued to corporate advisors Balance at the end of the year RMC ANNUAL REPORT 2022 Consolidated 2022 $ - - - 2021 $ 395,495 (395,495) - Consolidated 2022 $ - 574,600 574,600 2021 $ - - 35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 16. NON-CONTROLLING INTERESTS Non-controlling interests Movement during the year: Balance at the beginning of the year Capital invested by non-controlling interests in subsidiaries Share of profit/(loss) for the period Share of other comprehensive loss Balance at the end of the year Non-controlling interests represent: Consolidated 2022 $ 2021 $ (58,657) (11,113) (11,113) - (47,543) - 58,657 - 2 (11,115) - (11,113) • • a 1% interest in Eastern Nickel Limited held by Leticia Herman Kabunga. A 25% interest in Eastern Nickel Pty Ltd held by Kabunga Holdings Pty Ltd . 17. RELATED PARTY TRANSACTIONS Subsidiaries The consolidated financial statements included the financial statements of Resource Mining Corporation Limited and the subsidiaries listed in the following table: Name Class of shares Country of incorporation % Interest Resource Exploration Pty Ltd Ordinary Australia Niugini Nickel Pty Ltd ** Ordinary Australia 2022 100% - Eastern Nickel Pty Ltd Eastern Nickel Tanzania Limited * * Ordinary Australia Ordinary Tanzania 75% 99%, held by Eastern Nickel Pty Ltd 2021 100% 100%, held by Resource Exploration Pty Ltd 75% 99%, held by Eastern Nickel Pty Ltd * The 75% interest in Eastern Nickel Pty Ltd was acquired in 2021. Refer to note 15 for details on the Eastern Nickel Group. ** On 12 August 2021, the Company’s subsidiary, Resource Exploration Pty Ltd (REX), signed a Share Purchase Agreement (SPA) with Regency Mines Australasia Pty Ltd (Purchaser) to sell 100% of the issued share capital in REX’s subsidiary, Niugini Nickel Pty Ltd (NN). NN owns 100% of the Wowo Gap Nickel Laterite Project in Papua New Guinea. Refer to note 2 for details. Ultimate Parent Resource Mining Corporation Limited is the ultimate Australian parent entity and the ultimate parent of the Group. Compensation of Key Management Personnel Short term benefits Post-employment benefits Consolidated 2022 $ 267,924 3,409 271,333 2021 $ 156,957 - 156,957 $147,616 of this remuneration remains unpaid (2021: $156,957). Refer to note 17(b) below. Transactions with Related Parties RMC ANNUAL REPORT 2022 36 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 17. RELATED PARTY TRANSACTIONS - continued Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. The following transactions occurred with related parties: a) Warwick Davies, previous Director, is also shareholder and Director of Fairstone Holdings Pty Ltd (Fairstone). During the year, Fairstone provided office usage to the Company amounting to $1,439 (2021: $4,080). For the period July 2015 to June 2021, $300,000 of remuneration for previous RMI Director, Mr William Mackenzie has accrued, but not been paid. Mr Mackenzie agreed to receive $50,000 worth of RMI fully paid ordinary shares plus $5,000 of statutory superannuation in lieu of $300,000 in unpaid remuneration for the period July 2015 to June 2021. The actual number of shares issue was determined by dividing $50,000 by the volume weighted average sale price of share sold on ASX during the 20 consecutive trading days prior to the date of the Annual General Meeting held on 21 January 2022. The fair value of the shares on issue date was $37,076. b) Outstanding balances arising from services Current payables (included in trade creditors and accruals) Key management personnel Consolidated 2022 $ 2021 $ 147,616 994,810 Outstanding balances relate to remuneration services during 2015 to 2022 (inclusive of GST where applicable). c) Loans and Advances from related parties Advances (unsecured and interest free) from related parties Warwick Davies Balance at the beginning of the year Loans/Advances advanced Repaid Balance at the end of the year Note Loans (unsecured and interest free) from related parties Sinom (Hong Kong) Limited (i) Balance at the beginning of the year - undiscounted Advances during the year New loan to repay convertible notes Assignment of loans to Corcel Assignment of loans to Kabunga Holdings Pty Ltd Consolidated 2022 $ 66,059 11,001 (77,059) - Consolidated 2022 $ 365,000 110,000 (475,000) - - 2021 $ 76,340 18,953 (29,234) 66,059 2021 $ 1,126,087 290,000 2,000,000 (3,051,087) Balance at the end of the year – undiscounted 12(b) - 365,000 (i) Non-Executive Director Mr Zhang Chi is the Managing Director and Shareholder of Sinom (Hong Kong) Limited. Mr Zhang Chi resigned as a Director on 22 November 2021. Kabunga Holdings Pty Ltd Balance at the beginning of the year Assignment of loans from Sinom Assignment of loans from William Mackenzie Repayment via share issue Balance at the end of the year RMC ANNUAL REPORT 2022 Consolidated 2022 $ - 475,000 724,186 (550,000) 649,186 2021 $ - - - - - 37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 18. SHARE BASED PAYMENTS Total costs and share issue costs arising from share-based payment transactions recognised during the year were as follows: Recognised share-based payments costs Lead manager options Consultant options Total expense and issue costs arising from share-based payment transactions Options Consolidated 2022 $ 28,200 546,400 574,600 2021 $ - - - On 31 January 2022 the Company issued 2,000,000 options with an expiry of 31 January 2025 and an exercise price of $0.02 for lead consultant services in respect to capital raising. The estimated fair value of each share option granted is $0.0141. This was calculated by applying a Black Scholes option pricing model. The model inputs were the share price at grant date of $0.017, exercise price of $0.02, expected volatility of 162.86 percent, no expected dividends, contractual life of 3 years, and a risk-free interest rate of 1.19 percent. To allow for the effects of early exercise, it was assumed that the lead consultant would exercise the options after vesting date when the share price was twice the exercise price. Historical volatility was 817.55 percent, which includes the early years of the Company’s life; the Company expects the volatility of tis share price to reduce as it matures. On 24 May 2022 the Company issued 8,000,000 options with an expiry of 4 May 2025 and an exercise price of $0.10, to a consultant for corporate advisory and investor relations support. The estimated fair value of each share option granted is $0.0683. This was calculated by applying a Black Scholes option pricing model. The model inputs were the share price at grant date of $0.09, exercise price of $0.10, expected volatility of 135.83 percent, no expected dividends, contractual life of 3 years, and a risk-free interest rate of 2.80 percent. To allow for the effects of early exercise, it was assumed that the lead consultant would exercise the options after vesting date when the share price was twice the exercise price. Historical volatility was 817.55 percent, which includes the early years of the Company’s life; the Company expects the volatility of its share price to reduce as it matures. The fair value at grant date of the options has been estimated using the Black-Scholes option pricing formula, taking into account the terms and conditions upon which the options were granted. The options vested immediately upon issue and the contractual life of each option is 3 years. The inputs used to calculate the fair value of these options are set out above. The expected volatility is based on the historic volatility (calculated based on the weighted average remaining life of the share options), adjusted for any expected changes to future volatility due to publicly available information. The following table outlines the number and movements in share options during the year: Outstanding as at 1 July Granted during the year Exercised during the year Outstanding at end of the year Exercisable as at 30 June 2022 Number of Options - 17,000,000 (2,000,000) 15,000,000 15,000,000 2021 Number of Options - - - - - The Weighted Average Exercise Price (“WAEP”) for the year ended 30 June 2022 is $0.11. All options refer to options over ordinary shares of Resource Mining Corporation Limited which are exercisable on a one for one basis. RMC ANNUAL REPORT 2022 38 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 19. PARENT ENTITY DISCLOSURES Current assets Non-current assets Total assets Current liabilities Total liabilities Net liabilities Issued capital Reserves Accumulated losses Total equity Parent Entity 2022 $ 1,742,823 228,960 1,971,783 1,173,274 1,173,274 2021 $ 13,646 - 13,646 5,930,022 5,930,022 798,508 (5,916,376) 66,921,753 663,533 (66,786,777) 63,768,599 88,933 (69,773,908) 798,508 (5,916,376) Profit/(loss) for the year Total comprehensive profit/(loss) for the year 2,987,131 2,987,131 (703,088) (703,088) i) Guarantees: No guarantees have been entered into by the parent entity on behalf of the subsidiaries. ii) Contingent liabilities: No contingent liabilities exist. 20. CONTINGENCIES Resource Mining Corporation Limited and its controlled entities do not have any known material contingent assets or liabilities as at 30 June 2022. (30 June 2021: 1.5% net smelter royalty is payable to Kabunga Holdings Pty Ltd on future production from the Kabulwanyele Nickel Project in Tanzania). 21. REMUNERATION OF AUDITORS Amount received, or due and receivable, by the auditors for: Auditing and reviewing of financial reports Other services – corporate finance 22. COMMITMENTS Mineral Tenement Commitments Consolidated 2022 $ 54,550 41,550 96,100 2021 $ 37,718 - 37,718 In order to maintain current rights of tenure to mining tenements, the Group has exploration and evaluation expenditure obligations up until the expiry of those licences. The following stated obligations are not provided for in the financial statements and represent a commitment of the Group for Tanzania. Within 1 Year Later than 1 year but not later than five years Total Consolidated 2022 $ 12,756 38,268 51,024 2021 $ 27,784 35,216 63,000 RMC ANNUAL REPORT 2022 39 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 23. FINANCIAL RISK MANAGEMENT The Group’s activities expose it to a variety of financial risks, including market risk (including currency risk), credit risk and liquidity risks. 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 business. To date, the Group has not used derivative financial instruments. The Group uses different methods to measure different types of risk to which it is exposed. Risk Management Risk management is carried out by the Managing Director under policies approved by the Board of Group’s Directors and includes evaluation of financial risks. The Board provides principles for overall risk management and the finance function provides policies with regard to financial risk management that are defined and consistently applied. (a) Credit Risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or contract, leading to a financial loss. The maximum exposure to credit risk, excluding the value of any collateral or other security, at reporting date, is the carrying amount net of any provisions for impairment of debts, as disclosed in the Statement of Financial Position and notes to the financial statement. In the case of material cash deposited, credit risk is minimised by depositing with recognised financial intermediaries such as banks, subject to Australian Prudential Regulation Authority Supervision. For banks and financial institutions, only independently rated parties with a minimum rating of AA are accepted. The Group does not have any material risk exposure to any single debtor or Group of debtors under financial instruments entered into by it. (b) Liquidity and Capital Risk The Group has appropriate procedures in place to manage cash flows including continuous monitoring of forecast and actual cash flows to ensure funds are available to meet commitments. The objectives when managing the Group’s capital is to safeguard the business as a going concern, to maximise returns to shareholders and to maintain an optimal capital structure in order to reduce the cost of capital. The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period from the reporting date to the contractual maturity date. 6 to 12 months 1 to 5 years Over 5 years Financial liabilities 2022 Trade and other payables Interest bearing liabilities Non-interest bearing liabilities* 2021 Trade and other payables Interest bearing liabilities Less than 6 months 559,935 1,767 649,186 1,210,887 1,098,212 2,854 - - - - - - Non-interest bearing liabilities 3,220,249 2,000,000 4,321,315 2,000,000 Total Cash Flows Carrying Value 559,935 559,935 1,767 1,767 649,186 649,186 1,210,887 1,210,887 1,098,212 1,098,212 2,854 2,854 5,220,249 4,901,075 6,321,315 6,002,141 - - - - - - - - - - - - - - - - * The fair value of non-interest bearing liabilities is considered the same as the carrying value as the time value of money from the date the debt was assigned to the date it will be repaid via issue of shares will not be material. (c) Interest Rate Risk The Group’s exposure to market risk for changes in interest rates relates primarily to interest on deposits with banking institutions. The sensitivities of a movement in interest rates have no material impact on the Group due to the small balances that are interest bearing. (d) Foreign Exchange Risk As a result of operations in Tanzania in both United States dollars and Tanzanian shillings, the Group’s Statement of Financial Position can be affected by movements in exchange rates. The Group does not hedge this exposure. RMC ANNUAL REPORT 2022 40 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 23. FINANCIAL RISK MANAGEMENT - continued The Group manages its foreign exchange risk by constantly reviewing its exposure to commitments payable in foreign currency and ensuring appropriate cash balances are maintained in Tanzanian shillings, to meet current operational commitments. The Group’s exposure to foreign exchange risk for changes in exchange rates relates has no material impact on the Group due to the small balances of cash, receivables and payables. Management believes the balance date risk exposures are representative of the risk exposure inherent in financial instruments. (e) Net Fair Values Disclosure of fair value measurements by level are as follows: • Level 1 – the fair value is calculated using quoted prices in active markets • Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) • Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data Fair values of other financial instruments The carrying value of assets and liabilities, due to their short term nature, are assumed to approximate their fair value other than the following non-interest bearing liabilities. These borrowings are on interest-free terms, and accordingly present value calculations have been performed on the basis of an implied 14% discount rate as determined by the Directors. Non-interest bearing liabilities measured at fair value – Level 2 Loan funds provided Net (gain)/loss on measurement of loans fair value through equity Net (gain)/loss on measurement of loans fair value through profit or loss Initial recognition of financial liabilities at fair value Finance costs – implicit interest on fair value adjustments of loans 12(b) 12(c) 3(d) Consists of: Non-interest bearing liabilities – Sinom loans Non-interest bearing liabilities – Corcel loans 12(b) 12(c) Consolidated 2022 $ - - - - - - - - - 2021 $ 5,126,087 (88,933) (650,125) 4,387,029 419,884 4,806,913 - 296,223 4,510,690 4,806,913 24. SEGMENT INFORMATION Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Managing Director. Management has determined the operating segments based on the reports reviewed by the board of directors that are used to make strategic decisions. The Group does not have any material operating segments with discrete financial information. The Group does not have any customers and all its’ assets and liabilities are primarily related to the mining industry and its operations are located within Papua New Guinea and Tanzania. The Tanzanian operations are not material for the year. The Board of Directors review internal management reports on a regular basis that is consistent with the information provided in the statement of profit or loss and other comprehensive income, statement of financial position and statement of cash flows. As a result, no reconciliation is required because the information as presented is what is used by the Board to make strategic decisions. RMC ANNUAL REPORT 2022 41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2022 _____________________________________________________________________________ 25. MATTERS SUBSEQUENT TO THE REPORTING PERIOD Subsequent to year end, the following occurred: • On 14 July 2022, the Chairman, Asimwe Kabunga made an off-market share acquisition of 13,746,883 fully paid ordinary shares for a non-cash consideration with a deemed value of $0.10 per share. • On 29 September 2022 the Company held a General Meeting and all resolutions were passed on a poll. Amongst other resolutions passed, shareholders approved of the Massive Nickel Pty Ltd acquisition, and the issue of 10,470,742 Shares and 2,094,118 Options with an expiry date of 20 May 2025 and an exercise price of $0.08 to Kabunga Holdings Pty Ltd by way of repayment of the Company’s $649,186 debt to Kabunga Holdings Pty Ltd. There are no other matters or circumstances that have arisen since 30 June 2022 that have or may significantly affect the operations, results, or state of affairs of the Group in future financial years. RMC ANNUAL REPORT 2022 42 DIRECTOR’S DECLARATION for the year ended 30 June 2022 1. In the opinion of the Directors: a) The financial statements and notes are in accordance with the Corporations Act 2001, including: i) giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its performance for the year then ended; and ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations), the Corporations Regulations 2001 and other mandatory professional reporting requirements; and iii) complying with International Financial Reporting Standards (IFRS) as stated in note 1 of the financial statements; and b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2022. This declaration is signed in accordance with a resolution of the Board of Directors. Asimwe Kabunga Executive Chairman and Director Dated this 30th day of September 2022 RMC ANNUAL REPORT 2022 43 Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth, WA 6000 PO Box 700 West Perth WA 6872 Australia INDEPENDENT AUDITOR'S REPORT To the members of Resource Mining Corporation Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Resource Mining Corporation Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2022, 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) Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance for the year ended on that date; and (ii) 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. BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 44 Material uncertainty related to going concern We draw attention to Note 1(c) 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. 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. Accounting for disposal of subsidiary Key audit matter How the matter was addressed in our audit As disclosed in Note 2 to the Financial Report, the Group disposed of its interests in Niugini Nickel Pty Ltd (NNPL), a controlled entity of wholly owned subsidiary Resource Exploration Pty Ltd (REX) on 18 October 2021. The accounting treatment applied to this disposal is a key audit matter due to the complexity and significance associated with the determination of the fair value of the sale consideration which comprised re- assignment of debt at date of disposal. Our procedures included, but were not limited to the following: • • • • • Reviewing the share purchase agreement to understand the key terms and conditions of the transaction; Assessing the carrying value of the disposed assets and liabilities of the subsidiary at the date of disposal; Assessing the fair value of consideration received and verifying to supporting documentation; Re-performing the calculation of the gain on disposal of subsidiary by comparing the consideration received to the carrying value of the identified assets and liabilities as at 18 October 2021; and Assessing the adequacy of the related disclosures in Note 2 to the Financial Report. 45 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 2022, 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. 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 (http://www.auasb.gov.au/Home.aspx) at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. 46 Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 12 to 17 of the directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Resource Mining Corporation Limited, for the year ended 30 June 2022, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit (WA) Pty Ltd Melissa Reid Director Perth 30 September 2022 47 Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth, WA 6000 PO Box 700 West Perth WA 6872 Australia DECLARATION OF INDEPENDENCE BY MELISSA REID TO THE DIRECTORS OF RESOURCE MINING CORPORATION LIMITED As lead auditor of Resource Mining Corporation Limited for the year ended 30 June 2022, 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 Resource Mining Corporation Limited and the entities it controlled during the period. Melissa Reid Director BDO Audit (WA) Pty Ltd Perth 30 September 2022 BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 48 ADDITIONAL SHAREHOLDER INFORMATION Additional information required by the Australian Securities Exchange Listing Rules and not disclosed elsewhere in this report is set out below. The information is current as at 23 September 2022. ANALYSIS OF SHAREHOLDING - Ordinary Shares Size of Holding 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – or more Number of Holders 489 543 237 530 180 Number of Shares % of Shares 174,038 1,519,032 1,864,844 19,176,158 395,439,005 0.04 0.36 0.44 4.68 94.48 TOTAL 1,979 418,173,077 100% 913 shareholders holding less than a marketable parcel. SUBSTANTIAL SHAREHOLDERS The following substantial shareholders have notified the Company in accordance with the Corporations Act 2001: Shareholder Name Kabunga Holdings Pty Ltd Topwei Two Pty Ltd Number of Shares 70,711,936 33,567,818 % of Shares 16.91% 8.03% TOP 20 SHAREHOLDERS The top 20 largest shareholders are listed below: Name KABUNGA HOLDINGS PTY LTD TOPWEI TWO PTY LTD MR ROHAN PATNAIK BNP PARIBAS NOMINEES PTY LTD AFRIKA KAZI LIMITED MS JOVITHA CHARLES JOSEPH MS LETICIA HERMAN KABUNGA MR WALEED KH S A A ESBAITAH ASENA HOLDINGS PTE LTD ROPA INVESTMENTS (GIBRALTAR) LIMITED MR YULONG GU THUNDER LUCK INTERNATIONAL LTD BEST VENTURE DEVELOPMENT LIMITED MR JIUMIN YAN MR MARC DOMINIQUE SENGES VEN CAPITAL PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED CLASSIC ROOFING PTY LIMITED BRISPOT NOMINEES PTY LTD MR HASHIMU MUSEDEM MILLANGA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Number of Shares 70,711,936 % of Shares 16.91 33,567,818 16,353,754 15,896,690 15,200,000 15,200,000 15,200,000 14,664,773 14,089,377 13,000,000 12,220,295 8,503,171 8,469,895 8,279,640 7,962,095 7,000,000 5,844,489 5,510,000 5,019,910 4,569,801 8.03 3.91 3.80 3.63 3.63 3.63 3.51 3.37 3.11 2.92 2.03 2.03 1.98 1.90 1.67 1.40 1.32 1.20 1.09 TOTAL TOP 20 HOLDERS 297,263,644 71.09% TOTAL REMAINING HOLDERS BALANCE 120,909,433 28.91% TOTAL 418,178,077 100% RMC ANNUAL REPORT 2022 49 ADDITIONAL SHAREHOLDER INFORMATION VOTING RIGHTS - Ordinary Shares Article 13.13 of the Constitution specifies that on a show of hands every member present in person, by attorney or by proxy shall have: a) b) for every fully paid share held by him one vote for every share which is not fully paid a fraction of the vote equal to the amount paid on the share over the nominal value of the shares. REQUIREMENT LISTING RULE 4.10.18 In accordance with the listing rule 4.10.18 the Company confirms that it is not currently subject to an on-market buyback. REQUIREMENT LISTING RULE 4.10.21 On 29 September 2022, the Company held a General Meeting, and all resolutions were passed on a poll. Amongst the resolutions passed was that for the purposes of Listing Rule 10.1, item 7 of section 611 of the Corporations Act and for all other purposes, approval was given for the Company to acquire all of the issued share capital in Massive Nickel Pty Ltd from Kabunga Holdings Pty Ltd (a company controlled by Mr Asimwe Kabunga), including the issue of 75,000,000 shares to Kabunga Holdings Pty Ltd (or it nominee(s)) in connection with that transaction, and for Kabunga Holdings Pty Ltd and its associates, as a result of that transaction, to acquire voting power in the Company of up to 24.61%. ANALYSIS OF OPTIONHOLDINGS – Unlisted Options Unlisted options exercisable at $0.08 per option, expiring 20 May 2025: Size of Holding 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – or more TOTAL Number of Holders - Number of Options % of Options - - - - - 1 1 - - - 2,000,000 2,000,000 - - - 100% 100% The following option holders holds more than 20% of these unlisted options: Optionholder Name TOPWEI TWO PTY LTD Number of Options % of Options 2,000,000 100% Unlisted options exercisable at $0.10 per option, expiring 25 May 2025: Size of Holding 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – or more TOTAL Number of Holders - Number of Options % of Options - - - - - 3 3 - - - 8,000,000 8,000,000 - - - 100% 100% RMC ANNUAL REPORT 2022 50 ADDITIONAL SHAREHOLDER INFORMATION The following option holders holds more than 20% of these unlisted options: Optionholder Name CONG MING LIMITED NEW STREET CAPITAL PTY LTD Number of Options % of Options 4,000,000 3,000,000 50% 37.5% Unlisted options exercisable at $0.15 per option, expiring 22 June 2025: Size of Holding 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – or more TOTAL Number of Holders - Number of Options % of Options - - - - - 7 7 - - - 5,000,000 5,000,000 - - - 100% 100% The following option holders holds more than 20% of these unlisted options: Optionholder Name MR ZULIANG PARK WEI + MS BAO HONG ZHANG < WEI &ZHANG SUPER FUND A/C> MR YING WANG MR BIN ZHOU Number of Options % of Options 1,500,000 1,000,000 1,000,000 30% 20% 20% VOTING RIGHTS - Options Options have no voting rights. INTEREST IN MINING TENEMENTS Tenement Location Tenement No. RMC Interest Kabulwanyele Tanzania PL/11534/2021 Kabulwanyele Tanzania PL/11535/2021 Kabulwanyele Tanzania PL/17691/2021* 74.25% 74.25% 74.25%* * Tenement applied for but not yet granted. RMC ANNUAL REPORT 2022 51 

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