Rexel Annual Report 2022

Plain-text annual report

Annual Report 2022 Corporate Directory Directors Mr Stephen Dennis Non-Executive Chairman Dr John Mair Non-Executive Director Mr Robert Ryan Non-Executive Director Mr Alex Passmore Managing Director Company Secretary Mr Christopher Hunt Banker Westpac Banking Corporation 40 St George’s Terrace Perth WA 6000 Auditor Pitcher Partners BA&A Pty Ltd Level 11 12-14 The Esplanade Perth WA 6000 Telephone: (08) 9322 2022 Facsimile: (08) 9322 1262 Solicitors Thomson Geer Level 27, Exchange Tower 2 The Esplanade Perth WA 6000 Telephone: (08) 9404 9100 Facsimile: (08) 9300 1338 K & L Gates Level 32 44 St George’s Terrace Perth WA 6000 Telephone: (08) 9216 0900 Facsimile: (08) 9216 0601 For shareholder information contact: Share Registry Computershare Limited Level 11 172 St George’s Terrace Perth WA 6000 Telephone: (08) 9323 2000 Facsimile: (08) 9323 2033 Stock Exchange ASX Limited Company Code RXL (Fully Paid Shares) Capital Structure 168,940,947 Fully paid ordinary shares 4,466,668 $0.433, 30 November 2022 options 4 holders 1,333,333 $1.438, 31 December 2023 options 1 holder 1,333,333 $1.813, 31 December 2023 options 1 holder 1,333,333 $2.188, 31 December 2023 options 1 holder 660,000 $0.763, 25 May 2024 options 2 holders 10,476,190 $0.988, 26 March 2025 options 1 holder 1,000,000 $0.720, 4 March 2026 options 1 holder For information on the Company contact Principal & Registered Office Level 2, 87 Colin Street West Perth WA 6005 Telephone: (08) 9226 0044 Facsimile: (08) 9322 6254 Email: admin@roxresources.com.au Web: www.roxresources.com.au Contents CHAIRMAN’S REVIEW REVIEW OF OPERATIONS ENVIRONMENT, SOCIAL & GOVERNANCE DIRECTORS’ REPORT AUDITOR’S INDEPENDENCE DECLARATION CORPORATE GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statement of Financial Position Consolidated Statement of Comprehensive Income Consolidated Statement of Cash Flows Consolidated Statement of Changes in Equity Notes to the Consolidated Financial Statements Directors’ Declaration Independent Audit Report SCHEDULE OF MINING TENEMENTS OTHER INFORMATION 2 4 16 26 49 51 60 60 61 62 63 64 99 100 106 107 1 Rox Resources Annual Report 2022 Chairman’s Review The next 12 months are shaping up to be transformational for Rox. The Company will continue to grow the resource base and explore Dear Shareholder, I am pleased to report on the significant progress that Rox Resources Limited has made over the last 12-months, as we work towards the eventual restart of operations at our flagship Youanmi Gold Project in Western Australia. One of the highlights for the year has been the near doubling of the total mineral resource at Youanmi, from 1.7Moz Au at 2.85 grams per tonne to 3.2Moz Au at 3.57 grams per tonne. This resource consists of a 2.2Moz Au at 6.9 grams per tonne underground resource, and a 1Moz Au surface resource at 1.74 grams per tonne. Rox’s discovery cost is just $7 per resource ounce which is well below industry standard. pathways to The Youanmi resource remains open along strike and down dip, so there is development at significant potential for the resource to increase in size with further drilling. An Youanmi... additional focus for upcoming drilling programs will be inferred to indicated Non-Executive Chairman appointed August 2015 resource conversion which will highlight the high-grade nature of the mineralisation that we see at Youanmi. Youanmi was mined for 10 years until operations ceased in 1997 when the Australian dollar gold price was around $400 per ounce, and it is our firm belief that we will soon see mining operations recommence at Youanmi. Studies for the potential mine are progressing well. In April we appointed MACA Interquip to complete feasibility- level metallurgical testwork for the Youanmi open pit and underground Resources design, as well as the costing of a dual-purpose processing plant to scoping level accuracy. The Company expects concept level project economics to be very robust, and we will continue to rapidly pursue appropriate development pathways, with the aim of delivering a Scoping Study this year with further studies to follow. In late June, Rox was delighted to welcome experienced mining engineer Robert Ryan to the Board as a non- executive director. Mr Ryan brings more than 20 years of experience in the resources sector including exploration, resource development, feasibility studies, project development, mining operations and corporate merger and acquisitions. In March, Rox raised $4 million through a placement of 10 million shares at $0.40 per share to institutional investors. It was very encouraging to have our largest shareholder, Hawke’s Point, participate in the placement on a pro-rata basis to its existing interest. In August 2021, our company successfully spun-out and listed its nickel and base metals assets via the IPO of Cannon Resources Limited, which has performed strongly since listing and has hence unlocked significant value for Rox shareholders. The next 12 months are shaping up to be transformational for Rox. The Company will continue to grow the resource base and explore pathways to development at Youanmi, and we look forward to providing a resource update at Mt Fisher as we continue with our systematic exploration programs. I would like to take the opportunity to thank shareholders for their ongoing support, and also Rox senior management as we advance our projects. Stephen Dennis Rox Resources Annual Report 2022 Chairman’s Review 2 2 20223 Rox Resources Annual Report2022Review of Operations Rox Resources Limited (“Rox” or “the Company”) and its consolidated entities Highlights (together “the Group”) is a West Australian focused gold exploration and development company. It is the 70 per cent owner and operator of the historic Youanmi Gold Project near Mt Magnet, approximately • Quality high grade resource at Youanmi 3.2Moz at 3.57 g/t Au • Significantly advanced studies into the potential restart of Youanmi 480 kilometres northeast of Perth, and • Mt Fisher, high gold grades wholly-owns the Mt Fisher Gold Project intersected at the Damsel Prospect approximately 140 kilometres southeast of Wiluna. All projects contain JORC resources and are located in Western Australia (Figure 1). • Successfully demerged nickel and base metals assets by completing an IPO, Cannon Resources Limited listed 12 August 2021 • Capital raising of A$4.0 million (before costs) in March 2022 4 Rox Resources Annual Report 2022Review of OperationsFigure 1 - Project Location Map Meekatharra Mt Magnet Jundee Leinster Agnew Penny West Super Pit Kalgoorlie Perth 5 Rox Resources Annual Report 2022Review of OperationsYouanmi Project (Au)Mt Fisher Project (Au)6 The Youanmi Gold Project The Youanmi Gold Project is located 480km to the northeast of Perth, Western Australia. 7 Projects Youanmi Gold Project The Youanmi Gold Project 480km Northeast of Perth, Western Australia The Youanmi Gold Project is located During the financial year, the Youanmi 480km to the northeast of Perth, Western Gold Project was significantly advanced Australia, accessed by the sealed Great through exploration and study activities Northern Highway for a distance of which are further outlined below. 418km from Perth to Paynes Find and then for 150km by the unsealed Paynes Find to Sandstone Road. As a result of more than 50,000 metres of drilling, the Youanmi Gold Project resources substantially increased by 93% The Youanmi Gold Project consists of four from 1.7M ounces at 2.85 g/t of Au as at unincorporated joint ventures (JV) with 30 June 2021 to 3.2M ounces at 3.57 g/t Venus Metals Corporation Limited of Au as at 30 June 2022. The resource (“VMC”) and tenements 100% owned by includes a high-grade underground Rox (Figure 2). The joint ventures are component of 2.2M ounces at 6.9 g/t of outlined below: 1. OYG JV (all minerals) - covers 65km2, is circa 10km x 7km wide, and surrounds the Youanmi Gold Mine and nearby extensions (Rox 70%) 2. VMC JV (gold rights) - covers 302km2 (Rox 50%) Au. The resource remains open along strike down dip with further growth likely (see Figure 3). The discovery cost since acquisition is approximately $7 per ounce, which is well below industry averages. The Company also progressed metallurgical testwork during the financial year, with scoping study level 3. Youanmi JV (gold rights) - covers testwork completed for both Albion and 270km2 (Rox 45%) 4. Currans Find JV (all minerals) - covers 4km2 (Rox 45%) The Youanmi Project has produced an Pressure Oxidation Leach (“POX”). Both oxidation processes achieved high extraction rates, POX 95.6% and Albion 92.2% for the Youanmi underground mineralisation. Further sampling has estimated 667,000 oz of gold at 5.47 g/t been undertaken to progress feasibility Au since discovery in 1901 during three study level testwork. main periods: 1908 to 1921, 1937 to 1942, and 1987 to 1997. The last parcel of ore mined underground at Youanmi (November 1997) was at 14.6 g/t Au. Youanmi gold deposits are situated in the Youanmi greenstone belt. The geological structure of the belt is dominated by the north-trending Youanmi Fault Zone. The majority of gold mineralisation found at the project is hosted within the north- northwest splays off the north-northeast trending Youanmi Fault. During the financial year the Group significantly advanced its Scoping Study into the potential restart of Youanmi with results due to be released in the 2nd half of calendar year 2022. 8 Rox Resources Annual Report 2022Review of OperationsFigure 2 – Youanmi Gold Project Rox Resources OYG Joint Venture Youanmi Joint Venture VMC Joint Venture Currans Find Joint Venture Youanmi Joint Venture • Rox 45% • VMC 45% • Prospector 10% Currans Find Joint Venture • Rox 45% • VMC 45% • Prospector 10% Rox Resources • Rox 100% OYG Joint Venture • Rox 70% • VMC 30% VMC Joint Venture • Rox 50% • VMC 50% 9 Rox Resources Annual Report 2022Review of OperationsPenny WestYouanmiThe Group continues its approach of simultaneously exploring and conducting mining studies. Planned activities at the Youanmi Gold project include: • • Finalisation of the Scoping Study; Investigating early cash flow opportunities; • Inferred to indicated resource conversion and exploration drilling; • Feasibility level underground and open pit metallurgical testwork; The Group progressed an initial 22,000m aircore drilling programme to explore for Penny West style deposits on the Youanmi Regional joint venture tenements. This aircore drilling intersected regolith gold anomalism associated with interpreted NW trending structures over approximately four kilometres of strike (see Figure 4). Based on the results of the initial drilling programme the forward work plan is as follows: • Follow up infill and extensional aircore drilling to further define the geometry and extent of oxide mineralisation; and • Regional targeting generation along the strike of the Youanmi Shear Zone Figure 3 - 3D View of Youanmi Underground Resource Model and Near Mine Part of Near Surface Model Figure 4 - Target area 1 returned several zones of gold anomalism over NW trending structures interpreted from aeromagnetic data. 10 Rox Resources Annual Report 2022Review of OperationsMt Fisher Gold – Rox 100%; The Mt Fisher Gold/Mt Eureka Project is Mt Eureka – Rox 51%, earning to 75%, Cullen Resources Limited 49% Mt Fisher Gold/Mt Eureka Project Mineralisation remains open down dip and down plunge. The forward work located in the Northern Goldfields, roughly 500km north of Kalgoorlie (about plan includes: 120km east of Wiluna). The Group holds 850km2 of the Mt Fisher greenstone belt and surrounding prospective zones, comprised 500km2 held wholly by the Group and 350km2 in an unincorporated joint venture with Cullen Resources Limited (“Cullen”) which the Group has earnt a 51% interest during the financial year and is currently incurring expenditure to progress to a 75% stake. Following the demerger of the Fisher East Nickel Project, the Group renewed its focus on gold exploration in the belt and completed an extensive project scale review, with drilling undertaken to advance the project. The drilling campaign in December 2021 produced exceptional results with high gold grades intersected across broad widths at the Damsel Prospect (see Figure 5). • Follow up drilling (RC) planned along strike and down dip of newly identified mineralisation; • Samples submitted for multi- element assays to provide additional insight into the bed-rock geology and key pathfinder elements (such as arsenic and antimony) and will be of assistance in planning follow-up drilling and more detailed geochemical evaluation; • Regional target generation is ongoing over 850km² of highly prospective greenstone terrane; and • Project wide high resolution (50m spaced) aeromagnetic surveying will assist with further geological interpretation and target generation. Figure 5 - Cross Section of MFRC081 at the Damsel Prospect looking north. 11 Rox Resources Annual Report 2022Review of OperationsCorporate During the financial year the following The Placement grew the institutional key activities were undertaken by the shareholder component of the Company’s Group from a corporate perspective: register from 17% to 22%, a stated objective of the Company. Hawke’s Point, which currently has a 13.18% interest in the Company, participated in the placement on a pro-rata basis to its existing interest. Additional Non-Executive Director Mr Robert Ryan was appointed as a Non-Executive Director of the Company on 29 June 2022. Mr Ryan is a mining engineer with over 20 years of experience in the resource sector, including exploration, resource development, feasibility studies, project development, mining operations and corporate merger and acquisitions. Mr Ryan holds a Bachelor of Engineering (Mining Engineering) from Curtin University School of Mines and a First Class Mine Managers Certificate of Competency. He has prior Senior Executive experience with Bardoc Gold Limited, Norton Gold Fields, Barrick Gold, Goldfields – St Ives and Newmont Corporation. Mr Ryan brings strong mining engineering capabilities to the Group, which at its current stage of development is important as the Group progresses its studies showing the pathway for a return to mining at Youanmi. Cannon Demerger The Group demerged its nickel and base metals assets through its newly incorporated 100% owned subsidiary Cannon Resources Limited by way of an Initial Public Offering (IPO). Cannon was admitted to the Australian Securities Exchange (ASX) on 10 August 2021 and commenced trading on 12 August 2021. Teck Receivable Rox and Teck Australia Pty Ltd agreed to bring forward a deferred cash settlement due to Rox from the sale of Rox’s interest in the Reward Zinc-Lead Project. Rox completed the sale of its interest in Reward Zinc-Lead Project in February 2017 and as part of the consideration, $3.75 million was due to Rox at the earlier of the completion of a Bankable Feasibility Study or 6 years, being 16 February 2023. On 20 July 2021, Rox and Teck agreed to settle the deferred cash consideration for $3.1 million, payable to Rox by 1 September 2021. Payment was subsequently received on 26 August 2021. Institutional Placement The Company completed an institutional placement for 10 million new fully paid ordinary shares at $0.40 per share to raise $4 million (before costs). The Company received significant interest from key investors following the recent Youanmi Resource upgrade to 3Moz Au (ASX: 20 January 2022) and successful metallurgical testwork for Youanmi ore (ASX: 23 December 2021). 12 Rox Resources Annual Report 2022Review of OperationsMineral Resources During the year, the Group announced significant increases to the mineral resource estimate for the Youanmi Gold Project, both in the underground and near surface resources. Drilling and exploration work at the Youanmi Gold Project, predominantly in the OYG JV area, yielded substantial increases in known and defined tonnages and ounces since acquisition and commencement of drilling in mid-2019. The resources increased by 1,543k oz Au since 30 June 2021, at a discovery cost of approximately $7 per ounce since project acquisition with further upside potential remaining. Youanmi Gold Project, WA (Reported to the ASX on 20 April 2022) Area Classification Cut-off (g/t Au) Tonnes (dmt) Grade (g/t Au) Au Metal (oz) Near Surface Indicated Underground Indicated Sub-total Indicated Near Surface Inferred Underground Inferred Sub-total Inferred Near Surface Indicated + Inferred Underground Indicated + Inferred Total Indicated + Inferred 1. Grace 1.5 g/t cutoff. 0.51 3.0 0.51 3.0 0.51 3.0 9,070,000 3,060,000 12,130,000 8,930,000 6,840,000 15,770,000 18,000,000 9,900,000 27,900,000 1.89 7.55 3.32 1.58 6.59 3.75 1.74 6.89 3.57 552,000 744,200 1,296,000 453,000 1,450,000 1,903,000 1,004,000 2,194,000 3,199,000 Mt Fisher Gold, WA (Reported to the ASX on 11 July 2018, 0.8 g/tAu cut-off) Deposit Category Tonnes Uncut Cut Damsel Inferred Indicated Measured Mt Fisher Inferred Indicated Measured Moray Reef Inferred Total Indicated Measured Inferred Indicated Measured Total Grade (g/t Au) Metal (Ozs) Grade (g/t Au) Metal (Ozs) Value (g/t Au) 591,820 151,464 23,712 766,997 40,934 59,533 125,605 226,073 1,242 4,930 25,521 31,693 633,997 215,928 174,838 1,024,762 2.29 2.33 2.80 2.32 3.44 3.63 3.73 3.65 3.87 6.09 10.92 9.89 2.37 2.78 4.65 2.84 43,627 11,358 2,135 57,120 4,528 6,948 15,045 26,521 155 966 8,960 10,081 48,309 19,273 26,140 93,721 2.23 2.27 2.59 2.25 3.41 3.63 3.61 3.58 3.87 5.95 8.02 7.53 2.31 2.73 4.11 2.70 30 30 30 30 50 50 50 50 80 80 80 80 42,339 11,060 1,974 55,373 4,494 6,948 14,569 26,011 155 943 6,577 7,675 46,987 18,951 23,121 89,059 Figures in all tables may not add up exactly due to rounding. 13 Rox Resources Annual Report 2022Review of Operations Mineral Resources Estimation Governance Statement Governance of the Group’s mineral exposures, diamond drill core and the resources is a responsibility of the Key detailed paper data available in the map Management Personnel of the Group. room and has sufficient experience that is The Group has ensured that its mineral resources estimates are subject to appropriate levels of governance and internal controls. The underground mineral resources relevant to the style of mineralisation and type of deposit under consideration and to the activity that is being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration reported for the Youanmi Gold Project Results, Minerals Resources and Ore have been estimated by Mr David Reserves’ Allmark MAusIMM (CP), who is a full-time employee of Rox Resources Limited and who visited the Youanmi site from the 22nd to 23rd of September 2021, and Additionally, the Group carries out regular internal peer reviews of processes and contractors engaged. has sufficient experience that is relevant The Mt Fisher gold resource was to the style of mineralisation and type of estimated by Mr Ian Mulholland, the deposit under consideration and to the Group’s Managing Director at the time of activity that is being undertaken to the resources estimate. Mr Mulholland is qualify as a Competent Person as defined experienced in best practices in modelling in the 2012 Edition of the ‘Australasian and estimation methods. Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves’. The Company engaged CSA Global to conduct independent checks of the modelling and estimation process. The Group has reported its Youanmi Gold Project and Mt Fisher Gold Project mineral resources on an annual basis in accordance with the Australasian Code for Reporting of Exploration Results, The near surface mineral resources Mineral Resources and Ore Resources reported for the Youanmi Gold Project (the JORC code) 2012 Edition. have been estimated by Mr Lynn Widenbar, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Widenbar is a full time employee of Widenbar and Associates Pty Ltd. Mr Widenbar visited site on 9th and 10th May 2018 and reviewed the general site layout, open pit Competent Persons named by the Group are members of the Australian Institute of Mining and Metallurgy and/or the Australian Institute of Geoscientists and/ or of a “Recognised Professional Organisation”, as included in a list on the JORC and ASX websites. 14 Rox Resources Annual Report 2022Review of OperationsCompetent Person Statements The Statement of Estimates of Mineral Resources that relates to gold Mineral Resources for the Mt Fisher project was reported by Rox in accordance with ASX Listing Rule 5.8 in the announcement released to the ASX on 11 July 2018. Rox confirms it is not aware of any new information or data that materially affects the information included in the previous announcements and that all material assumptions and technical parameters underpinning the estimates in the previous announcements continue to apply and have not materially changed. Exploration Results The information in this report that relates to previous Exploration Results was prepared and first disclosed under the JORC Code 2012 and has been properly and extensively cross-referenced in the text to the date of the original announcement to the ASX. Resource Statements The Statement of Estimates of Mineral Resources for the Youanmi Near Surface Resource was reported by Rox in accordance with ASX Listing Rule 5.8 in the announcement released to the ASX on 20 April 2022. Rox confirms it is not aware of any new information or data that materially affects the information included in the previous announcements and that all material assumptions and technical parameters underpinning the estimates in the previous announcements continue to apply and have not materially changed. The Statement of Estimates of Mineral Resources for the Youanmi Underground Resource was reported by Rox in accordance with ASX Listing Rule 5.8 in the announcement released to the ASX on 20 January 2022. Rox confirms it is not aware of any new information or data that materially affects the information included in the previous announcements and that all material assumptions and technical parameters underpinning the estimates in the previous announcements continue to apply and have not materially changed. 15 Rox Resources Annual Report 2022Review of OperationsEnvironment, Social and Governance At Rox Resources, we believe that The Board of Rox Resources Limited is Environment, Social and Governance excited to be taking our first steps (“ESG”) is an opportunity to improve towards integrating ESG into the Rox business, environmental and social way as we focus firmly on unlocking the outcomes. true value of our assets for all our stakeholders. As we develop and grow, we are committed to doing what is right, not just what is easy. We know that our success depends on delivering value for those that we depend on. ESG Goals & Progress Produced our inaugural sustainability insert within our annual report Conduct an ESG gap analysis on company policies, standards, and actions where required Establish baseline measurements for our material topics Develop our Employee Value Proposition Commence preliminary studies into our carbon management plan 16 Rox Resources Annual Report 2022Review of OperationsOur Approach Our ESG approach has been designed to build understanding, create engagement, and develop a platform from which we can build and seek continuous improvement as we grow. 1 Gap Analysis & Benchmarking 2 Stakeholder Engagement 5 Communications & Reporting Our ESG Method 3 Risk & Materiality Assessment 4 ESG Charter Development 17 Rox Resources Annual Report 2022Review of OperationsOur ESG Framework UN SDGs The United Nations Sustainable Development Goals (UN SDGs) was developed in 2015 and has since been adopted by all 193 members states of the United Nations. This is a global plan of action based around 17 interlinked UN SDGs to achieve a better and more sustainable future for all by 2030. GRI The GRI Standards are the world’s most widely used standards for sustainability reporting and help organisations understand, measure and communicate their impacts on the economy, environment, and society. TCFD The TCFD was created in 2015 by the Financial Stability Board (FSB) to develop consistent climate-related financial risk disclosures for use by companies, banks, investors to improve and increase reporting of climate- related financial information. SDGs Rox Contributes to: 18 Rox Resources Annual Report 2022Review of OperationsStakeholder Engagement In Q1 2022, Rox Resources Limited invited stakeholders to share their thoughts, interests, and priorities on ESG. This process was aimed at identifying EGS topics that mattered most to Rox Resources Limited’s stakeholders and the business. Working Partners Board & Employees Investors & Shareholders Landholders Government & Regulators Contractors & Suppliers Local & Indigenous Communities Feedback from both internal and external stakeholders was captured through online surveys. These surveys asked stakeholders to rate a range of defined ESG topics based on their level of importance to them, which ultimately informed the definition of our material topics. Group’s Material Topics Emissions & Climate Health, Safety & Wellbeing Business Ethics & Transparency Environmental Compliance Recruitment, Training & Development Economic Performance & Contribution 19 Rox Resources Annual Report 2022Review of OperationsSDG13 - Take urgent action to combat climate change and its impacts SDG15 - Protect, restore, and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss Environment Emissions & Climate We acknowledge the impacts of a changing climate and are committed to playing our role, addressing the global threat, and managing its impacts on the business. The Group recognises that there is a global shift towards a low emissions future across the mining sector. While the Group is at development stage, the Group is committed to understanding its emissions profile and taking the opportunity to build capacity and knowledge of climate and emissions strategy within the business. With the Youanmi project at its scoping stage, the Group has committed to undertaking preliminary studies to support the development of a carbon conscious mine. Environmental Compliance We do what is right and care about what we do. We respect the natural world, minimise our environmental impact and always operate responsibly. Rox is committed to conducting our operations in an environmentally responsible and compliant manner. This includes continuous improvement in the identification, assessment, mitigation, and monitoring of the environmental impact of our operations. The Company’s approach to sustainable development includes understanding the impact of our work on the environment and taking appropriate steps to mitigate any negative impacts. Rox works with relevant government departments and where required, expert consultants to ensure responsible operations and compliance. In FY22, Rox identified a non-compliance in relation to a 5C Water Extraction License. This has since been rectified. Rox recorded zero environmental incidents in FY22. Our Forward Ambitions • Measure baseline Scope 1 & 2 GHG emissions for FY22 • Adoption of TCFD reporting in FY23 • Commence preliminary studies into our carbon management plan • Disclosure of annual performance data on environmental compliance 20 Rox Resources Annual Report 2022Review of OperationsSDG8 - Promote sustained, inclusive, and sustainable economic growth, full and productive employment for all SDG3 - Ensure healthy lives and promote wellbeing for all at all ages Social Recruitment, Training & Development Rox people are proactive. We are a business that gets things done, empowering our people with purpose and responsibility. We are not rigid, we provide dynamic and interesting work and are committed to growing careers as we grow. Rox employees are the foundation of the business. The Company believes in recruiting the best and retaining them by empowering people with purpose and responsibility. The Group’s Diversity Policy further demonstrates the Company’s commitment to building a diverse workplace and understands the benefits it brings to corporate performance. Annual performance evaluations are conducted with two objectives: 1) this ensures that employees receive timely feedback on their work performance and 2) it allows for Rox to understand employees’ personal and professional goals, so that Company can better support the ongoing development of its team. Rox is entering an exciting phase over the next 12 months that will likely require a significant recruitment program. To support this, the Company is committed to crystalising and communicating our unique Employee Value Proposition. Health, Safety & Wellbeing We aim to provide a workplace free from injury, illness, and harm. A responsible, supportive, inclusive culture where people can excel and find fulfilment in their work. Rox aims to build and maintain a workplace environment and culture that recognises and values the impact of positive mental and physical health and wellbeing. The Company understands the inherent risks associated with mining, exploration, and development and are committed to providing a safe and healthy work environment for all our employees, contractors, volunteers, and visitors. To support a safe and healthy workplace for all, Rox has published a Health, Safety, and Wellbeing Policy. Rox is proud to have zero Lost-Time Injuries reported in FY22 Our Forward Ambitions • • Thorough and transparent recruitment process Conduct salary benchmarking to ensure our remuneration strategy meets market expectations • Define our Employee Value Proposition to support staff recruitment, development, retention and wellbeing • Produce Rox recruitment video • Mental health first aid training for all staff • Kickstart Rox’s Employee’s Assistance Program 21 Rox Resources Annual Report 2022Review of OperationsSDG16 - Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable, and inclusive institutions at all levels SDG8 - Promote sustained, inclusive, and sustainable economic growth, full and productive employment for all Governance Business Ethics & Transparency We are committed to operating with openness and integrity, pursuing the true spirit of corporate governance commensurate with the needs of our stakeholders. Rox is committed to incorporating the highest level of corporate governance into our operations and business processes. The Company is compliant with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations. These commitments are also embedded in Rox’s corporate level policy documents and standard operating procedures, which are provided to all new employees and contractors. Rox is proud to have zero breaches of policies recorded in FY22 Economic Performance & Contribution As we grow, we proudly create economic opportunities and actively share our prosperity with our stakeholders and throughout our value chain. Rox’s most direct economic contribution comes from wages paid directly to our employees and contractors, and the procurement of supplies from the local businesses, all of which further stimulates economy. Ultimately, maintaining a high level of economic performance and contribution drives financial circularity. As part of the government requirements, the Company pays the required taxes and royalties that supports the local and national government on their respective infrastructure and social support initiatives. Our Forward Ambitions • Perform annual reviews of corporate policies to ensure that these policies remain informed and current • Deepen Rox’s engagement with the Shire of Sandstone to continue building on our exploration work in the region 22 Rox Resources Annual Report 2022Review of Operations2323 Rox Resources Annual Report 2022Review of Operations24 24 Rox Resources Annual Report 2022Review of OperationsDuring the financial year, the Youanmi Gold Project was significantly advanced through exploration and study activities. 25 25 Rox Resources Annual Report 2022Review of OperationsDirectors’ Report The Directors present their report on the Group consisting of the Parent entity, Rox Resources Limited (“Rox” or the “Company”), and the entities it controlled (“the Group”) at the end of, or during, the year ended 30 June 2022 (the “financial year”). Directors The names and details of the Directors of the Company in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Mr Stephen Dennis (Non-Executive Chairman, appointed 1 August 2015) – Bcom, BLLB, GradDipAppFin Mr Dennis has been actively involved in the mining industry for over 35 years. He has held senior executive roles in a number of Australian resources companies and was previously the Chief Executive Officer and Managing Director of CBH Resources Ltd, the Australian subsidiary of Toho Zinc Co Ltd of Japan. Mr Dennis is currently the Non-Executive Chairman of Kalium Lakes Limited and Marvel Gold Limited. In the past three years , he was a director of Lead FX Inc, Heron Resources Limited, and Burgundy Diamond Mines Ltd. Mr Alex Passmore (Managing Director, appointed 1 May 2019) – B.Sc (Hons), GradDipAppFin, , GAICD Mr Passmore is Rox’s Managing Director, a position he has held since 1 May 2019. He is a qualified geologist with extensive corporate experience. Mr Passmore holds a Bachelor of Science degree with First Class Honours in Geology from the University of Western Australia and a Graduate Diploma of Applied Finance from the Securities Institute of Australia. Mr Passmore is an experienced corporate executive and company director with recent appointments including Managing Director of Cockatoo Iron NL, Non-Executive Director of Aspire Mining Ltd, Non-Executive (and Executive) Director of Equator Resources Ltd/Cobalt One Ltd (which merged with TSX-listed First Cobalt Corp), and CEO of Draig Resources Ltd (now Bellevue Gold Ltd). Mr Passmore has also spent a considerable time in the finance sector, where he became well known over ten years at Patersons Securities Ltd in roles such as Director – Corporate Finance, Head of Research, Resources Analyst, and Institutional dealer. He was also Executive Director – Natural Resources & Institutional Banking for Commonwealth Bank of Australia from 2014 until late 2016. Mr Passmore is currently a director of the following listed entities: Pearl Gull Iron Limited, Cannon Resources Limited, and Blencowe Resources Limited (London listed). 26 Rox Resources Annual Report 2022Director’s ReportDr John Mair (Non-Executive Director, appointed 24 October 2019) PhD (Econ Geol), Member AusIMM) Dr Mair is an economic geologist with extensive international experience across technical, managerial and corporate fields. He holds a PhD in Economic Geology (UWA) and held the position of post-doctoral research fellow at the Mineral Deposit Research Unit, UBC, Canada. He has worked in the minerals sector in WA, NSW, British Columbia, Yukon, Alaska, Mexico and China. Dr Mair brings a deep understanding of a range of gold deposits types, and a working knowledge of other mineral systems. He has authored numerous papers in leading scientific journals on the geology of gold and other mineral deposit types. Dr Mair was the Managing Director of Greenland Minerals Ltd from 2014 to late 2021. He was integral in the technical development of Kvanefjeld (the world’s largest code-compliant rare earth resource), the corporate evolution of Greenland Minerals Ltd, and the commercial and strategic alignment with international rare earths group Shenghe Resources Holding Co Ltd. Dr Mair has worked closely with governments on matters pertaining to regulation and strategic metal supply. He has significant experience and connections in global capital markets. Dr Mair has not been a director of any other listed company in the last three years. Mr Robert Ryan (Non-Executive Director, appointed 29 June 2022) – B.Eng. Mining Engineering Mr Ryan is a mining engineer with over 20 years of experience in the resource sector, including exploration, resource development, feasibility studies, project development, mining operations and corporate merger and acquisitions. Mr Ryan holds a Bachelor of Engineering (Mining Engineering) from Curtin University School of Mines and a First Class Mine Managers Certificate of Competency. He has prior Senior Executive experience with Bardoc Gold Limited, Norton Gold Fields, Barrick Gold, Goldfields – St Ives and Newmont Corporation. Mr Ryan has not been a director of any other listed company in the last three years. Mr Christopher Hunt (Company Secretary, appointed 6 May 2021) – B.Bus, FCPA, GAICD Mr Hunt is an experienced finance executive with over 25 years’ experience predominately in the resources and construction industries. He has held senior finance roles for close to 15 years and has strong experience in feasibility studies, corporate financing, and mining operations. Mr Hunt’s most recent resources’ experiences were as the Chief Financial Officer for BC Iron Limited, Crossland Resources Limited, FerrAus Limited and Cliffs Natural Resources. Mr Hunt holds a Bachelor of Business, is a Fellow CPA, a graduate from the Australian Institute of Company Directors and has completed a Graduate Diploma of Applied Finance from the Securities Institute of Australia. Mr Hunt has not been a director of any other listed company in the last three years. 27 Rox Resources Annual Report 2022Director’s ReportInterest in the Share and Options of the Company As at the date of this report, the interest of the Directors in the shares and options of Rox Resources Limited were as follows: Shareholder Stephen Dennis John Mair Alex Passmore Robert Ryan (Loss)/Profit Per Share Basic and diluted (loss)/profit per share Dividends Ordinary Shares Unlisted Options 908,483 107,878 3,860,150 - 2022 (8.64) cents 666,667 666,667 2,666,667 - 2021 (8.30) cents No amounts have been paid or declared by way of dividend of the Company since the date of incorporation and the Directors do not recommend the payment of any dividend. Rounding of Amounts The Group is of a kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191, relating to the ‘rounding off’ of amounts in the Directors’ Report. Amounts in the Directors’ Report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar. Operating and Financial Review Rox Resources Limited is a public company limited by shares which is incorporated and domiciled in Australia. Nature of Operations and Principal Activities The principal activity of the Group during the year was mineral exploration. Results from Operations and Financial Position The Group incurred a net loss after tax for the year ended 30 June 2022 of $14.0 million (2021: $11.8 million). The loss includes exploration expenditure charged directly to the consolidated statement of comprehensive income of $7.8 million (2021: $6.4 million). Net cash outflows from operating activities were $14.5 million (2021: $9.6 million). At 30 June 2022, the Group had cash on hand of $4.4 million (2021: $11.9 million). The Directors believe the Group maintains a prudent capital structure and is in a robust position to continue progressing its projects. Review of Operations During the financial year, the Group was principally focussed on the OYG joint venture and other regional joint ventures at the Youanmi Gold Project. Additionally, further exploration was undertaken on the Mt Fisher Gold/Mt Eureka Project. For further information on these projects please refer to the Review of Operations within this Annual Report. Employees At 30 June 2022, the Group had 14 full-time employees, 2 part-time employees and 1 casual employee (2021:11 full-time and 1 casual employees). 28 Rox Resources Annual Report 2022Director’s Report29 29 29 Rox Resources Annual Report 2022Director’s ReportRisk Management The Group takes a proactive approach to risk management. The Board is responsible for ensuring that risks, including emerging risks, and also opportunities, are identified on a timely basis and the Group’s objectives and activities are aligned with the risks and opportunities identified by the Board. The Group believes that it is important for all Board members to be part of this process, and as such the whole Board are members of the Audit committee. The Board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned with the risks identified by the Board. These include the following: • • Board approval of a strategic plan designed to meet stakeholders needs and manage business risk; and Implementation of Board approved budgets and Board monitoring of progress against those budgets. Directors’ Meetings The number of meetings of Directors (including meetings of committees of Directors) held during the financial year and the numbers of meetings attended by each Director were as follows: Directors’ Normal Meetings Directors’ Remuneration Meetings Directors’ Nomination Meetings Directors’ Audit Meetings No. Eligible No. Attended No. Eligible No. Attended No. Eligible No. Attended No. Eligible No. Attended Stephen Dennis John Mair Alex Passmore Robert Ryan1 17 17 17 - 17 16 17 - 1 1 1 - 1 1 1 - - - - - - - - - 2 2 2 - 2 2 2 - Notes: 1. Mr Ryan was appointed as Non-executive Director 29 June 2022 Committee Membership As at the date of this report, the Group has separately constituted Audit, Nomination and Remuneration Committees. 30 Rox Resources Annual Report 2022Director’s ReportSignificant Changes in State of Affairs During the financial year, the following significant changes in state of affairs occurred: • The Company completed an institutional placement for 10 million new fully paid ordinary shares at $0.40 per share to raise $4.0 million before costs; • Youanmi Gold Project resources increased to 3.2Moz Au at 3.57 g/t Au an increase of 93% from 30 June 2021 (1.7m oz at 2.85 g/t Au); • Rox and Teck Australia Pty Ltd agreed to bring forward a deferred cash settlement due to Rox from the sale of Rox’s interest in the Reward Zinc-Lead Project. Rox completed the sale of its interest in Reward Zinc-Lead Project in February 2017 and as part of the consideration $3.75 million was due to Rox at the earlier of the completion of a Bankable Feasibility Study or 6 years, being 16 February 2023. On 20 July 2021 Rox and Teck agreed to settle the deferred cash consideration for $3.1 million, payable to Rox by 1 September 2021. Payment was subsequently received on 26 August 2021; and • The Group demerged its nickel and base metals assets through its newly incorporated 100% owned subsidiary Cannon Resources Limited by way of an IPO. Cannon Resources Limited was admitted to the ASX on 10 August 2021 and commenced trading on 12 August 2021. There were no other significant changes in the state of affairs of the Group during the year. Matters Subsequent to the End of the Financial Year No other matter or circumstance has arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial periods. Environmental Issues The Group carries out mineral exploration at its various projects which are subject to environmental regulations under both Commonwealth and State legislation. During the financial year, there has been no breach of these regulations. Likely Developments and Expected Results of Operations The Group will continue to explore its mineral tenements, with particular focus on the Youanmi Gold Project. Indemnification and Insurance of Directors and Officers During the financial year, the Company paid an insurance premium to insure certain officers of the Company. The Director and Officers Liability insurance provides cover against all costs and expenses that may be incurred in defending civil or criminal proceedings that fall within the scope of the indemnity and that may be brought against the Directors and Officers in their capacity as officers of the Group. The total amount of insurance premium paid is confidential under the terms of the insurance policy. Indemnification of Auditors To the extent permitted by law, the Company has agreed to indemnify its auditors, Pitcher Partners BA&A Pty Ltd (“Pitcher Partners”), as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Pitcher Partners during or since the financial year. 31 Rox Resources Annual Report 2022Director’s Report32 Rox Resources Annual Report 2022Director’s ReportShare Options At the date of the Directors’ Report, the following unlisted options are exercisable: Options (Number) Exercise Price ($) 4,466,668 1,333,333 1,333,333 1,333,333 660,000 10,476,190 1,000,000 20,602,857 0.433 1.438 1.813 2.188 0.763 0.988 0.720 Expiry Date 30 November 2022 31 December 2023 31 December 2023 31 December 2023 25 May 2024 26 March 2025 4 March 2026 During the year the following options were issued: Options (Number) Exercise Price ($) 1,000,000 0.720 Expiry Date 4 March 2026 During the year the following options were exercised: Options (Number) 1,333,333 Exercise Price 0.163 Expiry Date 31 January 2022 No options have been exercised since the end of the financial year. Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate or in the interest issue of any other registered scheme. Auditor Independence and Non-Audit Services Section 307C of the Corporations Act 2001 requires the Company’s Auditors to provide the Directors of Rox Resources Limited with an Independence Declaration in relation to the audit of the full-year financial report. This report has been received and is attached to the Directors’ Report at page 49. Non-Audit Services During the financial year the Group’s auditor, Pitcher Partners, provided the following non-audit services: Non-audit service Demerger accounting assistance in relation to Cannon Resources Limited Total Fees ($) 1,638 1,638 33 Rox Resources Annual Report 2022Director’s Report34 34 Rox Resources Annual Report 2022Director’s ReportDuring the financial year, the Group was principally focussed on the OYG joint venture and other regional joint ventures at the Youanmi Gold Project. 35 35 Rox Resources Annual Report 2022Director’s ReportRemuneration Report (Audited) This Remuneration Report outlines the Director and Executive remuneration arrangements of the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report, Key Management Personnel (KMP) are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including all Directors of the Company. Details of Key Management Personnel Alex Passmore Managing Director (appointed CEO on 1 February 2019, appointed Managing Director 1 May 2019) Stephen Dennis Non-Executive Chairman (appointed 1 August 2015) John Mair Non-Executive Director (appointed 24 October 2019) Robert Ryan Non-Executive Director (appointed 29 June 2022) Chris Hunt Matt Antill Chief Financial Officer (appointed 3 May 2021) and Company Secretary (appointed 6 May 2021) General Manager – Youanmi Operations (appointed 5 April 2021) Gregor Bennett Exploration Manager (1 July 2020) There were no changes of KMP after the reporting date and before the date the financial report was authorised for issue. Remuneration Committee The Remuneration Committee is responsible for determining and reviewing compensation arrangements for the Directors and the Managing Director. The Managing Director does not participate in discussions or resolutions on his own compensation arrangements. The Remuneration Committee assesses the appropriateness of the nature and amount of remuneration of Directors on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high-quality board and executive team. Remuneration Philosophy The performance of the Group depends upon the quality of its Directors and Executives. To prosper, the Group must attract, motivate and retain highly skilled Directors and Executives. To this end, the Group embodies the following principles in its remuneration framework: • • • Provide competitive rewards to attract high calibre Executives; Establish appropriate hurdles for variable executive remuneration; and Encouragement for Directors to sacrifice a portion of their fees to acquire shares in the Company at market price Remuneration Structure In accordance with best practice corporate governance, the structure of Non-Executive Director and Executive Remuneration is separate and distinct. 36 Rox Resources Annual Report 2022Director’s ReportNon-Executive Director Remuneration Objective The Board seeks to set aggregate remuneration at a level which provides the Group with the ability to attract and retain Directors of the highest calibre, whilst keeping costs acceptable to shareholders. Structure The Constitution and the ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the Directors as agreed. The latest determination was in 2020 when shareholders approved an aggregate remuneration of $400,000 per year. The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst Directors is reviewed annually. The Board considers the fees paid to Non-Executive Directors of comparable companies when undertaking the annual review process. Each Non-Executive Director receives a fee for serving as a Director of the Company. The remuneration of Non-Executive Directors for the years ended 30 June 2022 and 30 June 2021 is detailed later in this report. Non-Executive Directors have long been encouraged by the Board to hold shares in the Company (purchased by the Director on market). It is considered good governance for Directors to have a stake in the Company on whose Board they reside. In addition, long term incentives in the form of options may be awarded to Non-Executive Directors, subject to shareholder approval, in a manner which aligns this element of remuneration with the creation of shareholder wealth. Executive Remuneration Objective The Group aims to reward Executives with a level and mix of remuneration commensurate with their position and responsibilities within the Group and so as to: • Reward Executives for Company and individual performance against targets set by reference to appropriate benchmarks; • Align interests of Executives with those of shareholders; • • Link reward with strategic goals; and Ensure total remuneration is competitive by market standards. Structure In determining the level and make-up of Executive remuneration the Board considers market conditions and remuneration paid to Senior Executives of companies similar in nature to Rox Resources Limited. Remuneration consists of the following key elements: • • Fixed Remuneration Variable Remuneration: - short term incentive (“STI”) - long term incentive (“LTI”) 37 Rox Resources Annual Report 2022Director’s ReportFixed Remuneration Objective The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position and is competitive in the market. Fixed remuneration is reviewed annually by the Board and the process consists of a review of individual performance, relevant comparative remuneration in the market and, where appropriate, external advice on policies and practices. Structure Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Group. The fixed remuneration component of the Directors is detailed later in this report. Variable Remuneration - STI Objective The objective of the STI program is to link the achievement of the Group’s operational targets with the remuneration received by the Executives charged with meeting those targets. The total potential STI available is set at a level so as to provide sufficient incentive to the Executive to achieve those operational targets and such that the cost to the Group is reasonable in the circumstances. Structure Actual STI payments granted to Executives depend on the extent to which specific targets, set at the beginning of the review period, being a financial year (previously calendar year), are met. The targets generally consist of a number of Key Performance Indicators (KPI’s) covering both financial and non-financial, corporate and individual measures of performance. Typically included are measures such as contribution to exploration success, share price appreciation, risk management and cash flow sustainability. These measures were chosen as they represent the key drivers for the short-term success of the business and provide a framework for delivering long term value. The Board has predetermined benchmarks that must be achieved in order to trigger payments under the STI scheme. On an annual basis, after consideration of performance against KPI’s, the Remuneration Committee, determines the amount, if any, of the STI to be paid to each Executive. This process usually occurs in the first quarter of the following financial year. STI bonus for 2022 and 2021 Despite the majority of KPIs being met or exceeded no bonuses were paid during financial year ended 30 June 2021 and 30 June 2022 to KMPs due to cost saving initiatives. 38 Rox Resources Annual Report 2022Director’s ReportVariable Remuneration – LTI Objective The objective of the LTI plan is to reward Executives in a manner which aligns this element of remuneration with the creation of shareholder wealth. As such LTI grants are only made to Executives who are able to influence the generation of shareholder wealth. The Company considers that shareholder wealth is measured by changes to the Company’s share price. Structure LTI grants to Executives are delivered in the form of options. The options, when issued to Executives, will not be exercisable for a price less than the then current market price of the Company’s shares. The grant of LTI’s is reviewed annually, although LTI’s may not be granted each year. Exercise price and performance hurdles, if any, are determined at the time the LTIs are granted. To date no performance hurdles have been set on options issued to Executives. The Company may, and at times has, imposed time-based service conditions. The Company believes that as options are issued at not less than the current market price of the Company’s shares there is an inherent performance hurdle on those options as the share price of the Company’s shares must increase significantly before there is any benefit to the Executive. Employment Contracts Name Terms/Notice Periods/Termination Payment Alex Passmore (Managing Director) Mr Passmore is paid an annual salary of $380,000 plus superannuation up to the maximum statutory concessional amount, currently $27,500 pa. Mr Passmore may resign from his position and terminate his contract by giving 3 months’ notice. The Company may terminate this employment agreement by providing 3 months’ written notice. If the employment is terminated by the Company the Company will make an additional payment of 6 months’ Base Salary, inclusive of any amount of notice paid in lieu upon termination of the employment. The amount paid will be adjusted, if necessary, to ensure compliance with section 200F (2) of the Corporations Act 2001. The Company may terminate the contract at any time without notice if serious misconduct has occurred. Where termination with cause occurs, the Managing Director is only entitled to that portion of remuneration, which is fixed, and only up to the date of termination. On termination with cause any unvested options held will be immediately forfeited. Chris Hunt (Chief Financial Officer and Company Secretary) Mr Hunt is paid an annual salary of $300,000 plus superannuation up to the maximum statutory concessional amount, currently $27,500 pa. Employment can be terminated with 3 months’ notice by Mr Hunt or the Company. The Company may terminate the contract at any time without notice if serious misconduct has occurred. Matt Antill (General Manager) Mr Antill is paid an annual salary of $290,000 plus superannuation up to the maximum statutory concessional amount, currently $27,500 pa. Employment can be terminated with 3 months’ notice by Mr Antill or the Company. The Company may terminate the contract at any time without notice if serious misconduct has occurred. Gregor Bennett (Exploration Manager) Mr Bennett is paid an annual salary of $225,000 plus statutory superannuation at 10%. Employment can be terminated with 4 weeks’ notice by Mr Bennett or the Company. The Company may terminate the contract at any time without notice if serious misconduct has occurred. Name Base Salary (ex-superannuation) Non-Executive: Stephen Dennis John Mair Robert Ryan $80,000 $50,000 $50,000 39 Rox Resources Annual Report 2022Director’s ReportRemuneration of Key Management Personnel The remuneration tables below set out the remuneration information for the Directors and Executives, which includes the Managing Director, who are considered to be KMP of the Group. Short-term Long-term Post-employment Total Performance related Salary & fees $ STI bonus $ SBP Options $ Other $ Other $ Superannuation $ $ % 2022 Directors Stephen Dennis 80,000 John Mair Robert Ryan1 50,000 378 Alex Passmore 380,000 Total Directors 510,378 Executives Chris Hunt Matt Antill 300,000 290,000 Gregor Bennett2 220,000 Total Executives 810,000 TOTAL KMP 1,320,378 Notes: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 8,000 5,000 40 88,000 55,000 418 27,500 407,500 40,540 550,918 27,500 327,500 27,500 317,500 27,500 247,500 82,500 892,500 123,040 1,443,418 1. Mr Ryan was appointed as Non-Executive Director 29 June 2022. 2. Mr Bennett salary sacrificed $5,000 to superannuation. - - - - - - - - - - 40 Rox Resources Annual Report 2022Director’s ReportShort-term Long-term Post-employment Total Performance related Salary & fees $ STI bonus $ SBP Options $ Other $ Other $ Superannuation $ $ % 2021 Directors Stephen Dennis 80,000 John Mair 50,000 Alex Passmore 380,000 Brett Dickson3,4 - Total Directors 510,000 Executives Chris Hunt1 Matt Antill2 50,000 72,500 - - - - - - - Gregor Bennett5 179,909 55,000 Brett Dickson3,4 - - - - - - - 58,333 57,167 - - - - - 81,088 81,088 - - - 174,638 Total Executives 302,409 55,000 115,500 174,638 TOTAL KMP 812,409 55,000 115,500 255,726 - - - - - - - - - - - 7,600 4,750 87,600 54,750 25,000 405,000 - 81,088 37,350 628,438 4,167 6,250 112,500 135,917 25,000 259,909 - 174,638 35,417 682,964 72,767 1,311,402 - - - - - 51.9 42.1 21.7 - 25.0 13.0 Notes: 1. Mr Hunt was appointed as Chief Financial Officer 3 May 2021 and Company Secretary 6 May 2021. 2. Mr Antill was appointed 5 April 2021. 3. Mr Dickson resigned as a Director 16 October 2020, continued as Chief Financial Officer and Company Secretary until 30 June 2021. 4. Paid to Coolform Investments Pty Ltd for services, a related entity of Mr Dickson. 5. Mr Bennett considered a KMP from 1 July 2020. Compensation Options: Granted and Vested during the year During the financial year ended 2022, nil options were issued to the KMP of the Group (2021: 660,000). During the financial year ended 2022, 1,333,333 options were exercised and converted to shares at an exercise price of $0.163 per option, with $217,333 paid in total. Granted in 2021 Terms and conditions for each grant Vested 2021 Lapsed 2021 2021 Number Date Fair value $ Total fair value Exercise price $ Expiry date First exercise date Last exercise date Number % Lapsed during the year Executives Chris Hunt Matt Antill Total Notes: 333,333 18 Jun 21 0.175 58,333 0.7631 25 May 24 18 Jun 21 25 May 24 326,667 18 Jun 21 0.175 57,167 0.7631 25 May 24 18 Jun 21 25 May 24 660,0001 115,500 100 100 333,333 326,667 660,000 - - - 1. The option price was reduced by 6.19 cents per share following the demerger of Cannon Resources Limited (28 July 2021). There were no alterations to the terms and conditions of options granted as remuneration since their grant. The Group’s remuneration policy prohibits Directors and Executives from entering into transactions or arrangements which limit the economic risk of participating in unvested entitlements. To ensure compliance with this policy Directors and Executives are required to disclose all dealings in Company securities, whether vested or not. 41 Rox Resources Annual Report 2022Director’s ReportOther Transactions with Key Management personnel During the financial year, the Group had the following transactions with KMP: • An amount of $888,328 (30 June 2021: $469,823) was paid to LG Mining Pty Ltd, a company of which Mr Passmore is a Director, for the provision of labour hire services, specifically geologists and field assistants. An amount of $49,490 was payable as at 30 June 2022 (30 June 2021: $136,193). The transactions were on an arms-length basis and utilised by the Company, on a discretionary basis, for recruitment and labour hire of predominantly field staff which are in high demand in the current tight labour market. Other recruitment and labour hire firms are also utilised by the Company as required and including when terms are offered on an equal basis. Mr Passmore does not receive any remuneration from LG Mining Pty Ltd. • The Company entered into a Demerger Agreement with its subsidiary, Cannon Resources Limited on 13 May 2021. On 10 August 2021, Cannon successfully demerged and listed on the ASX and raised $6.0 million through the issue of 30 million shares. As at 30 June 2021, Cannon had a loan payable of $542,009 to Rox. The loan payable was related to all costs and expenses associated with the listing of Cannon and operating costs up to the listing date. The loan was unsecured, non-interest bearing and repayable to Rox with 5 business days of completion of Cannon’s Initial Public Offering. The loan was repaid on 20 August 2021. • The Demerger Agreement included a provision for Rox to sub-lease office space to Cannon at $2,000 per month (amended as mutually agreed). The amount received by Rox under the Demerger Agreement for the financial year 30 June 2022 for rent was $22,000. • Following the demerger of Cannon Resources Limited (“Cannon”), Rox entered into a Shared Services Agreement (the Agreement) with Cannon whereby Rox will provide Company Secretarial and Finance Services for $8,000 per month (amended as mutually agreed). In addition, under the Agreement, Cannon can engage Rox to provide Geological services at a 10% mark-up on the cost. The Agreement commenced on 1 September 2021. The amount received by Rox under the Shared Services Agreement for the financial year 30 June 2022 was $130,625. Mr Chris Hunt is the Company Secretary of Cannon. Mr Chris Hunt, Mr Matt Antill and Mr Gregor Bennett do not receive any remuneration from Cannon. • Rox funded $103,375 of expenditure on behalf of Cannon. Mr Alex Passmore is the Non-Executive Chairman and Mr Chris Hunt is the Company Secretary of Cannon. The balance outstanding to Rox as at 30 June 2022 was $44,852. • Rox entered into two agreements with Pearl Gull Iron Limited (“Pearl Gull”) whereby Rox will provide Company Secretarial and Finance Services for $8,000 per month (amended as mutually agreed) and to sub-lease office space to Pearl Gull at $2,000 per month (amended as mutually agreed). The amount received by Rox for the financial year 30 June 2022 were $24,000 and $22,000, respectively. Mr Alex Passmore is a Non-Executive Director of Pearl Gull and Mr Chris Hunt is the Company Secretary of Pearl Gull. Mr Chris Hunt does not receive any remuneration from Pearl Gull. • All the amounts quoted above are excluding GST. 42 Rox Resources Annual Report 2022Director’s ReportCompany’s Performance The Company’s share price performance shown in the below graph is a reflection of the Company’s performance over the past 5 years. The variable components of the Executives’ remuneration including short-term and long-term incentives are indirectly linked to the Company’s share price performance. Rox Resources Limited - 5 Year Share Price Performance $ e c i r P e r a h S 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21 Jun 22 The table below sets out information about the Group’s earnings and movements in shareholder value for the past 5 years up to and including the current financial year. Net (loss)/profit after tax ($m)1 Basic (loss)/profit per share (cents)1,2 Share Price at year end (cents)2 Total dividends (cents per share) Notes: 2022 (14.0) (8.64) 24.00 - 2021 (11.8) (8.30) 43.50 - 2020 (7.5) (7.73) 126.00 - 2019 (2.8) (3.30) 16.8 - 2018 (3.2) (3.90) 16.50 - 1. Historical results have not been assessed and adjusted for the impact of new accounting standards. 2. Historical results have been adjusted for the 15 to 1 share consolidation in financial year 21. 43 Rox Resources Annual Report 2022Director’s Report Shareholdings of Key Management Personnel The interests of KMP of the Group in shares at the end of the financial year 2022 and financial year 2021 are as follows: Balance as at 1 July 2021 Granted as Remuneration Purchased Net Change/ Other Shares Issued on Exercise of Options Balance as at 30 June 2022 2022 Alex Passmore1 2,461,817 Stephen Dennis2 John Mair Robert Ryan3 Chris Hunt4 Matt Antill Gregor Bennett Total Notes: 808,483 107,878 - 66,666 63,333 137,060 3,645,237 - - - - - - - - 65,000 100,000 - - - - - - - - (63,333) - 1,333,333 3,860,150 - - - - - - 908,483 107,878 - 66,666 - 137,060 165,000 (63,333) 1,333,333 5,080,237 1. Mr Passmore, holds 3,593,483 shares directly and 266,667 shares through Venus Corporation Pty Ltd . 2. Mr Dennis holds his shares through the Dennis Super Fund A/C. 3. Mr Ryan was appointed as Non-Executive Director 29 June 2022. 4. Mr Hunt holds his shares through Mr Chris Hunt and Mrs Jody Hunt. Balance as at 1 July 2020 Granted as Remuneration Purchased Net Change/ Other Shares Issued on Exercise of Options Balance as at 30 June 2021 2021 Alex Passmore1 2,461,817 Stephen Dennis2 John Mair Chris Hunt3 Matt Antill Gregor Bennett4 Brett Dickson5 Total Notes: 608,483 107,878 - - 70,393 672,272 3,920,843 - - - - - - - - - - - 66,666 - - - - - - - 63,333 - 2,461,817 200,000 - - 808,483 107,878 66,666 63,333 - 66,667 137,060 (533,333) 946,670 1,085,609 66,666 (470,000) 1,213,337 4,730,846 1. Mr Passmore, holds his shares 2,195,150 directly and 266,667 through Venus Corporation Pty Ltd . 2. Mr Dennis holds his shares through the Dennis Super Fund A/C. 3. Mr Hunt holds his shares through Mr Chris Hunt and Mrs Jody Hunt. 4. Mr Bennett appointed as a KMP 1 July 2020. 5. Mr Dickson resigned as a Director 16 October 2020, continued as Chief Financial Officer and Company Secretary until 30 June 2021. 44 Rox Resources Annual Report 2022Director’s ReportOptions holdings of Key Management Personnel The options held by the KMP of the Group at the end of the financial year 2022 and financial year 2021 are as follows: Balance at 1 July 2021 Granted as Remuneration Options Exercised Options Expired Balance at 30 June 2022 Options Vested Not Yet Exercised1 2022 Alex Passmore4 4,000,000 Stephen Dennis4 John Mair4 Robert Ryan Chris Hunt2,5 Matt Antill3,5 Gregor Bennett4 Total Notes: 666,667 666,667 - 333,333 326,667 466,666 6,460,000 - - - - - - - - (1,333,333) - - - - - (1,333,333) - - - - - - - - 2,666,667 2,666,667 666,667 666,667 - 333,333 326,667 466,666 666,667 666,667 - 333,333 326,667 466,666 5,126,667 5,126,667 1. All options which have vested are exercisable. 2. Mr Hunt holds through Mrs Jody Hunt. 3. Mr Antill holds through Mrs Ranela Antill. 4. $0.433 per share options with an expiry of 30 November 2022 5. $0.763 per share options with an expiry of 25 May 2024 Balance at 1 July 2020 Granted as Remuneration Options Exercised Options Expired Balance at 30 June 2021 Options Vested Not Yet Exercised1 2021 Alex Passmore5,6 4,000,000 Stephen Dennis6 John Mair6 Robert Ryan Chris Hunt3,7 Matt Antill4,7 Gregor Bennett6 Brett Dickson Total Notes: 866,667 666,667 - - - 533,333 1,333,333 7,400,000 - - - - 333,333 326,667 - (200,000) - - - - - - (66,667) (1,333,333) 660,000 (1,600,000) - - - - - - - - - 4,000,000 4,000,000 666,667 666,667 - 333,333 326,667 466,666 - 666,667 666,667 - 333,333 326,667 466,666 - 6,460,000 6,460,000 1. All options which have vested are exercisable. 2. Opening values have been adjusted for the 15 to 1 share consolidation undertaken in financial year 2021. 3. Mr Hunt holds through Mrs Jody Hunt. 4. Mr Antill holds through Mrs Ranela Antill. 5. 1,333,333 options at $0.163 per share with an expiry of 31 January 2022. The option price was reduced by 6.19 cents per share following the demerger of Cannon Resources Limited (28 July 2021). 6. $0.433 per share options with an expiry of 30 November 2022. The option price was reduced by 6.19 cents per share following the demerger of Cannon Resources Limited (28 July 2021). 7. $0.763 per share options with an expiry of 25 May 2024. The option price was reduced by 6.19 cents per share following the demerger of Cannon Resources Limited (28 July 2021). End of Remuneration Report 45 Rox Resources Annual Report 2022Director’s Report46 Rox Resources Annual Report 2022Director’s ReportOther Related Party Transactions During the financial year ended 30 June 2022, there were no other related party transactions other than as disclosed in the Remuneration Report. Refer to Note 27 for further detail on Related Party transactions. Signed in accordance with a resolution of the Directors. Alex Passmore Managing Director Perth, 27 September 2022 47 Rox Resources Annual Report 2022Director’s ReportAuditor’s Independence Declaration to the Directors of Rox Resources Limited 48 48 Rox Resources Annual Report 2022Auditor’s Independence DeclarationAUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF ROX RESOURCES LIMITED In relation to the independent audit for the year ended 30 June 2022, to the best of my knowledge and belief there have been: (i) (ii) No contraventions of the auditor independence requirements of the Corporations Act 2001; and No contraventions of APES 110 Code of Ethics for Professional Accountants (including Independence Standards). This declaration is in respect of Rox Resources Limited and the entities it controlled during the year. PITCHER PARTNERS BA&A PTY LTD J C PALMER Executive Director Perth, 27 September 2022 Pitcher Partners BA&A Pty Ltd An independent Western Australian Company ABN 76 601 361 095. Level 11, 12-14 The Esplanade, Perth WA 6000 Registered Audit Company Number 467435. Liability limited by a scheme under Professional Standards Legislation. 38 Adelaide Brisbane Melbourne Newcastle Perth Sydney Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. 49 Rox Resources Annual Report 2022Auditor’s Independence Declaration50 50 Rox Resources Annual Report 2022Corporate GovernanceCorporate Governance Corporate Governance Statement Rox Resources Limited (“the Company”) has established a corporate governance framework, the key features of which are set out in this statement. In establishing its corporate governance framework, the Company has referred to the recommendations set out in the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations 4th edition. The Company has followed each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its corporate governance practices. Where the Company’s corporate governance practices follow a recommendation, the Board has made appropriate statements reporting on the adoption of the recommendation. In compliance with the “if not, why not” reporting regime, where, after due consideration, the Company’s corporate governance practices do not follow a recommendation, the Board has explained the reasons for not following the recommendation and disclosed what, if any, alternative practices the Company has adopted instead of those in the recommendation. The following governance-related documents can be found on the Company’s website at www.roxresources.com.au/corporate/corporate-governance. Charters • Board • Audit Committee • Nomination Committee • Remuneration Committee Policies and Procedures • • • • • • Policy and Procedure for the Selection and (Re)Appointment of Directors Process for Performance Evaluations Policy on Assessing the Independence of Directors Policy for Trading in Company Securities Shareholder Communication and Investor Relations Policy Code of Conduct • ASX Listing Rule Compliance • • • • • • Compliance Procedures Procedure for the Selection, Appointment and Rotation of External Auditor Corporate Governance Principles and Recommendations Risk Management Policy Policy on Whistleblower Policy on Continuous Disclosure • Diversity Policy • Induction Program • Anti-Bribery and Anti-Corruption Policy • Website Disclosure 51 Rox Resources Annual Report 2022Corporate GovernanceThe Company reports below on whether it has followed each of the recommendations during financial year 2022. The information in this statement is current at 27 September 2022. This statement was approved by a resolution of the Board on 27 September 2022. Principle 1 - Lay solid foundations for management and oversight Recommendation 1.1 The Company has established the respective roles and responsibilities of its Board and management, and those matters expressly reserved to the Board and those delegated to management and has documented this in its Board Charter, which is disclosed on the Company’s website at https://www.roxresources.com.au/corporate/corporate-governance/ Recommendation 1.2 The Company undertakes appropriate checks before appointing a person or recommending to shareholders a candidate for election as a Director and provides shareholders with all material information in its possession relevant to a decision on whether to elect or re-elect a Director. The Company appointed Mr Robert Ryan to the Board on 29 June 2022 and the checks referred to in the Company’s Policies and Procedures for the selection and (re)appointment of Directors were undertaken. The Company provided shareholders with all material information in relation to the re-election of Mr Stephen Dennis as Director at its 2021 Annual General Meeting. Recommendation 1.3 The Company has a written agreement with each Director and Senior Executive setting out the terms of their appointment. The material terms of any employment, service or consultancy agreement the Company, or any of its subsidiaries, has entered into with its Managing Director, any of its Directors, and any other person or entity who is a related party of the Managing Director or any of its Directors has been disclosed in accordance with ASX Listing Rule 3.16.4 (taking into consideration the exclusions from disclosure outlined in that rule). Recommendation 1.4 The Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board as outlined in the Company’s Board Charter. Recommendation 1.5 The Company has a Diversity Policy. However, the Diversity Policy does not include requirements for the Board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the Company’s progress in achieving them. Nor has the Board set measurable objectives for achieving gender diversity. Given the Company’s stage of development as an exploration company and the number of employees, the Board considers that it is not practical to set measurable objectives for achieving gender diversity at this time. 52 Rox Resources Annual Report 2022Corporate GovernanceThe respective proportions of men and women on the Board, in Senior Executive positions and across the whole organisation as at the date of this statement are set out in the following table. “Senior Executive” for these purposes means a person who makes, or participates in the making of, decisions that affect the whole or a substantial part of the business or has the capacity to affect significantly the Company’s financial standing. For the financial year, this included the Managing Director: Whole organisation (including the Board) Senior Executive positions Board Recommendation 1.6 Proportion of women 3 out of 14 (21%) 0 out of 4 (0%) 0 out of 4 (0%) The Chair is responsible for evaluating the Board and, when deemed appropriate, Board committees and individual Directors. The evaluations are undertaken in accordance with the Company’s Process for Performance Evaluations, which is disclosed on the Company’s website. During the financial year an evaluation of the Board, its committees, and individual Directors took place in accordance with the process disclosed in the Company’s Process for Performance Evaluations. Recommendation 1.7 The Managing Director is responsible for evaluating the performance of Senior Executives in accordance with the process disclosed in the Company’s Process for Performance Evaluations. During the financial year, an evaluation of the former Chief Financial Officer and Company Secretary, General Manager - Youanmi Operations and Exploration Manager took place in accordance with the process disclosed in the Company’s Process for Performance Evaluations. The Chair is responsible for evaluating the Managing Director in accordance with the process disclosed in the Company’s Process for Performance Evaluations. During the financial year, an evaluation of the Managing Director took place in accordance with the process disclosed in the Company’s Process for Performance Evaluations. 53 Rox Resources Annual Report 2022Corporate GovernancePrinciple 2 - Structure the Board to be effective and add value Recommendation 2.1 The Board has established a separate Nomination Committee, with the full Board being members of the Committee. The Company has adopted a separate Nomination Committee which describes the role, composition and responsibilities of the Committee. The Committee deals with any conflicts of interest that may occur by ensuring that the Director with conflicting interests is not party to the relevant discussions. Details of Director attendance at the Nomination Committee, during the financial year, are set out in a table in the Directors’ Report on page 30. Recommendation 2.2 The mix of skills and diversity for which the Board is looking to achieve in its membership is represented by the Board’s current composition. Whilst the Company is at exploration stage, it does not wish to significantly increase the size of the Board and considers that the Board, which includes Directors with geological qualifications, exploration and mining industry experience, experience in the development and operation of mining projects in Australia and accounting and finance qualifications, is an appropriate mix of skills and expertise relevant to the Company. Notwithstanding the Board’s current view that the composition of the Board is appropriate, as project acquisitions and development opportunities occur a review of the Board size and composition will be undertaken. Recommendation 2.3 The Board considers the independence of Directors having regard to the relationships listed in Box 2.3 of the Principles & Recommendations and its Policy on Assessing the Independence of Directors. The independent Directors of the Company are Mr Stephen Dennis, Chairman of the Company, Dr John Mair a Non-Executive Director and Mr Robert Ryan, a Non-Executive Director. None of the independent Directors of the Company have an interest, position or relationship of the type described in Box 2.3 The length of service of each Director is set out in the Directors’ Report on page 26. Recommendation 2.4 During the financial year, the Board had a majority of Directors who are independent. The Board considered that its composition was adequate for the Company’s size and operations and included an appropriate mix of skills and expertise relevant to the Company’s business. As noted above, a review of the Board’s size and composition, including the balance of independence on the Board may be undertaken in accordance with the Nomination Committee Charter. Recommendation 2.5 The independent Chair of the Board is Mr Stephen Dennis, who is not also the Managing Director. 54 Rox Resources Annual Report 2022Corporate GovernanceRecommendation 2.6 The Company has an induction program that it uses when new Directors join the Board and when new Senior Executives are appointed. The goal of the program is to assist new Directors to participate fully and actively in Board decision-making at the earliest opportunity and to assist Senior Executives to participate fully and actively in management decision-making at the earliest opportunity. The Company’s Induction Program is disclosed on the Company’s website. The Board in its capacity as the Nomination Committee, regularly reviews whether the Directors as a group have the skills, knowledge and familiarity with the Company and its operating environment required to fulfil their role on the Board and the Board committees effectively using a Board skills matrix. Where any gaps are identified, the Board considers the training or development that should be undertaken to fill those gaps. In particular, the Board ensures that any Director who does not have specialist accounting skills or knowledge has a sufficient understanding of accounting matters to fulfil his or her responsibilities in relation to the Company’s financial statements. Directors also receive ongoing education on developments in accounting standards. Principle 3 - Install a culture of acting lawfully, ethically and responsibly Recommendation 3.1 The Company has articulated its values and disclosed them throughout its governance material, including its Code of Conduct which can be found on the Company website. The Company expects that its Board and Senior Executives will conduct themselves with integrity and honesty in accordance with the Code of Conduct. Directors, Executives and employees shall deal with the Company’s customers, suppliers, competitors, shareholders and each other with honesty, fairness and integrity and observe the rule and spirit of the legal and regulatory environment in which the Company operates. The Company aims to increase shareholder value within an appropriate framework which safeguards the rights and interests of the Company’s shareholders and the financial community and to comply with systems of control and accountability which the Company has in place as part of its corporate governance with openness and integrity. The Company complies with all legislative and common law requirements which affect its business wherever it operates. Currently the Company only operates in Australia, should it in the future have operations overseas, it shall comply with the relevant local laws as well as any applicable Australian laws. Any transgression from the applicable legal rules is to be reported to the Managing Director as soon as a person becomes aware of such a transgression. Recommendation 3.2 The Company has established a Code of Conduct for its Directors, Senior Executives and employees, which is disclosed on the Company’s website. Any breach of that code is reported to the Board at the next meeting of Directors. Recommendation 3.3 The Company has adopted a Whistleblower Policy to encourage the raising of any concerns or reporting of instances of any violations (or suspected violations) of the Code of Conduct (or any potential breach of law or any other legal or ethical concern) without the fear of intimidation or reprisal. Any material incidents may be reported to the Supervisors or Senior Managers, the Director, Company Secretary, the Whistleblower Protection Officer appointed by the Company as well as the other person and bodies outlined in the Company’s Whistleblower Policy. Recommendation 3.4 The Company has established an Anti-Bribery and Corruption policy which is disclosed on the Company’s website. Any material breach of that policy is immediately reported to the Managing Director and Chairman of the Board of Directors. 55 Rox Resources Annual Report 2022Corporate GovernancePrinciple 4 – Safeguard the integrity of corporate reports Recommendation 4.1 The Board has established a separate Audit Committee, with the full Board being members of the Committee. The Company has adopted an Audit Committee Charter. The Committee deals with any conflicts of interest that may occur ensuring that the Director with conflicting interests is not party to the relevant discussions. The Company has also established a Procedure for the Selection, Appointment and Rotation of its External Auditor, which is disclosed on the Company’s website. The Board is responsible for the initial appointment of the external auditor and the appointment of a new external auditor when any vacancy arises. Candidates for the position of external auditor must demonstrate complete independence from the Company through the engagement period. The Board may otherwise select an external auditor based on criteria relevant to the Company’s business and circumstances. Pitcher Partners, the Company’s auditor, was appointed at the 2019 AGM. The performance of the external auditor is reviewed on an annual basis by the Board. Details of Director attendance at the Audit Committee, held during the financial year, are set out in a table in the Directors’ Report on page 30. Recommendation 4.2 Before the Board approved the Company financial statements for the half year ended 31 December 2021 and the full-year ended 30 June 2022, it received from the Managing Director and the Chief Financial Officer a declaration that, in their opinion, the financial records of the Company for the relevant financial period have been properly maintained and that the Financial Statements for the relevant financial period comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the Company and the consolidated entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively (“the Declaration”). The Board did not receive a Declaration for each of the quarters ending 30 September 2021, 31 December 2021, 31 March 2022 and 30 June 2022 because in the Board’s view its quarterly reports are not financial statements to which the Declaration can be appropriately given. Recommendation 4.3 Processes are in place to verify the integrity of the Company’s periodic corporate reports released to the market that are not audited or reviewed by the external auditor. Examples of periodic corporate reports released by the Company include quarterly cash flow reports. The process to verify includes circulation to Senior Executives and the Board for review prior to finalising and releasing to the market. The Company has adopted a Continuous Disclosure Policy which sets out how market announcements are prepared and released and has appointed the Company Secretary as the Continuous Disclosure officer who oversees the drafting of and approves the final release of announcements. The Company Secretary is responsible for satisfying themself that the content of any announcement is accurate and not misleading and is supported by appropriate verification. 56 Rox Resources Annual Report 2022Corporate GovernancePrinciple 5 - Make timely and balanced disclosure Recommendation 5.1 The Company has established written policies and procedures for complying with its continuous disclosure obligations under the ASX Listing Rules, in particular Listing Rule 3.1. A summary of the Company’s Policy on Continuous Disclosure and Compliance Procedures is disclosed on the Company’s website. Recommendation 5.2 The Company Secretary circulates all material market announcements to the Board prior to release to the ASX. Recommendation 5.3 All new and substantive investor or analyst presentations are released to the ASX ahead of any presentation to investors. Principle 6 - Respect the rights of security holders Recommendation 6.1 The Company provides information about itself and its governance to investors via its website at www.roxresources.com.au as set out in its Shareholder Communication and Investor Relations Policy. Recommendation 6.2 The Company has designed and implemented an investor relations program to facilitate effective two-way communication with investors. The program is set out in the Company’s Shareholder Communication and Investor Relations Policy. Recommendation 6.3 The Company has in place a Shareholder Communication and Investor Relations Policy, which outlines the policies and processes that it has in place to facilitate and encourage participation at meetings of shareholders. The Company encourages shareholder attendance and participation at its meetings. The Chair of the meeting allows a reasonable opportunity for members to ask questions or make comments on the management of the Company. Recommendation 6.4 All resolutions put to meetings of shareholders are decided by way of a poll. Recommendation 6.5 Shareholders are given the option to receive communications from, and send communications to, the Company and its share registry electronically. The Company engages its share registry to manage the majority of communications with shareholders. Shareholders are encouraged to receive correspondence from the Company electronically, thereby facilitating a more effective, efficient and environmentally friendly communication mechanism with shareholders, Shareholders not already receiving information electronically can elect to do so through the share registry, Computershare Limited, at www.computerhare.com.au. 57 Rox Resources Annual Report 2022Corporate GovernancePrinciple 7 - Recognise and manage risk Recommendation 7.1 The Board has established a separate Audit Committee which considers risks, with the full Board being members. Please refer to the disclosure above under Recommendation 4.1 in relation to the Audit Committee. Recommendation 7.2 The Board reviews the Company’s risk management framework annually to satisfy itself that it continues to be sound, to determine whether there have been any changes in the material business risks that the Company faces and to ensure that the Company is operating within the risk appetite set by the Board. The Board carried out these reviews during the financial year. Recommendation 7.3 The Company does not have an internal audit function. To evaluate and continually improve the effectiveness of the Company’s governance risk management and internal control processes, the Board relies on ongoing reporting and discussion of the management of material business risks as outlined in the Company’s Risk Management Policy. The Board also reviews the effectiveness of its governance, risk management and internal control processes in accordance with its Audit Committee Charter and Board Charter. Recommendation 7.4 As with most exploration projects and mining operations, the Company’s operations and activities are expected to have an impact on the environment. This impact will likely increase once the Company is in production. The Company takes care to ensure that its operations comply with any environmental laws applicable to it, including the conditions attaching to any of its tenements. Except as identified above the Company has not identified any significant exposure to any environmental and/or social sustainability risks in this financial year. However, the Company does have a material exposure to the following economic risks: • Market risk - movements in commodity prices. The Company manages its exposure to market risk by monitoring market conditions and making decisions based on industry experience. • Future capital risk - cost and availability of funds to meet the Company’s business requirements. The Company manages this risk by maintaining adequate reserves by continuously monitoring forecast and actual cash flows. The Board has adopted a Risk Management Policy and Risk Management Procedures. Under the Risk Management Policy, the Board oversees the processes by which risks are managed. This includes defining the Company’s risk appetite, monitoring of risk performance and the risks that may have a material impact on the business. Management is responsible for the implementation of the risk management and internal control system to manage the Company’s risk and to report to the Board whether those risks are being effectively managed. The Company’s system to manage its material business risks includes the preparation of a risk register by management to identify the Company’s material business risks, analyse, evaluate, and treat those risks (including assigning a risk owner to each risk). Risks and their management are to be monitored and reviewed at least annually by senior management. The risk register is to be updated and a report submitted to the Managing Director. The Managing Director is to provide a risk report at least annually to the Board. 58 Rox Resources Annual Report 2022Corporate GovernancePrinciple 8 - Remunerate fairly and responsibly Recommendation 8.1 The Board has established a separate Remuneration Committee, with the full Board being members. The Committee deals with any conflicts of interest that may occur when by ensuring that the Director with conflicting interests is not party to the relevant discussions. The Remuneration Committee considers the level and composition of remuneration for Directors and Senior Executives and ensures that such remuneration is appropriate and not excessive, in accordance with the Remuneration Committee Charter. Details of Director attendance at meetings of the full Board, in its capacity as the Remuneration Committee, during the financial year, are set out in a table in the Directors’ Report on page 30. Recommendation 8.2 Details of remuneration, including details of the Company’s Non-Executive remuneration and Executive remuneration practices and the Company’s policy on “clawback policy” regarding the lapsing of performance-based remuneration in the event of fraud or serious misconduct and the clawback of the performance-based remuneration in the event of a material misstatement in the Company’s financial statements, are contained in the “Remuneration Report” which forms of part of the Directors’ Report and commences at page 36 of the Company’s Annual Report for year ended 30 June 2022. Recommendation 8.3 The Company’s Securities Trading Policy includes a statement of the Company’s policy that participants in the Company’s equity- based remuneration schemes are prohibited from entering into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme. 59 Rox Resources Annual Report 2022Corporate GovernanceConsolidated Statement of Financial Position As at 30 June 2022 Notes 2022 ($000’s) 2021 ($000’s) Assets Current assets Cash and cash equivalents Trade and other receivables Prepayments Total current assets Non-current assets Trade and other receivables Property, plant and equipment Capitalised exploration and evaluation expenditure Right of use assets Investment in associates Other financial assets Total non-current assets Total assets Liabilities Trade and other payables Provisions Other financial liabilities Total current liabilities Non-current liabilities Provisions Other financial liabilities Total non-current liabilities Total liabilities Net assets Equity Issued Capital Reserves Accumulated losses Total equity attributable to shareholders 11 12 12 16 17 13 14 15 18 19 20 19 20 21 21 23 4,441 55 28 4,524 3,012 624 10,970 332 1,776 - 16,714 21,238 863 199 149 1,211 5,358 342 5,700 6,911 14,327 64,830 14,834 (65,337) 14,327 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. 11,913 835 36 12,784 1,109 4,236 10,885 422 - 3,210 19,862 32,646 2,720 127 116 2,963 4,381 491 4,872 7,835 24,811 70,596 4,828 (50,613) 24,811 60 Rox Resources Annual Report 2022Consolidated Financial StatementsConsolidated Statement of Comprehensive Income For the year ended 30 June 2022 Income Interest income Other income Expenses Corporate expenses Short-term lease and occupancy related expenses Salaries, wages and superannuation Restructure expenses Exploration expenditure Share based payments Finance expense Depreciation and amortisation Impairment of assets Fair value movement on financial instruments at fair value through profit or loss Share of associates profit or loss Loss before income tax Income tax expense Net loss after income tax Other comprehensive income Other comprehensive income net of tax Total comprehensive loss for the year Loss per share for the year attributable to shareholders Basic loss per share Diluted loss per share Notes 6 6 22 16 14 7 8 8 2022 ($000’s) 2 13 (1,356) (109) (1,182) (32) (7,758) (59) (735) (155) (1,774) (110) (695) (13,950) - (13,950) - (13,950) cents (8.64) (8.64) The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes. 2021 ($000’s) 3 67 (1,256) (122) (1,005) (284) (6,422) (2,220) (823) (81) - 379 - (11,764) - (11,764) - (11,764) cents (8.30) (8.30) 61 Rox Resources Annual Report 2022Consolidated Financial StatementsConsolidated Statement of Cash Flows For the year ended 30 June 2022 Notes Cash flows from operating activities Interest received Government grants Payments to suppliers and employees Expenditure on mineral interests Other Net cash used in operating activities 11 Cash flows from investing activities Proceeds from sale of investments Purchase of mineral properties Purchase of property, plant and equipment Proceeds on sale of property, plant and equipment Repayment of loan by Cannon Resources Limited Net cash used in investing activities Cash flows from financing activities Proceeds from issue of ordinary shares Proceeds from exercise of options Share issue costs Repayment of lease liabilities Net cash provided by financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 11 2022 ($000’s) 2 - (2,792) (11,741) - (14,531) 3,100 (198) (393) - 665 3,174 4,000 217 (227) (106) 3,885 (7,472) 11,913 4,441 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. 2021 ($000’s) 3 38 (2,169) (7,052) (412) (9,592) 156 - (197) 2 - (39) 11,222 - (246) - 10,976 1,345 10,568 11,913 62 Rox Resources Annual Report 2022Consolidated Financial StatementsConsolidated Statement of Changes in Equity For the year ended 30 June 2022 Contributed equity Reserves Accumulated losses Notes ($000’s) 57,783 ($000’s) 3,445 Balance as at 1 July 2020 Loss for the year Other comprehensive loss Total comprehensive loss for the year Transactions with shareholders Issue of share capital Share issue costs Share-based payments Balance as at 30 June 2021 Balance as at 1 July 2021 Loss for the year Other comprehensive loss Total comprehensive loss for the year Transactions with shareholders Issue of share capital Share issue costs Exercise of options Share-based payments - - - 13,059 (246) - 70,596 - - - - - 1,383 4,828 70,596 4,828 - - - 4,000 (227) 217 - (9,756) 64,830 - - - - - - 59 9,947) 14,834 Demerger of Cannon Resources Limited 31 Balance as at 30 June 2022 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. ($000’s) (38,849) (11,764) - Total ($000’s) 22,379 (11,764) - (11,764) (11,764) - - - (50,613) (50,613) (13,950) - 13,059 (246) 1,383 24,811 24,811 (13,950) - (13,950) (13,950) - - - - (774) (65,337) 4,000 (227) 217 59 (583) 14,327 63 Rox Resources Annual Report 2022Consolidated Financial Statements Notes to the Consolidated Financial Statements For the year ended 30 June 2022 Note 1 – Corporate Information Rox Resources Limited is a for profit company incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange (ASX). The consolidated financial statements of Rox Resources Limited incorporate Rox Resources Limited (the Parent) as well as its subsidiaries (collectively, the Group) as outlined in Note 30. The financial statements of the Group for the year ended 30 June 2022 were authorised for issue in accordance with a resolution of the Directors on 27 September 2022. The nature of the operations and principal activities of the Group are described in the Directors Report. Note 2 – Significant Accounting Policies Basis of preparation The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has been prepared on a historical cost basis, except for certain financial investments that have been measured at fair value. The financial report is presented in Australian dollars. As a result of the uncertainties inherent in business and other activities, certain items in a financial report cannot be measured with precision but can only be estimated. The estimation process involves best estimates based on the latest information available, which are set out in Note 4. Comparatives Certain prior financial year amounts have been reclassified for consistency with the current financial year presentation. Rounding of Amounts The Group is of a kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191, relating to the ‘rounding off’ of amounts in the Directors’ Report. Amounts in the Directors’ Report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar. Going concern This report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business. The Group has incurred a net loss after tax for the year ended 30 June 2022 of $13,950k (2021: $11,764k) and experienced net cash outflows from operating activities of $14,531k (2021: $9,592k). As at 30 June 2022, the Group had net current assets of $3,313k (30 June 2021: $9,821k). The Directors recognise that additional funding either through the issue of further shares, or convertible notes, or the sale of assets, or a combination of these activities will be required for the Group to continue to actively explore its mineral properties. The Directors are also aware that the Group can relinquish certain projects in order to maintain its cash at appropriate levels. The Directors have reviewed the business outlook and the assets and liabilities of the Group and are of the opinion that the use of the going concern basis of accounting is appropriate as the Directors believe the Group will be able to pay its debts as when they fall due. 64 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 2 – Significant Accounting Policies continued Going concern (continued) In forming this view, the Directors have taken into consideration the following: • The Group’s ability to reduce expenditure as and when required including, but not limited to, reviewing all expenditure for deferral or elimination, until the Group has sufficient funds; and • Assets sales, including sale of tenure. The financial report does not include any adjustments relating to the recoverability or classification of recorded asset amounts, nor the amounts or classification of liabilities that might be necessary should the Group not be able to continue as a going concern. Should the Group be unsuccessful with the initiatives detailed above then, there is a material uncertainty as to whether the Group will be able to continue as a going concern and may therefore be required to realise assets and extinguish liabilities other than in the ordinary course of business with the amount realised being different from those shown in the financial statement. (a) Compliance statement The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. (b) Accounting standards issued but not yet effective The Australian Accounting Standards Board (AASB) has issued a number of new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods, some of which are relevant to the Group. The Group has decided not to early adopt any of these new and amended pronouncements. The Group’s assessment of the new and amended pronouncements that are relevant to the Group but applicable in future reporting periods is set out below. AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018 – 2020 and Other Amendments (i) AASB 1 – simplifies the application by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences; (ii) AASB 3 – updates references to the Conceptual Framework for Financial Reporting; (iii) AASB 9 – clarifies the fees an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability; (iv) AASB 116 – requires an entity to recognise the sales proceeds from selling items produced while preparing PP&E for its intended use and the related cost in profit or loss, instead of deducting the amounts received from the cost of the asset; (v) AASB 137 – specifies the costs that an entity includes when assessing whether a contract will be loss making; and (vi) AASB 141 – removes the requirement to exclude cash flows from taxation when measuring fair value, thereby aligning the fair value measurement requirements in AASB 141 with those in other Australian Accounting Standards. AASB 2020-3 mandatorily applies to annual reporting periods commencing on or after 1 January 2022 and will be first applied by the Group in the financial year commencing 1 July 2022. The likely impact of this accounting standard on the financial statements of the Group has not been determined. AASB 2020-1: Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current, AASB 2020-6 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current – Deferral of Effective Date AASB 2020-1 amends AASB 101 Presentation of Financial Statements to clarify requirements for the presentation of liabilities in the statement of financial position as current or non-current. It requires a liability to be classified as current when entities do not have a substantive right to defer settlement at the end of the reporting period. 65 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 2 – Significant Accounting Policies (continued) (b) Accounting standards issued but not effective (continued) AASB 2020-6 defers the mandatory effective date of amendments that were originally made in AASB 2020-1 so that the amendments are required to be applied for annual reporting periods beginning on or after 1 January 2023 instead of 1 January 2022. They will first be applied by the Group in the financial year commencing 1 July 2023. The likely impact of this accounting standard on the financial statements of the Group has not been determined. AASB 2021-7a: Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections AASB 2021-7a amends various standards, interpretations and other pronouncements for editorial corrections made by accounting standards boards since December 2017. AASB 2021-7a mandatorily applies to annual reporting periods commencing on or after 1 January 2022 and will be first applied by the Group in the financial year commencing 1 July 2022. The likely impact of this accounting standard on the financial statements of the Group has not been determined. AASB 2021-5: Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction AASB 2021-5 amends AASB 112 Income Taxes to clarify the accounting for deferred tax transactions that, at the time of the transaction, give rise to equal taxable and deductible temporary differences. In specified circumstances, entities are exempt from recognising deferred tax when they recognise assets or liabilities for the first time. The amendments clarify that the exemption does not apply to transactions for which entities recognise both an asset and a liability and that give rise to equal taxable and deductible temporary difference. This amending standard mandatorily apply to annual reporting periods commencing on or after 1 January 2023 and will be first applied by the Group in the financial year commencing 1 July 2023. The likely impact of this accounting standard on the financial statements of the Group has not been determined. AASB 2022-1: Amendments to Australian Accounting Standards – Initial Application of AASB 17 and AASB 9 – Comparative Information AASB 2022-1 amends AASB 17 Insurance Contracts to provide insurers with a transition option relating to comparative information about financial assets presented on the initial application of AASB 17. The amendments relate to financial assets for which comparative information presented on initial application of AASB 17 and AASB 9 has not been restated for AASB 9. Applying the transaction option would permit an entity to present comparative information about such a financial asset as if the classification and measurement requirements of AASB 9 had been applied to that financial asset. AASB 2022- 1 mandatorily applies to annual reporting periods commencing on or after 1 January 2023 and will be first applied by the Group in the financial year commencing 1 July 2023. The likely impact of this accounting standard on the financial statements of the Group has not been determined. AASB 2021-2: Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definition of Accounting Estimates AASB 2021-2 amends AASB 7 Financial Instruments: Disclosures, AASB 101 Presentation of Financial Statements, AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors, AASB 134 Interim Financial Reporting and AASB Practice Statement 2 Making Materiality Judgements. The main amendments relate to: (a) AASB 7 – clarifies that information about measurement bases for financial instruments is expected to be material to an entity’s financial statements; (b) AASB 101 – requires entities to disclose their material accounting policy information rather than their significant accounting policies; (c) AASB 108 – clarifies how entities should distinguish changes in accounting policies and changes in accounting estimates; (d) AASB 134 – to identify material accounting policy information as a component of a complete set of financial statements; and 66 Rox Resources Annual Report 2022Consolidated Financial Statements Note 2 – Significant Accounting Policies (continued) (b) Accounting standards issued but not effective (continued) (e) AASB Practice Statement 2 – to provide guidance on how to apply the concept of materiality to accounting policy disclosures. AASB 2021-2 mandatorily applies to annual reporting periods commencing on or after 1 January 2023 and will be first applied by the Group in the financial year commencing 1 July 2023. The likely impact of this accounting standard on the financial statements of the Group has not been determined. (c) New Accounting standards applicable to 30 June 2022 year end The following new accounting standards were applicable to the Group for the first time from 1 July 2021. There is no material impact of these newly adopted accounting standards on the financial statements of the Group. AASB 2020-8: Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform – Phase 2 AASB 2020-4 amends AASB 4 Insurance Contracts, AASB 7 Financial Instruments: Disclosures, AASB 9: Financial Instruments, AASB 16: Leases and AASB 139 Financial Instruments: Recognition and Measurement to provide financial statement users with useful information about the effects of the interest rate benchmark reform on those entities financial statements. As a result of the amendments, an entity: (a) will not have to derecognise or adjust the carrying amount of financial instruments for changes required by the reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate; (b) will not have to discontinue hedge accounting solely because it makes changes required by the reform, if the hedge meets other hedge accounting criteria; and (c) will be required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates. AASB 2021-3: Amendments to Australian Accounting Standards – Covid 19 Related Rent Concessions beyond 30 June 2021 AASB 2021-3 amends AASB 16: Leases to extend by one year the application period of the practical expedient added to AASB 16 by AASB 2020-4. The practical expedient permits lessees not to assess whether rent concessions that occur as a direct consequence of the covid-19 pandemic and meet specified conditions are lease modifications and, instead, to account for those rent concessions as if they were not modifications. The Standard extends the practical expedient to rent concessions that reduce only lease payments originally due on or before 30 June 2022, provided the other conditions for applying the practical expedient are met. AASB 2021-3 mandatorily applies to annual reporting periods commencing on or after 1 April 2021 and is available for earlier application. It will be applied by the Group in the financial year commencing 1 July 2021. (d) Summary of significant accounting policies (i) Cash and cash equivalents Cash and cash equivalents in the Consolidated Statement of Financial Position and Consolidated Statement of Cash Flows comprise cash at bank and in hand and deposits that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (ii) Capitalised exploration and evaluation expenditure Exploration and evaluation costs are written off in the year they are incurred apart from acquisition costs which are carried forward where right of tenure of the area of interest is current and they are expected to be recouped through sale or successful development and exploitation of the area of interest or, where exploration and evaluation activities in the area of interest have not reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Where an area of interest is abandoned or the Directors decide that it is not commercial, any accumulated acquisition costs in respect of that area are written off in the financial period the decision is made. Each area of interest is also reviewed at the end of each accounting period and accumulated costs written off to the extent that they will not be recoverable in the future. Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until production commences. 67 Rox Resources Annual Report 2022Consolidated Financial Statements Note 2 – Significant Accounting Policies (continued) (d) Summary of significant accounting policies (continued) (iii) Trade and other payables Trade payables and other payables are initially recognised at fair value and are subsequently carried at amortised costs and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. Refer also to Note 2 (d)(xvi) Financial instruments. (iv) Issued capital Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction, net of tax, of the share proceeds received. (v) Income tax Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of comprehensive income. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. The recoverable amount of equipment is the greater of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. (vi) Trade and other receivables Trade receivables are initially recognised at fair value and subsequently carried at amortised cost less an allowance for impairment. Refer also to Note 2 (d)(xvi) Financial instruments. (vii) Property, plant and equipment All classes of equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on a straight-line basis over the estimated useful life of the specific asset as follows: Asset Equipment 2022 2021 3-10 years 3-10 years Depreciation is not charged on plant until production commences. Impairment The carrying values of property, plant and equipment are reviewed for impairment at each balance date, with recoverable amount being estimated when events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash- generating unit to which the asset belongs, unless the asset’s value in use can be estimated to be close to its fair value. An impairment exists when the carrying values of an asset or cash generating unit exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. The recoverable amount of equipment is the greater of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. 68 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 2 – Significant Accounting Policies (continued) (d) Summary of significant accounting policies (continued) (vii) Property, plant and equipment (continued) Derecognition Property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the Statement of Comprehensive Income in the period the item is derecognised. (viii) Employee benefits Provision is made for the employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries, annual leave, sick leave and long service leave. Liabilities arising in respect of wages and salaries, annual leave and other employee benefits expected to be settled within 12 months of the reporting date are measured at the nominal amounts based on remuneration rates which are expected to be paid when the liability is settled. All other employee benefit liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date. In determining the present value of future cash outflows, the market yield as at the reporting date on national corporate bonds, which have terms to maturity approximating the terms of the related liability, are used. (ix) Revenue recognition Interest revenue Interest income is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset. Government Grants Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. Sale of Assets Revenue from the sale of assets is recognised when the significant risks and rewards of ownership of the assets have passed to the buyer, usually on delivery of the asset. (x) Leases Leases of 12-months or less and leases of low value assets Lease payments made in relation to leases of 12-months or less and leases of low value assets (for which a lease asset and a lease liability has not been recognised) are recognised as an expense on a straight-line basis over the lease term. Leases of 12-months or greater Lease Asset A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over the estimated useful life. Right-of-use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. 69 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 2 – Significant Accounting Policies (continued) (d) Summary of significant accounting policies (continued) (x) Leases (continued) Lease Liability A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of-use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down (xi) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST except: • where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable • receivables and payables are stated with the amount of GST included The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (xii) Earnings/loss per share Basic earnings/loss per share is calculated by dividing the profit/loss from ordinary activities after related income tax expense by the weighted average number of ordinary shares outstanding during the financial year. Diluted earnings/loss per share is calculated as net profit/loss attributable to members, adjusted for: • • costs of servicing equity (other than dividends) the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses • other discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares • divided by the weighted average number of ordinary shares and dilutive potential ordinary shares adjusted for any bonus element 70 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 2 – Significant Accounting Policies continued (d) Summary of significant accounting policies (continued) (xiii) Share based payment transactions The Group provides benefits to employees (including Directors) of the Group in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’). The cost of these equity-settled transactions with employees is measured by reference to the fair value of the shares at the grant date. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Rox Resources Limited (‘market conditions’). The cost of equity-settled transactions is recognised in the Statement of Comprehensive Income, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects the extent to which the vesting period has expired and the number of awards that, in the opinion of the Directors of the Company, will ultimately vest. This opinion is formed based on the best available information at balance sheet date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transactions a result of the modification, as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share, unless the Group is loss making, then it is anti-dilutive as the inclusion of these options would reduce the loss per share. (xiv) Provisions Rehabilitation provision The Group makes full provision for the future cost of rehabilitating mine sites and related production facilities on a discounted basis at the time of acquiring, or developing, the mines and installing and using those facilities. The rehabilitation provision represents the present value of rehabilitation costs relating to the Group’s mine site. Further information on the assumptions used in the determining the rehabilitation provision is set out in Note 19. (xv) Interests in joint arrangements Joint arrangements represent the contractual sharing of control between parties in a business venture where unanimous decisions about relevant activities are required. Joint operations represent arrangements whereby joint operators maintain direct interests in each asset and exposures to each liability of the arrangement. The Group’s interests in the assets, liabilities, revenue and expenses of the joint operations are included in the respective line items of the financial statements. Information about the joint arrangements is set out in Note 28. 71 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 2 – Significant Accounting Policies continued (d) Summary of significant accounting policies (continued) (xvi) Financials instruments Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. For financial assets, this is the date that the Group commits itself to either purchase or sale of assets. Financial liabilities Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit and loss, loans and borrowings, payables or as derivatives designated as hedging instruments in an effective hedge, as appropriate. An instrument is a financial liability when an issuer is, or can be required, to deliver either cash or another financial asset (e.g. ordinary shares in the Company) to the holder. Where the Group has the choice of settling a financial instrument in cash or otherwise is contingent on the outcome of circumstances beyond the control of both the Group and the holder, the Group accounts for the instrument as a financial liability. All financial liabilities are initially recognised at fair value. The Group’s financial liabilities include trade payables and contingent consideration (compound financial liability). Financial assets Financial assets are initially recognised at fair value. The Group’s financial assets include cash and cash equivalents, receivables, financial investments and the deferred consideration and the amounts owing from VMC under the funding arrangement in conjunction with the joint arrangement held with VMC (see Note 12). The deferred consideration owed to the Group in relation to the Group’s sale of the Reward Zinc-Lead Project in 2017 to Teck Resources Limited (“Teck”) (see Note 15) is recognised at fair value on initial recognition and subsequent remeasurement, with the movement recorded as a fair value gain or loss on financial instruments in the Consolidated Statement of Comprehensive Income. The Group applies the AASB 9 Financial Instruments (“AASB 9”) simplified approach to measuring the expected credit losses which uses a lifetime expected loss allowance for all trade receivables. Where the simplified approach to measuring the expected credit loss does not apply (i.e. the deferred consideration and the amounts owing to VMC under the funding arrangement), the Group recognises a loss allowance on initial recognition based on the 12 month expected credit losses. The Group thereafter continues to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in the credit risk since initial recognition of the financial asset. Specifically, AASB 9 requires the Group to measure the loss allowance at an amount equal to the lifetime expected credit loss. (xvii) Investments in associates An associate is an entity over which the Group is able to exercise significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. The Group’s interests in associates are accounted for using the equity method after initially being recognised at cost. Under the equity method, the Group’s share of the profits or losses of the associate is recognised in the Group’s profit or loss and the Group’s share of other comprehensive income items is recognised in the Group’s condensed consolidated statement of other comprehensive income. Unrealised gains and losses on transactions between the Group and an associate are eliminated to the extent of the Group’s interest in the associate. 72 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 3 – Financial Risk Management and Policies Overview This note presents information about the Group’s exposure to each of the below risks, its objectives, policies and processes for measuring and managing risk, and the management of capital. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and manages the financial risks relating to the operations of the Group through regular reviews of the risks. The Group has exposure to the following risks from its use of financial instruments: • • credit risk liquidity risk • market risk • interest rate risk Credit Risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s credit risk exposure arises principally from the Group’s other financial assets, receivables, including receivables from related parties, security deposits and cash and cash equivalents. Cash and cash equivalents The Group’s cash and cash equivalents are maintained in banks with credit ratings of AA as per Standard & Poor’s as at year-end. Trade and other receivables As the Group operates in the mining exploration sector its receivables generally relate to GST receivable from the Australian Taxation Authority and the credit risk is assessed similar to other financial instruments under AASB 9 and the credit risk is low. Presently, the Group undertakes exploration and evaluation activities in Australia. At the balance sheet date there were no significant concentrations of credit risk and none of the Group’s receivables are past due or impaired (2021: Nil). Other financial assets At the end of the financial year 30 June 2021, the Group had a non-current receivable of $3.2m in present value terms resulting from the sale of the Reward Zinc-Lead project in 2017 (Note 15) to Teck. Payment was received from Teck on 26 August 2021 as per the terms of the early settlement agreement, announced to the market on 20 July 2021. Exposure to credit risk The carrying amount of the Group’s financial assets represents the Group’s maximum credit exposure. None of the Group’s trade and other receivables are past due (2021: nil). As at 30 June 2022, the Group does not have any collective impairment on its other receivables (2021: nil). Guarantees At the date of this report there are no outstanding guarantees (2021: nil). 73 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 3 – Financial Risk Management and Policies continued Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages liquidity risk by maintaining adequate cash reserves by continuously monitoring forecast and actual cash flows. The Group’s liquidity risk arises from other financial liabilities and trade and other payables, together comprising the Group’s financial liabilities. Financial liabilities maturing profiles as follows: Maturity profiles Less than 6 months 6 months to 1 year 1 year to 5 years Greater than 5 years Total Market risk 2022 ($000’s) 847 149 342 - 1,338 2021 ($000’s) 2,497 116 491 - 3,104 Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Equity risk The Group considers its exposure to equity risk minimal and has not developed any policies or procedures to manage such risk. Currency risk The Group considers that its exposure to currency risk is minimal and has not developed any policies or procedures to manage such risk. Exposure to currency risk The Group’s exposure to foreign currency risk at reporting date was nil (2021: nil). Interest rate risk The Group is exposed to interest rate risk. The Group considers that its exposure to interest risk is minimal, however it has a policy of monitoring interest rates offered by competing financial institutions to ensure it is aware of market trends and it receives competitive interest rates. Profile At the reporting date the Group’s only exposure to interest rate risk is related to the balance of its cash and cash equivalents. he following table represents the Group’s exposure to interest rate risk: Variable rate instruments Cash and cash equivalents 2022 ($000’s) 4,441 2021 ($000’s) 11,913 A change of 1% (2021: 1%) in variable interest rates would have increased or decreased the Group’s equity and profit by $0.04m (2021: $0.12m) and would have had the same effect on cash. The 1% sensitivity is based on reasonable possible movements over a financial year, after observation of a range of actual historical rate movement over the past five years. 74 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 3 – Financial Risk Management and Policies continued Fair values Fair values versus carrying amounts The fair values of financial assets and liabilities, together with the carrying amounts shown in the Statement of Financial Position, are as follows: Financial assets and liabilities Note Carrying amount ($000’s) Fair value ($000’s) Carrying amount ($000’s) Fair value ($000’s) 2022 2021 Cash and cash equivalents Trade and other receivables (current) Trade and other receivables (non-current) Investment in associates Other financial assets (current) Other financial assets (non-current) Trade payables Other financial liabilities (current) Other financial liabilities (non-current) Total 11 12 12 14 15 15 18 20 20 4,441 55 3,012 1,776 - - (847) (149) (342) 7,946 4,441 55 3,012 1,776 - - (847) (149) (342) 7,946 11,913 835 1,109 - - 3,210 (2,372) (116) (491) 14,088 11,913 835 1,109 - - 3,210 (2,372) (116) (491) 14,088 The Directors consider the carrying amount of the financial instruments to be a reasonable approximation of their fair value on account of their short to medium-term maturity cycle. Assets measured at fair value Financial assets 2022 Other financial assets (non-current) - Deferred consideration 2021 Other financial assets (non-current) - Deferred consideration Note Date of Valuation Value ($000’s) Level 1a ($000’s) Level 2b ($000’s) Level 3c ($000’s) 15 - - 15 30 Jun 2021 3,210 - - - - - 3,210 aQuoted prices in active markets; bSignificant observable inputs; cSignificant unobservable inputs. Valuation techniques and significant unobservable inputs used in level 3 fair value measurements For the year ended 30 June 2021, the fair value of the deferred consideration totalling $3.2m was valued using the discounted cash flow method. The significant unobservable inputs used in this method were as follows: • Nominal amount due: $3.8m; • Date payment due: 15 February 2023 (being the earlier of the acquirer completing a bankable feasibility study or 6 years from the contract date); and • Discount rate: 10% (pre-tax nominal). 75 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 3 – Financial Risk Management and Policies continued Reconciliation of recurring level 3 fair value movements Other financial assets - deferred consideration (non-current) (Level 3) Opening balance Total loss recognised in the Statement of Comprehensive Income Proceeds received Closing balance Total loss recognised in the Statement of Comprehensive Income Remeasurement of deferred consideration Sensitivity analysis for recurring level 3 fair value measurements Value 2022 ($000’s) 3,210 (110) (3,100) - 110 For fair values in level 3, if the events below were to vary from that used to determine fair value as at the reporting date, assuming all other variables that might impact on fair value remain constant, then the impact on profit for the 2021 financial year and equity is as follows: Other financial assets - deferred consideration (non-current) (level 3) Bankable feasibility study completed one year earlier Cost of debt decreases by 1% Impact on profit after tax ($000’s) Impact on equity ($000’s) 29 (23) 29 (23) The sensitivity analysis was calculated by adjusting the net present value workings for the changes in inputs. Each input was changed separately leaving all other variables constant. Capital management When managing capital, management’s objective is to ensure that the Group continues as a going concern as well as to maintain 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 Group. The Group will raise equity through the issue of shares from time to time as the board sees fit to ensure it meets its objective of continuing as a going concern. The Group does not have any borrowings and has no current plans to obtain any debt facilities; as a result, the Group’s total capital is defined as shareholders’ equity, and at 30 June stood at: Equity The Group is not subject to any externally imposed capital requirements. 2022 ($000’s) 14,327 2021 ($000’s) 24,811 76 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 4 – Significant accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements. Exploration and evaluation The Group’s accounting policy for exploration and evaluation is set out in Note 2(d)(ii) to the accounts. The application of this policy necessarily requires management to make certain estimates and assumptions as to future events and circumstances, in particular, the assessment of whether economic quantities of reserves have been found. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised expenditure under our policy, management conclude that they are unlikely to recover the expenditure by future exploitation or sale, then the relevant capitalised amount will be written off to the Consolidated Statement of Comprehensive Income. Share options The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using the binominal formula. For options issued in this financial year, the assumptions detailed as per Note 22 were used. Fair value measurement The Group’s accounting policy for Financial Instruments is set out in Note 2(d)(xvi). Where the fair values of financial assets and liabilities recorded in the consolidated statement of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including discounted cashflows. The input into these models is taken from observable inputs where possible. Changes in assumptions about these factors could affect the reported fair value of financial instruments, which also may differ from amounts at settlement. Joint control The Group’s accounting policy for Joint Arrangements is set out in Note 2(d)(xv). AASB 11 Joint Arrangements requires an investor to have contractually agreed the sharing of control when making decisions about the relevant activities (in other words requiring the unanimous consent of the parties sharing control). However, what these activities are is a matter of judgement. Please see Note 28 for more information on the Group’s joint operations. Rehabilitation The Group made a full provision for its share of the future cost of rehabilitating the Youanmi Gold Project and related production facilities on a discounted basis, recognised initially on acquisition of its interest in mine and related facilities. The rehabilitation provision represents the estimated present value of rehabilitation costs relating to the Group’s mine properties as at balance date. Assumptions are based on the current economic environment at each balance date, which management believe provide a reasonable basis upon which to estimate the future liability. These estimates are reviewed regularly to consider and material changes to the assumptions. Accordingly, during the financial year, as the scoping study progressed, the Group undertook a full third party assessment of the extent and timing of the rehabilitation provision. This included the impact of the decision to utilise an alternative solution to the existing plant infrastructure. Actual rehabilitation costs will ultimately depend upon future market prices for the necessary rehabilitation works required that will reflect market conditions at the relevant time. 77 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 4 – Significant accounting judgements, estimates and assumptions continued Rehabilitation (continued) Furthermore, the timing of rehabilitation is likely to depend on when the mine commences and ultimately (if a decision to mine is made) ceases to produce at economically viable rates. This, in turn, will depend upon commodity prices, which are inherently uncertain. Expected Credit Loss Under the AASB 9 simplified approach, the Group determines the allowance for credit losses for receivables from contracts with customers and contract assets on the basis of the lifetime expected credit losses of the financial asset. Judgement is required in determining the lifetime expected credit loss, and the group uses information from a range of sources in determining the amount, including publicly available financial information. Benefit from deferred tax losses The future recoverability of the carried forward tax losses are dependent upon Group’s ability to generate taxable profits in the future in the same tax jurisdiction in which the losses arise. This is also subject to determinations and assessments made by the taxation authorities. The recognition of a deferred tax asset on carried forward tax losses (in excess of taxable temporary differences) is dependent on management’s assessment of these two factors. The ultimate recoupment and the benefit of these tax losses could differ materially from management’s assessment. Potential future income tax benefits attributable to gross tax losses carried forward have not been brought to account at 30 June 2022 because the Directors do not believe it is appropriate to regard realisation of the future tax benefit as probable. These benefits will only be obtained if: (i) the Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the losses and deductions to be released; (ii) the Group continues to comply with the conditions for deductibility imposed by the law; and (iii) no changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the losses. Note 5 – Segment information Identification of Reportable Segments Operating segments that meet the quantitative criteria of AASB 8 are reported separately. However, an operating segment that does not meet the quantitative criteria is still reported separately where information about the segment would be useful to the users of the financial statements. The Group operates within the mineral exploration industry within Australia. The Group determines its operating segments by reference to internal reports that are reviewed and used by the Board of Directors (the chief operating decision maker) in assessing performance and in determining the allocation of resources. The Board of Directors currently receive Consolidated Statement of Financial Position and Consolidated Statement of Comprehensive Income information that is prepared in accordance with Australian Accounting Standards. The Consolidated Statement of Financial Position and Consolidated Statement of Comprehensive Income information received by the Board of Directors does not include any information by segment. The executive team manages each exploration activity of each exploration concession through review and approval of statutory expenditure requirements and other operational information. Based on this criterion, the Group has only one operating segment, being exploration, and the segment operations and results are the same as the Group results. 78 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 6 – Income Interest income Interest income Other income Government grants Lease income Other Total other income Note 7 – Income tax Income Tax Expense Recognised in the income statement: a) Tax expense Current tax expense Deferred tax expense Total income tax expense per income statement Recognised in the income statement: b) Tax expense Current tax expense Deferred tax expense Total income tax expense per income statement c) Numerical reconciliation between tax expense and pre-tax net profit /(loss) Net profit/(loss) before tax Corporate tax rate applicable Income tax expense/(benefit) on above at applicable corporate rate Increase/(decrease) in income tax due to tax effect of: Share based payments Other non-deductible expenses Other assessable income Current year tax losses not recognised Derecognition of previously recognised tax losses and temporary differences Tax gain on sale of tenements Movement in unrecognised temporary differences Utilisation of previously unrecognised tax losses Other Deductible equity raising costs Income tax expense/(benefit) reported in the Statement of Comprehensive Income 2022 ($000’s) 2021 ($000’s) 2 - - 13 13 3 37 30 - 67 2022 ($000’s) 2021 ($000’s) - - - - - - (13,950) 30% (4,185) 18 342 272 3,116 318 - 208 - - (89) - - - - - - - (11,764) 30% (3,530) 666 - - - (348) 2,453 2,188 (1,346) (83) - - 79 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 7 – Income tax continued Deferred tax assets and liabilities d) Recognised deferred tax assets and liabilities Deferred tax assets Employee provisions Rehabilitation assets and liabilities Blackhole – equity raising costs Tax losses Gross deferred tax assets Set-off deferred tax liabilities Net deferred tax assets Deferred tax liabilities Exploration and mine properties Gross deferred tax liabilities Set-off of deferred tax assets Net deferred tax liabilities e) Unused tax losses and temporary differences for which no deferred tax asset has been recognised Deferred tax assets have not been recognised in respect of the following using corporate tax rates of: Deductible temporary differences Tax revenue losses Tax capital losses 2022 ($000’s) 2021 ($000’s) 30% 10 754 - 192 956 (956) - (956) (956) 956 - 30% 1,589 13,205 206 15,000 30% 64 476 256 - 796 (796) - (796) (796) 796 - 30% 96 10,617 - 10,713 The corporate tax rates on both recognised and unrecognised deferred tax assets and deferred tax liabilities have been calculated with respect to the tax rate that is expected to apply in the year the deferred tax asset is realised or the liability is settled. Potential future income tax benefits attributable to gross tax losses of $44.7m (2021: $35.4m) carried forward have not been brought to account at 30 June 2022 because the Directors do not believe it is appropriate to regard realisation of the future tax benefit as probable. These benefits will only be obtained if: (i) the Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the losses and deductions to be released (ii) the Group continues to comply with the conditions for deductibility imposed by the law (iii) no changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the losses Tax losses carried forward have no expiry date. 80 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 8 – Earnings per share 2022 2021 The following reflects the income and share data used in the calculation of basic and diluted earnings per share: Net loss ($13,950,392) ($11,764,300) Weighted average number of ordinary shares used in calculating basic earnings per share 161,415,833 141,809,925 Effect of dilutive securities: Share optionsa - - Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share 161,415,833 141,809,925 Basic and Diluted profit/(loss) cents per share (8.64) (8.30) aShare options are not dilutive as their inclusion would give rise to a reduced loss per share. There was a total of 20,602,857 share options that were potentially dilutive to shares on issue at 30 June 2022 (2021: 21,136,190). The above weighted average number of shares incorporates an adjustment to the calculation to incorporate the effects of bonus elements (if any) in relation to rights issues in the current and previous financial year. Conversion, calls, subscriptions or issues after 30 June 2022 There have been no other options issued, conversions to, calls of, or subscriptions for ordinary shares since the reporting date and before the completion of this financial report. Note 9 – Director and Executive disclosures (a) Details of Key Management Personnel Alex Passmore Managing Director (appointed CEO 1 February 2019, appointed MD 1 May 2019) Stephen Dennis Non-Executive Chairman (appointed 1 August 2015) John Mair Non-Executive Director (appointed 24 October 2019) Robert Ryan Non-Executive Director (appointed 29 June 2022) Chris Hunt Matt Antill Chief Financial Officer (appointed 3 May 2021) and Company Secretary (appointed 6 May 2021) General Manager – Youanmi Operations (appointed 5 April 2021) Gregor Bennett Exploration Manager (appointed 1 July 2020) There were no changes of Key Management Personnel after the reporting date and before the date that the financial report was authorised for issue. 81 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 9 – Director and Executive disclosures continued (b) Compensation of Key Management Personnel by category Incentive plan Short-term Post-employment Total Note 10 – Auditor’s remuneration Remuneration of the current auditor of the Group, Pitcher Partners, for: Audit and review of the financial report - Rox Resources Limited Audit and review of the financial report - Cannon Resources Limited Demerger accounting assistance Total Note 11 – Cash and cash equivalents Cash and cash equivalents Cash at bank earns interest at floating rates based on daily deposit rates 2022 ($) 2021 ($) 1,320,378 1,238,635 123,040 72,767 1,443,418 1,311,402 2022 ($) 2021 ($) 48,124 - 1,638 49,762 44,054 24,013 24,150 92,217 2022 ($000’s) 4,441 2021 ($000’s) 11,913 Reconciliation of net loss after income tax to net cash flow from operations Net loss after income tax (13,950) (11,764) Adjustments to reconcile profit before tax to net operating cash flows Depreciation and amortisation Finance expense Share based payments Impairment of assets Other income Short-term lease and occupancy related expenses Loss/(profit) on sale of property, plant and equipment Fair value movement on financial instruments at fair value through profit or loss Restructure expenses Repayment of lease liabilities Share of associates profit or loss Changes in assets and liabilities (Increase)/decrease in prepayments Increase/(decrease) in provisions Increase/(decrease) in trade payables/accruals (Increase)/decrease in receivables Cash out-flow from operations The Group does not have any credit standby arrangements, used or unused loan facilities. 155 735 59 1,774 (8) - - 110 32 106 695 8 - (1,709) (2,538) (14,531) 81 823 2,220 - (16) (47) - (379) - - - (22) 75 139 (702) (9,592) 82 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 12 – Trade and other receivables Current Other receivables (i) Advances to JV partners (i) Currans Find & Pincher Joint Venture (RXL 45%, VMC 45%, MER 10%a) Total advances to JV partners Cannon Resources Limited (i) Other related parties (i) Total Non-current Amounts owing from JV partner (ii) aMurchison Earthmoving & Rehabilitation Pty Ltd 2022 ($000’s) 2021 ($000’s) 1 9 10 45 - 55 293 - - 542 - 835 3,012 1,109 (i) Receivables, including from related parties (see Note 27), generally have 30-day terms and are unsecured. (ii) Receivable from the OYG JV Partner, VMC. In accordance with the joint arrangement with VMC, all approved expenditure (the “Expenditure”) incurred in accordance with the OYG JV must be borne and paid for by the Joint Venturers severally in proportion to their prospective interests (30 June 2021: RXL: 70%, VMC 30%). Under the OYG JV agreement, VMC may elect in writing (until a Decision to Mine is made) to not fund their percentage share of the Expenditure but instead request the Group to fund such expenditure by way of a loan provided to VMC. Accordingly, the Group agrees to contribute to VMC’s share of costs on the following basis: (1) on receipt from VMC of an Election Notice within 2 business days of a billing statement (cash call) being receipted (2) evidence in writing demonstrating (to the Group’s satisfaction) of VMC’s inability to contribute to its percentage share of the Expenditure No interest is payable on outstanding amounts under this loan arrangement. In determining the expected credit loss, for which judgement is required (refer Note 4), the Group had regard to the Repayment terms and expected timing of each event occurring as set out below. Repayment Repayment of amounts loaned to VMC under this arrangement will be repayable solely from: (1) VMC’s percentage share of the sale proceeds from the sale of any OYG JV property, including gold produced. (2) the sale proceeds from any sale by VMC to a third party of all, or part, of its OYG JV interest and interest in the tenements. (3) the portion of the sale proceeds to which VMC is entitled from a sale arising from the event described in Note 28. The loan is secured over VMC’s interests in the OYG joint venture. 83 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 13 – Right of use assets Office lease Opening balance Addition of lease asset Accumulated amortisation on lease asset Closing balance Note 14 – Investment in associates 2022 ($000’s) 2021 ($000’s) 422 - (90) 332 - 465 (43) 422 Cannon Resources Limited(1) Ownership interest Equity accounted carrying amount 2022 % 10.01 2021 % n/a 2022 ($000’s) 1,776 2021 ($000’s) n/a Notes: (1) As at 30 June 2021, Cannon Resources Limited (“Cannon”) was a 100% subsidiary of the Company and hence was not accounted for as an investment in associate. On 28 July 2021 Cannon demerged from the Company and became an investment in associate as at 30 June 2022, as detailed in Note 31. Fair value of investment in Cannon Resources Limited(1) Summarised financial information for Cannon Resources Limited is set out below: 2022 ($000’s) 2,908 2021 ($000’s) n/a Cash and cash equivalents Other current assets Total current assets Non-current assets Total assets Other current liabilities Total current liabilities Total liabilities Net assets Group’s share of net assets 3,283 53 3,336 9,313 12,649 1,395 1,395 1,395 11,254 1,127 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 84 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 14 – Investment in associates continued 2022 ($000’s) 2021 ($000’s) Investment in Cannon Resources Limited Balance at the beginning of the period Initial value upon recognition Share of investments in associate’s profit/(loss) Carrying amount of investment (equity accounted) Interest income Depreciation and amortisation Loss before income tax Income tax expense Loss from continuing operations Other comprehensive income Total comprehensive loss for the year Dividends received during the year Commitments Contingent liabilities Notes: - 2,471 (695) 1,776 1 (18) (6,664) - (6,664) - (6,664) - 613 - - - - - n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a (1) Cannon is an ASX Listed Company (ASX: CNR). The Company owns 8,553,130 shares as at 30 June 2022 at a closing share price of 34 cents per share. (2) The principal place of business for Cannon Resources Limited is Level 2, 87 Colin Street West Perth, Western Australia, 6005. Note 15 – Other financial assets Non-current Teck Australia Pty Ltd receivable: Balance at the beginning of the period Fair value movement through profit or loss Proceeds received Closing balance 2022 ($000’s) 2021 ($000’s) 3,210 (110) (3,100) 2,919 291 - 3,210 (i) In 2017, the Group sold the Reward Zinc-Lead project which included a deferred consideration component of $3,750,000 to be received at the earlier of the acquirer completing a bankable feasibility study or 6 years. The non-current receivable represents the net present value of that deferred consideration using a pre-tax nominal discount rate of 10%. Payment was received from Teck on 26 August 2021 as per the terms of the early settlement agreement, announced to the market on 20 July 2021. 85 Rox Resources Annual Report 2022Consolidated Financial Statements Note 16 – Property, plant and equipment Plant and equipment at cost Accumulated depreciation Total property, plant and equipment Movement in property plant and equipment Balance as at 1 July, net of accumulated depreciation Adjustment to rehabilitation provision (i) Plant and equipment additions - at cost Disposal - at cost Accumulated depreciation on disposals Impairment of assets (ii) Depreciation Balance as at 30 June, net of accumulated depreciation Notes: 2022 ($000’s) 2021 ($000’s) 925 (301) 624 4,236 (2,076) 393 - - (1,774) (155) 624 4,382 (146) 4,236 3,880 - 396 (3) 2 - (39) 4,236 (i) Adjustment to property, plant & equipment, resulting from an independent review of the Group’s rehabilitation provision following the commencement of the scoping study. Refer to Note 19 (i) and Note 4 Significant Judgements & Estimates for further details. (ii) The Group resolved to scrap the majority of its process plant infrastructure as part of the mineralised resource resides under the process plant infrastructure. This resulted in an impairment of $3,298k to write to plant down to $nil based on the expected Fair Value less costs to sell. Note 17 – Capitalised exploration and evaluation expenditure Areas of interest in exploration and evaluation phases: Balance at the beginning of the year Demerger of Cannon Resources Limited (i) Adjustment to rehabilitation provision (ii) Stamp duty on OYG acquisition Total Notes: 2022 ($000’s) 2021 ($000’s) 10,885 (3,053) 3,089 49 10,970 10,736 - - 149 10,885 (i) On 28 July 2021, the Company completed the demerger of Cannon Resources Limited (refer Note 31 for further details). (ii) Adjustment to capitalised exploration and evaluation, resulting from an independent review of the Group’s rehabilitation provision following the commencement of the scoping study. Refer to Note 19 (i) and Note 4 Significant Judgements & Estimates for further details. (iii) Ultimate recoupment of exploration and evaluation expenditure carried forward is dependent on successful development and commercial exploitation or, alternatively, sale of the respective areas. 86 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 18 – Trade and other payables Trade payables (i) Accruals Payroll liabilities and superannuation Total (i) Terms and Conditions Creditors, including related parties, are non-interest bearing and generally on 30-day terms. Note 19 – Provisions Current Employee benefits – annual leave Employee benefits – long service leave Total Non-current Provision – rehabilitation Carrying amount at the beginning of the year Adjustment to rehabilitation provision (i) Carrying amount at the end of the year Employee benefits – long service leave Total Notes: 2022 ($000’s) 2021 ($000’s) 847 16 - 863 2,372 223 125 2,720 2022 ($000’s) 2021 ($000’s) 158 40 199 4,345 1,013 5,358 - 5,358 127 - 127 4,345 - 4,345 36 4,381 (i) The rehabilitation provision represents a provision for site rehabilitation of the area previously disturbed during mining activities up to the reporting date, but not yet rehabilitated at the OYG joint venture. The Group made a full provision for its share of the future cost of rehabilitating the Youanmi Gold Project and related production facilities on a discounted basis, recognised initially on acquisition of its interest in mine and related facilities. The rehabilitation provision represents the estimated present value of rehabilitation costs relating to the Group’s mine properties as at balance date. These estimates are reviewed regularly to consider and material changes to the assumptions. Accordingly, during the financial year, as the scoping study progressed, the Group undertook a full third-party assessment of the extent and timing of the rehabilitation provision. This independent assessment resulted in an increase to the rehabilitation provision as at 30 June 2022 of $1,013k. 87 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 20 – Other financial liabilities Current Lease liability – office lease Total Non-current Lease liability – office lease Opening balance Finance charges Repayments Closing balance Note 21 – Contributed equity and reserves 2022 ($000’s) 2021 ($000’s) 149 149 491 4 (153) 342 116 116 - 531 (40) 491 2022 ($000’s) 2021 ($000’s) 64,830 70,596 (a) Contributed Equity (i) Issued and paid-up capital Ordinary shares fully paid (ii) Movement in ordinary shares on issue Ordinary shares Date 2022 (Number) 2022 ($000’s) 2021 (Number) 2021 ($000’s) Balance at beginning of year 157,607,614 70,596 1,989,100,903 57,783 Cash issue (option exercise) 8 Jul 2020 Non-cash issue (option exercise) 8 Jul 2020 Non-cash issue 30 Jul 2020 Cash issue (option exercise) 15 Sep 2020 Cash issue (option exercise) 27 Nov 2020 Cash issue (option exercise) 30 Nov 2020 Cash issue (net of costs) 26 Mar 2021 15:1 Share consolidation 28 Jun 2021 Demerger of Cannon Resources 28 Jul 2021 - - - - - - - - - Cash issue (option exercise) 31 Jan 2022 1,333,333 Capital raising 3 Mar 2022 10,000,000 250,000 9,810,893 41,666,667 5,000,000 1,000,000 3,000,000 6 837 1,000 120 24 72 314,285,714 10,754 - - - - - - - - (2,206,506,563) (9,756) 217 3,773 - - - - - - - Balance at end of year 168,940,947 64,830 157,607,614 70,596 (iii) Terms and conditions of contributed equity Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting on the Company. 88 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 21 – Contributed equity and reserves continued (b) Reserves Share based payments reserve Equity reserve (i) Share based payments reserve Balance at the beginning of the year Options issued to Directors and employees (Note 22(a)) Options exercised by Directors and employees (Note 22(a)) Options issued to unrelated parties (Note 22(b)) Balance at the end of the year 2022 ($000’s) 4,887 9,947 14,834 4,828 - - 59 4,887 2021 ($000’s) 4,828 - 4,828 3,445 871 (837) 1,349 3,445 This reserve is used to record the value of equity benefits provided to employees and unrelated parties for services and the acquisition of mineral exploration projects. (ii) Equity reserve Balance at the beginning of the year Profit from demerger of Cannon Resources Limited Balance at the end of the year (c) Share Options 2022 ($000’s) - 9,947 9,947 2021 ($000’s) - - - In March 2021, the Company issued 20,952,381 ordinary shares (post 15:1 share consolidation) to Hawke’s Point for an issue price of $0.525 per share, raising $11 million before issue costs. Hawke’s Point received 10,476,190 unlisted options (one option for every two shares issued) with an exercise price of $0.988 (the option price was reduced by 6.19 cents per share following the demerger of Cannon Resources Limited, 28 July 2021). As at the balance date, Hawke’s Point had not exercised any of these options. Note 22(a) – Share based payments: Directors and Employees (i) Employee share incentive scheme – Rox Resources Limited An Employee Share Scheme (ESS) has been established where Rox Resources Limited may, at the discretion of Directors, grant options over the ordinary shares of Rox Resources Limited to Directors, Executives and employees of the Company. The plan is designed to provide long-term incentives for employees and to deliver long term shareholder returns. Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the plan or to receive guaranteed benefits. In addition, under the Plan, the Board determines the terms of the options including exercise price, expiry date and vesting conditions, if any. Options granted under the plan are unlisted and carry no dividend or voting rights. When exercised, each option is convertible into an ordinary share of the Company with full dividend and voting rights. During the financial year, nil options were issued pursuant to the ESS (2021: 860,000). Set out below is a summary of options issued. 89 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 22(a) – Share based payments: Directors and Employees continued For the year ended 30 June 2022 Value per option at grant date (cents) 11.9 17.5 Exercise price (cents)1 43.3 76.3 Grant date Expiry date 12 Dec 19 30 Nov 22 18 Jun 21 25 May 24 Weighted average exercise price (cents) Balance of options at the start of the year Options granted during the year Options exercised during the year Options lapsed during the year Balance of options at the end of the year Options exercise-able at the end of the year 4,466,668 860,000 5,326,668 47.5 - - - - - - - - - 4,466,668 4,466,668 (200,000) 660,000 660,000 (200,000) 5,126,668 5,126,668 - 47.5 47.5 The weighted average remaining contractual life of share options outstanding at the end of the year was 0.6 years. Notes: (1) The weighted average exercise prices have been reduced by 6.19 cents per share following the demerger of Cannon Resources Limited (28 July 2021). For the year ended 30 June 2021 Exercise price (cents) Value per option at grant date (cents) Balance of options at the start of the year Options granted during the year Options exercised during the year Options lapsed during the year Balance of options at the end of the year Options exercise-able at the end of the year Grant date Expiry date 15 Dec 17 30 Nov 20 12 Dec 19 30 Nov 22 18 Jun 21 25 May 24 36.0 49.5 82.5 11.9 12.5 17.5 283,334 5,533,334 - - (283,334) (1,066,666) - 860,000 - 5,816,668 860,000 (1,350,000) - - - - - - - 4,466,668 4,466,668 860,000 860,000 5,326,668 5,326,668 53.9 53.9 Weighted average exercise price (cents) 48.8 82.5 46.7 The weighted average remaining contractual life of share options outstanding at the end of the year was 1.7 years. Fair value of options granted under ESS For the financial year ended 30 June 2021, the fair value for options issued under the ESS was calculated using the Binomial Option valuation methodology using the following parameters. There were no options issued under ESS scheme in FY2022 Weighted average exercise price (cents)1 Weighted average life of the option Weighted average underlying share price (cents) Expected share price volatility Risk-free interest rate Number of options issued Fair value per option (cents) Notes: 2022 - - - - - - - 2021 82.5 3 years 40.0 93.74% 0.14% 860,000 17.5 (1) The weighted average exercise price has been reduced by 6.19 cents per share following the demerger of Cannon Resources Limited (28 July 2021). Accordingly the revised weighted average exercise price post demerger is 76.3 cents per share. (2) Historical volatility has been the basis for determining expected share price volatility as it assumed that this is indicative of future trends, which may not eventuate. (3) The life of the options is based on historical exercise patterns, which may not eventuate in the future. (4) No other features of options granted were incorporated into the measurement of fair value. 90 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 22(a) – Share based payments: Directors and Employees continued (ii) Employee share incentive scheme – Cannon Resources Limited Prior to the demerger of Cannon, an ESS was established where Cannon may, at the discretion of Directors, grant options over the ordinary shares of Cannon to its Directors, Executives and employees. Following the demerger of Cannon on 28 July 2022, the discretion for the issue of instruments under the scheme no longer remained with the Rox Directors. Accordingly, no options were issued pursuant to the Cannon ESS during the financial year (2021; 6,750,000). Set out below is a summary of options issued in the prior year, as at 30 June 2021, when Cannon remained a controlled subsidiary of the Group. For the year ended 30 June 2021 Grant date Expiry date Exercise price (cents) Value per option at grant date (cents) Balance of options at the start of the year Options granted during the year Options exercised during the year Options lapsed during the year Balance of options at the end of the year Options exercise-able at the end of the year 25 Jun 21 25 Jun 24 30.0 10.7 6,750,000 Weighted average exercise price (cents) 6,750,000 30.0 - - - 6,750,000 6,750,000 - - 30.0 30.0 - - - - - - The weighted average remaining contractual life of share options outstanding at the end of the year was 3.0 years. Fair value of options granted under ESS The fair value for options issued under the ESS was calculated using the Black-Scholes valuation methodology using the following parameters. Weighted average exercise price (cents) Weighted average life of the option Weighted average underlying share price (cents) Expected share price volatility Risk-free interest rate Number of options issued Fair value per option (cents) (iii) Other share options 2021 30.0 3 years 20.0 100% 0.10% 6,750,000 10.7 During the financial year ended 30 June 2022, nil options were issued to Directors and employees other than through the ESS (2021: nil). For the year ended 30 June 2022 Grant date Expiry date Exercise price (cents)1 Value per option at grant date (cents) Balance of options at the start of the year Options granted during the year Options exercised during the year Options lapsed during the year Balance of options at the end of the year Options exercise-able at the end of the year 01 Feb 19 31 Jan 22 16.3 6.0 1,333,333 Weighted average exercise price (cents) Notes: 1,333,333 16.3 - - - (1,333,333) (1,333,333) - - - - - - - - - - (1) The weighted average exercise price has been reduced by 6.19 cents per share following the demerger of Cannon Resources Limited (28 July 2021), previously 22.5 cents per share. (2) The weighted average share price at the date of exercise was 16.3 cents per share 91 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 22(a) – Share based payments: Directors and Employees continued For the year ended 30 June 2021 Grant date Expiry date 15 Dec 17 30 Nov 20 01 Feb 19 31 Jan 22 Exercise price (cents) 36.0 22.5 Value per option at grant date (cents) 11.9 6.0 Weighted average exercise price (cents) Balance of options at the start of the year Options granted during the year Options exercised during the year Options lapsed during the year Balance of options at the end of the year Options exercise-able at the end of the year 1,200,000 1,333,333 2,533,333 28.9 - - - - (333,333) (866,667) - - - - 1,333,333 1,333,333 (333,333) (866,667) 1,333,333 1,333,333 36.0 36.0 22.5 22.5 Note 22(b) – Unrelated parties Options issued to unrelated parties for the year ended 30 June 2022 and 30 June 2021 are set out below. For the year ended 30 June 2022 Grant date Expiry date Exercise price (cents) Value per option at grant date (cents) Balance of options at the start of the year Options granted during the year Options exercised during the year Options lapsed during the year Balance of options at the end of the year Options exercise-able at the end of the year 16 Sep 20 31 Dec 23 143.8(1) 16 Sep 20 31 Dec 23 181.3(1) 16 Sep 20 31 Dec 23 218.8(1) 3 Mar 22 3 Mar 26 72.0 37.3 33.6 30.3 23.5 1,333,333 1,333,333 1,333,333 - - - - 1,000,000 3,999,999 4,999,999 Weighted average exercise price (cents) 181.3 72.0 - - - - - - - - - - - - 1,333,333 1,333,333 1,333,333 1,333,333 1,333,333 1,333,333 1,000,000 1,000,000 4,999,999 4,999,999 159.4 159.4 The weighted average remaining contractual life of share options outstanding at the end of the year was 1.95 years. Notes: (1) The weighted average exercise prices have been reduced by 6.19 cents per share following the demerger of Cannon Resources Limited (28 July 2021). Fair value of options granted For the year ended 30 June 2022, the fair value for options issued to Argonaut PCF for financial advisory fees was calculated using the Binomial Option valuation methodology using the following parameters. Grant date Weighted average exercise price (cents) Weighted average life of the option Weighted average underlying share price (cents) Expected share price volatility Risk-free interest rate Number of options issued Fair value per option (cents) Notes: 3 March 2022 72.0 4 years 41.5 94.79% 2.21% 1,000,000 23.5 (1) Historical volatility has been the basis for determining expected share price volatility as it assumed that this is indicative of future trends, which may not eventuate. (2) The life of the options are based on historical exercise patterns, which may not eventuate in the future. (3) No other features of options granted were incorporated into the measurement of fair value. 92 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 22(b) – Unrelated parties continued For the year ended 30 June 2021 Grant date Expiry date Exercise price (cents) Value per option at grant date (cents) Balance of options at the start of the year Options granted during the year Options exercised during the year Options lapsed during the year Balance of options at the end of the year Options exercise-able at the end of the year 16 Sep 20 31 Dec 23 150.0 16 Sep 20 31 Dec 23 187.5 16 Sep 20 31 Dec 23 225.0 37.3 33.6 30.3 Weighted average exercise price (cents) - - - - - 1,333,333 1,333,333 1,333,333 3,999,999 187.5 - - - - - - - - - - 1,333,333 1,333,333 1,333,333 1,333,333 1,333,333 1,333,333 3,999,999 3,999,999 187.5 187.5 The weighted average remaining contractual life of share options outstanding at the end of the year was 2.5 years. Fair value of options granted For the year ended 30 June 2021, the fair value for options issued to unrelated parties was calculated using the Binomial Option valuation methodology using the following parameters. Grant date 16 Sep 2020 16 Sep 2020 16 Sep 2020 Weighted average exercise price (cents) (i) (ii) 150.0 187.5 225.0 Weighted average life of the option 3.4 years 3.4 years 3.4 years Weighted average underlying share price (cents) (i) Expected share price volatility Risk-free interest rate Number of options issued (i) Fair value per option (cents) (ii) Notes: 81.0 89.93% 0.27% 81.0 89.93% 0.27% 81.0 89.93% 0.27% 1,333,333 1,333,333 1,333,333 37.3 33.6 30.3 (1) The options have been converted post the 15:1 share consolidation which occurred on 28 June 2021. (2) The weighted average exercise prices have been reduced by 6.19 cents per share following the demerger of Cannon Resources Limited (28 July 2021). Accordingly, the revised weighted average exercise prices post demerger are Tranche 1 $1.438, Tranche 2 $1.813 and Tranche 3 $2.188. (3) Historical volatility has been the basis for determining expected share price volatility as it assumed that this is indicative of future trends, which may not eventuate. (4) The life of the options are based on historical exercise patterns, which may not eventuate in the future. (5) No other features of options granted were incorporated into the measurement of fair value. Note 23 – Accumulated losses Balance at the beginning of the year Net loss attributable to members of Rox Resources Limited Cannon Resources Limited demerger Balance at the end of the year 2022 ($000’s) 50,613 13,950 774 65,337 2021 ($000’s) 38,849 11,764 - 50,613 No dividends were paid during or since the financial year. There are no franking credits available (2021: nil). 93 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 24 – Expenditure commitments (a) Exploration commitments The Group has entered into certain obligations to perform minimum work on mineral tenements held. The Group is required to meet tenement minimum expenditure requirement which are set out below. These may be varied or deferred on application and are expenditures expected to be met in the normal course of business. No later than one year Later than one year and not later than five years Total (b) Remuneration commitments 2022 ($000’s) 2,067 - 2,067 2021 ($000’s) 2,404 - 2,404 Commitments for the payment of salaries and other remuneration under long-term employment contracts in existence at the reporting date but not recognised as liabilities: No later than one year Later than one year and not later than five years Total Note 25 – Contingent liabilities 2022 ($000’s) 2021 ($000’s) - - - - - - At the financial reporting date there are no contingent liabilities. Royalties exist over certain tenements held by the Group and become payable upon the receipt of revenue from mining activities. Note 26 – Events subsequent to the reporting date No matter or circumstance has arisen since the end of the financial year, other than mentioned above, which significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial periods. Note 27 – Related party transactions (a) Director related transactions - - An amount of $888,328 (30 June 2021: $469,823) was paid to LG Mining Pty Ltd, a company of which Mr Passmore is a Director, for the provision of labour hire services, specifically geologists and field assistants. An amount of $49,490 was payable as at 30 June 2022 (30 June 2021: $136,193). The transactions were on an arms-length basis and utilised by the Company, on a discretionary basis, for recruitment and labour hire of predominantly field staff which are in high demand in the current tight labour market. Other recruitment and labour hire firms are also utilised by the Company as required and including when terms are offered on an equal basis. Mr Passmore does not receive any remuneration from LG Mining Pty Ltd. The Company entered into a Demerger Agreement with its subsidiary, Cannon Resources Limited on 13 May 2021. On 10 August 2021, Cannon successfully demerged and listed on the ASX and raised $6.0 million through the issue of 30 million shares. As at 30 June 2021, Cannon had a loan payable of $542,009 to Rox. The loan payable was related to all costs and expenses associated with the listing of Cannon and operating costs up to the listing date. The loan was unsecured, non-interest bearing and repayable to Rox with 5 business days of completion of Cannon’s Initial Public Offering. The loan was repaid on 20 August 2021. 94 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 27 – Related party transactions continued - The Demerger Agreement included a provision for Rox to sub-lease office space to Cannon at $2,000 per month (amended as mutually agreed). The amount received by Rox under the Demerger Agreement for the financial year 30 June 2022 for rent was $22,000. - - - - Following the demerger of Cannon Resources Limited (Cannon), Rox entered into a Shared Services Agreement (the Agreement) with Cannon whereby Rox will provide Company Secretarial and Finance Services for $8,000 per month (amended as mutually agreed). In addition, under the Agreement, Cannon can engage Rox to provide Geological services at a 10% mark-up on the cost. The Agreement commenced on 1 September 2021. The amount received by Rox under the Shared Services Agreement for the financial year 30 June 2022 was $130,625. Mr Chris Hunt is the Company Secretary of Cannon. Mr Chris Hunt, Mr Matt Antill and Mr Gregor Bennett do not receive any remuneration from Cannon. Rox funded $103,375 of expenditure on behalf of Cannon. Mr Alex Passmore is the Non-executive Chairman and Mr Chris Hunt is the Company Secretary of Cannon. The balance outstanding to Rox as at 30 June 2022 was $44,852. Rox entered into two agreements with Pearl Gull Iron Limited (“Pearl Gull”) whereby Rox will provide Company Secretarial and Finance Services for $8,000 per month (amended as mutually agreed) and to sub-lease office space to Pearl Gull at $2,000 per month (amended as mutually agreed). The amount received by Rox for the financial year 30 June 2022 were $24,000 and $22,000, respectively. Mr Alex Passmore is a Non-Executive Director of Pearl Gull and Mr Chris Hunt is the Company Secretary of Pearl Gull. Mr Chris Hunt does not receive any remuneration from Pearl Gull All the amounts quoted above are excluding GST.. Note 27 – Joint operations Youanmi Gold Project In April 2019, the Group established four separate joint ventures with VMC whereby the Group has purchased or may earn between a 45% and 50% interest set out below. Joint control exists for all joint arrangements where the Group has purchased its rights, or met its earn-in requirements, with each being classified as joint operations under AASB 11 Joint Arrangements on the basis that the binding arrangements signed between the participants establish a contractually agreed sharing of control with decisions about the relevant activities require the unanimous consent of the parties sharing control. Further considerations on management’s assumptions in determining control of the OYG Joint Venture where the Group holds a majority percentage share interest is set out below. In the 2019 financial year, the Group acquired a 50% interest in all minerals by the payment of $2.8 million and the issue of 1.7 million fully paid shares at a deemed price of $0.12 (a deemed $0.2 million). The Group was required to meet exploration expenditure of $2 million over the two years to June 2021 and to cover the costs of holding and managing the project. Failure to meet the exploration expenditure of $2 million would give rise to a debt due and payable to VMC, on demand, for the amount of the expenditure commitment that has not been incurred as at 30 June 2021. Additionally, at any point up until 30 June 2021 and after the Group has contributed the $2 million to exploration expenditure, the Group may elect to move to 70% ownership of the OYG Joint Venture (through delivery of an Exercise Notice) via, at VMC’s election, either: • • the payment of $3 million cash to VMC; or the payment of $1.5 million cash and issuing to VMC the number of Rox shares equal to $1.5 million divided by the volume weighted average price of Rox’s ordinary shares on the ASX calculated over the 20 trading days immediately prior to the date the option is exercised. The payment of cash and issuing of shares occurred on 30 July 2020 following shareholder approval at a General Meeting on 28 July 2020. Joint Venture costs are then to be contributed in proportion to ownership, with VMC electing under the joint venture agreement for Rox to fund its 30% of costs by way of a joint venture loan secured over VMC’s interests in the Joint Venture (see Note 12). 95 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 27 – Joint operations continued OYG Joint Venture (Rox 70%, VMC 30%) As outlined in the prior year, on 8 June 2020, the parties agreed to amend the term sheet whereby the consideration for the additional 20% interest would be $2 million within 2 business days of the Group delivering its Exercise Notice and either: • • issuing to VMC the number of Rox Shares equal to $1 million divided by the deemed issue price of $0.36 (being 2.8m Rox Shares, post 15:1 share consolidation), with approval by shareholders at a meeting no later than 60 days following the Group delivering the Exercise Notice; or in the event that shareholder approval is not obtained, paying VMC $1 million in cash within 2 business days of the date of the meeting, or expiry of the 60-day period. On 10 June 2020, the Group met its $2 million expenditure commitment and delivered the Exercise Notice, whereby exercising its option to acquire the Additional OYG Interest (increasing the Group’s interest to 70%). The Group paid VMC $2 million on 10 June 2020. As at this date, and 30 June 2020, the remaining consideration to acquire the Additional OYG Interest represented a compound financial instrument with liability component and an equity component. At 30 June 2020, with no influence over whether shareholders would approve the issue of shares, the Group valued the liability portion at $1 million with no value being attributed to the equity component. On 28 July 2020, shareholders approved the issue of 2.8 million shares to VMC in final settlement of the Additional OYG Interest. Joint control Under the binding arrangement with VMC, unless the parties agree otherwise, if a Decision to Mine has not been made by 10 June 2025 (being 5 years after the Group exercised its option to acquire the Additional OYG Interest) then the parties must use their best endeavours to sell all of their interests in the OYG Tenements on terms acceptable to both parties to a third party purchaser, with both parties agreeing that such interests must be sold in full together. Neither the Group, or VMC, contractually under the agreement hold a pre-emption right to otherwise mitigate this event occurring. Despite the Group holding substantive rights over relevant activities in accordance with their 70% contributing interest held given the significance of the above event requiring unanimous consent, joint control is considered to exist until such time that: • A Decision to Mine is agreed by both participants (as defined in the binding agreement); or • VMC, for any reason, gives up its substantive right to force the sale of the project if a Decision to Mine is not reached by 10 June 2025. Venus Joint Venture (Rox 50% and VMC 50%) On 5 April 2019, the Group entered into an agreement whereby it may earn a 50% interest in the gold rights of the Venus Joint Venture by contributing the first $0.8 million of exploration expenditure on the project area across the Joint Venture to June 2021. Following the earn-in the joint ventures are standard contribute or dilute arrangements. As at 30 June 2021, the Group has earnt into been appointed manager of the Joint Venture. Youanmi Joint Venture (Rox 45%, VMC 45% and 10% Legendre) On 5 April 2019, the Group entered into an agreement whereby it may earn a 45% interest in the gold rights of the Youanmi Joint Venture by contributing the first $0.2 million of exploration expenditure on the project area across the Joint Venture to June 2021. Following the earn-in the joint ventures are standard contribute or dilute arrangements. As at 30 June 2021, the Group has earnt into been appointed manager of the Joint Venture. Currans Find & Pincher Joint Venture (Rox 45%, VMC 45% and 10% MER) On 12 April 2019, the Group entered into an agreement whereby it acquired a 45% interest in all minerals by the payment of $75,000 and the issue of 500,000 fully paid shares (post 15:1 share consolidation) at a deemed price of $0.15 (a deemed $75,000). As at 30 June 2021, the Group has earnt into been appointed manager of the Joint Venture. 96 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 27 – Joint operations continued Cullen Resources Earn-In (Rox 51% and Cullen 49%) On 5 September 2019, the Group entered into an agreement with Cullen Resources Limited whereby it may earn up to a 75% interest in the Cullen joint venture. Key terms of the agreement are as follows: • • • • • • • • Rox may earn a 51% interest by spending $1,000,000 on exploration expenditure within a three-year period from satisfaction of certain Conditions Precedent (Stage 1 Earn In). Cullen will receive $40,000 cash upon satisfaction of one of the Conditions Precedent. If Rox earns the 51% interest, it can elect to earn a further 24% interest by expending a further $1,000,000 on exploration expenditure over a three-year period, commencing at the end of the Stage 1 Earn In. Rox must spend a minimum of $333,334 and ensure the Cullen tenements are in good standing on a daily pro rata basis before it may withdraw. Upon Rox earning 51% or, if it earns the additional 24%, upon Rox earning 75%, the parties will be associated in an unincorporated Joint Venture in relation to the Joint Venture Tenements, which will include certain Rox tenements and applications. If Rox earns 75%, Cullen will be free-carried, with no liability for any Joint Venture costs, until completion of a Pre-Feasibility Study. If Rox only earns 51%, or earns 75% and completes a Pre-Feasibility Study, thereafter Cullen must contribute to Joint Venture costs pro-rata, or dilute under a standard dilution formula. If a Participant’s interest falls to 10% or less, that Participant’s interest will be converted to a Net Smelter Return Royalty of 1% on those Cullen tenements already subject to a royalty and 2.5% on the balance of the Joint Venture Tenements. As at the date of this report, Rox had earnt in to the 51% target interest and is currently progressing towards earning 75% in the joint venture. As at 30 June 2022, the Group has contributed $1,299,629 to this arrangement (2021: $759,520). Note 29 – Information relating to Rox Resources Limited (the Parent) Current assets Total assets Current liabilities Total liabilities Contributed equity Reserves Accumulated losses Net assets Income/(loss) of the Parent entity Total comprehensive income/(loss) for the year 2022 (000’s) 2021 (000’s) 4,356 12,360 (599) (24,459) 64,830 8,887 (36,898) (12,099) 4,483 4,483 12,591 45,730 (1,422) (1,948) 70,596 4,828 (31,642) 43,782 587 587 The Parent entity has contractual obligations for exploration commitments of $533,000 at balance date (2021: $717,000) and $nil remuneration commitments at the balance date (2021: nil). 97 Rox Resources Annual Report 2022Consolidated Financial StatementsNote 30 – Group information Information about subsidiaries Entity Principal activities Country of incorporation Rox (Mt Fisher) Pty Ltd Mineral exploration Rox (Murchison) Pty Ltd Mineral exploration Cannon Resources Limited(1) Mineral exploration Australia Australia Australia Note: % Equity interest 2022 100 100 - 2021 100 100 100 (1) Cannon Resources Limited demerged from the Company on 28 July 2021 and accordingly is no longer a subsidiary as at 30 June 2022. The Company has recorded Cannon Resources Limited as an investment in associate as at 30 June 2022, as detailed in Note 14 and 31. Note 31 – Demerger of Cannon Resources Limited During financial year 2021, the Group announced the demerger of its Fisher East and Collurabbie nickel and base metal assets to focus on the development of the Youanmi gold project. The Group structured the demerger as an in-specie distribution with a priority offer to Group shareholders to raise $6.0 million, in a new listed entity, Cannon Resources Limited (Cannon). The Group successfully completed the demerger of its 100% owned subsidiary Cannon by way of an initial public offering. Cannon was admitted to the ASX on 10 August 2021 and commenced trading on 12 August 2021. The Group also obtained a Class Ruling from the Australian Tax Office in relation to the demerger (CR 2021/63) which confirmed that: • • demerger tax relief is available for Australian tax resident Group shareholders who hold their Group shares on capital account; and receipt of Cannon shares is not an assessable dividend As the demerger was affected by way of an in-specie distribution of Cannon shares to Rox shareholders this had the effect of reducing the Company’s share capital by $9,756k and reducing retained earnings by $773k. After removing the capitalised exploration and evaluation costs associated with the deposits being demerged ($3,053k), the Company recorded a profit on the demerger of $9,947k which was recorded in an equity reserve. The initial Investment in Cannon was recorded at $2,471k. 98 Rox Resources Annual Report 2022Consolidated Financial Statements Directors’ Declaration For the year ended 30 June 2022 In accordance with a resolution of the Directors of Rox Resources Limited, I state that: (1) In the opinion of the Directors’: (a) The financial statements and notes of the Group 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 its performance for the year ended on that date; and (ii) complying with Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and (b) The financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 2(a); and (c) Subject to the matters set out in Note 2, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable. (d) This declaration is 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 ending 30 June 2022. On behalf of the Board Alex Passmore Managing Director Perth, 27 September 2022 99 Rox Resources Annual Report 2022Consolidated Financial StatementsROX RESOURCES LIMITED ABN 53 107 202 602 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ROX RESOURCES LIMITED Report on the Audit of the Financial Report Opinion We have audited the financial report of Rox Resources Limited (the “Company”) and its controlled entities (the “Group”), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of 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 statements, 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: (a) (b) 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 then ended; and complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material Uncertainty Related to Going Concern We draw attention to Note 2 in the financial report for the year ended 30 June 2022 which indicates that the Group has incurred a net loss after tax for the year ended 30 June 2022 of $13,950k (2021: $11,764k) and experienced net cash outflows from operating activities of $14,531k (2021: $9,592k). As at 30 June 2022, the Group had net current assets of $3,313k (30 June 2021: $9,821k). These conditions, along with other matters as set forth in Note 2 indicate the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Pitcher Partners BA&A Pty Ltd An independent Western Australian Company ABN 76 601 361 095. Level 11, 12-14 The Esplanade, Perth WA 6000 Registered Audit Company Number 467435. Liability limited by a scheme under Professional Standards Legislation. 94 Adelaide Brisbane Melbourne Newcastle Perth Sydney Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. 100 Rox Resources Annual Report 2022Independent Audit ReportROX RESOURCES LIMITED ABN 53 107 202 602 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ROX RESOURCES LIMITED Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter How our audit addressed the key audit matter Capitalisation of exploration and evaluation expenditure Refer to Note 2(d)(ii) and 17 to the financial report. As at 30 June 2022, the Group held capitalised exploration and evaluation expenditure of $10,970,000. The carrying value of exploration and evaluation expenditure is assessed for impairment by the Group when facts and circumstances indicate that the capitalised exploration and evaluation expenditure may exceed its recoverable amount. The determination as to whether there are any indicators to require the capitalised exploration and evaluation expenditure to be assessed for impairment involves a number of judgments including but not limited to: • Whether the Group has tenure of the relevant area of interest; • Whether the Group has sufficient funds to meet the relevant area of interest minimum expenditure requirements; and • Whether there is sufficient information for a decision to be made that the relevant area of interest is not commercially viable. Given the size of the balance and the judgemental nature of the impairment indicator assessments associated with exploration and evaluation assets, we consider this is a key audit matter. Our procedures included, amongst others: Obtaining an understating of and evaluating the design and implementation of the processes and controls associated with the capitalisation of exploration and evaluation expenditure, and those associated with the assessment of impairment indicators. Examining the Group’s right to explore in the relevant area of interest, which included obtaining and assessing supporting documentation. We also considered the status of the exploration licences as it related to tenure. Considering the Group’s intention to carry out significant exploration and evaluation activity in the relevant area of interest, including an assessment of the Group’s cash-flow forecast models, assessing the sufficiency of funding and discussions with senior management and Directors as to the intentions and strategy of the Group. Reviewing management’s evaluation and judgement as to whether the exploration activities within each relevant area of interest have reached a stage where the commercial viability of extracting the resource could be determined. Assessing the adequacy of the disclosures included within the financial report. 95 101 Rox Resources Annual Report 2022Independent Audit Report ROX RESOURCES LIMITED ABN 53 107 202 602 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ROX RESOURCES LIMITED Share-based payments Refer to Note 2(d)(xiii) and 22 to the financial report. During the year ended 30 June 2022, the Group has issued options to advisors, totalling $235,285, for which a share based payment expense has been recognised in the year of $58,821. Under Australian Accounting Standards, equity settled awards issued to advisors are measured at fair value of the services received, or if not reliably measurable, the fair value of the equity instruments granted on the measurement date taking into consideration the probability of the vesting conditions (if any) attached. This amount is recognised as an expense either immediately if there are no vesting conditions, or over the vesting period if there are vesting conditions. In calculating the fair value there are a number of judgements management must make, including but not limited to: • • • • estimating the likelihood that the equity instruments will vest; estimating expected future share price volatility; expected dividend yield; and risk-free rate of interest. Due to the significance to the Group’s financial report and the level of judgment involved in determining the valuation of the share-based payments, we consider the Group’s calculation of the share-based payment expense to be a key audit matter. Our procedures included, amongst others: Obtaining an understanding of design and implementation of the relevant controls associated with the preparation of the valuation model used to assess the fair value of share based payments, including those relating to volatility of the underlying security and the appropriateness of the model used for valuation. Critically evaluating and challenging the methodology and assumptions of management in their preparation of valuation model, including management’s assessment of likelihood of vesting, agreeing inputs to internal and external sources of information as appropriate. Assessing the Group’s accounting policy as set out within Note 2(d)(xiii) for compliance with the requirements of AASB 2 Share- based Payment. Assessing the adequacy of the disclosures included in the financial report. 96 102 Rox Resources Annual Report 2022Independent Audit Report ROX RESOURCES LIMITED ABN 53 107 202 602 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ROX RESOURCES LIMITED Rehabilitation provision Refer to Note 2(d)(xiv) and 19 to the financial report. As a result of the Group’s jointly controlled interest in the OYG Joint Venture, the Group is jointly and severally liable to rehabilitate the environment disturbed by the historical operations at the Youanmi Gold Project. Rehabilitation activities are governed by a combination of legislative and licence requirements. At 30 June 2022, the consolidated statement of financial position included a provision for such obligations of $5,358,000 (2021: $4,345,000). This was a key audit matter given the determination of this provision requires evaluating the key assumptions used by management and judgement in the assessment of the nature and extent of future works to be performed, the future cost of performing the works, the timing of when the rehabilitation will take place and the economic assumptions such as the discount and inflation rates applied to future cash outflows associated with rehabilitation activities to bring them to their present value. Our procedures included, amongst others: Critically evaluating and challenging the methodology and assumptions of management in their preparation of valuation model, including the appropriateness of the economic assumptions such as the inflation rate and provision specific discount rate. Evaluating the experience and credentials of the third party engaged to prepare valuation; and Assessing the adequacy of the disclosures included in the financial report. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2022 but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly 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. 97 103 Rox Resources Annual Report 2022Independent Audit Report ROX RESOURCES LIMITED ABN 53 107 202 602 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ROX RESOURCES LIMITED 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 have 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. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. • • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. 98 104 Rox Resources Annual Report 2022Independent Audit Report ROX RESOURCES LIMITED ABN 53 107 202 602 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ROX RESOURCES LIMITED From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 36 to 45 of the directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Rox Resources 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. PITCHER PARTNERS BA&A PTY LTD J C PALMER Executive Director Perth, 27 September 2022 99 105 Rox Resources Annual Report 2022Independent Audit ReportSchedule of Mining Tenements as at 9 September 2022 Project Interest Tenement Number Interest held Mt Fisher, WA All Minerals All Minerals All Minerals All Minerals All Minerals All Minerals All Minerals All Minerals Gold Rights All Minerals All Minerals All Minerals All Minerals Application Application Application All Minerals All Minerals All Minerals Application Application Application Application All Minerals All Minerals All Minerals All Minerals All Minerals All Minerals All Minerals All Minerals All Minerals All Minerals All Minerals Gold Rights Gold Rights Gold Rights Gold Rights Gold Rights Gold Rights Gold Rights Gold Rights Gold Rights Gold Rights All Minerals All Minerals All Minerals All Minerals All Minerals All Minerals All Minerals All Minerals All Minerals All Minerals All Minerals Youanmi Gold Project, WA Youanmi - OYG JV, WA Youanmi - Sandstone Youanmi JV Youanmi - VMC JV, WA Youanmi - Currans JV, WA Mt Eureka - Cullen JV, WA E53/1061 E53/1106 E53/1836 E53/1319 E53/1788 M53/0009 M53/0127 E36/0948 E53/1218 E53/2002 E53/2075 E53/2095 E53/2102 E53/2201 E53/2199 L53/0262 E57/1121 E57/1122 E57/1123 E57/1209 E57/1210 L57/0058 L57/0059 M57/10 M57/51 M57/75 M57/97 M57/109 M57/135 M57/160A M57/164 M/57165 M57/166 M57167 E57/985 E57/986 E57/1011 P57/1365 P57/1366 E57/0982 E57/1018 E57/1019 E57/1023-I E57/1078 M57/641 M57/642 E53/1209 E53/1299 E53/1637 E53/1893 E53/1957 E53/1958 E53/1959 E53/1961 E53/2052 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 0% 0% 0% 100% 100% 100% 0% 0% 0% 0% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 45% 45% 45% 45% 45% 50% 50% 50% 50% 50% 45% 45% 51% (Earning up to 75%) 51% (Earning up to 75%) 51% (Earning up to 75%) 51% (Earning up to 75%) 51% (Earning up to 75%) 51% (Earning up to 75%) 51% (Earning up to 75%) 51% (Earning up to 75%) 51% (Earning up to 75%) Schedule of Mining Tenements 106 Rox Resources Annual Report 2022Other InformationOther Information as at 9 September 2022 Top 20 shareholders - Ordinary Shares No. Shareholder 1 2 3 4 5 6 7 8 9 Citicorp Nominees Pty Limited BNP Paribas Noms Pty Ltd Mr Alexander Ross Passmore Redscope Enterprises Pty Ltd Mr Daryl Kenneth Miller HSBC Custody Nominees (Australia) Limited Mr Gabor Matoricz National Nominees Limited BNP Paribas Noms Pty Ltd 10 Mr Richard Arthur Lockwood 11 Mr Mark Linfield Longmore Scott 12 Mr Ram Shanker Kangatharan 13 Mr Stephen Bruce Dennis + Mrs Alison Jill Dennis 14 Mrs Marisa Mackow 15 Crescent Nominees Limited 16 Mr John William Fawcett 17 Mr Gregory James Blight + Mr Stephen Maxwell Blight 18 Mr Daniel James Lynch 19 20 Nalmor Pty Ltd Andalee Superannuation Pty Ltd Shares held % of issued capital 24,581,986 14.55 4,277,905 3,593,483 2,777,778 2,610,685 2,049,872 2,000,000 1,950,000 1,197,041 1,183,333 1,093,639 1,000,000 908,483 846,000 816,667 800,000 760,000 746,090 733,333 729,492 2.53 2.13 1.64 1.55 1.21 1.18 1.15 0.71 0.70 0.65 0.59 0.54 0.50 0.48 0.47 0.45 0.44 0.43 0.43 Total 54,655,787 32.35 107 Rox Resources Annual Report 2022Other InformationOther Information Continued Substantial Shareholders The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2011 are: Shareholder Hawke’s Point Distribution of Shareholders Number Shares held 22,269,881 % of issued capital 13.18% Size of shareholding 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 Over Total Number of holders 891 1,892 1,048 1,719 225 5,775 Number of shares 471,619 5,037,076 7,871,024 53,704,586 101,856,642 168,940,947 % of issued capital 0.28 2.98 4.66 31.79 60.29 100.00 There is a total of 168,940,947 fully paid ordinary shares on issue, all of which are listed on the ASX. At shareholder 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. Unmarketable Parcels There were 1,508 shareholders holding 1,341,515 shares, which is less than a marketable parcel of shares in the Company at $0.265 per share. Restricted Securities There are no restricted securities. 108 Rox Resources Annual Report 2022Other Information109 Rox Resources Annual Report 2022Other InformationRox Resources Limited ABN 53 107 202 602 Level 2, 87 Colin Street West Perth WA 6005 T. (08) 9226 0044 F. (08) 9322 6254 E. admin@roxresources.com.au

Continue reading text version or see original annual report in PDF format above