Scorpion Minerals Limited
Annual Report 2020

Plain-text annual report

SCORPION MINERALS LIMITED ABN 40 115 535 030 Financial Report For the year ended 30 June 2020 SCORPION MINERALS LIMITED | www.scorpionminerals.com.au | ASX:SCN 24 MUMFORD PLACE BALCATTA WA 6021 | T: +61 8 6241 1877 | F: +61 8 6241 1811 | ABN: 40 115 535 030 CONTENTS CORPORATE DIRECTORY ..............................................................................................................................................................1 DIRECTORS’ REPORT .....................................................................................................................................................................2 AUDITOR’S INDEPENDENCE DECLARATION .............................................................................................................................22 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ...........................................23 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020 ......................................................................24 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2020 .........................................25 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2020 ......................................................26 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ....................................................................................................27 DIRECTORS’ DECLARATION ........................................................................................................................................................44 INDEPENDENT AUDITOR’S REPORT ...........................................................................................................................................45 ADDITIONAL INFORMATION .........................................................................................................................................................49 TENEMENT........................................................ ............................................................................................................................ 51 APPENDIX 4G .................................................................................................................................................................................52 CORPORATE DIRECTORY Directors Bronwyn Barnes Carol New Craig Hall Non-Executive Director Non-Executive Director Non-Executive Director Share Registry Advanced Share Registry Telephone Facsimile Email: 08 9389 8033 08 6370 4203 admin@advancedshare.com.au Company Secretary Carol New Kate Stoney Registered Office Level 1, 24 Mumford Place Balcatta WA 6021 Telephone Facsimile 08 6241 1877 08 6241 1811 Solicitors Dentons Level 7/150 St Georges Tce Perth WA 6000 Auditors BDO Audit (WA) Pty Ltd 38 Station Street Subiaco WA 6008 Australia Telephone Facsimile 08 6382 4600 08 6382 4601 ASX Code Website SCN www.scorpionminerals.com.au 1 DIRECTORS’ REPORT Your Directors submit their report on the consolidated entity (referred to hereafter as the Group) consisting of Scorpion Minerals Limited and the entities it controlled at the end of or during the financial year ended 30 June 2020. DIRECTORS The names and details of the Group’s Directors in office during the financial year and until the date of this report are as follows: Bronwyn Barnes Carol New Craig Hall Non-Executive Director – appointed 31 October 2018 Non-Executive Director – appointed 1 February 2019 Non-Executive Director – appointed 11 February 2019 INFORMATION ON DIRECTORS Bronwyn Barnes (appointed 31 October 2018) Ms Barnes has had an extensive career in the resources sector, having worked with companies ranging from BHP Billiton to emerging juniors in directorship, executive leadership, and operational roles in Australia and internationally. Ms Barnes is a member of the Executive Council of the Association of Mining and Exploration Companies (AMEC) and has extensive experience in working across Africa and an extensive career in ASX listed company boards Ms Barnes is currently a Non-executive director of ASX listed Indiana Resources Limited. Ms Barnes was previously a Non- executive director of MOD Resources Limited, Windward Resources Limited, Auris Minerals Ltd and JC International Group Ltd. Carol New (appointed 1 February 2019) Ms New holds a Bachelor of Business Degree and is a Chartered Accountant and has over 20 years’ experience working with public companies in director, accounting and secretarial roles. Ms New is currently a Non-executive Director of ASX listed Horseshoe Metals Limited. Ms New was previously a Non- executive Director of Redbank Copper Limited and Target Energy Limited. Craig Hall (appointed 11 February 2019) Mr Hall is an experienced geologist with over 30 years of mineral industry experience in exploration, development and production roles in a range of commodities, principally precious and base metals. He has held a variety of senior positions with mid-tier and junior sector resource companies within Australia and overseas. Mr Hall is currently a Non-executive director of ASX listed Auris Minerals Limited and Horseshoe Metals Limited. Mr Hall was previously a Non-executive Director of Redbank Copper Limited, Eclipse Metals Limited and Target Energy Limited. COMPANY SECRETARY Carol New B.Bus, CA (appointed 16 January 2019) Ms New holds a Bachelor of Business Degree and is a Chartered Accountant and has over 20 years’ experience working with public companies in director, accounting and secretarial roles. Kate Stoney B Bus, CPA (appointed 02 December 2019) Ms Kate Stoney was appointed joint Company Secretary on 2 December 2019. Ms Stoney is a CPA qualified accountant with over 15 years’ experience working in accounting, administration and company secretarial positions. 2 PRINCIPAL ACTIVITIY The principal activity of the Group is exploration for mineral resources. INTERESTS IN SHARES AND OPTIONS As at the date of this report, the interests of the Directors in the shares and options of Scorpion Minerals Limited were: Bronwyn Barnes DIVIDENDS There were no dividends declared or paid during the financial year. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS Ordinary shares Options over Ordinary Shares 5,561,405 19,473,690 Apart from the above or as noted elsewhere in this report no significant changes in the state of affairs of the Group occurred during the financial year. OPERATING AND FINANCIAL REVIEW GOING CONCERN The Group auditor has inserted an emphasis of matter in the audit report regarding going concern. The Directors believe it is appropriate to prepare the financial statements on a going concern basis as there are no matters that exist at the date of the report that indicate the Group will be unable to manage the matters referred to in the Note 1 for the next 12 months. REVIEW OF OPERATIONS PHAROS GOLD and BASE METALS PROJECT Murchison, WA In November 2019, the Company acquired an Option to Acquire 100% of exploration tenement applications E20/948 and E20/953 from Element 25 (ASX: E25) (refer Figures 1 & 2); forming the basis for the Pharos Project- covering 384 km2 of prospective ground contiguous with 58 km2 of granted SCN tenure (E20/931), containing the Mount Mulcahy copper-zinc volcanic-hosted massive sulphide (VMS) deposit. E20/948 was subsequently granted on the 17th January 2020, and E20/953 was recently granted on the 18th September 2020. In March 2020 the Company also announced an agreement with local indigenous prospector Mr Terry Little for the acquisition of tenements P20/2252 and P20/2253 in proximity to the Company’s existing prospects, which have historically produced significant occurrences of gold, mainly in the form of large alluvial nuggets. The most significant of these was a large nugget of around 800 grams (25oz.) from P20/2252. The Company is encouraged by the presence of both large alluvial nuggets and historical workings in the vicinity of the known prospects at the Pharos Project and considers them an obvious proxy for a highly relevant gold geochemical signature. In May 2020, the Company also applied for exploration licence EL20/962 immediately west of application E20/953 (refer Figure 2) to cover an interpreted extension to the greenstone belt southwest of the Weld Range, containing several mafic intrusions that are of high interest. The application for EL20/962 (Choallie Creek) is approximately 200 km2 and will bring the total contiguous package in this highly prospective region, including Mt Mulcahy, to over 640 km2. 3 The Company noted several significant historical gold intercepts from Rotary Air Blast (RAB) drilling undertaken by previous companies on the tenements, including the following high grade intersections from the Lantern prospect on E20/948, following up on an original 3100 ppb (3.1 g/t) Au soil sample in the 1990’s from Guardian Resources. A complete listing of historical significant results is listed in Table 2. • • 12 m @ 7.40 g/t Au from 44 m, including 2 m @ 42.4 g/t Au 16 m@ 3.09 g/t Au from 0 m, including 2 m @ 16.8 g/t Au During the year the Company announced results of two reconnaissance rock-chip sampling programmes focussed upon outcrop and workings, including quartz veins of various orientations in high priority zones. Fifty-seven samples were taken for analysis by fire assay, with seventeen samples returning anomalous values above 150 ppb (refer Table 1 for a complete list of results, and Figures 3, 4 & 5). Highlights from rock chip sampling results include two high grade (10.5 g/t Au and 10.0 g/t Au) assays returned from undrilled workings 200m apart, at a prospect now named Salt Flat, 200m West of Cap Lamp (refer Figure 5 and photo 2), and newly discovered mineralised outcrop at Candle returning values of 2.5 g/t Au, and 2.8 g/t Au, on parallel lines of strike 100m apart (refer Figures 3, 4) A line of workings at Cap Lamp returned multiple high grade values from channel sampling of veining in the only easily accessible area, with a maximum value of 7.5 g/t Au, and an approximate average value of 2.1 g/t Au over approximately 5m length (refer Figure 5 and photo 1). At Cap Lamp, the Company also compiled additional historical drilling results which include RAB drilling highlights of 2m @ 5.5 g/t Au from 18m and various anomalous results The historical RAB drilling in the vicinity of these workings was not overlapping and is considered to have not adequately tested this area (refer Figure 5). Additional anomalous results were returned from stoped quartz veins at Oliver’s (maximum assay 3.0 g/t Au), and from a working on P20/2253, where material returned a maximum value of 1.2 g/t Au. The Company completed a heritage clearance survey to cover priority areas in late July after the restriction of intra-state movements, and received Programme of Works (PoW) approval to allow RC Drilling, which commenced in late August 2020, with a planned 2500m Reverse Circulation (“RC”) drilling programme targeting high-grade mineralisation previously identified at Lantern, and newly discovered zones at Candle and Beacon, along with selected workings within Oliver’s Patch and workings along the ‘Old Prospect’ northern extension and Salt Flat Prospect (refer Photos 1 and 2). Results from this drilling are pending. The Company considers that the Candle, Lantern and newly outlined prospects such as Cap Lamp and ‘Salt Flat’ areas contain multiple quartz vein targets similar to “Day Dawn” style mineralisation (refer Figure 1), and is highly encouraged by the open-ended nature of the current prospects. General Discussion of Mineral Potential of Pharos Project The Company has an Option to Acquire 100% of two exploration tenement applications (E20/948 and E20/953) from Element 25 (ASX: E25). E20/948 and application E20/953 - together the Pharos Project - cover 384 km2, and are contiguous with 58 km2 of granted SCN tenure (E20/931), which contains the Mount Mulcahy copper-zinc volcanic-hosted massive sulphide (VMS) deposit, a zone of mineralisation with a JORC 2012 Measured, Indicated and Inferred Resource of 647,000 tonnes @ 2.4% copper, 1.8% zinc, 0.1% cobalt and 20g/t Ag (refer SCN:ASX release 25 September 2014, also Figures 1 & 3) at the ‘South Limb Pod’ (SLP). The Pharos Project tenements are considered prospective for a number of gold mineralisation types including: 1. 2. 3. 4. Shear zone hosted lode style mineralisation hosted in mafic, ultramafic and felsic volcanics. Banded Iron hosted “Hill 50” style replacement deposits. High grade quartz vein “Day Dawn” style mineralisation hosted within dolerite and basalt. Felsic porphyry hosted quartz stockwork and ladder vein mineralisation. The Company considers that the Candle, Lantern and the Oliver’s Patch areas within the Pharos Project contain multiple quartz-vein targets similar to “Day Dawn” style mineralisation (refer Figure 2) and is highly encouraged by the open-ended nature of the current prospects. 4 Table 1: Rock chip sample location and assay Results released post-quarter end (9/7/2020 ) Previously released 13/2/2020 Prospect Sample ID North MGA East MGA Au ppm Prospect Sample ID North MGA East MGA Au ppm A127202 A127203 A127204 A127205 A127206 A127207 A127208 A127209 A127210 A127211 A127212 A127213 A127214 A127215 A127216 A127217 A127218 A127219 A127220 A127221 A127222 A127223 A127224 A127225 A127226 A127227 A127228 A127229 A127230 A127231 A127232 A127233 A127234 A127235 A127236 A127237 A127238 7015170 7015166 7015166 7015126 7015131 7015098 7015096 7015081 7015208 7015176 7015236 7015250 7015247 7015349 7015416 7015480 7015515 7015401 7015387 7015386 7015386 7015617 7015618 7015462 7015451 7015636 7015640 7015657 7015673 7015709 7015716 7015728 7015464 7015755 7015463 7014986 7014987 572182 572183 572183 572138 572134 572159 572153 572254 572046 572007 572076 572084 572086 572039 572633 572661 572680 572743 572767 572778 572794 573319 573331 573284 573292 573313 573312 573280 573277 573401 573401 573940 574530 573920 574528 575847 575846 0.841 0.382 0.068 0.003 0.002 0.001 0.001 0.003 0.002 <0.001 <0.001 0.001 0.001 0.003 0.001 <0.001 0.001 0.001 0.001 0.001 0.001 2.509 0.328 0.003 0.004 1.303 0.397 0.023 0.18 0.011 2.794 0.017 0.004 0.006 0.007 0.001 0.002 Beacon East of Beacon Candle Regional A127240 A127241 A127242 A127243 A127244 A127245 A127246 A127247 A127248 A127249 A127250 A127251 PP004 A127252 A127253 A127254 A127255 A127256 A127257 A127258 A127259 A127260 A127261 A127262 A127263 A127264 A127265 A127266 PP003 A127270 A127271 A127272 A127273 A127274 A127275 A127276 A127277 A127278 A127279 A127280 A127281 A127282 A127283 A127284 A127285 PP005 A127267 A127268 A127269 A127286 A127287 A127288 A127289 A127290 A127291 A127292 PP002 PP001 7014097 7014097 7014097 7014049 7014049 7014233 7014233 7014342 7014342 7014401 7014401 7014401 7014404 7013758 7013744 7013744 7013458 7013458 7014190 7014207 7014279 7014114 7014115 7014115 7014116 7014114 7014121 7014121 7013456 7013857 7013860 7014104 7014097 7013925 7013769 7013752 7013744 7013933 7013966 7014004 7014388 7013469 7013469 7013375 7013311 7014140 7013604 7013588 7013578 7012423 7012423 7012389 7012392 7012393 7012398 7012372 7012355 7011718 576872 576872 576873 576964 576965 576953 576954 576871 576870 576916 576917 576917 576915 577031 577022 577022 577425 577426 577212 577200 577143 577154 577155 577156 577157 577153 577157 577158 577465 573374 573371 573386 573303 573328 573431 573445 573457 573657 573639 573616 573310 573463 573464 573489 573515 572837 576220 576202 576232 573501 573502 573757 573839 573851 573876 573891 573744 574472 0.170 0.551 0.005 0.186 0.004 0.005 9.947 0.013 0.014 0.057 10.501 0.184 0.002 0.005 0.006 0.006 0.005 0.003 0.002 0.018 0.002 0.910 5.136 1.898 0.751 1.856 7.472 0.334 0.003 0.114 3.046 0.159 0.008 0.005 0.002 0.002 0.005 0.002 0.001 <0.001 0.001 0.001 <0.001 0.001 0.001 0.001 0.045 0.334 0.006 0.004 0.005 0.003 0.018 0.009 0.010 0.012 0.005 1.182 Salt Flat Cap Lamp Olivers Patch North Of Maguires Tank Light Terrys Coordinate system MGA94 zone 50, sample sites located by GPS, accuracy +/- 3m Assay method, 50g Fire assay, lower detection limit 0.001 ppm 5 Table 2: Material Historical Results (=/>4m @ >0.2 g/t Au)- Reported intervals are downhole lengths, true width not known Assumed RL 0 0 0 0 0 Max Depth (m) 95.00 50.00 55.00 58.00 59.00 MGA Northing 7015952 7015952 7016188 7016082 7015633 MGA Azimuth 0 0 0 270 315 MGA Easting 573141 573541 573260 573277 574164 Hole ID RYA99-035 RYA99-039 RYA99-047 WCR05 WLR001 Prospect Candle Candle Candle Candle Lantern Dip -90 -90 -90 -60 -60 Lantern WLR006 7015601 Lantern WLR009 7015566 Lantern WLR024 7015654 Lantern WLR032 7015666 Lantern WLR033 7015666 Lantern Lantern WOR005 WOR006 7015674 7015633 Candle Candle Mustang Sally Mustang Sally Mustang Sally Laterite Hill Laterite Hill Laterite Hill Cap Lamp Cap Lamp Cap Lamp Cap Lamp Cap Lamp Cap Lamp Cap Lamp Cap Lamp WOR008 WOR009 MS256-4 MS255-3 MS264-5 LWL100-4 LWN329-3 LWN330-4 OP 102-1 OP 102-2 OP 103-2 OP 103-3 OP 104-2 OP 1015-2 OP 1015-3 OP 1035-3 7016072 7016033 7016797 7016689 7016606 7022651 7022599 7022716 7013923 7013923 7014023 7014023 7014123 7013873 7013873 7014073 574159 574124 574143 574169 574149 574159 574158 573243 573243 579630 579607 579558 581237 582096 582134 577175 577140 577105 577075 577105 577200 577170 577135 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 315 315 135 270 270 0 0 0 0 117 117 117 156 117 117 90 90 90 90 90 90 90 90 -60 -60 -60 -60 -60 -60 -60 -60 -60 -60 -60 -60 -60 -60 -60 -60 -60 -60 -60 -60 -60 -60 -60 53.00 40.00 56.00 57.00 94.00 Including 44.00 27.00 Including 32.00 32.00 102.00 81.00 89.00 55.00 71.00 54.00 49.00 including 65.00 41.00 21.00 54.00 71.00 65.00 26.00 From (m) 62.00 20.00 0.00 40.00 36.00 51.00 4.00 24.00 0.00 8.00 16.00 28.00 40.00 0.00 52.00 44.00 46.00 68.00 40.00 0.00 8.00 20.00 28.00 0.00 89.00 49.00 53.00 28.00 43.00 29.00 16.00 18.00 46.00 9.00 16.00 20.00 16.00 48.00 8.00 To (m) 72.00 25.00 2.00 44.00 47.00 59.00 8.00 28.00 4.00 12.00 24.00 36.00 44.00 4.00 57.00 56.00 48.00 72.00 44.00 16.00 10.00 24.00 32.00 4.00 91.00 50.00 58.00 32.00 44.00 30.00 24.00 20.00 49.00 11.00 18.00 24.00 28.00 52.00 12.00 Interval (m) 10.00 5.00 2.00 4.00 11.00 8.00 4.00 4.00 4.00 4.00 8.00 8.00 4.00 4.00 5.00 12.00 2.00 4.00 4.00 16.00 2.00 4.00 4.00 4.00 2.00 1.00 5.00 4.00 1.00 1.00 8.00 2.00 3.00 2.00 2.00 4.00 12.00 4.00 4.00 Au (g/t) 0.24 0.51 0.41 0.21 0.69 0.59 EOH 0.74 0.23 0.28 0.36 0.57 0.83 0.42 0.94 0.64 EOH 7.40 42.41 0.23 0.51 EOH 3.09 16.80 0.37 2.65 EOH 0.37 2.46 3.50 1.38 1.36 1.18 1.35 1.65 5.45 0.64 0.40 1.43 0.45 0.27 0.20 0.20 Drill Type Aircore Aircore Aircore RAB RAB RAB RAB RAB RAB RAB RAB RAB RAB RAB RAB RAB RAB RAB RAB RAB RAB RAB RAB RAB RAB RAB RAB RAB Company Newcrest Newcrest Newcrest Hampton Guardian Guardian Guardian Guardian Hampton Hampton Guardian Guardian Guardian Guardian Equinox Equinox Equinox Equinox Equinox Equinox Newcrest Newcrest Newcrest Newcrest Newcrest Newcrest Newcrest Newcrest 6 Figure 1 – Location of Pharos and Mt Mulcahy Project in Murchison area, WA, highlighting regional mineral endowment. 7 Figure 2 – Location of Pharos and Mt Mulcahy Project, with drilling highlights; demarcation of ELA20/962 within project in yellow. 8 Figure 3 – Location of Pharos advanced prospects. 9 Figure 4 – Beacon, Candle and Lantern Prospects showing Significant Historic Drilling Results, with 2020 rock chip highlights in yellow. Interpreted NW mineralised trend in orange. 10 Figure 5 – Cap Lamp and Salt Flat prospects showing Significant Historic Drilling Results, with 2020 rock chip highlights in yellow. Interpreted NW and NE mineralised trends in orange. 11 Photo 1 – Northernmost working at Cap Lamp (approx 7014116mN, 577157mE) view is approximately South confirming 330⁰ strike and 60⁰ dip to west. 12 Photo 2 – Stoped mineralised quartz veining at Salt Flat (approx. 576916mE, 7014401mN), which returned a maximum assay of 10.5ppm Au. View is approximately North. Note backfilling above veining. Planned systematic exploration will focus on interpreted structural controls for primarily gold mineralisation associated with NNW trending splay structures off the Big Bell Shear (refer Figure 1), a major regional structure associated with significant gold endowment, including the 5Moz Big Bell gold deposit (refer Figure 2). The Company believes that significant potential for new gold and base metal deposits exist within the expanded project area. 13 The stratigraphic sequence to the west of and adjacent to the Big Bell shear contains all the above rock types for the gold mineralisation styles targeted, and systematic exploration has not been undertaken historically where the NW-NNW trending splays off the Big Bell shear intersect these lithologies (refer Figure 1). Previous explorers have noted repeated observation of sericite-chlorite-carbonate alteration and pyrite-arsenopyrite mineralisation associated with gold mineralisation, which the Company believes indicative of large Archean gold hydrothermal systems. Planned future exploration includes: 1. 2. 3. 4. Reprocessing of existing air magnetics and completion of a regional geologic interpretation. Detailed geological mapping and rock chip sampling of selected target areas. Systematic geochemical sampling of the project initially focusing on high priority targets. Follow up investigation and RC drilling of Mustang Sally, Ulysses and Laterite Hill. MT MULCAHY COPPER PROJECT Murchison, WA The Mt Mulcahy project in Western Australia (Refer Figures 1, 2 & 3) hosts the Mount Mulcahy copper-zinc deposit, a volcanic-hosted massive sulphide (VMS) zone of mineralisation with a JORC 2012 Measured, Indicated and Inferred Resource of 647,000 tonnes @ 2.4% copper, 1.8% zinc, 0.1% cobalt and 20g/t Ag (refer PUN:ASX release 25 September 2014) at the ‘South Limb Pod’ (SLP). The tenement containing the SLP was granted in the second half of 2019 (refer ASX:SCN Mt Mulcahy Exploration Licence Granted, 16th September 2019). The Company noted the following highlights in that release: Contained metal at the SLP resource of: • • • • • • • 33.5M pounds (15,200 tonnes) of Cu 26.3M pounds (11,800 tonnes) of Zn, 1.35M pounds (600 tonnes) of Co, 415,000 ounces of Ag, and 5000 ounces of Au 87% of tonnes & 91% of Cu, Zn and Ag metal content classified Measured + Indicated. Significant intercepts from the historic drilling at SLP include: 6.8m @ 4.9% Cu, 3.7% Zn, 0.16%Co, 39g/t Ag, and 0.19g/t Au 10.2m @ 4.5% Cu, 4.0% Zn, 0.17%Co, 33g/t Ag, and 0.18g/t Au 12.4m @ 3.1% Cu, 2.3% Zn, 0.10%Co, 28g/t Ag, and 0.21g/t Au 11.3m @ 4.9% Cu, 4.2% Zn, 0.16%Co, 44g/t Ag, and 0.57g/t Au The folded horizon hosting the SLP VMS mineralisation forms a regional keel, where the surface expression can be traced for a distance of at least 12 kilometres along strike and excellent potential exists for additional mineralisation to be discovered along this prospective horizon. Twenty untested targets have been identified along strike of this horizon using a combination of VTEM and soil geochemistry. These targets have characteristics similar to the SLP and are considered prospective for VMS base metal accumulations. The Company has plans for three extensional diamond tail holes targeting down-dip of the current resource. Gold targets will also be pursued in tandem with the base metal exploration. A north-south trending Big Bell Shear splay is interpreted to pass through the western side of the licence area and auger soil geochemistry is planned to test for targets to be followed by RC drill testing of any anomalies defined by the programme. No field work was undertaken during the quarter. 14 Table 3: Current Mineral Resource Estimate, Mt Mulcahy Project (refer ASX release 25/9/2014 “Maiden Copper - Zinc Resource at Mt Mulcahy”, which also contains a list of significant drill intersections for the deposit, listed within this report at Table 2) Resource Category Measured Indicated Inferred TOTAL Mt Mulcahy South Limb Pod Mineral Resource Estimate Grade Contained Metal Tonnes 193,000 372,000 82,000 647,000 Cu (%) Zn (%) Co (%) Ag (g/t) Au (g/t) 3.0 2.2 1.5 2.4 2.3 1.7 1.3 1.8 0.1 0.1 0.1 0.1 25 19 13 20 0.3 0.2 0.2 0.2 Cu (t) 5,800 8,200 1,200 Zn (t) 4,400 6,300 1,100 15,200 11,800 Co (t) 220 330 60 610 Ag (oz) 157,000 223,000 35,000 415,000 Au (oz) 2,000 2,000 4,000 SCORPION MINERALS LIMITED Dablo Pd-Pt-Au-Ni-Cu Project, Burkina Faso Scorpion has previously announced (refer SCN:ASX announcement 10th January 2018) that it had entered into an agreement to acquire Scorpion Minerals Limited, which held the rights to enter a 70% joint venture interest in the Dablo exploration project in Burkina Faso, Africa, through a then-proposed joint venture with Newgenco Exploration (West Africa) Pty Ltd (“NEWA”). On 31 December 2018, the Burkina Faso Government declared a State of Emergency in a number of provinces in northern and eastern Burkina Faso along the Mali, Niger, Togo and Benin borders due to security concerns, which has recently been extended by the Burkinabe Parliament for a further year, to be reviewed in January 2021. Scorpion had previously communicated to the market that no work was being undertaken in the field and planned work activity was on hold until the situation stabilises. During the initial State of Emergency declaration, the Company’s joint venture partner advised that it had terminated the Memorandum of Agreement (MOA) between NEWA and Scorpion; that it considers the period of exclusivity relating to the Dablo Project at an end and that they were continuing to seek and speak to potential new investors in the Dablo Project. Scorpion had subsequently advised NEWA that it expressly reserves all its right in regards to this matter and that it was considering, without limitation, potential legal remedies that may be available to the Company in relation to Scorpion’s rights and interests under the MOA. On the 22nd June 2020 the Company was advised of the appointment of a liquidator to NEWA on the 15th June 2020, through a creditor’s voluntary liquidation, shortly after the Company advised NEWA on the 12th June 2020 that it demanded repayment of the sum of $AUD1.07M, being the total amount contributed to the project by Scorpion, minus a non- refundable $200,000 payment. Scorpion was not listed as a creditor of NEWA in its directors’ report on company activities and property, and the Company subsequently submitted a Proof of Debt (“POD”) in the liquidation of NEWA in the amount of $AUD1.07M. The liquidator has since advised of their refusal to accept the POD, and although the Company initially instituted an appeal to the Federal Court of Australia against the rejection of the POD and application for orders in relation to the external administration of NEWA, the company has abandoned this approach on the basis of a lack of asset value within NEWA. Previously the Company had been advised by legal representatives of NEWA that the Dablo Project tenements had lapsed; that no replacement tenements have been applied for; that there was no intention of re-applying for the tenements, and that the business operations of NEWA have ceased. As a result of enquiries made during the current quarter Scorpion understands that NEWA-associated entities have re-applied for two ‘Dablo JV’ tenements, being Dablo-3 and Perko. Scorpion continues to expressly reserve all its right in regards to this matter and is considering, without limitation, all potential legal remedies against NEWA’s subsidiaries and directors at the time. 15 Competent Persons Statement 1 The information in this report that relates to the Exploration Results and Mineral Resources at the Mt Mulcahy and Pharos Projects is based on information reviewed by Mr Craig Hall, whom is a member of the Australian Institute of Geoscientists. Mr Hall is a director and consultant to Scorpion Minerals Limited and has sufficient experience which is relevant to the style of mineralisation and types of deposit under consideration and to the activity he is undertaking to qualify as Competent Persons as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2012)’. Mr Hall consents to the inclusion of the information in the form and context in which it appears. The information in this report that relates to the Mt Mulcahy Mineral Resource is based on information originally compiled by Mr Rob Spiers, an independent consultant to Scorpion Minerals Limited and a then full-time employee and Director of H&S Consultants Pty Ltd (formerly Hellman & Schofield Pty Ltd), and reviewed by Mr Hall. This information was originally issued in the Company’s ASX announcement “Maiden Copper-Zinc Resource at Mt Mulcahy”, released to the ASX on 25th September 2014. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements. The company confirms that the form and context in which the findings are presented have not materially modified from the original market announcements. Forward Looking Statements Scorpion Minerals Limited has prepared this announcement based on information available to it. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this announcement. To the maximum extent permitted by law, none of Scorpion Minerals Ltd, its Directors, employees or agents, advisers, nor any other person accepts any liability, including, without limitation, any liability arising from fault or negligence on the part of any of them or any other person, for any loss arising from the use of this announcement or its contents or otherwise arising in connection with it. This announcement is not an offer, invitation, solicitation or other recommendation with respect to the subscription for, purchase or sale of any security, and neither this announcement nor anything in it shall form the basis of any contract or commitment whatsoever. This announcement may contain forward looking statements that are subject to risk factors associated with exploration, mining and production businesses. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a variety of variables and changes in underlying assumptions which could cause actual results or trends to differ materially, including but not limited to price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimations, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory changes, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimate. LIKELY DEVELOPMENTS Ongoing exploration at Mt Mulcahy is planned, following the grant of E20/931. The Group will continue to assess the impact of COVID-19 on existing projects and operations. The duration and spread of the pandemic and regulations imposed by governments continue to be closely monitored to determine any future impact on the Group. 16 FINANCIAL RESULTS FOR THE PERIOD The operating loss after income tax of the Group for the year ended 30 June 2020 was $818,449 (2019: loss of $2,644,232). SHAREHOLDER RETURNS Basic and diluted loss per share (cents) 2020 (0.43) 2019 (1.51) SIGNIFICANT EVENTS AFTER THE REPORTING DATE COVID-19 The impact of the Coronavirus (COVID-19) pandemic is ongoing and it is not practicable to estimate the potential future impact after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided. On 13 August 2020 the Company announced commencement of drilling at the Pharos Project. In doing so the Company signed a contract with iDrilling Australia to undertake a minimum of 5,000m of RC drilling to be completed during 2020, with an initial programme of 2,500m to commence from next week. On 16 September 2020 2,500,000 fully paid ordinary shares were issued following the exercise of 2,500,000 unlisted options (expiry date 18 October 2020, exercise price $0.05 per share). On 28 September 2020 the Company announced to the ASX the initial results from its exploration program at the Pharos Project. High grade gold was confirmed at the Lantern prospect. On 29 September 2020 the Company announced to the ASX a further letter of variation to the loan facility had been executed extending the repayment date to 31 December 2021. Other than the above, there have not been any matters that have arisen since 30 June 2020 that have significantly affected, or may significantly affect, the operations of the Group, the results of the operations or the state of affairs of the Group in future years. LIKELY DEVELOPMENTS AND EXPECTED RESULTS The directors are not aware of any likely developments in the operations of the Group and the expected results of those operations that may have a material effect in subsequent years that are not already disclosed. Comments on certain operations of the Group are included in this annual report under the operating and financial review on activities on page 3. ENVIRONMENTAL REGULATION AND PERFORMANCE The Group’s operations are subject to environmental regulation in respect to its mineral tenements relating to exploration activities on those tenements. No breaches of any environmental restrictions were recorded during the financial year. The Group has not yet fully reviewed the reporting requirements under the Energy Efficient Opportunities Act 2006 or the National Greenhouse and Energy Reporting Act 2007, but believes it has adequate systems in place to ensure compliance with these Acts having regard to the scale and nature of current operations. CORPORATE GOVERNANCE The Company has reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (3rd Edition) as published by the ASX Corporate Governance Council. The 2020 Corporate Governance Statement is dated as at 30 June 2020 and reflects the corporate governance practices in place throughout the 2020 financial year. A copy of the Company’s 2020 Corporate Governance Statement can be accessed at the Company’s website. 17 REMUNERATION REPORT (AUDITED) Directors and Key Management Personnel disclosed in this report (see page 2 for details about each Director). During the financial year there were no Key Management Personnel other than the Directors. Name Bronwyn Barnes Carol New Craig Hall Position Non-Executive Director Non-Executive Director Non-Executive Director The information provided in this Remuneration Report has been audited as required under Section 308 (3C) of the Corporations Act 2001. Assessing performance and claw-back of remuneration The Remuneration Committee of the Board of Directors of the Company is responsible for determining and reviewing compensation arrangements for the Directors, the CEO and the executive team. The Board’s policy for determining the nature and amount of remuneration for Board members and senior Executives of the Group (if any) is as follows: Remuneration Policies for Non-Executive Directors The Board will adopt remuneration policies for Non-Executive Directors (including fees, travel and other benefits). In adopting such policies, the Board will take into account the following guidelines: ▪ ▪ ▪ ▪ Non-Executive Directors should be remunerated by way of fees – in the form of cash, non-cash benefits or superannuation contributions; Non-Executive Directors should not participate in schemes designed for remuneration of executives; Non-Executive Directors should not receive bonus payments; Non-Executive Directors should not be provided with retirement benefits other than statutory superannuation. The maximum aggregate annual remuneration is approved by shareholders. The maximum aggregate amount of fees that can be paid to Non-Executive Directors is currently $200,000 which was approved at a General Meeting held on 22 January 2008. Fees for Non-Executive Directors are not linked to the performance of the Group. However, to align Directors’ interests with shareholder interests, the Directors are encouraged to hold shares in the Group and are able to participate in employee option plans. Remuneration Policies for Executive Directors and Executive Management The Board will adopt remuneration policies for Executive Directors and Executive Management, including: ▪ Fixed annual remuneration (including superannuation) and short term and long-term incentive awards (including performance targets); Any termination payments (which are to be agreed in advance and include provisions in case of early termination); and Offers of equity under Board approved employee equity plans. Any issue of Company shares or options (if any) made to Executive Directors are to be placed before shareholders for approval. ▪ ▪ The Board’s objectives are that the remuneration policies: ▪ Motivate Executive Directors and Executive Management to pursue the long-term growth and success of the Company; Demonstrate a clear relationship between performance and remuneration; and Involve an appropriate balance between fixed and incentive remuneration, to reflect the short and long-term performance objectives appropriate to the Company’s circumstances and goals. ▪ ▪ Performance based remuneration There was no performance-based remuneration paid to Directors during the financial year. Based upon the present stage of development of the Company, performance-based remuneration is not considered appropriate. Group performance, shareholder wealth and Directors' and executives' remuneration The remuneration policy has been tailored to increase the direct positive relationship between shareholders’ investment objectives and Directors and Executives’ performance. Currently, this is facilitated through the issue of options to Executives to encourage the alignment of personal and shareholder interests. No market-based performance remuneration has been paid in the current year. 18 Voting and comments made at the Group’s 2019 Annual General Meeting At the Group’s 2019 Annual General Meeting, the Company’s Remuneration Report was passed on a show of hands. The Board remains confident that the Group’s remuneration policy and the level and structure of its executive remuneration are suitable for the Company and its shareholders and hence it has not amended its overall remuneration policy. Details of remuneration The amount of remuneration of the Directors (as defined in AASB 124 Related Party Disclosures) is set out below. During the financial year there were no Key Management Personnel other than the Directors. Short-Term Salary & Fees $ Post-Employment Superannuation $ Share-based Payments Options $ Total $ Directors Bronwyn Barnes 2020 2019 Craig Hall 2020 2019 Carol New 2020 2019 Michael Fotios (resigned 31 October 2018) 2020 2019 Grant Osbourne (resigned 31 October 2018) 2020 2019 Neil Porter (resigned 11 February 2019) 2020 2019 Alan Still (resigned 31 October 2018) 2020 2019 Total Key Management Personnel compensation 2020 2019 30,000* 20,000* 30,000* 11,250* 48,000* 11,250* - 12,000* - 7,500* - 17,500* - 10,000* 108,000* 89,500* - - - - - - - - - - - - - - - * Salary or fees were all or partially accrued during the year and are outstanding where unpaid. As at 30 June 2020 the following amounts owed to the directors remain unpaid: • • • Craig Hall Carol New Bronwyn Barnes $41,250 $59,250 $166,400 - - - - - - - - - - - - - - - 30,000* 20,000* 30,000* 11,250* 48,000* 11,250* - 12,000* - 7,500* - 17,500* - 10,000* 108,000* 89,500* There are no cash bonuses or non-monetary benefits relating to any of the Directors and Key Management Personnel during the year. 19 Shareholdings of Key Management Personnel Bronwyn Barnes Balance 1 July 19 5,561,405 5,561,405 Granted as remuneration On exercise of options Net change Other Balance 30 June 20 - - - - 5,561,405 5,561,405 Option holdings of Key Management Personnel Balance 1 July 19 Granted as remuneration Other On lapsing of options Balance 30 June 20 Bronwyn Barnes 29,210,535 29,210,535 - - (9,736,845) (9,736,845) 19,473,690 19,473,690 Service agreements As at the date of this report there are no executives or Key Management Personnel, other than the Directors, engaged by the Company. Formal appointment letters are in place with Non-Executive Directors, each of which is entitled to a fee of $30,000 per annum effective from 1 January 2017 ($36,000 per annum previous year). There are no termination payments payable. Share-based compensation There were no options issued to Directors and Executives as part of their remuneration during the year (2019: nil). Additional information The table below sets out information about the Group’s earnings and movements in shareholder wealth of the periods since listing: 30 June 20 30 June 19 30 June 18 30 June 17 30 June 16 $ $ $ $ Revenue - - - - Net (loss)/profit before tax (818,849) (2,644,232) Share price at year-end 0.045 0.004 (294,916) 0.024 (452,190) (2,091,648) 0.030 0.043 There were no remuneration consultants engaged by the Group during the financial year. This is the end of the audited remuneration report. DIRECTORS’ MEETINGS Given the size and nature of the Company, the Non-Executive Directors meet frequently at a management level. These meetings are not recorded as board meetings. During the year the Group held two Board meetings. Board decisions were also undertaken via circular resolutions signed by all Directors entitled to vote. Director B Barnes C Hall C New Eligible to Attend 2 2 2 Attended 2 2 2 20 ADD Share-based compensation SHARES UNDER OPTION At the date of this report there are nil unlisted options outstanding. Balance at the beginning of the year Movements of share options during the year – Expiry of Options Options exercised 16 September 2020 $0.05 Total number of options outstanding as at the date of this report Number of options 69,000,000 (23,000,000) (2,500,000) 43,500,000 PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. INSURANCE OF DIRECTORS AND OFFICERS The Company entered into a Directors and Officer’s liability insurance policy for a 12-month period commencing 7 February 2020 for a total premium of $15,000.00 (30 June 2019: $17,325.00). The Company has entered into Deeds of Access, Insurance and Indemnity with each of the Directors and Officers of the Company. Under the Deeds of Access, Insurance and Indemnity, the Company will indemnify those Officers against any claim or for any expenses or costs which may arise as a result of work performed in their respective capacities as Directors and Officers of the Company or any related entities. NON-AUDIT SERVICES The Group may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Group are important. The Board of Directors would consider the position that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditors, would not compromise the auditors’ independence requirements of the Corporations Act 2001 for the following reasons: ▪ all non-audit services would be reviewed to ensure they do not impact the impartiality and objectivity of the auditor; and none of the services undermine the general principles relating to auditor independence as set out in APES 11- Code of Ethics for Professional Accountants. ▪ No non-audit services were provided by BDO Audit (WA) Pty Ltd during the current financial year. AUDITOR’S INDEPENDENCE DECLARATION A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 22. Signed in accordance with a resolution of the Directors, and on behalf of the Board by, Craig Hall Director Perth, Western Australia 30 September 2020 21 Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au 38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia DECLARATION OF INDEPENDENCE BY NEIL SMITH TO THE DIRECTORS OF SCORPION MINERALS LIMITED As lead auditor of Scorpion Minerals Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Scorpion Minerals Limited and the entities it controlled during the period. Neil Smith Director BDO Audit (WA) Pty Ltd Perth, 30 September 2020 BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent a firms. Liability limited by a scheme approved under Professional Standards Legislation. 22 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2020 REVENUE Other income Director fees Exploration expenses Impairment expense Occupancy expenses Other expenses Operating loss Finance income Finance costs Finance costs - net Loss before income tax Income tax benefit/(expense) Loss after income tax for the year Notes 2020 $ 2019 $ - - (75,000) (89,500) (373,833) (94,894) - (1,622,768) (36,000) (32,000) 2 (281,511) (724,263) (766,344) (2,563,425) - 139 (52,105) (80,946) (52,105) (80,946) (818,449) (2,644,232) 3 - - (818,449) (2,644,232) Other comprehensive income for the year, net of tax - - Total comprehensive loss for the year (818,449) (2,644,232) TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO OWNERS OF SCORPION MINERALS LIMITED 10 (818,449) (2,644,232) Loss per share for loss attributable to ordinary equity holders of the Group: Basic loss per share (cents per share) Diluted loss per share (cents per share) 12 12 (0.43) N/A (1.51) N/A The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the Notes to the Consolidated Financial Statements. 23 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020 CURRENT ASSETS Cash and cash equivalents Trade and other receivables TOTAL CURRENT ASSETS NON-CURRENT ASSETS Capitalised exploration expenditure TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Borrowings TOTAL CURRENT LIABILITIES TOTAL LIABILITIES Notes 2020 $ 167,205 188,176 355,381 4 5 2019 $ 4,750 133,025 137,775 6 2,060,027 2,060,027 2,060,027 2,060,027 2,415,407 2,197,802 7 8 (2,282,933) (1,859,933) (1,299,854) (1,099,199) (3,582,787) (2,959,132) (3,582,787) (2,959,132) NET ASSETS / (LIABILITY) (1,167,379) (761,330) EQUITY Contributed equity Accumulated losses Reserves TOTAL EQUITY 9 10 11 20,234,964 19,822,564 (21,866,636) (21,048,187) 464,293 464,293 (1,167,379) (761,330) The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Consolidated Financial Statements. 24 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2020 CONSOLIDATED Balance 30 June 2019 Note Contributed Equity Accumulated Losses Total Equity Share- based Payments Reserve 19,822,564 (21,048,187) 464,293 (761,330) Loss for the-year 10 Total comprehensive loss for the year -- - (818,449) (818,449) Transactions with owners in their capacity as owners Shares issued during the year Options issued during the year Balance 30 June 2020 9 412,400 - - - 20,234,964 (21,866,636) 464,293 (1,167,379) - - - - (818,449) (818,449) 412,400 - Note Contributed Equity Accumulated Losses Total Equity Share- based Payments Reserve CONSOLIDATED Balance 1 July 2018 Loss for the-year Total comprehensive loss for the year Transactions with owners in their capacity as owners Shares issued during the year Options issued during the year Transfer on expiry of options Balance 30 June 2019 10 9 11 18,814,564 (21,033,576) 2,629,621 410,609 - - (2,644,232) (2,644,232) - - (2,644,232) (2,644,232) 1,008,000 - - - 1,008,000 464,293 464,293 2,629,621 (2,629,621) - 19,822,564 (21,048,187) 464,293 (761,330) The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Consolidated Financial Statements. 25 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2020 CASH FLOWS FROM OPERATING ACTIVITIES Research and development tax refund Payments to suppliers and employees Payments for exploration Interest paid Interest received Notes 2020 $ 2019 $ - - (28,715) (195,683) (373,832) 34,113 - - - 176 Net cash outflow from operating activities 22 (368,434) (195,507) CASH FLOWS FROM INVESTING ACTIVITIES Cash on acquisition of subsidiary Investment in new opportunity Net cash inflow from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issue of shares Proceeds from share applications not yet issued Proceeds from borrowings Net cash inflow from financing activities 9 Net increase/(decrease) 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 4 - - - 412,400 - 118,489 530,889 162,455 4,750 167,205 2,630 - 2,630 - - 169,163 169,163 (23,714) 28,464 4,750 The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Consolidated Financial Statements 26 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 : SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies adopted in the preparation of the financial information included in this report have been set out below. Basis of preparation of historical financial information a) These general-purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Boards, Australian Accounting Interpretations and the Corporations Act 2001. These financial statements have been prepared on a historical cost basis. Scorpion Minerals Limited is a for-profit entity for the purpose of preparing financial statements. The financial report complies with Australian Accounting Standards which include International Financial Reporting Standards as adopted in Australia. Compliance with these standards ensure that the consolidated financial statements and notes as presented comply with International Financial Reporting Standards (IFRS). Going Concern The Group incurred a loss before tax of $818,449 (2019: loss of $2,644,232) and incurred cash outflows from operating activities of $368,434 (2019: $195,507) for the year ended 30 June 2020. At that date the Group had a working capital deficiency of $3,227,406 (2019: $2,821,357) and net liabilities of $1,167,379 (2019: $761,330). This included current liabilities of $2,282,933 (trade and other payables), and $1,299,854 (borrowings). From the $2,282,933 in trade and other payables outstanding at year end, $1,408,175 are owed to related parties, $406,445 relates to Companies in Liquidation, and $468,313 are owed to external creditors. With $472,107 being overdue or outside agreed payment terms. From the $1,299,854 in borrowings outstanding at year end, $985,421 are owed to related parties and $314,434 is owed to Investmet Limited & Whitestone Mining Pty Ltd, who are currently in liquidation. At 29 September 2020, the Group had a cash balance of $21,107. These conditions indicate a material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern and therefore whether it will be able to pay its debts as and when they fall due, and realise its assets and extinguish its liabilities in the normal course of business at amounts stated in the financial report. The Directors believe that there are sufficient funds available to continue to meet the Group’s working capital requirements as at the date of this report. The financial statements have been prepared on the basis that the Group is a going concern, which contemplates the continuity of normal business activity, realisation of assets and settlement of liabilities in the normal course of business for the following reasons: • • • • The Company has executed a loan facility agreement with associated entities. The loan facility with associated entities is to be repaid in cash within 7 days of the successful completion of a capital raising. Prior to a capital raising, any lender may convert all or some of the outstanding balance of the loan in ordinary shares at the price at which the capital raising is to be completed. Conversion of the loan to ordinary shares is subject to compliance with the applicable laws and regulations including the requirement to seek shareholder approval for a related party transaction. The loan bears interest of 8% p.a. The undrawn loan balance available to the Company as at 30 June 2020 from related entities amounts to $904,000. In addition, the current lenders (excluding Investmet Limited who are currently in Liquidation) have confirmed unconditionally that they will not call on or demand any repayment of the advances made to the Company up to 31 December 2021 until such time as the Group’s financial position improves. The Company currently has 20,000,000 options on issue with an exercise price of $0.05 expiring on 18 October 2020 and a further 500,000 at $0.05 expiring 26 October 2020. The company has received confirmations from the holders of 19,500,000 options that indicate the holder’s intent to exercise these options. Therefore, the Company is confident that it will be in receipt of $975,000 in option proceeds within the timeframes detailed above. The Company expects to raise additional funds through the Equity market. 27 • The Directors have also prepared a cash flow forecast that further indicates the Company’s ability to continue to operate as a going concern. This assumes the ability to continue to defer payment of creditors and for the directors to continue to defer payment of fees or accept part of their fees in shares. In the Directors’ opinion, at the date of signing the financial report there are reasonable grounds to believe that the matters set out above will be achieved and have therefore prepared the financial statements on a going concern basis. Should the Directors not achieve the matters set out above, there is material uncertainty whether the Group will be able to continue as a going concern. The financial report does not include any adjustments relating to the recoverability or classification of recorded asset amounts, or to the amounts or classification of liabilities, which might be necessary should the Group not be able to continue as a going concern. Revenue Recognition b) Interest Revenue is recognised as interest accrues using the effective interest method. This method uses the effective interest rate which is the rate that exactly discounts the estimated future cash receipt over the expected life of the financial asset. Income Tax c) The income tax expense for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax base of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for all temporary differences, between carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases, at the tax rates expected to apply when the assets are recovered or liabilities settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. Exceptions are made for certain temporary differences arising on initial recognition of an asset or a liability if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit. Deferred tax assets are only recognised for deductible temporary differences and unused tax loses if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Current and deferred tax balances relating to amounts recognised directly in equity are also recognised directly in equity. Impairment of Assets d) At each reporting date, the Group assesses whether there is any indication that individual assets are impaired. Where impairment indicators exist, the recoverable amount is determined and impairment losses are recognised in the Statement of Profit or Loss and Other Comprehensive Income where the asset’s carrying value exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of 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. Where it is not possible to estimate recoverable amount for an individual asset, recoverable amount is determined for the cash-generating unit to which the asset belongs. Cash and Cash Equivalents e) “Cash and cash equivalents” includes cash on hand, deposits held at call with financial institutions, other short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position. Fair value estimation f) Fair values may be used for financial asset and liability measurement and well as for sundry disclosures. Fair values for financial instruments traded in active markets are based on quoted market prices at statement of financial position date. The quoted market price for financial assets is the current bid price and the quoted market price for financial liabilities is the current ask price. The fair value of financial instruments that are not traded in an active market are determined using valuation techniques. Assumptions used are based on observable market prices and rates at reporting date. The fair value of long-term debt 28 instruments is determined using quoted market prices for similar instruments. Estimated discounted cash flows are used to determine fair value of the remaining financial instruments. The fair value of trade receivables and payables is their normal value less estimated credit adjustments due to their short- term nature. Borrowing costs g) Borrowing costs are capitalised that are directly attributable to the acquisition, construction or production of qualifying assets where the borrowing cost is added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Trade and other payables h) Trade and other payables represent liabilities for goods and services provided to the Group prior to the year end and which are unpaid. These amounts are unsecured and have 30-60 days payment terms. They are recognised initially at fair value and subsequently at amortised cost. Employee Benefits i) Wages and Salaries, Annual Leave and Sick Leave Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of statement of financial position date are recognised in respect of employees’ services rendered up to reporting date and measured at amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when leave is taken and measured at the actual rates paid or payable. Liabilities for wages and salaries are included as part of Other Payables and liabilities for annual and sick leave are included as part of Employee Benefits Provisions. Long Service Leave Liabilities for long service leave are recognised as part of the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees to the statement of financial position date using the projected future projected unit credit method. Consideration is given to expected future salaries and wages levels, experience of employee departures and periods of service. Expected future payments are discounted using national government bond rates at reporting date with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Retirement Benefit Obligations The Group does not have a defined contribution superannuation fund. All employees of the Group are entitled to receive a superannuation guarantee contribution required by the government which is currently 9.5%. Exploration and evaluation expenditure j) Exploration and evaluation expenditure encompass expenditures incurred by the Group in connection with the exploration for and evaluation of mineral resources before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. Exploration and evaluation expenditure incurred by the Group is accumulated for each area of interest and recorded as an asset if: 1) 2) the right to tenure of the area of interest are current; and at least one of the following conditions is also met: a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; and exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation incurred by the Group are expensed in the year they are incurred. b) 29 For each area of interest, expenditure incurred in the acquisition of rights to explore is capitalised, classified as tangible or intangible, and recognised as an exploration and evaluation asset. Exploration and evaluation assets are measured at cost at recognition. Exploration and evaluation incurred by the Group subsequent to acquisition of the rights to explore is expensed as incurred. During the financial year, no amounts have been capitalised, as the relevant tenement was in the process of being renewed, and all expenditure was recorded in Profit and Loss. The recoverable amount of each area of interest is determined on a bi-annual basis and the provision recorded in respect of that area adjusted so that the net carrying amount does not exceed the recoverable amount. For areas of interest that are not considered to have any commercial value, or where exploration rights are no longer current, the capitalised amounts are written off against the provision and any remaining amounts are charged to profit or loss. Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. Contributed Equity k) Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Goods and Services Tax l) Revenues, expenses and assets are recognised net of GST except where 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. 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 financial activities, which are recoverable from, or payable to, the taxation authority, are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. Leases m) From 1 January 2019 AASB 16 replaces the existing guidance in AASB 117 Leases. For lessees, all leases other than short term leases and low value leases will be recognised on the balance sheet. The new standard is effective for annual reporting periods commencing on or after 1 January 2019. The standard will see all leases, held by a lessee, record obligations as a liability and a corresponding right of use asset, both current and non-current, for the term of the lease. It has been determined that there is no material impact of the new and revised Standards and Interpretations on the financial position or performance of the Group. Provisions n) Provisions for legal claims are recognised when the Group has a legal or constructive obligation as a result of past events. It is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense. Share based payments o) The Group provides benefits to employees (including Directors) of the Group in the form of share-based payment transactions, whereby employees render services in exchange for shares or options over shares (“equity-settled transactions”). The fair value of options is recognised as an expense with a corresponding increase in equity (share-based payments reserve). The fair value is measured at grant date and recognised over the period during which the holder becomes unconditionally entitled to the options. Fair value is determined by an independent valuer using a Black-Scholes option 30 pricing model. In determining fair value, no account is taken of any performance conditions other than those related to the share price of Scorpion Minerals Limited (“market conditions”). The cumulative expense recognised between grant date and vesting date is adjusted to reflect the director’s best estimate of the number of options that will ultimately vest because of internal conditions of the options, such as the employees having to remain with the Group until vesting date, or such that employees are required to meet internal sales targets. No expense is recognised for options that do not ultimately vest because a market condition was not met. Where the terms of options are modified, the expense continues to be recognised from grant date to vesting date as if the terms had never been changed. In addition, at the date of the modification, a further expense is recognised for any increase in fair value of the transaction as a result of the change. Where options are cancelled, they are treated as if vesting occurred on cancellation and any unrecognised expenses are taken immediately to the Statement of Profit or Loss and Other Comprehensive Income. However, if new options are substituted for the cancelled options and designated as a replacement on grant date, the combined impact of the cancellation and replacement options are treated as if they were a modification. p) (i) (ii) Earnings per Share Basic Earnings per Share Basic earnings per share is determined by dividing the operating loss after income tax by the weighted average number of ordinary shares outstanding during the financial year. Diluted Earnings per Share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by taking into account amounts unpaid on ordinary shares and any reduction in earnings per share that will probably arise from the exercise of partly paid shares or options outstanding during the financial year. Segment Reporting q) Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker, which has been identified by the Group as the Managing Director and other members of the Board of Directors. Interest-bearing loans and borrowings r) All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with the borrowing. Interest calculated using the effective interest rate method is accrued over the period it becomes due and increases the carrying amount of the liability. Principles of consolidation s) The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Scorpion Minerals Limited. Subsidiaries are all entities (including structured entities) over which the Company has control. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of asset transferred. Accounting policies of subsidiaries are consistent with the policies adopted by the consolidated entity. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Non-controlling interests in the results and equity of subsidiaries are shown separately in the Statement of Profit or Loss and Other Comprehensive Income. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Non-controlling interests in the results and equity of subsidiaries are shown separately in the Statement of Profit or Loss and Other Comprehensive Income, Statement of Financial Position and Statement of Changes 31 in Equity of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit balance. Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. Changes in Accounting Policies t) In the year ended 30 June 2020, the Company has reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2020. As a result of this review, the Group has adopted AASB 16 Leases. AASB 16 replaces the existing guidance in AASB 117 Leases. For lessees, all leases other than short term leases and low value leases will be recognised on the balance sheet. The new standard is effective for annual reporting periods commencing on or after 1 January 2019. The standard will see all leases, held by a lessee, record obligations as a liability and a corresponding right of use asset, both current and non- current, for the term of the lease. It has been determined that there is no material impact of the new and revised Standards and Interpretations on the financial position or performance of the Group It has been determined that there is no material impact of the new and revised Standards and Interpretations on the financial position or performance of the Group. New Accounting Standards and Interpretations not yet mandatory or early adopted u) Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2020. The consolidated entity's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below. Conceptual Framework for Financial Reporting (Conceptual Framework) The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January 2020 and early adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards. Where the consolidated entity has relied on the existing framework in determining its accounting policies for transactions, events or conditions that are not otherwise dealt with under the Australian Accounting Standards, the consolidated entity may need to review such policies under the revised framework. At this time, the application of the Conceptual Framework is not expected to have a material impact on the consolidated entity's financial statements. The Group has also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the year ended 30 June 2020. As a result of this review the Directors have determined that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change necessary to Group accounting policies Critical Accounting Estimates and Judgements v) Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Impairment of capitalised exploration and evaluation expenditure The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. Factors that could impact the future recoverability include abandonment of area of interest, the level of reserves and resources, future technological changes, costs of drilling and production, production rates, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices. 32 Leases When a contract is entered into, the Group assesses whether the contract contains a lease. A lease arises when the Group has the right to direct the use of an identifiable asset that is not substitutable and to obtain substantially all economic benefits from the use of the asset throughout the period of use. Coronavirus (COVID-19) Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the Group based on known information. Currently there is no significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the Group unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic. NOTE 2: EXPENSES Other expenses Accounting and secretarial fees Audit fees Consultants and advisors Corporate costs Fines & penalties Legal fees Share Based Payments – see Note 21 Insurance Other expenses NOTE 3: INCOME TAX (a) Reconciliation of income tax expense to prima facie tax payable Loss before income tax Prima facie income tax at 27.5% (2019: 27.5%) Non-deductible expenses Movement in unrecognised temporary differences Effect of tax loss not recognised as deferred assets Income tax (expense)/benefit (b) Unrecognised deferred differences and losses tax assets arising on timing Unrecognised deferred tax asset – tax losses Unrecognised deferred tax asset – timing NOTE 4: CASH AT BANK Cash at bank and on hand Information about the Group’s exposure to interest rate risk is provided in Note 13 2020 $ 2019 $ 104,239 34,086 49,955 37,084 694 37,219 - 16,780 1,454 281,511 65,266 48,353 40,000 41,422 154 37,230 464,293 7,339 20,206 724,263 2020 2019 (818,449) (225,073) (2,644,232) (727,164) (191) (5,043) 230,307 - (43) (16,089) 743,296 - 3,827,153 65,670 3,892,823 4,218,820 24,675 4.243,795 2020 2019 167,205 167,205 4,750 4,750 33 NOTE 5: TRADE AND OTHER RECEIVABLES Current GST receivable Other receivables 2020 2019 174,205 13,971 188,176 131,055 1,970 133,025 As at 30 June 2020, trade receivables that were past due to impaired was nil (2019: nil). Information about the Group’s exposure to credit risk is provided in Note 13. NOTE 6: CAPITALISED EXPLORATION EXPENDITURE Capitalised tenement acquisition costs Opening net book amount Closing net book amount 2020 2019 2,060,027 2,060,027 2,060,027 2,060,027 The ultimate recoverability of the Group’s areas of interest is dependent on the successful discovery and commercialisation of the project. The Group follows the guidance of AASB 6 Exploration for and Evaluation of Mineral Resources to determine when capitalised exploration and evaluation expenditure is impaired. Refer to Note 1(u) for further details. NOTE 7: TRADE AND OTHER PAYABLES Trade payables Director and former director related entities creditors Accrued expenses Accrued director fees and remuneration Payroll liabilities – accrued superannuation Other payable 2020 1,882,182 123,013 10,500 255,500 11,400 338 2019 828,430 810,375 32,228 177,500 11,400 - 2,282,933 1,859,933 Details about the Group’s exposure to risks arising from current and non-current liabilities are set out in Note 13. 34 NOTE 8: BORROWINGS On 14 March 2014, the Group entered into a loan agreement with the lenders (entities associated with Mr Michael Fotios) to the amount of $1,000,000 or such other greater sum as the parties may agree in writing. The loan is provided by a syndicate of lender the details of which are provided in Note 19 The purpose of the loan facility is to provide working capital to the Group to fund its immediate operational requirements is at an interest rate of 8% per annum. The loan facility limit does not refresh if debt is converted to equity. This agreement was superseded by the variations and agreement described below. Reconciliation of carrying amount of loans from related parties Opening amount Reclassified as other borrowings Drawdowns during the year Loans assumed on acquisition of subsidiary Interest accrued Interest repaid in shares during the year Repayments in shares during the year Closing drawdown balance 2020 2019 1,090,247 118,489 - - 85,872 - - 1,294,608 354,297 (8,952) 167,164 868,982 80,946 (28,017) (344,173) 1,090,247 Loans from non-related parties 5,246 8,952 From the $1,294,608 drawdown balance, $985,421 are owed to related parties and $309,188 relates to Investmet Limited who are currently in Liquidation. This latter balance has been called upon on behalf of the Liquidators and is not bound by the most recent Loan Variation announced on 29 September 2020. On 27 October 2017, the Company announced it had entered into an agreement with Investmet Limited and Delta Resource Management Pty Ltd to provide funding of up to $1,000,000 to the Company. As per the ASX Announcement dated 27 September 2018, a Letter of Variation was executed to increase the loan facility limit from $1,000,000 to $2,000,000. On 16 October 2018, a revised agreement incorporating all previous variations was signed. As per the ASX Announcement dated 13 March 2020, a Letter of Variation was executed to increase the loan facility limit from $2,000,000 to $2,500,000. As at 30 June 2020 the company had $904,000 available redraw on the loan facility (see June Quarterly Activities and Cashflow announced on ASX 3 August 2020). On 29 September 2020 the Company announced to the ASX a further letter of variation had been executed extending the repayment date to 31 December 2021. There are no covenants in connection to the Loan Facility. Details about the Group’s exposure to risks arising from current and non-current borrowings are set out in Note 13. NOTE 9: CONTRIBUTED EQUITY Issued Capital Fully paid ordinary shares (a) Shares to be issued (b)(i) Shares issued Total Contributed Equity 2020 Number 177,024,525 11,000,000 27,493,334 215,517,859 $ 17,622,564 2,200,000 412,400 20,234,964 35 Issued Capital Fully paid ordinary shares (a) Shares to be issued (b) Total Contributed Equity 2019 Number 177,024,525 11,000,000 188,024,525 $ 17,622,564 2,200,000 19,822,564 (i) The above shares to be issued represents the deferred consideration payable under the Mt Mulcahy Tenement Sale Agreement (a) Movements in fully paid ordinary shares Details Balance 1 July 2018 Issued during the year Balance 30 June 2019 Issued during the year Balance 30 June 2020 (b) Movements in shares to be issued Details Balance 1 July 2018 Issued Placement shares Balance 30 June 2019 Issued Placement shares Balance 30 June 2020 NOTE 10: ACCUMULATED LOSSES Accumulated losses at beginning of year Net loss for the year Transfer on expiry of options Accumulated losses at end of year NOTE 11: SHARE BASED PAYMENT RESERVE Balance at the beginning of the year Transfer on expiry of options Issue of unlisted options Balance at end of year 2020 Number 135,024,525 42,000,000 177,024,525 27,493,334 204,517,859 2020 $ 16,554,564 1,068,000 17,622,564 412,400 18,034,964 Number $ 13,000,000 (2,000,000) 11,000,000 - 2,260,000 (60,000) 2,200,000 - 11,000,000 2,200,000 2020 (21,048,187) (818,449) - 2019 (21,033,576) (2,644,232) 2,629,621 (21,866,636) (21,048,187) 2020 2019 464,293 - - 464,293 2,629,621 (2,629,621) 464,293 464,293 Nature and purpose of reserves The share-based payments reserve is used to recognise the fair value of shares issued to employees, to Directors and for the acquisition of assets. 36 NOTE 12: LOSS PER SHARE Loss attributable to the members of the Company used in calculating basic and diluted loss per share Basic loss per share (cents) Diluted loss per share (cents) Weighted average number of ordinary shares outstanding during the year used in the calculation of basic loss per share) 2020 2019 (818,449) (2,644,232) (0.43) N/A (1.51) N/A 192,092,653 175,337,767 The loss for the year means that the potential ordinary shares on issue are anti-dilutive. NOTE 13: FINANCIAL RISK MANAGEMENT The Group has exposure to the following risks from their use of financial instruments: ▪ ▪ ▪ Credit risk Liquidity risk Market risk This Note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and manages the financial risks relating to the operations of the Group through regular reviews of the risks. 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 and arises principally from the cash and cash equivalents. Trade and other receivables As the Group operates in the mining explorer sector, it does not have trade receivables and therefore is not exposed to credit risk in relation to trade receivables. Presently, the Group undertakes exploration and evaluation activities exclusively in Australia. At the reporting date there were no significant concentrations of credit risk. The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at the reporting date was: Cash and cash equivalents Other receivables Carrying Amount 2020 $ 2019 $ 167,205 188,176 355,381 4,750 133,025 137,775 The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates. Financial assets – counterparties without external credit rating Financial assets with no default in past Cash at bank and short-term bank deposits AA-S&P rating 2020 $ 2019 $ 188,176 167,205 355,381 1,970 4,750 6,720 37 Capital Risk Management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so as to maintain a strong capital base sufficient to maintain future exploration and development of its projects. In order to maintain or adjust the capital structure, the Group may issue new shares or sell assets to reduce debt. The Group’s focus has been to raise sufficient funds through equity and to sell surplus assets to fund exploration and evaluation activities. The Group monitors the level of funding from related parties and the reliance of such funding on the basis of the gearing ratio. There were no changes in the Group’s approach to capital management during the year. Risk management policies and procedures are established with regular monitoring and reporting. Neither the Company nor its subsidiary is subject to externally imposed capital requirements. Gearing levels are reviewed by the Board on a regular basis in line with its target gearing ratio, the cost of capital and the risks associated with each class of capital. 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 reserves by continuously monitoring forecast and actual cash flows. Typically, the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements: 30 June 2020 Carrying amount Contractual cash flows 6 months or less 6-12 months 1-2 years 2-5 years More than 5 years Trade and other payables 2,282,933 2,282,933 2,282,933 - Borrowings 1,299,854 1,299,534 - 1,299,534 3,582,787 3,582,787 2,282,933 1,299,534 - - - 30 June 2019 Carrying amount Contractual cash flows 6 months or less 6-12 months 1-2 years 2-5 years Trade and other payables 1,859,933 1,859,933 1,859.933 - Borrowings 1,099,199 1,099,199 - 1,099,199 2,959,132 2,959,132 1,859,933 1,099,199 - - - - - - - - - - - - More than 5 years - - - Market Risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’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. Sensitivity analysis If the interest rates had weakened/strengthen by 10% (based on forward treasury rates) at 30 June 2020, there would be no material impact on the statement of profit or loss and other comprehensive income. There would be no effect on the equity reserves other that those directly related to statement of profit or loss and other comprehensive income movements. Interest rate risk Exposure arises predominantly from assets and liabilities bearing variable interest rates as the Group intends to hold fixed rate assets and liabilities to maturity. Interest rate risk is not considered to be material. 38 2020 Financial Assets Cash and cash equivalents Trade and other receivables Weighted Average Interest Rate Net Financial Assets Financial Liabilities Trade and other payables and borrowings 2019 Financial Assets Cash and cash equivalents Trade and other receivables Weighted Average Interest Rate Net Financial Assets Financial Liabilities Trade and other payables and borrowings Fixed Interest $ Floating Interest $ Non-Interest Bearing $ Total $ - - - - 167,205 - - - 188,174 - 167,205 188,174 - 167,205 188,174 355,379 1,299,854 1,299,854 - - 2,294,333 2,294,333 3,594,187 3,594,187 Fixed Interest Floating Interest $ $ Non-Interest Bearing $ Total $ - - - - 4,750 - - 4,750 - 1,970 - 1,970 4,750 1,970 - 6,720 1,099,199 1,099,199 - 1,859,933 1,859,933 2,959,132 2,959,132 Fair values The Group does not have any financial instruments that are subject to recurring fair value measurements. Due to their short-term nature, the carrying amounts of the current receivables and current trade and other payables are assumed to approximate their fair value. NOTE 14: SEGMENT INFORMATION Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions. The Group does not have any operating segments with discrete financial information. The Group does not have any customers, and all the Group’s assets and liabilities are located within Australia. The Board of Directors review internal management reports on a monthly basis that is consistent with the information provided in the statement of profit or loss and other comprehensive income, statement of financial position and statement of cash flows. As a result, no reconciliation is required because the information as presented is what is used by the Board to make strategic decisions. NOTE 15: COMMITMENTS Exploration commitments The Group has certain obligations to perform minimum exploration work and to spend minimum amounts on exploration tenements. The obligations may be varied from time to time subject to approval and are expected to be fulfilled in the normal course of the operations of the Group. 39 Due to the nature of the Group’s operations in exploring and evaluating areas of interest, it is difficult to accurately forecast the nature and amount of future expenditure beyond the next year. Expenditure may be reduced by seeking exemption from individual commitments, by relinquishing of tenure or any new joint venture agreements. Expenditure may be increased when new tenements are granted. Commitment contracted for at balance date but not recognised as liabilities are as follows: Within one year 2020 $ 234,000 234,000 2019 $ 50,000 50,000 NOTE 16: EVENTS OCCURRING AFTER THE REPORTING PERIOD COVID-19 The impact of the Coronavirus (COVID-19) pandemic is ongoing and it is not practicable to estimate the potential future impact after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided. On 13 August 2020 the Company announced commencement of drilling at the Pharos Project. In doing so the Company signed a contract with iDrilling Australia to undertake a minimum of 5,000m of RC drilling to be completed during 2020, with an initial programme of 2,500m to commence from next week. On 16 September 2020 2,500,000 fully paid ordinary shares were issued following the exercise of 2,500,000 unlisted options (expiry date 18 October 2020, exercise price $0.05 per share). On 28 September 2020 the Company announced to the ASX the initial results from its exploration program at the Pharos Project. High grade gold was confirmed at the Lantern prospect. On 29 September 2020 the Company announced to the ASX a further letter of variation to the loan facility had been executed extending the repayment date to 31 December 2021. There have been no matters that have arisen since 30 June 2020 that have significantly affected, or may significantly affect, the operations of the Group, the results of the operations or the state of affairs of the Group in future years. NOTE 17: AUDITOR’S REMUNERATION Amount paid or payable to BDO Audit (WA) Pty Ltd for assurance services NOTE 18: DIVIDENDS There were no dividends declared or paid during the current and prior years. NOTE 19: RELATED PARTY TRANSACTIONS (a) Summarised Compensation of Key Management Personnel Short-term employee benefits Post-employment benefits 2020 $ 2019 $ 34,086 34,086 48,353 48,353 2020 $ 2019 $ 108,000 - 108,000 89,500 - 89,500 40 Other Transactions with Key Management Personnel (b) The entities referred to below were related parties while Mr Michael Fotios was a director of the Company and also a director of each of the entities. Mr Fotios ceased to be a director of the Company on 31 October 2018 and of each entity on 30 April 2019. Related party creditors The Group has entered into an administrative services management agreement with Delta Resource Management Pty Ltd (Delta). No Amounts were settled through the issue of shares to Delta Resource Management Pty Ltd for the year (2019: $373,488); As at 30 June 2020, there is a balance of $1,037,524 excl. of GST outstanding (2019: $597,370). Delta Resource Management Pty Ltd Investment Limited (in liquidation) 2020 $ 2019 $ 1,141,276 93,018 657,107 93,018 1,234,294 750,125 The above transactions are based on normal commercial terms and conditions and at arm’s length. Loans from related parties The purpose of the loans with related parties is to provide working capital to the Group to fund its immediate operational requirements. The proceeds from the loans have been used to meet short-term expenditure needs. The following balance is outstanding at the end of the reporting period. Further information relating to loan from Michael Fotios Family Trust is set out in Note 8. Interest-bearing loans Azurite Corporation Delta Resource Management Pty Ltd Michael Fotios Family Trust Investmet Limited (in liquidation) 2020 $ 2019 $ 347,348 163,288 474,784 309,188 324,570 37,856 442,099 285,722 1,294,608 1,090,247 The above loans (other than the portion relating to Investmet Limited, who are currently in Liquidation) are not expected to be repaid until such a time that the Company has received the necessary funds for repayment and such a repayment would not impair the ability for the Company to continue as a going concern. NOTE 20: INVESTMENT IN CONTROLLED ENTITIES Name of Entity Equity Holding Cost of Parent Entity’s Investment Parent Entity Scorpion Minerals Limited Controlled Entity Placer Resources Pty Ltd LESS Impairment Costs Scorpion Metals Limited LESS Impairment Costs 2020 % 2019 % 2020 $ 2019 $ 100 100 100 100 700,000 700,000 (700,000) (700,000) 168,000 (168,000) 168,000 (168,000) - - 41 Scorpion Metals Limited, Scorpion Minerals Limited and Placer Resources Pty Ltd are domiciled in and incorporated in Australia. NOTE 21: SHARE BASED PAYMENTS For the year ending 30 June 2020 there was no share based payments. On 2 October 2018, and as part of acquisition of Scorpion Metals Limited, shareholders approved the issue of 12,000,000 shares at a deemed issue price of $0.03 as consideration for the acquisition of all of the capital of the subsidiary Scorpion Metals Limited. The shares were issued on 18 October 2018 and recorded in the accounts at the share price $0.018 being the fair value of the shares on the date of issue. Shareholders also approved the issue of a total of 45,000,000 options to the directors of Scorpion Metals Limited. The options were issued 18 October 2018 on the following terms: Director Bronwyn Barnes Grant Osborne John Dixon Total 3 cents Expiry 18/10/2019 9,736,845 3,421,051 1,842,104 5 cents Expiry 18/10/202 9,736,845 3,421,051 1,842,104 10 Cents Expiry 18/10/2021 9,736,845 3,421,051 1,842,104 Total 29,210,535 10,263,153 5,526,312 15,000,000 15,000,000 15,000,000 45,000,000 On 2 October 2018, shareholders also approved the issue of 26,666,666 shares at an implied price of $0.03 per share and a total of 22,500,000 options to Investmet Limited and Delta Resource Management Pty Ltd as consideration for the agreement to revised loan terms as detailed in the Notice of Meeting. The options were issued 18 October 2018 on the following terms: Company Investment Limited Delta Resources Management Pty Ltd Total 3 cents Expiry 18/10/2019 3,750,000 3,750,000 7,500,000 5 cents Expiry 18/10/2020 3,750,000 3,750,000 7,500,000 10 Cents Expiry 18/10/2021 3,750,000 3,750,000 7,500,000 Total 11,250,000 11,250,000 22,500,000 The fair value of these options granted was calculated by using the Black-Scholes option valuation methodology and applying the following inputs: Input Data 3 cents Expiry 18/10/2019 5 cents Expiry 18/10/2020 10 Cents Expiry 18/10/2021 Total Share Price Current Exercise Price of Option Periods to Exercise in years Expiry Date Expected share price volatility Risk-free interest rate Value per option Total $0.018 $0.030 1.00 $0.018 $0.050 2.00 $0.018 $0.100 3.00 26/10/2019 26/10/2020 26/10/2021 118% 4% $0.0057 $2,827 118% 4% $0.0071 $3,547 118% 4% $0.0074 $3,719 - - - - - - - $10,093 42 NOTE 22: STATEMENT OF CASH FLOWS Reconciliation of cash and cash equivalents Cash and cash equivalents as shown in the statement of financial position and the statement of cash flows Operating loss after tax Interest Impairment expenses Share based payment expenses Changes in assets and liabilities (Increase)/decrease in trade and other receivables Increase/(decrease) in borrowings Increase/(decrease) in trade and other payables Net cash (used in) operating activities There were no non-cash financing and investing activities (2019: nil) NOTE 23: SCORPION MINERALS LIMITED PARENT COMPANY INFORMATION 2020 ASSETS Current assets Non-current assets TOTAL ASSETS LIABILITIES Current liabilities Borrowings TOTAL LIABILITIES EQUITY Contributed equity Reserves Accumulated losses TOTAL EQUITY FINANCIAL PERFORMANCE (Loss) for the year GUARANTEES ENTERED INTO BY THE PARENT ENTITY 2020 $ 2019 $ 4,750 (2,644,232) 1,622,768 464,293 464,800 (20,187) (82,949) (195,507) 2019 $ 137,013 2,645,446 2,782,459 1,719,321 164,544 1,883,865 (818,449) 52,105 - - (54,811) 82,166 370,555 (368,434) $ 354,593 2,060,027 2,414,620 2,173,145 297,756 2,470,901 20,234,964 464,293 (20,755,537) (56,280) 19,822,564 464,293 (19,388,263) (898,594) (763,636) (984,309) As at 30 June 2020 and 2019, the Company has not provided any financial guarantees in relation to the debts of its subsidiaries. 43 DIRECTORS’ DECLARATION The Directors of the Company declare that: 1. 2. 3. 4. The financial statements, comprising the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity, accompanying consolidated notes, are in accordance with the Corporations Act 2001 and: (a) (b) Comply with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting requirements; and Give a true and fair view of the financial position as at 30 June 2020 and of the performance for the year ended on that date of the Group. In the Directors’ opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable. The Directors have been given the declarations by the Managing Director required by section 295A. The Group has included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards. This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Directors by: Craig Hall Director Perth, Western Australia 30 September 2020 44 Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au 38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia INDEPENDENT AUDITOR'S REPORT To the members of Scorpion Minerals Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Scorpion Minerals Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial performance for the year ended on that date; and (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material uncertainty related to going concern We draw attention to Note 1 in the financial report which describes the events and/or conditions which give rise to the existence of a material uncertainty that may cast significant doubt about the group’s ability to continue as a going concern and therefore the group may be unable to realise its assets and discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this matter. BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent a firms. Liability limited by a scheme approved under Professional Standards Legislation. 45 Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. Carrying Value of Exploration and Evaluation Assets Key audit matter How the matter was addressed in our audit Our procedures included, but were not limited to: · Obtaining from management a schedule of areas of interest held by the Group and assessing whether rights to tenure of those areas of interest remained current at balance date; · · · Holding discussions with management with respect to the status of ongoing exploration programmes in the area of interest and assessed the Group’s cash flow forecast for the level of budgeted spend on the project; Considering whether the area of interest had reached a stage where a reasonable assessment of economically recoverable reserves existed; and Considering whether any facts or circumstances existed to suggest impairment testing was required. · We also assessed the adequacy of the related disclosures in Note 1 (j) & Note 6 to the Financial Statements. At 30 June 2020 the Group held a significant carrying value of Exploration and Expenditure Assets as disclosed in Note 1 (j) & Note 6. As the carrying value of these Exploration and Evaluation Assets represents a significant asset of the Group, we considered it necessary to assess whether any facts or circumstances exist to suggest that the carrying amount of this asset may exceed its recoverable amount. Judgement is applied in determining the treatment of exploration expenditure in accordance with Australian Accounting Standard AASB 6 Exploration for and Evaluation of Mineral Resources. In particular: · · · Whether the conditions for capitalisation are satisfied; Which elements of exploration and evaluation expenditures qualify for recognition; and Whether facts and circumstances indicate that the exploration and expenditure assets should be tested for impairment. As a result, this is considered a key audit matter. 46 Other information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2020, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 18 to 20 of the directors’ report for the year ended 30 June 2020. In our opinion, the Remuneration Report of Scorpion Minerals Limited, for the year ended 30 June 2020, complies with section 300A of the Corporations Act 2001. 47 Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit (WA) Pty Ltd Neil Smith Director Perth, 30 September 2020 48 ADDITIONAL INFORMATION Additional Information for Listed Public Companies Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report is set out below. The information is current as at 28 September 2020. Distribution of quoted security holders Range 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 Over 100,000 TOTAL Holders 33 83 85 270 177 628 Voting rights All ordinary shares carry one vote per share without restriction. Unquoted securities Nil. On-market buy-back There is no current on-market buy-back. Units Percentage 6,858 262,694 701,324 11,579,835 196,467,148 206,517,859 0.00% 0.13% 0.34% 5.54% 93.99% 100% Securities Exchange listing Quotation has been granted for the Company’s Ordinary Shares on ASX Limited (Code: SCN). Substantial shareholders Shareholder Name Investmet Ltd Delta Resource Management Pty Ltd Less Than Marketable Parcel Parcel Total unmarketable parcel 1-5050 shares Units 31,092,735 13,831,033 Percentage 14.9% 6.7% Holders 117 Units Percentage 274,553 0.13% Twenty largest shareholders – Ordinary Shares Shareholder Name INVESTMET LTD C/- McGRATH NICOL INVESTMET LTD DELTA RESOURCE MANAGEMENT PTY LTD 1 2 3 4 WYLLIE GROUP PTY LTD BARNES STUART C & B < S & B BARNES FAMILY A/C> 5 PERTH SELECT SEAFOODS PTY LTD 6 7 FOTIOS MICHAEL GEORGE 8 MR ANTHONY HAROLD FOTIOS 9 MR JOHN JANSEN + MRS DALE JANSEN 10 BLACK RAVEN MINING PTY LTD 11 SHARIC SUPERANNUATION PTY LTD 12 PEAK BODY PTY LTD 13 ORANGE CORPORATION PTY LTD 14 MS BETTY JEANETTE MOORE & MR PHILIP COLIN HAMMOND Units Percentage 17,009,402 14,083,333 13,831,033 6,596,465 5,561,405 5,000,000 4,341,893 4,281,937 4,189,229 4,000,000 3,500,000 3,451,725 3,333,334 3,300,000 8.14% 6.74% 6.62% 3.16% 2.66% 2.39% 2.08% 2.05% 2.00% 1.91% 1.67% 1.65% 1.61% 1.58% 49 15 16 17 MR PHILIP COLIN HAMMOND & MS BETGTY JEANETTE MOORE MS BETTY JEANETTE MOORE & MR PHILIP COLIN HAMMOND MR PHILIP COLIN HAMMOND & MRS BETTY JEANETTE MOORE 18 LACLOS PTY LTD 19 SPENCER ANDREW WILLIAM 20 MR ERIC PETER MURPHY + MRS KIM LEA MURPHY TOTAL 3,300,000 3,200,000 3,074,962 3,000,000 2,925,570 2,600,000 1.58% 1.53% 1.47% 1.43% 1.40% 1.24% 110,580,288 52.90% Corporate Governance Statement The Company’s Corporate Governance Statement for the 2020 financial year can be accessed on the Company’s website. 50 TENEMENT TENEMENT No. E20/931 P51/3016 P51/3017 E20/962 E20/948 E20/953 P20/2252 P20/2253 LOCATION STATUS WA WA WA WA WA WA WA WA Granted Granted Granted Application Granted Granted Granted Granted INTEREST % 100 100 100 100 0%1 0%1 0%2 0%2 HOLDER Scorpion Minerals Ltd Scorpion Minerals Ltd Scorpion Minerals Ltd Scorpion Minerals Ltd Element 25 Element 25 T.H. Little T.H. Little 1As per the ‘Pharos Project (Yallon and Sunday Well) Call Option Agreement Summary’ SCN has commenced a 9 month option period for E20/948, with payment of $75,000 to earn 100% due to Element 25 before 21st October 2020; and a 9 month option period for recently granted E20/953, with payment of $75,000 to earn 100% due to Element 25 before 22nd July 2021. 2Company is in receipt of transfer papers from T.H. Little. 51 Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations Appendix 4G Rules 4.7.3 and 4.10.31 Key to Disclosures Corporate Governance Council Principles and Recommendations Introduced 01/07/14 Amended 02/11/15 Name of entity Scorpion Minerals Limited Financial year ended: 30 June 2020 These pages of our annual report: This URL on our website: ABN / ARBN 40 115 535 030 Our corporate governance statement2 for the above period above can be found at:3 ☐ ☒ The Corporate Governance Statement is accurate and up to date as at [insert effective date of statement] and has been approved by the board. The annexure includes a key to where our corporate governance disclosures can be located. Date: Name of Director or Secretary authorising lodgement: 30 September 2020 Carol New 1 Under Listing Rule 4.7.3, an entity must lodge with ASX a completed Appendix 4G at the same time as it lodges its annual report with ASX. Listing Rule 4.10.3 requires an entity that is included in the official list as an ASX Listing to include in its annual report either a corporate governance statement that meets the requirements of that rule or the URL of the page on its website where such a statement is located. The corporate governance statement must disclose the extent to which the entity has followed the recommendations set by the ASX Corporate Governance Council during the reporting period. If the entity has not followed a recommendation for any part of the reporting period, its corporate governance statement must separately identify that recommendation and the period during which it was not followed and state its reasons for not following the recommendation and what (if any) alternative governance practices it adopted in lieu of the recommendation during that period. Under Listing Rule 4.7.4, if an entity chooses to include its corporate governance statement on its website rather than in its annual report, it must lodge a copy of the corporate governance statement with ASX at the same time as it lodges its annual report with ASX. The corporate governance statement must be current as at the effective date specified in that statement for the purposes of rule 4.10.3. 2 “Corporate governance statement” is defined in Listing Rule 19.12 to mean the statement referred to in Listing Rule 4.10.3 which discloses the extent to which an entity has followed the recommendations set by the ASX Corporate Governance Council during a particular reporting period. 3 Mark whichever option is correct and then complete the page number(s) of the annual report, or the URL of the web page, where the entity’s corporate governance statement can be found. You can, if you wish, delete the option which is not applicable. Throughout this form, where you are given two or more options to select, you can, if you wish, delete any option which is not applicable and just retain the option that is applicable. If you select an option that includes “OR” at the end of the selection and you delete the other options, you can also, if you wish, delete the “OR” at the end of the selection. 2 November 2015 + See chapter 19 for defined terms Page 52 Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations ANNEXURE – KEY TO CORPORATE GOVERNANCE DISCLOSURES Corporate Governance Council recommendation We have followed the recommendation in full for the whole of the period above. We have disclosed … We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4 PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT 1.1 A listed entity should disclose: (a) (b) the respective roles and responsibilities of its board and management; and those matters expressly reserved to the board and those delegated to management. … the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location] … and information about the respective roles and responsibilities of our board and management (including those matters expressly reserved to the board and those delegated to management): ☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable 1.2 A listed entity should: (a) (b) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. ☐ at [insert location] … the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location] 1.3 A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. … the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location] 1.4 The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board. … the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location] ☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable ☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable ☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable 4 If you have followed all of the Council’s recommendations in full for the whole of the period above, you can, if you wish, delete this column from the form and re-format it. + See chapter 19 for defined terms 2 November 2015 Page 2 Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations Corporate Governance Council recommendation We have followed the recommendation in full for the whole of the period above. We have disclosed … We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4 1.5 A listed entity should: (a) (b) (c) have a diversity policy which includes requirements for the board or a relevant committee of to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them; the board disclose that policy or a summary of it; and disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them and either: (1) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or (2) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act. … the fact that we have a diversity policy that complies with paragraph (a): ☒ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable ☒ in our Corporate Governance Statement OR ☐ at [insert location] … and a copy of our diversity policy or a summary of it: ☒ at www.scorpionminerals.com.au … and the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with our diversity policy and our progress towards achieving them: ☐ in our Corporate Governance Statement OR ☐ at [insert location] … and the information referred to in paragraphs (c)(1) or (2): ☒ in our Corporate Governance Statement OR ☐ at [insert location] 2 November 015 Page 3 + See chapter 19 for defined terms Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations Corporate Governance Council recommendation We have followed the recommendation in full for the whole of the period above. We have disclosed … We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4 1.6 A listed entity should: … the evaluation process referred to in paragraph (a): ☒ an explanation why that is so in our Corporate Governance (a) (b) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and ☐ at [insert location] ☒ in our Corporate Governance Statement OR Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. … and the information referred to in paragraph (b): ☐ in our Corporate Governance Statement OR ☐ at [insert location] 1.7 A listed entity should: … the evaluation process referred to in paragraph (a): ☒ an explanation why that is so in our Corporate Governance (a) (b) have and disclose a process for periodically evaluating the performance of its senior executives; and disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE ☒ in our Corporate Governance Statement OR Statement OR ☐ at [insert location] … and the information referred to in paragraph (b): ☐ in our Corporate Governance Statement OR ☐ at [insert location] ☐ we are an externally managed entity and this recommendation is therefore not applicable 2 November 2015 Page 4 + See chapter 19 for defined terms Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations Corporate Governance Council recommendation 2.1 The board of a listed entity should: (a) have a nomination committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. 2.2 A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership. We have followed the recommendation in full for the whole of the period above. We have disclosed … We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4 [If the entity complies with paragraph (a):] ☐ an explanation why that is so in our Corporate Governance … the fact that we have a nomination committee that complies with paragraphs (1) and (2): Statement OR ☐ we are an externally managed entity and this recommendation ☐ in our Corporate Governance Statement OR is therefore not applicable ☐ at [insert location] … and a copy of the charter of the committee: ☐ at [insert location] … and the information referred to in paragraphs (4) and (5): ☐ in our Corporate Governance Statement OR ☐ at [insert location] [If the entity complies with paragraph (b):] … the fact that we do not have a nomination committee and the processes we employ to address board succession issues and to ensure the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively: the board has that ☒ in our Corporate Governance Statement OR ☐ at [insert location] … our board skills matrix: ☐ an explanation why that is so in our Corporate Governance ☒ in our Corporate Governance Statement OR Statement OR ☐ at [insert location] ☐ we are an externally managed entity and this recommendation is therefore not applicable 2 November 2015 Page 5 + See chapter 19 for defined terms Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations Corporate Governance Council recommendation 2.3 A listed entity should disclose: (a) (b) the names of the directors considered by the board to be independent directors; if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and (c) the length of service of each director. We have followed the recommendation in full for the whole of the period above. We have disclosed … We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4 … the names of the directors considered by the board to be independent directors: ☐ an explanation why that is so in our Corporate Governance Statement ☒ in our Corporate Governance Statement OR ☐ at [insert location] … and, where applicable, the information referred to in paragraph (b): ☒ in our Corporate Governance Statement OR ☐ at [insert location] … and the length of service of each director: ☒ in our Corporate Governance Statement OR ☐ at [insert location] 2.4 A majority of the board of a listed entity should be independent directors. … the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location] 2.5 2.6 The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity. … the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location] A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively. … the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location] ☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable ☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable ☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable 2 November 2015 Page 6 + See chapter 19 for defined terms Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations Corporate Governance Council recommendation We have followed the recommendation in full for the whole of the period above. We have disclosed … We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4 PRINCIPLE 3 – ACT ETHICALLY AND RESPONSIBLY 3.1 A listed entity should: … our code of conduct or a summary of it: ☐ an explanation why that is so in our Corporate Governance (a) have a code of conduct for its directors, senior executives and employees; and ☐ in our Corporate Governance Statement OR (b) disclose that code or a summary of it. ☒ at www.scorpionminerals.com.au Statement PRINCIPLE 4 – SAFEGUARD INTEGRITY IN CORPORATE REPORTING 4.1 The board of a listed entity should: (a) have an audit committee which: (1) has at least three members, all of whom are non- executive directors and a majority of whom are independent directors; and (2) is chaired by an independent director, who is not the chair of the board, and disclose: (3) the charter of the committee; (4) the relevant qualifications and experience of the members of the committee; and (5) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. [If the entity complies with paragraph (a):] ☐ an explanation why that is so in our Corporate Governance … the fact that we have an audit committee that complies with paragraphs (1) and (2): Statement ☐ in our Corporate Governance Statement OR ☐ at [insert location] … and a copy of the charter of the committee: ☐ at [insert location] … and the information referred to in paragraphs (4) and (5): ☐ in our Corporate Governance Statement OR ☐ at [insert location] [If the entity complies with paragraph (b):] … the fact that we do not have an audit committee and the processes we employ that independently verify and safeguard the integrity of our corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner: ☒ in our Corporate Governance Statement OR ☐ at [insert location] 2 November 2015 Page 7 + See chapter 19 for defined terms Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations Corporate Governance Council recommendation We have followed the recommendation in full for the whole of the period above. We have disclosed … We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4 4.2 The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the 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 fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location] 4.3 A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit. … the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location] ☐ an explanation why that is so in our Corporate Governance Statement ☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity that does not hold an annual general meeting and this recommendation is therefore not applicable PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE 5.1 A listed entity should: … our continuous disclosure compliance policy or a summary of it: (a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and ☐ in our Corporate Governance Statement OR ☐ Statement an explanation why that is so in our Corporate Governance (b) disclose that policy or a summary of it. PRINCIPLE 6 – RESPECT THE RIGHTS OF SECURITY HOLDERS ☒ at www.scorpionminerals.com.au 6.1 6.2 6.3 A listed entity should provide information about itself and its governance to investors via its website. … information about us and our governance on our website: ☐ an explanation why that is so in our Corporate Governance ☒ at www.scorpionminerals.com.au Statement A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors. … the fact that we follow this recommendation: ☐ in our Corporate Governance Statement OR ☐ an explanation why that is so in our Corporate Governance Statement A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders. ☒ at www.scorpionminerals.com.au … our policies and processes for facilitating and encouraging participation at meetings of security holders: ☐ an explanation why that is so in our Corporate Governance Statement OR ☒ in our Corporate Governance Statement OR ☐ at [insert location] + See chapter 19 for defined terms ☐ we are an externally managed entity that does not hold periodic meetings of security holders and this recommendation is therefore not applicable 2 November 2015 Page 8 Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations Corporate Governance Council recommendation We have followed the recommendation in full for the whole of the period above. We have disclosed … We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4 6.4 A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically. … the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ an explanation why that is so in our Corporate Governance Statement PRINCIPLE 7 – RECOGNISE AND MANAGE RISK ☐ at [insert location] 7.1 The board of a listed entity should: [If the entity complies with paragraph (a):] ☐ an explanation why that is so in our Corporate Governance (a) have a committee or committees to oversee risk, each of which: … the fact that we have a committee or committees to oversee risk that comply with paragraphs (1) and (2): Statement (1) has at least three members, a majority of whom are independent directors; and ☐ in our Corporate Governance Statement OR (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework. ☐ at [insert location] … and a copy of the charter of the committee: ☐ at [insert location] … and the information referred to in paragraphs (4) and (5): ☐ in our Corporate Governance Statement OR ☐ at [insert location] [If the entity complies with paragraph (b):] … the fact that we do not have a risk committee or committees that satisfy (a) and the processes we employ for overseeing our risk management framework: ☒ in our Corporate Governance Statement OR ☐ at [insert location] 2 November 2015 Page 9 + See chapter 19 for defined terms Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations Corporate Governance Council recommendation We have followed the recommendation in full for the whole of the period above. We have disclosed … We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4 7.2 The board or a committee of the board should: (a) (b) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and disclose, in relation to each reporting period, whether such a review has taken place. … the fact that board or a committee of the board reviews the entity’s risk management framework at least annually to satisfy itself that it continues to be sound: ☒ an explanation why that is so in our Corporate Governance Statement ☐ in our Corporate Governance Statement OR ☐ at [insert location] … and that such a review has taken place in the reporting period covered by this Appendix 4G: ☐ in our Corporate Governance Statement OR ☐ at [insert location] 7.3 A listed entity should disclose: [If the entity complies with paragraph (a):] ☐ an explanation why that is so in our Corporate Governance (a) (b) if it has an internal audit function, how the function is structured and what role it performs; or … how our internal audit function is structured and what role it performs: Statement if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes. ☐ in our Corporate Governance Statement OR ☐ at [insert location] [If the entity complies with paragraph (b):] 7.4 A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks. … the fact that we do not have an internal audit function and the processes we employ for evaluating and continually improving the effectiveness of our risk management and internal control processes: ☒ in our Corporate Governance Statement OR ☐ at [insert location] … whether we have any material exposure to economic, environmental and social sustainability risks and, if we do, how we manage or intend to manage those risks: ☐ an explanation why that is so in our Corporate Governance Statement ☒ in our Corporate Governance Statement OR ☐ at [insert location] + See chapter 19 for defined terms 2 November 2015 Page 10 Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations Corporate Governance Council recommendation We have followed the recommendation in full for the whole of the period above. We have disclosed … We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4 PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY 8.1 The board of a listed entity should: [If the entity complies with paragraph (a):] ☐ an explanation why that is so in our Corporate Governance (a) have a remuneration committee which: (1) has at least three members, a majority of whom are independent directors; and … the fact that we have a remuneration committee that complies with paragraphs (1) and (2): Statement OR ☐ we are an externally managed entity and this recommendation is ☐ in our Corporate Governance Statement OR therefore not applicable (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring is appropriate and not excessive. that such remuneration 8.2 A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives. ☐ at [insert location] … and a copy of the charter of the committee: ☐ at [insert location] … and the information referred to in paragraphs (4) and (5): ☐ in our Corporate Governance Statement OR ☐ at [insert location] [If the entity complies with paragraph (b):] … the fact that we do not have a remuneration committee and the processes we employ for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive: ☒ in our Corporate Governance Statement OR ☐ at [insert location] … separately our remuneration policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives: ☒ in our Corporate Governance Statement OR ☐ at [insert location] ☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable 2 November 2015 Page 11 + See chapter 19 for defined terms Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations Corporate Governance Council recommendation We have followed the recommendation in full for the whole of the period above. We have disclosed … We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4 8.3 A listed entity which has an equity-based remuneration scheme should: (a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and (b) disclose that policy or a summary of it. … our policy on this issue or a summary of it: ☐ in our Corporate Governance Statement OR ☐ at [insert location] ADDITIONAL DISCLOSURES APPLICABLE TO EXTERNALLY MANAGED LISTED ENTITIES ☐ an explanation why that is so in our Corporate Governance Statement OR ☒ we do not have an equity-based remuneration scheme and this recommendation is therefore not applicable OR ☐ we are an externally managed entity and this recommendation is therefore not applicable - - Alternative to Recommendation 1.1 for externally managed listed entities: The responsible entity of an externally managed listed entity should disclose: (a) (b) the arrangements between the responsible entity and the listed entity for managing the affairs of the listed entity; the role and responsibility of the board of the responsible entity for overseeing those arrangements. Alternative to Recommendations 8.1, 8.2 and 8.3 for externally managed listed entities: An externally managed listed entity should clearly disclose the terms governing the remuneration of the manager. … the information referred to in paragraphs (a) and (b): ☐ an explanation why that is so in our Corporate Governance ☐ in our Corporate Governance Statement OR Statement ☐ at [insert location] … the terms governing our remuneration as manager of the entity: ☐ an explanation why that is so in our Corporate Governance ☐ in our Corporate Governance Statement OR Statement ☐ at [insert location] 2 November 2015 Page 12 + See chapter 19 for defined terms 

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