SI6 Metals Limited
Annual Report 2021

Plain-text annual report

(FORMERLY KNOWN AS SIX SIGMA METALS LIMITED) ACN 122 995 073 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 CHAIRMAN’S LETTER CORPORATE DIRECTORY DIRECTORS’ REPORT AUDITOR’S INDEPENDENCE DECLARATION CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DIRECTORS’ DECLARATION INDEPENDENT AUDITOR’S REPORT CORPORATE GOVERNANCE STATEMENT ASX ADDITIONAL INFORMATION SCHEDULE OF INTERESTS IN MINING TENEMENTS CONTENTS 1 2 3 14 15 16 17 18 19 40 42 46 46 50 CHAIRMAN’S LETTER CHAIRMAN’S LETTER Dear Fellow Shareholders, Welcome to the 2021 Annual Report for Si6 Metals Limited (ASX: Si6). We have spent the last year diversifying our business by pursuing an Australian asset, the Monument Gold Project (Monument Gold), which now sits alongside our assets in Botswana, the Maibele Base Metals Project (Maibele). Both projects contain Mineral Resources and are surrounded by areas of significant resource endowment. They boast excellent access, nearby infrastructure (e.g. sealed roads, power, water and telecommunications), adjacent mines and corporate appeal. We have been actively working on advancing prospects at each of these projects. Since entering into a Heads of Agreement to acquire 100% of Monument Gold in August 2020, we have undertaken a drill program on the Korong and Waihi prospects along the banded iron formations. The results from this drilling, combined with historical data, has resulted in the definition of a new Mineral Resource Estimate of circa 154koz of gold. In other regional areas prospective for syenite intrusives and where historical exploration is limited, maiden drilling will target high level intrusives prospective for bulk tonnage gold mineralisation analogous to the Wallaby (~7Moz Au) and Jupiter (~1.5Moz Au) gold deposits that occur within a similar setting elsewhere in the Laverton Tectonic Zone. Contemporaneously, we continued work on Maibele in Botswana undertaking multi-faceted exploration campaigns employing a variety of ground geophysical techniques. Programs were designed to target deeper mineralisation for follow-up drill testing. The results achieved from work carried out over the Airstrip, Dibete and Maibele prospects demonstrate that multiple significant anomalies are present. Mid-year, Si6 completed diamond hole MADD00153 to a depth of approximately 550 metres. The hole was designed to test for the continuation of nickel sulphide mineralisation previously intersected in historic hole MARD0094. The hole was drilled approximately 50 metres to the northeast and designed to test the mineralised horizon at about the same vertical depth. MARD0094 and MADD0153 nickel sulphide intersections are located some 200 vertical metres below the bottom of the current resource and demonstrate the significant potential for further discovery at depth. Mineralisation remains open to the east, west and at depth. COVID-19 has caused delays in conducting work programs and securing technical contractors, particularly in Botswana and various restrictions and lockdown measures have presented challenges. However, we are pleased to have made excellent progress on our programs despite these challenges. In July/August 2020, Si6 completed a placement and share purchase plan for $2.4 million to fund continued exploration in Botswana, assess new gold and base metal opportunities and for working capital purposes. In December 2020, Si6 completed a placement for $2 million to fund further drilling in Botswana, drilling in Western Australia and for working capital purposes. Your Board will continue to seek to add shareholder value through active exploration, project acquisitions or strategic alliances. We look forward to an exciting year ahead as we progress both of our projects and I look forward to keeping you updated on our progress. Kind Regards Patrick Holywell Executive Chairman 1 CORPORATE DIRECTORY CORPORATE DIRECTORY Directors: Mr Patrick Holywell Mr Steven Russell Groves Mr Joshua Alan Letcher Company Secretary: Mr Mauro Piccini Registered Office: Suite 2, Level 1 1 Altona Street West Perth WA 6005 Share Registry: Automic Group Level 2/267 St Georges Terrace Perth WA 6000 Telephone 1300 288 664 Banker: Westpac Banking Corporation Level 13, 109 St Georges Terrace Perth WA 6000 Auditor: BDO Audit (WA) Pty Ltd 38 Station Street Subiaco WA 6008 Securities Exchange: Listed on the Australian Securities Exchange, ASX Code: SI6 2 DIRECTORS’ REPORT The Directors present their report on the consolidated entity consisting of Si6 Metals Limited (formerly known as Six Sigma Metals Limited) and its controlled entity (“the Group”) for the year ended 30 June 2021. Directors held office for this entire period unless otherwise stated. DIRECTORS The following persons were Directors of the Company during the whole of the financial year and up to the date of this Report unless otherwise stated: Mr Patrick Holywell (appointed 25 November 2019) Mr Steven Groves (appointed 22 February 2017) Mr Joshua Letcher (appointed 21 August 2017) COMPANY SECRETARY Mr Mauro Piccini Mr Piccini is a Chartered Accountant (CA) and a member of the Governance Institute of Australia (GIA). He specialises in corporate advisory, company secretarial and financial management services. Mauro spent 7 years at the ASX and possesses core competencies in publicly listed and unlisted company secretarial, administration and governance disciplines. PRINCIPAL ACTIVITIES The Group’s principal activities during the year are unchanged from prior years being exploration for various commodities in various jurisdictions. To date, that focus has been in the Limpopo belt on the eastern side of Botswana focused on base metals and precious metals targets and in particular nickel, copper and PGEs. Earlier in the year, the Group entered into an option agreement to acquire the Monument Gold Project in Western Australia. The Project lies in the world class Laverton Tectonic Zone, which to date has produced more than 30 million ounces of gold and yielded some of Australia’s best-known gold mines. The Group has also assessed a number of other potential acquisition opportunities. Additionally, the Group continues to monitor the BCL Limited liquidation process concerning the Group’s affected Botswanan tenements. OPERATING RESULTS The consolidated loss for the year attributable to the members of the Company was: Operating loss after income tax Net consolidated loss attributable to members of the Company DIVIDENDS 2021 $ 2020 $ (2,887,552) (686,375) (2,887,552) (686,375) As the Group’s principal activities are minerals exploration it has not as yet paid any dividends and does not see any short– term return to shareholders via dividend payments. 3 DIRECTORS’ REPORT REVIEW OF OPERATIONS Driven largely by the Covid-19 pandemic, the focus during the last year was on diversifying our business by firstly identifying a project of merit (Monument Gold Project, Western Australia) and then developing it alongside our assets in Botswana (Maibele Base Metals Project). Covid-19 has caused delays in conducting work programs and securing technical contractors, particularly in Botswana and South Africa and various restrictions and lockdown measures have presented challenges. Our country manager did succumb to the illness and the Board is grateful that he received adequate support and fought through it all. In Botswana, the focus during the year has been on three prospects (Maibele North, Airstrip and Dibete). A deep down- plunging anomaly to the east of the main resource at Maibele was drilled. A number of surveys have also been undertaken in an attempt to accurately detect potential sulphide mineralisation including gradient array induced polarisation, pole-dipole induced polarisation and audio-frequency magnetotellurics surveys. Early stage field exploration work was also undertaken at Majante. In Western Australia, a number of field programs were undertaken particularly as part of due diligence investigations. The focus was on the Korong and Waihi prospects with drilling undertaken to target strike extensions to existing mineralisation, high-grade shoot extensions at depth and the prospective basal banded iron formation unit. Work was also conducted to validate the historic drill data in preparation for future resource calculations. In April 2014, the Group entered into a farm-in and joint venture agreement with BCL Limited and its subsidiary BCL Investments (Pty) Ltd (jointly referred to as “BCL”). Under the terms of the agreement, BCL was required to spend A$4 million on exploration expenditure to earn a 40% equity interest in three tenements (~185km2). BCL had the option to continue funding the project to a Bankable Feasibility Study in order to earn an additional 30%. By July 2016, BCL had earned the initial 40% equity, subject to the completion of formalities. In October 2016, BCL was placed into liquidation and all work on the JV assets ceased. The Ministry of Minerals Resources, Green Technology and Energy Security has subsequently suspended (put on hold) the renewal date of the three Prospecting Licences but this decision does not affect the Group’s right to continue exploring these licences. The liquidation process is ongoing to date and the Group is closely monitoring progress. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS The Group continues to consider the acquisition and development of any other investments, both within the mining industry and in market segments unrelated to the mining. The impact of Covid-19 on the company going forward, including its financial condition cannot be reasonably estimated at this stage and will be monitored by the Directors on an ongoing basis. CORPORATE ACTIVITY FINANCIAL POSITION The financial results of the Company for the year ended 30 June 2021 are: Cash and cash equivalents Net Assets Other income Net loss after tax 2021 $ 4,559,417 4,460,115 11,119 (2,887,552) 2020 $ 799,695 729,714 23,912 (686,375) 4 DIRECTORS’ REPORT SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS Significant changes in the state of affairs of the Group during the financial year were as follows: During the year, Si6 Metals Limited entered into a binding and exclusive heads of agreement (Heads of Agreement) with DiscovEx Resources Limited (ASX: DCX) whereby DCX has granted Si6 with an option (Option) to acquire a 100% interest in the Monument Gold Project (MGP or the Project) in Western Australia via acquisition of Monument Exploration Pty Ltd. The acquisition was completed in August 2021. SHARE PLACEMENTS AND OPTIONS EXERCISED On 14 July 2020 the Company raised $960,000 before costs through the issue of 160,000,000 fully paid ordinary shares at $0.006 per share. On 18 August 2020, the Company raised $1,440,000 before costs through the issue of 240,000,000 fully paid ordinary shares at $0.006 per share. On 16 December 2020, the Company raised $2,000,000 before costs through the issue of 117,647,060 fully paid ordinary shares at $0.017 per share. A further $2,192,110 was raised by Company through the exercise of options at various times throughout the year. AFTER BALANCE DATE EVENTS On 1 July 2021, 100,687,654 quoted options exercisable at $0.015 expired. On 26 July 2021, the Company announced it had exercised its option to acquire a 100% interest in the Monument Gold Project and entered into a binding option agreement with DiscovEx Resources Limited (ASX:DCX). On 23 August 2021, the Company announced it had completed its acquisition of Monument Gold Project. A total of 34,883,721 fully paid ordinary shares were issued to DiscovEx Resources Limited (ASX:DCX) and $100,000 paid in cash as consideration under the option agreement regarding the Monument Gold Project. On 6 August 2021, the Company announced that it had received a Purported 249D Notice. On 1 September 2021, the Company announced an Extraordinary General Meeting would be held on 12 October 2021 following receipt of the Purported 249D Notice. The full impact of the COVID-19 outbreak continues to evolve at the date of this report. The Company is therefore uncertain as to the full impact that the pandemic will have on its financial condition, liquidity, and future results of operations during 2022. Management is actively monitoring the global situation and its impact on the Company’s financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for the 2022 financial year. Although the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have a material adverse effect on the Company’s results of future operations, financial position, and liquidity in fiscal year 2022 Other than the matters discussed above, there has not arisen in the interval between the end of the financial year and the date of this report, any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company to affect the operations of the Group, the results of these operations or the state of affairs of the Group in subsequent years. 5 FUTURE DEVELOPMENTS The Group continues to consider the acquisition and development of any other investments, both within the mining industry and in market segments unrelated to the mining. The impact of Covid-19 on the company going forward, including its financial condition cannot be reasonably estimated at this stage and will be monitored by the Directors on an ongoing basis. DIRECTORS’ REPORT INFORMATION ON DIRECTORS PATRICK HOLYWELL – EXECUTIVE CHAIRMAN Mr Holywell has over fifteen years of experience in accounting, finance and corporate governance, including employment at Deloitte and Patersons. He is a Chartered Accountant and a Fellow of the Governance Institute of Australia with the last ten years focused on Director/CFO/Company Secretarial roles. Mr Holywell worked at Deloitte, in the assurance and advisory division and was a founding member and investment analyst for Patersons Asset Management. He has held roles with various companies particularly in the resources and technology space and is currently also involved with De Grey Mining Ltd and Pentanet Ltd. Mr Holywell has completed a Bachelor of Commerce at UWA, a Graduate Diploma of Chartered Accounting with the Institute of Chartered Accountants and the Company Directors Course with the Australian Institute of Company Directors. During the past three years, Mr Holywell held the following directorship in other ASX listed companies: • Transcendence Technologies Ltd (current) STEVEN GROVES – NON-EXECUTIVE DIRECTOR Mr Groves has a Bachelor of Applied Geology (Honours) and completed a Master’s of Economic Geology from CODES-SRC at the University of Tasmania. Mr Groves brings 25 years of geological experience in the mining industry including exploration and management roles with BHP Billiton (ASX: BHP), Newmont Mining, Newcrest Mining (ASX: NCM), A-Cap Resources (ASX: ACB) and Botswana Metals. During the past three years, Mr Groves held the following directorship in another ASX listed companies: • Managing Director of Sultan Resources Ltd (current) MR JOSHUA LETCHER – NON-EXECUTIVE DIRECTOR Mr Letcher has experience working in various operational and technical roles within the African and Australian mining industry. He was the founder of Allotropes Diamonds Pty Ltd and was responsible for its acquisition by Newfield Resources Ltd (ASX: NWF) which provided the company with A$4M in working capital. As CEO of Allotropes, Mr Letcher was responsible for the development of the project from exploration to trial mining. The roles in that capacity included project management, plant construction and commissioning, exploration management and asset acquisition. Mr Letcher served in the Royal Australian Navy and trained as a Mechanical Engineer. During the past three years, Mr Letcher held the following directorships in other ASX listed companies: • Non-executive Director of Aldoro Resources Limited (current). 6 INTERESTS IN SHARES AND OPTIONS OF THE GROUP AND RELATED BODIES CORPORATE The following table sets out each current Director’s relevant interest in shares, options and performance rights of the Group or a related body corporate as at the date of this report. DIRECTORS’ REPORT Director Patrick Holywell Steven Groves Joshua Letcher Total DIRECTORS' MEETINGS Ordinary Shares 14,200,000 1,013,492 958,334 16,171,826 Listed Share Options Unlisted Share Options 1,000,000 - - 1,000,000 - 5,625,000 2,375,000 8,000,000 The number of meetings of the Group’s Board of Directors held during the year ended 30 June 2021, and the numbers of meetings attended by each director were: Name Patrick Holywell Steven Groves Joshua Letcher Board of Directors Number eligible to attend Number attended 3 3 3 3 3 3 In addition to the scheduled Board meetings, Directors regularly communicate by telephone, email or other electronic means, and where necessary, circular resolutions are executed to effect decisions. Due to the size and scale of the Group, there is no Remuneration & Nomination Committee or Audit & Risk Committee at present. Matters typically dealt with by these Committees are, for the time being, managed by the Board. For details of the function of the Board, refer to the Corporate Governance Statement. REMUNERATION REPORT (AUDITED) REMUNERATION POLICY Key Management Personnel (“KMP”) have authority and responsibility for planning, directing and controlling the activities of the Group. KMP of the Group comprise of the Board of Directors. The Group’s broad remuneration policy is to ensure the remuneration package properly reflects the person’s duties and responsibilities and that remuneration is competitive in attracting, retaining and motivating people of the highest quality. No remuneration consultants were employed during the financial year. Voting and comments made at the Company's Annual General Meeting At the 2020 Annual General Meeting, the resolution to adopt the Remuneration Report for the year ended 30 June 2020 was passed without amendment by 96.91% of the vote on the resolution to adopt the Remuneration Report. The Company did not receive any specific feedback at the Annual General Meeting regarding its remuneration practices. 7 DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) CONTINUED Remuneration Governance, Structure and Approvals Remuneration of Directors is currently set by the Board of Directors. The Board has not established a separate Remuneration Committee at this point in the Group’s development, nor has the Board engaged the services of an external remuneration consultant. It is considered that the size of the Board along with the level of activity of the Group renders this impractical. The Board is primarily responsible for: The over-arching executive remuneration framework; • • Operation of the incentive plans which apply to executive directors and senior executives, including key performance indicators and performance hurdles; • Remuneration levels of executives; and • Non-Executive Director fees. Their objective is to ensure that remuneration policies and structures are fair and competitive and aligned with the long-term interests of the Company. Non-Executive Remuneration Structure The remuneration of Non-Executive Directors consists of Directors’ fees, payable in arrears. The total aggregate fixed sum per annum to be paid to Non-Executive Directors in accordance with the Company’s Constitution shall be no more than A$250,000 and may be varied by ordinary resolution of the Shareholders in a General Meeting. Remuneration of Non-Executive Directors is based on fees approved by the Board of Directors and is set at levels to reflect market conditions and encourage the continued services of the Directors. The chair’s fees are determined independently to the fees of the Non-Executive Director’s based on comparative roles in the external market. In accordance with the Company’s Constitution, the Directors may at any time, subject to the Listing Rules, adopt any scheme or plan which they consider to be in the interests of the Company and which is designed to provide superannuation benefits for both present and future Non- Executive Directors, and they may from time to time vary this scheme or plan. The remuneration of Non-Executive Directors is detailed in KMP Remuneration table and their contractual arrangements are disclosed below. Remuneration may also include an invitation to participate in share-based incentive programmes in accordance with Company policy. The nature and amount of remuneration is collectively considered by the Board of Directors with reference to relevant employment conditions and fees commensurate to a company of similar size and level of activity, with the overall objective of ensuring maximum stakeholder benefit from the retention of high performing Directors. Remuneration and Performance The following table shows the gross revenue, losses, earnings per share (“EPS”) of the Company as at 30 June 2021. 30-Jun-21 30-Jun-20 Other income ($) Net profit/(loss) after tax ($) EPS (cents) 11,119 (2,887,552) (0.24) 23,912 (686,375) (0.11) Relationship between Remuneration and Company Performance Given the current phase of the Company’s development, the Board does not consider earnings during the current and previous financial year when determining, and in relation to, the nature and amount of remuneration of KMP. Executive Remuneration The pay and reward framework for key management personnel may consist of the following areas: a) Fixed Remuneration – base salary b) Variable Short-Term Incentives c) Variable Long-Term Incentives 8 DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) CONTINUED The combination of these would comprise the key management personnel’s total remuneration. a) Fixed Remuneration – Base Salary The fixed remuneration for each senior executive is influenced by the nature and responsibilities of each role and knowledge, skills and experience required for each position. Fixed remuneration provides a base level of remuneration which is market competitive and comprises a base salary inclusive of statutory superannuation. It is structured as a total employment cost package. Key management personnel are offered a competitive base salary that comprises the fixed component of pay and rewards. External remuneration consultants may provide analysis and advice to ensure base pay is set to reflect the market for a comparable role. No external advice was taken this year. Base salary for key management personnel is reviewed annually to ensure the executives’ pay is competitive with the market. The pay of key management personnel is also reviewed on promotion. There is no guaranteed pay increase included in any key management personnel’s contract. b) c) Variable Remuneration – Short -Term Incentives (STI) Discretionary cash bonuses may be paid to senior executives annually, subject to the requisite Board and shareholder approvals where applicable. Variable Remuneration – Long-Term Incentives (LTI) Options are issued at the Board’s discretion. Other than options disclosed in the Remuneration Report there have been no options issued to employees at the date of this financial report. KMP Remuneration for the year ended 30 June 2021 Details of the nature and amount of each major element of the remuneration of each KMP of Si6 Metals Limited for the year ended 30 June 2021 are: Short-term Benefits Post-employment Benefits Share-Based Payments*** Total $ Name Mr P Holywell* Mr S R Groves Mr J Letcher Total Cash Salary & Fees $ 98,112 78,000 46,400 222,512 Other** $ - 30,000 15,000 45,000 Superannuation $ - - - - $ 147,501 59,001 29,500 236,002 245,613 167,001 90,900 503,514 * $28,908 of fees were payable at the end of the year. ** A bonus of $30,000 was approved by the Board for Mr Groves’ services during the year. A bonus of $15,000 was approved by the Board for Mr Letcher’s services during the year. The Board spent considerable time assessing acquisitions before finally entering into the agreement to acquire the Monument Gold Project. A payment was made for special exertions and additional services provided. *** Options were granted on 21 September 2020 to the directors; 15,000,000 were granted to Patrick Holywell, 6,000,000 were granted to Steve Groves and 3,000,000 were granted to Joshua Letcher. See Share-based compensation below for details on the valuation of these. KMP Remuneration for the year ended 30 June 2020 Details of the nature and amount of each major element of the remuneration of each KMP of Si6 Metals Limited for the year ended 30 June 2020 are: Short-term Benefits Post-employment Benefits Share-Based Payments Name Mr P Holywell Mr S R Groves Mr J Letcher Mr E King* Total Cash Salary & Fees $ 43,617 58,000 46,400 45,968 193,985 *Eddie King resigned 15 April 2020. Other - - - - - Superannuation $ - - - - - 9 $ - - - - - Total $ 43,617 58,000 46,400 45,968 193,985 REMUNERATION REPORT (AUDITED) CONTINUED The following table shows the relative proportions of remuneration that are linked to performance and those that are fixed, based on the amounts disclosed as statutory remuneration expense in the tables above. DIRECTORS’ REPORT Relative proportion of fixed vs variable remuneration expense Name Key Management Personnel Mr P Holywell Mr S R Groves Mr E King* Mr J Letcher Fixed Remuneration 2020 2021 At Risk – STI (%) 2020 2021 At Risk – LTI (%) 2020 2021 40% 47% - 51% 100% 100% 100% 100% - 18% - 17% - - - - 60% 35% - 32% - - - - *Eddie King resigned 15 April 2020 Number of Shares held directly or indirectly by Key Management Personnel 2021 Balance 1.7.2020 Received as Compensation Mr P Holywell Mr S R Groves Mr J Letcher Total 3,500,000 438,492 - 3,938,492 *On market movement during the year. - - - - Issued on Exercise of Options 15,000,000 575,000 1,291,667 16,866,667 Net Change Other* (4,300,000) - (333,333) (4,633,333) Balance 30.6.2021 14,200,000 1,013,492 958,334 16,171,826 Number of Listed Options Held directly or indirectly by Key Management Personnel 2021 Balance 1.7.2020 Granted as Compensation Exercised Lapsed/ Expired Net Change Other* Balance 30.6.2021 Vested and exercisable Mr P Holywell - Mr S R Groves Mr J Letcher Total 6,666,667 6,666,667 13,333,334 *On market movement during the year. - - - - - - 1,500,000 1,500,000 1,500,000 (200,000) (666,667) (866,667) (6,000,000) (6,000,000) (12,000,000) - - 1,500,000 466,667 - 1,966,667 466,667 - 1,966,667 Number of Unlisted Options Held directly or indirectly by Key Management Personnel 2021 Balance 1.7.2020 Granted as Compensation Exercised Lapsed/ Expired Net Change Other Balance 30.6.2021 Vested and exercisable Mr P Holywell Mr S R Groves Mr J Letcher Total - - - - 15,000,000 (15,000,000) 6,000,000 3,000,000 24,000,000 (375,000) (625,000) (16,000,000) - - - - - - - - - - 5,625,000 2,375,000 8,000,000 5,625,000 2,375,000 8,000,000 10 DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) CONTINUED Service Agreements There are no service agreement contracts between the Company and the directors. Share-based compensation The Company rewards Directors for their performance and aligns their remuneration with the creation of shareholder wealth by issuing share options. Share-based compensation is at the discretion of the Board and no individual has a contractual right to receive any guaranteed benefits. The following table summarises the model and assumptions used to estimate the value of the options granted during the year. The value of the service related to each tranche granted cannot be estimated reliably, they have been valued using the Black-Scholes model. All options vested immediately upon grant. Of the 24,000,000 options granted to Directors, 15,000,000 were granted to Patrick Holywell, 6,000,000 were granted to Steve Groves and 3,000,000 were granted to Joshua Letcher. • Grant date share price Exercise price Expected volatility Grant date Expiry date Dividend yield Risk free rate Black-Scholes Valuation Total Fair Value of Options Number of Options Issued $0.014 $0.008 125% 21/09/2020 1/07/2022 0% 0.19% $0.010 $255,669 24,000,000 Equity Instruments Issued on Exercise of Remuneration Options 16,000,000 remuneration options were exercised during the financial year. Other transactions with Directors and related parties At 30 June 2021, Director fees of $28,908 were payable to PWT Corporate Pty Ltd, a Company in which Patrick Holywell is a director (2020: $5,256). $nil was payable to Renewable Resources Pty Ltd a Company in which Joshua Letcher is a director (2020: $3,200). During the year $nil of rental fees was paid to King Corporate Pty Ltd, an entity in which Eddie King is a Director (2020: $16,700). Eddie King resigned as a director of the Company on 15 April 2020. Loans with KMP There were no loans made to any KMP during the year ended 30 June 2021 (2020 nil). This is the end of the audited remuneration report ADDITIONAL INFORMATION Other income EBITDA EBIT Loss after income tax Share Price Basic EPS (cent) 2021 $ 11,119 (2,875,066) (2,886,150) (2,887,552) 0.012 (0.24) 2020 $ 23,912 (686,375) (686,375) (686,375) 0.005 (0.11) 2019 $ 18,547 (1,158,895) (1,196,239) (1,196,239) 0.005 (0.26) 2018 $ 5,896 (1,865,883) (1,871,186) (1,871,186) 0.013 (0.61) 2017 $ 47,468 (2,296,741) (2,302,811) (2,302,811) 0.012 (0.02) The Company has not yet set measurable objectives for achieving gender diversity. The Company is currently not of a size that justifies the establishment of measurable diversity objectives. As the Company develops, the Board will seek to develop a 11 reporting framework in the future to report the Company’s progress against the objectives and strategies for achieving a diverse workplace which can be used as a guide to be used by the Company to identify new Directors, senior executives and employees. The Company intends to appoint additional female Directors and employees should a vacancy arise, and appropriately qualified and experienced individuals are available. Full details of the Company’s Diversity Policy can be found on the Corporate Governance page of the Company’s website. DIRECTORS’ REPORT SHARES UNDER OPTION At the date of this report, the unissued ordinary shares of the Company under option are as follows: • • • 160,015,115 listed options expiring 1 July 2022, exercisable at $0.008 each. 28,937,500 unlisted options expiring 1 July 2022, exercisable at $0.008 each. 3,000,000 unlisted options expiring 13 October 2022, exercisable at $0.008 each. SHARES ISSUED ON EXERCISE OF OPTIONS 224,796,097 ordinary shares of the Company were issued on the exercise of options during the year ended 30 June 2021 and up to the date of this report. INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS The Company has indemnified the Directors and Executives of the Company for costs incurred, in their capacity as a Director or Executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the Company paid a premium in respect of a contract to insure the Directors and Executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor. During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity. ENVIRONMENTAL REGULATIONS The company is not currently subject to any specific environmental regulation. There have not been any known significant breaches of any environmental regulations during the year under review and up until the date of this report. AUDITOR BDO Audit (WA) Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001. 12 DIRECTORS’ REPORT OFFICERS OF THE COMPANY WHO ARE FORMER PARTNERS OF BDO AUDIT (WA) PTY LTD There are no officers of the company who are former partners of BDO Audit (WA) Pty Ltd. AUDITOR’S INDEPENDENCE DECLARATION The lead auditor’s independence declaration for the year ended 30 June 2021 has been received and included within these financial statements. NON-AUDIT SERVICES The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the Company are important. Refer to note 14 for details of the amounts paid or payable to the auditor for non-audit services provided during the year. The Board of Directors has considered the position and is satisfied 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, as set out below, did not compromise the auditor independent requirements of the Corporations Act 2001 for the following reasons: • all non-audit services have been reviewed by the Board of Directors to ensure they do not impact the impartiality and objectivity of the auditor; and • None of the services undermine the general principles relating to the auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. This report is signed in accordance with a resolution of Board of Directors. Mr Patrick Holywell Director 30 September 2021 13 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 JARRAD PRUE TO THE DIRECTORS OF SI6 METALS LIMITED As lead auditor of Si6 Metals Limited for the year ended 30 June 2021, 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 Si6 Metals Limited and the entities it controlled during the period. Jarrad Prue Director BDO Audit (WA) Pty Ltd Perth, 30 September 2021 BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2021 Consolidated Group Revenue and other income Expenses Administration and corporate expenses Other expenses Directors remuneration and fees Professional fees Marketing Amortisation Fair value loss Interest expense Share-based payments Exploration expenses Loss before Income Tax Expense Income Tax Expense Loss for the year attributable to owners of Si6 Metals Limited Other Comprehensive Income for the year that may be subsequently reclassified to the profit or loss Exchange differences on translating foreign controlled operation Total Comprehensive Loss attributable to owners of Si6 Metals Limited Notes 2021 2020 4 5a 13 5b 6 $ 11,119 (275,852) (59,423) (246,076) (227,920) (71,684) (11,084) (5,691) (1,402) (279,300) (1,720,239) (2,887,552) - (2,887,552) $ 23,912 (147,901) (59,394) (193,985) (207,064) (12,580) - - - - (89,363) (686,375) - (686,375) 1,500 15,904 (2,886,052) (670,471) Basic Loss per Share (cents per share) & Diluted Loss per Share (cents per share) 15 (0.24) (0.11) The accompanying notes form part of these financial statements. 15 CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 30 June 2021 Consolidated Group Current Assets Cash and Cash Equivalents Trade and Other Receivables Financial asset at fair value through profit or loss Total Current Assets Non-Current Assets Right of use asset Total Non-Current Assets TOTAL ASSETS Current Liabilities Trade and other payables Provisions Lease liabilities Total Current Liabilities Non-Current Liabilities Lease liabilities Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS Equity Issued capital Reserves Accumulated losses TOTAL EQUITY Notes 7 8 9 10 11 10 10 12 13 2021 $ 4,559,417 72,583 91,049 4,723,049 121,928 121,928 2020 $ 799,695 30,971 - 830,666 - - 4,844,977 830,666 249,776 46,303 15,078 311,157 73,705 73,705 384,862 4,460,115 27,703,282 799,105 (24,042,272) 4,460,115 84,897 16,055 - 100,952 - - 100,952 729,714 21,661,131 223,303 (21,154,720) 729,714 The accompanying notes form part of these financial statements. 16 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For year ended 30 June 2021 Issued Share Capital Share Based Payments Reserve Foreign Currency Translation Reserve Accumulated Losses Total Equity $ $ $ $ $ 21,661,131 465,090 (241,787) (21,154,720) 729,714 -) (2,887,552) (2,887,552) 1,500 1,500 -) 1,500 (2,887,552) (2,886,052) -) -) -) -) -) -) -) -) 4,400,000 (304,957) 2,192,110 329,300 Shares issued during the year 4,400,000 Balance at 1 July 2020 Loss after income tax for the year Other Comprehensive income Total comprehensive income/(loss) Transactions with owners in their capacity as owners Share issue costs Exercise of options Options issued during the year Balance at 30 June 2021 Balance at 1 July 2019 Loss after income tax for the year Other Comprehensive income Total comprehensive income/(loss) Transactions with owners in their capacity as owners Shares issued during the year Share issue costs Balance at 30 June 2020 -) -) -) -) -) -) -) (599,959) 295,002 2,192,110 -) 50,000 279,300 -) -) -) 332,500 (73,439) -) -) -) -) 50,993 27,703,282 1,039,392 (240,287) (24,042,272) 4,460,115 21,402,070 414,097 (257,691) (20,468,345) 1,090,131 -) (686,375) (686,375) 15,904 15,904 -) 15,904 (686,375) (670,471) 21,661,131 465,090 (241,787) (21,154,720) -) -) -) -) 332,500 (22,446) 729,714 The accompanying notes form part of these financial statements. 17 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 30 June 2021 Consolidated Group Notes 2021 $ 2020 $ (727,440) 1,119 (1,402) 10,000 (1,670,239) (2,387,962) 7b (96,740) (96,740) (44,229) 4,400,000 (304,957) 2,192,110 6,242,924 3,758,222 799,695 1,500 4,559,417 (680,502) 2,743 - 10,000 (89,363) (757,122) - - - 332,500 (22,447) - 310,053 (447,069) 1,230,860 15,904 799,695 Cash Flows from Operating Activities Payments to suppliers and employees Interest received Payments for interest Government cashflow boost Exploration expenditure Net Cash Used in Operating Activities Cash Flows Used In Investing Activities Payment for an investment in listed shares Net Cash Used In Financing Activities Cash Flows from Financing Activities Payments for lease liabilities Issue of share capital Payments of share capital issue costs Proceeds from the exercise of options Net Cash Received From Financing Activities Net Increase/(Decrease) in Cash and cash equivalents held Cash and cash equivalents at the Beginning of the Financial Year Foreign currency effect on cash held Cash and cash equivalents at the End of the Financial Year 7 The accompanying notes form part of these financial statements. 18 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Reporting Entity Si6 Metals Limited (referred to as “Company” or “parent entity”, formerly known as Six Sigma Metals Limited) is a company domiciled in Australia. The address of the Company’s registered office and principal place of business is disclosed in the Corporate Directory of the Financial Report. The consolidated financial statements of the Company as at and for the year ended 30 June 2021 comprise the Company and its subsidiaries (together referred to as the “Consolidated Entity” or the “Group”). (b) Basis of Preparation Statement of compliance These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB'). Basis of measurement The consolidated financial statements have been prepared on a going concern basis in accordance with the historical cost convention, unless otherwise stated. Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in Note 21. Basis of preparation and changes to the Group’s accounting policies The consolidated entity has adopted all of the new or amended Accounting Standards and interpretations issued by the Australian Accounting Standards Board (‘AASB”) that are mandatory for the current reporting period. No new standards have had a significant impact on the company’s financial statements. Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted by the consolidated entity. Significant Judgements and Estimates The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2. 19 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Principles of Consolidation Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Si6 Metals Limited (‘Company’ or ‘parent entity’) as at 30 June 2021 and the results of all subsidiaries for the year then ended. Si6 Metals Limited and its subsidiaries together are referred to in this financial report as the consolidated entity. Subsidiaries are all entities (including special purpose entities) over which the consolidated entity has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the consolidated entity controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between consolidated entity companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity. The acquisition method of accounting is used to account for business combinations by the consolidated entity. (d) Segment Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board. (e) Foreign Currency Translation Functional and presentation currency Items included in the financial statements of each of the consolidated entity’s entities are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The consolidated financial statements are presented in Australian dollars, which is Si6 Metals Limited’s functional and presentation currency. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. 20 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (e) Foreign Currency Translation (continued) Consolidated entity companies The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • Assets and liabilities for each statement of financial position account presented are translated at the closing rate at • the date of that statement of financial position; Income and expenses for each statement of profit or loss and other comprehensive income account are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and • All resulting exchange differences are recognised in other comprehensive income and included in the foreign currency translation reserve in the statement of financial position. On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale. (f) Revenue Recognition and other Income The consolidated entity recognises revenue and other income as follows: Revenue from contracts with customers Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are initially recognised as deferred revenue in the form of a separate refund liability. Interest Interest revenue is recognised as interest accrues using the effective interest method. Other income Other income is recognised when it is received or when the right to receive payment is established. 21 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (g) Income Tax The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. (h) Leases Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the fixed lease payments discounted using the incremental borrowing rate in the lease. Right-of- use assets are measured at cost comprising the amount of the initial measurement of the lease liability, depreciated over the lease term on a straight-line basis. In December 2020, the Company purchased a motor vehicle for $133,012. The motor vehicle has been financed at an interest rate of 2.98%, expiring December 2026. Refer to note 10 for further details on the Group’s lease arrangements. (i) Exploration and evaluation expenditure The Group expenses exploration and evaluation expenditure as incurred in respect of each identifiable area of interest until a time where an asset is in development. Exploration and Evaluation expenditure Exploration for and evaluation of mineral resources is the search for mineral resources after the entity has obtained legal rights to explore in a specific area as well as the determination of the technical feasibility and commercial viability of extracting mineral resource. Exploration and evaluation expenditure are expensed to the profit or loss as incurred except when existence of a commercially viable mineral reserves has been established and it is anticipated that future economic are more likely than not to be generated as a result of the expenditure. 22 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (j) Cash and Cash Equivalents Cash on hand and in bank and short-term deposits are stated at nominal value. For the purpose of the statement of cash flows, cash includes cash on hand and in bank, and bank securities readily convertible to cash, net of outstanding bank overdrafts. (k) Trade and Other Receivables Trade and other receivables include amounts due from customers for goods sold and services performed in the ordinary course of business. Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other receivables are classified as non-current assets. Other receivables are recognised at amortised cost, less any allowance for expected credit losses (ECL). The ECL is based on either the 12-month or lifetime ECL. The 12-month ECL is the portion of lifetime ECLs that results from default events on a financial instrument that are possible within 12 months after the reporting date. When there has been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECL. (l) Investments and other financial assets Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset, unless an accounting mismatch is being avoided. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off. Financial assets at fair value through profit or loss Equity investments that are held for trading and for which the entity has not elected to recognise fair value gains and losses through other comprehensive income are classified as financial assets at fair value through profit or loss. Impairment of financial assets The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets measured at fair value, a fair value loss is recognised in profit or loss. 23 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (m) Impairment of Assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Where an impairment loss subsequently reverses, the carrying amount of the asset, other than goodwill, is increased to the revised estimate of its recoverable amount, but only to the extent the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised in prior years. A reversal of an impairment loss is recognised immediately in profit or loss. (n) Trade and Other Payables Liabilities are recognised for amounts to be paid in the future for goods and services received whether or not billed to the Group. Trade payables are usually settled within 30 days of recognition. (o) Employee Benefits Short-term employee benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Other long-term employee benefits The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the liability. The liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to the expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. (p) Share-based Payments Equity-settled share-based compensation benefits are provided to Key Management Personnel and employees. Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using an appropriate valuation model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. 24 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (p) Share-based Payments Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification. (q) Contributed equity 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. If the entity reacquires its own equity instruments, for example as a result of a share buy-back, those instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity. (r) Earnings Per Share Basic earnings per share Basic earnings per share are calculated by dividing: • The profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares • By the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares. Diluted earnings per share Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account: • • The after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and The weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. 25 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (s) Goods and Services Tax (“GST”) Revenue, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included as a current asset or liability in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the taxation authority are presented as operating cash flows. Commitments and contingencies are disclosed net of amount of GST recoverable from, or payable to, the tax authorities. (t) Current and Non-Current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. (u) Dividends Dividends are recognised when declared during the financial year and are no longer at the discretion of the Company. 26 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS AND ASSUMPTIONS The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Share based payments The consolidated entity measures the cost of equity-settled transactions with service providers by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using an appropriate valuation model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. The assumptions and models used for estimating the fair value of share based payments transactions are disclosed in Note 13. SEGMENT INFORMATION NOTE 3 The consolidated entity operates within two geographical segments within mineral exploration being Australia and Botswana. The segment information provided to the chief operating decision maker is as follows: Year Ended 30 June 2021 Revenue and other income Result (loss) Total assets Total liabilities Year Ended 30 June 2020 Revenue and other income Result (loss) Total assets Total liabilities Australia $ 11,119 (2,393,897) 4,834,268 (358,220) 12,745 (593,712) 825,077 (75,444) Botswana $ - (493,655) 10,709 (26,642) 11,167 (92,663) 5,589 (25,508) Total $ 11,119 (2,887,552) 4,844,977 (384,862) 23,912 (686,375) 830,666 (100,952) 27 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 4 REVENUE AND OTHER INCOME Income from Ordinary Activities Interest revenue VAT income received Government cashflow boost NOTE 5 EXPENDITURE 5(a) Professional Fees Legal Fees Corporate advisory Accounting and audit fees Consulting fees 5(b) Exploration Expenditure Exploration Expenditure Consolidated Group 2021 $ 2020 $ 1,119 - 10,000 11,119 2,745 11,167 10,000 23,912 Consolidated Group 2021 $ 43,852 99,983 43,619 40,466 2020 $ 39,445 130,161 37,458 - 227,920 207,064 2021 $ 2020 $ 1,720,239 1,720,239 89,363 89,363 In July 2020, the Company entered into an exclusivity agreement and subsequently, in August 2020, a binding Heads of Agreement with DiscovEx Resources Ltd with an option to acquire a 100% interest in the Monument Gold Project. As part of the agreement, $50,000 was paid in cash and a further $50,000 was paid in shares. A further $100,000 cash consideration was paid as part of the terms of the agreement. Subsequent to year end, the Company exercised its option and acquired a 100% interest in the Monument Gold Project. $100,000 in cash and $300,000 in shares was paid as the remaining consideration for the acquisition. DiscovEx will retain a royalty of up to 1.5% of gross revenue. 28 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 6 INCOME TAX EXPENSE Consolidated Group 2021 $ 2020 $ The prima facie tax on loss from ordinary activities before income tax is reconciled to income tax as follows: (Loss) before income tax expense (2,887,552) (686,375) Prima facie (tax benefit) on (loss) from ordinary activities before income tax at 30% (2020: 30%) (866,266) (205,913) Add: Tax effect of: - Accrued expenses - Non-deductible expenses -Foreign tax rate differential Less Tax effect of: - Other deductible items - Prepayments Tax losses for the year Prior year tax losses not previously brought to account The Directors estimate that the potential deferred income tax assets at 30 June in respect of tax losses not brought to account is: Tax benefits not recognised during the year Income Tax Expense for the year 14,945 108,646 39,493 (428) 8,567 7,413 (33,371) (2,464) (49,813) (1,380) (739,017) (241,554) (3,125,074) (2,871,707) (3,864,091) (3,113,261) 3,864,091 3,113,261 - - Tax benefits are not brought to account for the year ended 30 June 2021 (2020: nil) as the certainty of recovery cannot yet be reliably determined at this stage of the Group’s development. 29 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 7 CASH AND CASH EQUIVALENTS Cash at bank and in hand Term deposits held NOTE 7A CASH FLOW INFORMATION (a) Reconciliation of cash For the purposes of the statement of cash flows, cash includes cash on hand and at bank and short term deposits at call, net of outstanding bank overdrafts. Cash as at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position. Cash at bank and on hand (b) Reconciliation of cash Operating Loss after income tax Non–cash flows in loss: - Depreciation - - - Share-based payment Exploration expenditure (non-cash) Fair value loss on investment in listed shares Working capital: - - - (Increase)/decrease in trade and other receivables Increase/(decrease) in trade and other payables Increase/(decrease) in provisions Net cash (outflow) from operating activities NOTE 8 TRADE AND OTHER RECEIVABLES Current Trade and other receivables Prepayments GST receivable Consolidated Group 2020 2021 $ 4,549,417 10,000 4,559,417 $ 799,695 - 799,695 Consolidated Group 2021 $ 2020 $ 4,559,417 799,695 (2,887,552) (686,375) 11,084 279,300 50,000 5,691 - - - - (41,612) 164,879 30,248 (85) (62,116) (8,546) (2,387,962) (757,122) Consolidated Group 2020 2021 $ $ 2,704 24,946 44,933 72,583 2,192 16,730 12,049 30,971 Receivables past due but not considered impaired are $nil (2020: $nil). Other receivables are non-interesting bearing and are generally on terms of 30 days. Information about the Group’s exposure to credit risk is provided in note 20. 30 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 9 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 569,057 (2020: nil) fully paid ordinary shares held in Cobre Limited 2021 $ 2020 $ 91,049 91,049 - - In April 2021, the Company purchased 569,057 shares in Cobre Limited at $0.17 each. The share price at year end was $0.16 and an unrealised fair value loss of $5,691 was recognized (2020: $nil). NOTE 10 RIGHT OF USE ASSET AND LEASE LIABILITY Right of Use asset At 1 July New leases entered Amortisation At 30 June 2021 $ 2020 $ - 133,012 (11,084) 121,928 - - - - In December 2020, the Company purchased a motor vehicle for $133,012. A deposit of $36,872 was paid and the remaining balance of $96,140 has been financed at an interest rate of 2.98%, expiring December 2026. The amount of amortisation recognised in the consolidated statement of profit or loss was $11,084 (2020: $nil). Lease liability Current Non-current At 1 July New leases entered Lease payments Interest At 30 June The total cash outflow for the lease was $8,759 (2020: $nil). NOTE 11 TRADE AND OTHER PAYABLES Current Trade payables Accrued remuneration owing to Directors Accrued professional fees & operating expenses Other payables Information about the Group’s exposure to credit risk is provided in note 20. 31 2021 $ 2020 $ 15,078 73,705 88,783 - 96,140 (8,759) 1,402 88,783 - - - - - - - - Consolidated Group 2021 $ 129,807 28,908 65,600 25,461 249,776 2020 $ 37,387 13,302 19,983 14,225 84,897 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 12 ISSUED CAPITAL 1,393,260,264 (2020: 645,003,153) fully paid ordinary shares (a) Ordinary Shares Consolidated Group 2021 $ 2020 $ 27,703,282 21,661,131 Movement in ordinary shares on issue Date Issue price No. of Shares $ Balance at the beginning of the year Share placement plan Share placement plan Capital raising costs Balance at the end of year Balance at the beginning of the year Share placement plan Share placement plan Issue of shares to DiscovEx Limited Issue of shares Conversion of options Conversion of options Conversion of options Capital raising costs Balance at the end of year 1 July 2019 16 August 2019 21 August 2019 - 30 June 2020 1 July 2020 14 July 2020 18 August 2020 27 August 2020 16 December 2020 Various Various Various - 30 June 2021 - 561,878,153 21,402,070 $0.004 $0.004 - - 62,500,000 20,625,000 - 645,003,153 645,003,153 250,002 82,501 (73,442) 21,661,131 21,661,131 $0.004 160,000,000 960,000 $0.004 $0.0086(1) $0.017 $0.008 $0.015 $0.022 - 240,000,000 1,440,000 5,813,954 50,000 117,647,060 180,797,385 31,748,712 12,250,000 - 1,393,260,264 2,000,000 1,446,379 476,231 269,500 (599,959) 27,703,282 (1) Deemed issue price equal to the 15 day volume weighted average price of the Company’s shares prior to execution of the Monument acquisition heads of agreement on 20 August 2020. NOTE 13 RESERVES Share-based payments reserve (a)(i) Foreign currency translation reserve (b) Movement reconciliation Share-based payments reserve (a) (i) Balance at the beginning of the year Equity settled share-based payment Balance at the end of the year Movement reconciliation Foreign currency translation reserve (b) Balance at the beginning of the year Other comprehensive income Balance at the end of the year 32 2021 $ 2020 $ 1,039,392 (240,287) 799,105 465,090 574,302 1,039,392 465,090 (241,787) 223,303 414,097 50,993 465,090 (241,787) 1,500 (240,287) (257,691) 15,904 (241,787) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 13 RESERVES CONTINUED Share-based payment reserve The share-based payment reserve is used to record the value of share-based payments provided to outside parties, and share-based remuneration provided to employees and directors. Recognised share-based payment transactions (a) Capital raising costs - Options to Lead managers (i) Options to Directors & Company Secretary (ii) Options to Exploration manager (iii) 2021 $ 2020 $ 295,002 255,669 23,631 574,302 50,993 - - 50,993 The following table summarises the model and assumptions used to estimate the value of the options granted during the year. The value of the service related to each tranche granted cannot be estimated reliably, they have been valued using the Black-Scholes model. All options vested immediately upon grant. Of the 26,000,000 options granted to Directors and the Company Secretary, 15,000,000 were granted to Patrick Holywell, 6,000,000 were granted to Steve Groves and 3,000,000 were granted to Joshua Letcher. Grant date share price Exercise price Expected volatility Grant date Expiry date Dividend yield Risk free rate Black-Scholes Valuation Total Fair Value of Options Number of Options Issued Directors & Company secretary (ii) $0.014 $0.008 125% 21/09/2020 1/07/2022 0% 0.19% $0.010 $255,669 26,000,000 Lead manager (i) Exploration manager (iii) $0.014 $0.008 125% 21/09/2020 1/07/2022 0% 0.19% $0.010 $295,002 30,000,000 $0.013 $0.02 125% 13/10/2020 13/10/2022 0% 0.19% $0.008 $23,631 3,000,000 • (b) Grantee Summary of options granted as share-based payments Balance at Date of 1 July 2020 Expiry Exercise Price Issue Date Granted during the year Exercised/ Disposed during the year Expired during the year Balance at 30 June 2021 Lead manager 15/08/2019 1/07/2022 $0.08 20,000,000 - (20,000,000) Lead manager 30/9/2020 1/7/2022 $0.008 Directors & Company Secretary Exploration manager 30/9/2020 1/7/2022 $0.008 13/10/2020 13/10/2022 $0.02 - - - 30,000,000 (30,000,000) 26,000,000 (18,000,000) 3,000,000 - 20,000,000 59,000,000 (68,000,000) - - - - - - - 8,000,000 3,000,000 11,000,000 33 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 14 REMUNERATION OF AUDITORS Amounts received or due and receivable by BDO Audit (WA) Pty Ltd for: Audit or review of the financial statements Other services - BDO Corporate Tax (WA) Pty Ltd Tax compliance NOTE 15 LOSS PER SHARE (“LPS”) a) Reconciliation of losses to profit or loss Loss used to calculate basic and diluted loss per share Consolidated Group 2020 2021 $ $ 26,487 25,358 12,770 39,257 5,510 30,868 Consolidated Group 2021 $ 2020 $ (2,887,552) (670,471) b) Weighted average number of ordinary shares used in the calculation of basic and diluted loss per share 1,204,446,682 634,046,869 Basic and diluted loss per share ($0.24) (2020: ($0.11)). NOTE 16 CONTROLLED ENTITY Country of Incorporation Principal Activity Class of Share African Metals (Pty) Ltd Botswana Mineral Exploration Ordinary Equity Holding 2021 % 100 2020 % 100 34 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 17 COMMITMENTS Planned Exploration Expenditure Payable - not later than 12 months - between 12 months and 5 years - greater than 5 years Consolidated Group 2021 $ 2020 $ 529,759 945,244 - 307,606 - - 1,475,003 307,606 The commitments relate to the Prospecting licences issued to African Metals (Pty) Ltd by the Department of Mines in Botswana and the licences issued to Monument Exploration Project Pty Ltd (an asset acquisition of the Company and its licences occurred subsequent to year end in August 2021). Expenditures are required to maintain the right of tenure to exploration until the expiry of the licences. These obligations are subject to renegotiation upon expiry of the tenements and are not provided for in the financial statements. The Group anticipates future expenditure on its current rights of tenure to exploration and mining tenements up until their expiry. In the event the Group does not meet the minimum exploration expenditure the licences may be cancelled or not renewed. NOTE 18 CONTINGENT LIABILITIES Magogaphate Tenement Although the Group acquired a 100% interest in the Magogaphate group of tenements in Botswana from A-Cap Resources Limited in 2007, Mineral Holdings Botswana (Pty) Ltd (“MHB”) has retained a right to a 5% net profits share. The Group therefore, has a contingent liability to MHB should it establish a profitable mining operation on those tenements. The 5% net profits share interest is limited to the three tenements subject to joint venture with BCL, namely PL 110/94, PL 111/94 and PL 54/98. A profitable mining operation has not yet been established and accordingly there have been no payments to MHB. 35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 19 RELATED PARTY INFORMATION Details relating to key management personnel, including remuneration paid, are below. Key Management Personnel Compensation Short-term benefits Share-based payments Total Related Party Transactions Director fees payable to Renewable Resources Pty Ltd(i) Director fees payable to PWT Corporate Pty Ltd(ii) Rental Fees paid to King Corporate Pty Ltd(iii) Total 2021 $ 267,512 236,002 503,514 2020 $ 193,985 - 193,985 2021 $ 2020 $ - 28,908 - 28,908 3,200 5,256 16,700 25,156 (i) An entity in which Joshua Letcher is a Director. (ii) An entity in which Patrick Holywell is a Director. (iii) An entity in which Eddie King is a Director. Eddie King resigned as a director of the Company on 15 April 2020. All amounts above are exclusive of GST. Expenses paid by, or for, Directors and related entity were, or will be, reimbursed at cost. The Company has provided at call interest free unsecured loans to its wholly owned subsidiary African Metals (Pty) Ltd to pay operational and exploration costs. Terms and conditions All transactions were made on normal commercial terms and conditions and at market rates. The Company has provided at call interest free unsecured loans to its wholly owned subsidiary African Metals (Pty) Ltd to pay operational and exploration costs. NOTE 20 FINANCIAL RISK MANAGEMENT The Group’s financial instruments consist mainly of deposits with banks, an investment in equity securities and accounts receivable and payable. Treasury Risk Management The Board of Directors meets on a regular basis to analyse financial risk exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts. The Board’s overall risk management strategy seeks to assist the Group in meeting its financial targets, whilst minimising potential adverse effects on financial performance. Financial Risk Exposures and Management The main risk the group is exposed to through its financial instruments is liquidity risk. 36 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 20 FINANCIAL RISK MANAGEMENT CONTINUED Liquidity Risk Liquidity risk arises from the possibility that the group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The group manages liquidity risk by monitoring forecast cash flows and only investing surplus cash with major financial institutions. Maturity analysis: Consolidated 2021 Financial liabilities Trade and other payables Lease liabilities <6 months $ 6-12 months $ 1-5 years $ >5 years $ Total $ (249,776) (7,357) - (7,357) -) (66,712) -) (7,357) (249,776) (88,783) Consolidated 2020 <6 months $ 6-12 months $ 1-5 years $ >5 years $ Total $ Financial liabilities Trade and other payables (84,897) - -) -) (84,897) Interest rate risk The Group is exposed to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in the market interest rates on interest bearing financial instruments. The Group’s exposure to this risk relates primarily to the Group’s cash and any cash on deposit. The Group does not use derivatives to mitigate these exposures. The Group manages its exposure to interest rate risk by holding certain amounts of cash in fixed and floating interest rate facilities. At the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was: Cash and cash equivalents 2021 2020 Weighted average interest rate (i) 0.04% Balance $ 4,531,781 Weighted average interest rate (i) 0.12% Balance $ 799,695 (i) This interest rate represents the average interest rate for the period. Sensitivity Within the analysis, consideration is given to potential renewals of existing positions and the mix of fixed and variable interest rates. The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date. The 1% increase and 1% decrease in rates is based on reasonably expected possible changes over a financial year, using the observed range of historical rates for the preceding five-year period. At 30 June 2021, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post-tax losses and equity would have been affected as follows: Judgements of reasonably possible movements: + 1.0% (100 basis points) - 1.0% (100 basis points) Profit higher/(lower) 2020 2021 $ $ 45,594 (45,594) 7,997 (7,997) 37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 20 FINANCIAL RISK MANAGEMENT (CONTINUED) Credit risk Credit risk arises from the financial assets of the Company, which comprise cash and cash equivalents and trade and other receivables. The Company’s exposure to credit risk arises from potential default of the counterparty, with maximum exposure equal to the carrying amount of the financial assets. The Company’s policy is to trade only with recognised, creditworthy third parties. It is the Company’s policy that all customers who wish to trade on credit terms will be subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Company’s exposure to bad debts is not significant. There are no significant concentrations of credit risk within the Company except for cash and cash equivalents. The Company’s cash accounts are held with Westpac, their credit rating is AA- by S&P Global and Moody’s. Price risk The group’s exposure to equity securities price risk arises from a publicly traded investment in the ASX. To manage price risk, the group regularly monitors the price of the equity security to determine its investment position. The loss of the company would increase/(decrease) by $4,552/($4,552) (2020: $nil) if prices in the securities market were to decrease/(increase) by 5%. Foreign Currency Risk The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations. The Group also has exposure to foreign exchange risk due to the currency cash reserves and other balances denominated in foreign currencies. The Group does not actively manage foreign currency risk and does not make use of derivative financial instruments. The following sensitivity is based on the foreign currency risk exposures in existence at the reporting date. At 30 June 2021, had the Australian Dollar/Botswana Pula exchange rate moved, as illustrated in the table below with all other variables held constant, post-tax profit would have been affected as shown. Judgments of reasonable possible movements AUD/BWP +5% AUD/BWP -5% Post-tax Loss Higher/(Lower) Other Comprehensive Income Higher/(Lower) Equity Higher/(Lower) 2021 $ 24,683 (24,683) 2020 $ 4,633 (4,633) 2021 $ 24,758 (24,758) 2020 $ 5,428 (5,428) 2021 $ 49,441 (49,441) 2020 $ 10,062 (10,062) Management believes the reporting date risk exposures are representative of the risk exposure inherent in the financial instruments. The net fair values of financial assets and liabilities approximate their carrying values due to their short-term nature. Capital Risk Management The Group manages its capital to ensure that Companies in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt to equity balance. The Group’s focus has been to raise sufficient funds through equity to fund exploration and resource development activities. The Group’s overall strategy remains unchanged from 2020. Risk management policies and procedures are established with regular monitoring and reporting. The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the parent, comprising of issued capital, reserves and accumulated losses as disclosed in Notes 12 and 13 respectively. The Group operates in Australia and Botswana. None of the Group’s companies are subject to externally imposed capital requirements. 38 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 21 PARENT ENTITY DISCLOSURES Financial Position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Issued capital Reserves Accumulated losses Total equity Financial Performance Loss for the year Other comprehensive income Total comprehensive loss 2021 $ 2020 $ 4,712,340 121,928 4,834,268 284,515 73,705 358,220 825,077 - 825,077 75,444 75,444 27,703,282 21,661,131 1,039,392 465,090 (24,266,626) (21,376,588) 4,476,048 749,633 (2,890,038) (650,551) - - (2,890,038) (650,551) Guarantees, contingent liabilities and contractual commitments The subsidiary company has expenditure commitments to maintain its current rights of tenure to exploration and mining tenements up until the expiry of the leases including its joint venture commitments. These obligations are subject to renegotiation upon expiry of the leases and are not provided for in the financial statements. The parent entity may provide funds to ensure the subsidiary company can fulfil these commitments as well as any other operating commitments. NOTE 22 EVENTS AFTER THE END OF THE REPORTING PERIOD On 1 July 2021, 100,687,654 quoted options exercisable at $0.015 expired. On 26 July 2021, the Company announced it had exercised its option to acquire a 100% interest in the Monument Gold Project and entered into a binding option agreement with DiscovEx Resources Limited (ASX:DCX). On 23 August 2021, the Company announced it had completed its acquisition of Monument Gold Project. A total of 34,883,721 fully paid ordinary shares were issued to DiscovEx Resources Limited (ASX:DCX) and $100,000 paid in cash as consideration under the option agreement regarding the Monument Gold Project. On 6 August 2021, the Company announced that it had received a Purported 249D Notice. On 1 September 2021, the Company announced an Extraordinary General Meeting would be held on 12 October 2021 following receipt of the Purported 249D Notice. 39 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 22 EVENTS AFTER THE END OF THE REPORTING PERIOD (CONTINUED) The full impact of the COVID-19 outbreak continues to evolve at the date of this report. The Company is therefore uncertain as to the full impact that the pandemic will have on its financial condition, liquidity, and future results of operations during 2022. Management is actively monitoring the global situation and its impact on the Company’s financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for the 2022 financial year. Although the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have a material adverse effect on the Company’s results of future operations, financial position, and liquidity in fiscal year 2022. Other than the matters discussed above, there has not arisen in the interval between the end of the financial year and the date of this report, any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company to affect the operations of the Group, the results of these operations or the state of affairs of the Group in subsequent years. 40 DIRECTORS’ DECLARATION In the Directors’ opinion: a) The financial statements and accompanying notes are in accordance with the Corporations Act 2001, including: i) complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2021 and of its performance for the year ended on that date. b) c) The financial statements and notes comply with International Financial Reporting Standards as described in Note 1 to the financial statements. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. The Directors have been given the declarations required by section 295A of the Corporations Act 2001. 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: Mr Patrick Holywell Director 30 September 2021 41 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 Si6 Metals Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Si6 Metals Limited (the Company) and its subsidiary (the Group), which comprises the consolidated statement of financial position as at 30 June 2021, 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 2021 and of its financial performance for the year ended on that date; and (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 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. Accounting for share-based payments Key audit matter How the matter was addressed in our audit During the year ended 30 June 2021, the Group issued Our procedures included, but were not limited to the options to key management personnel, employees and following: consultants which have been accounted for as share- based payments (refer to Note 13). (cid:127) Reviewing relevant supporting documentation to obtain an understanding of the contractual nature Refer to Note 2 of the financial report for a description and terms and conditions of the share-based of the significant estimates and judgements applied to payment arrangements; these arrangements. Share-based payments are a complex accounting area and due to the complex and judgemental estimates used in determining the fair value of the share-based payments, we consider the Group’s calculation of the share-based payment expense to be a key audit matter. (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) Holding discussions with management to understand the share-based payment transactions in place; Reviewing management’s determination of the fair value of the share-based payments granted, considering the appropriateness of the valuation models used and assessing the valuation inputs; Involving our valuation specialists, to assess the reasonableness of management’s valuation method and inputs, including volatility; Assessing the reasonableness of the share-based payment expense; and Assessing the adequacy of the related disclosures in Note 2 and Note 13 of the Financial Report. 2 Other information The directors are responsible for the other information. The other information comprises the information contained in the financial report for the year ended 30 June 2021, but does not include the financial report and our auditor’s report thereon, which we obtained prior to the date of this auditor’s report, and the annual report, which is expected to be made available to us after that date. 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 identified above 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 on the other information that we obtained prior to the date of this auditor’s report, 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. When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and will request that it is corrected. If it is not corrected, we will seek to have the matter appropriately brought to the attention of users for whom our report is prepared 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. 3 A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 7 to 11 of the directors’ report for the year ended 30 June 2021. In our opinion, the Remuneration Report of Si6 Metals Limited, for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit (WA) Pty Ltd Jarrad Prue Director Perth, 30 September 2021 4 CORPORATE GOVERNANCE STATEMENT The Company has elected to publish its Corporate Governance Statement on its website in accordance with ASX Listing Rule 4.10.3. ASX ADDITIONAL INFORMATION A copy of the Corporate Governance Statement can be found at: https://www.si6metals.com/about-us/corporate-governance/ ASX ADDITIONAL INFORMATION Additional information required by the Australian Securities Exchange and not shown elsewhere in this Annual Report is as follows. The information is current as of 13 October 2021. DISTRIBUTION OF EQUITY SECURITIES Ordinary share capital  1,428,143,985 fully paid shares held by 4,805 individual shareholders. All issued ordinary shares carry one vote per share and carry the rights to dividends. The number of shareholders, by size of holding, is: Range 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total Listed options Holders 84 43 22 2,711 1,945 4,805 Units 14,802 126,071 171,500 128,347,398 1,299,484,214 1,428,143,985 Percentage 0.00% 0.01% 0.01% 8.99% 90.99% 100.00%  132,436,366 quoted options expiring 1 July 2022, exercisable at $0.008 held by 147 individual option holders. The number of Option holders, by size of holding, is: Range 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total Holders 6 1 1 22 117 147 Units 2,089 5,000 10,000 1,400,723 158,597,303 160,015,115 Percentage 0.00% 0.00% 0.01% 0.88% 99.11% 100.00% 46 TWENTY LARGEST SHAREHOLDERS Position Holder Name 1 PATRICK VOLPE* 2 DISCOVEX RESOURCES LIMITED* 3 CITICORP NOMINEES PTY LIMITED 4 TELL CORPORATION PTY LTD 5 AUSTRALIAN LEISURE EQUITY PTY LTD 6 MR MICHAEL SCHLOMAN 7 CRAIG NASH* 8 MR ARTHUR IOANNOU & MS OLIVIA KEENE 9 PATRICK HOLYWELL* 10 ROSS MORRIS* 11 MS JIALING LIU 12 MR EDWIN EDWARD BULSECO & MRS ALLISON BULSECO LIGHTSTORM PTY LTD 14 MR VINCE TRUDA 13 14 MRS WILLY SHAW 14 MR THUAN HOA DOAN 15 PAPILLON HOLDINGS PTY LTD 16 MR JORDAN ANTHONY BALO 17 MISS THI PHUONG DOAN 18 MR MATTHEW GREHAN 19 MR VIVEK HANDA 20 BNP PARIBAS NOMINEES PTY LTD Total *Holding is aggregated over a shareholder group ASX ADDITIONAL INFORMATION Holding 86,558,314 40,697,675 34,192,943 26,000,000 20,044,320 20,000,000 17,376,228 14,900,000 14,200,000 12,000,000 11,765,681 11,027,984 10,731,707 10,000,000 10,000,000 10,000,000 9,818,927 9,255,097 8,000,000 7,263,636 6,685,319 6,407,798 % IC 6.06% 2.85% 2.39% 1.82% 1.40% 1.40% 1.22% 1.04% 0.99% 0.84% 0.82% 0.77% 0.75% 0.70% 0.70% 0.70% 0.69% 0.65% 0.56% 0.51% 0.47% 0.45% 396,925,629 27.79% 47 TWENTY LARGEST LISTED OPTION HOLDERS Position 1 2 3 Holder Name TRAYBURN PTY LTD MR NICK POUTSELAS LASTA NOMINEES PTY LTD MR VINCE TRUDA CAP HOLDINGS PTY LTD RIMOYNE PTY LTD MR CON PANAGO CALCOL PTY LTD MS MEI-LYN PETERSON MR VINCENZO BRIZZI & MRS RITA LUCIA BRIZZI MR VIVEK HANDA MS CHUNYAN NIU RED DOG FUND PTY LTD MR GRANT MALCOLM WALKER CAP HOLDINGS PTY LTD MR SCOTT ROBERT WEIR MR JAMES CHEN VEMAC ASCENT INVESTMENTS PTY LTD HONSHO PTY LTD MR BAHAA AMIN BASSILY MISS REKHA ARJANDAS BHAMBHANI 4 5 6 7 8 9 10 11 12 13 14 15 15 15 16 17 18 19 20 ASX ADDITIONAL INFORMATION Holding 41,027,984 9,000,000 8,000,000 6,500,000 6,055,970 5,399,202 4,000,000 3,655,448 3,500,000 3,411,262 3,127,984 3,000,002 2,250,000 2,061,016 2,000,000 2,000,000 2,000,000 1,477,113 1,350,000 1,349,995 1,300,000 % IC 25.64% 5.62% 5.00% 4.06% 3.78% 3.37% 2.50% 2.28% 2.19% 2.13% 1.95% 1.87% 1.41% 1.29% 1.25% 1.25% 1.25% 0.92% 0.84% 0.84% 0.81% CAP HOLDINGS PTY LTD Total 1,287,550 113,753,526 0.80% 71.09% UNLISTED OPTIONS   28,937,500 unquoted options with an exercise price of $0.008 and an expiry date of 1/07/22. 3,000,000 unquoted options with an exercise price of $0.02 and an expiry date of 13/10/22. SUBSTANTIAL SHAREHOLDERS Substantial shareholders in the Company are: Patrick Volpe Ordinary Shares Number Percentage 86,558,314 6.06% 48 ASX ADDITIONAL INFORMATION VOTING RIGHTS The voting rights attaching to each class of equity security are set out below: Ordinary Shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Options Options carry no voting rights. UNMARKETABLE PARCELS There were 1,650 holders of less than a marketable parcel of ordinary shares, which as at 13 October 2021 was 45,454. RESTRICTED / UNQUOTED SECURITIES There are no restricted or unquoted securities on issue. ON-MARKET BUY-BACK There is currently no on-market buyback program for any of ‘SI6 Metals’ listed securities. SECURITIES EXCHANGE The Company is listed on the Australian Securities Exchange under the code SI6. ACQUISITION OF VOTING SHARES No issues of securities have been approved for the purposes of Item 7 of Section 611 of the Corporations Act 2001. TAX STATUS The Company is treated as a public company for taxation purposes. FRANKING CREDITS The Company has no franking credits. 49 SCHEDULE OF INTERESTS IN MINING TENEMENTS EXPLORATION AREAS HELD IN BOTSWANA The Company holds the following prospecting licences in Botswana: Tenement Magogaphate PL 110/94 Mokoswane PL 111/94 Takane PL 54/98 Shashe South PL 059/2008 Renewal / Expiry Date Percentage Holding Title Holder Comment 31/03/2018 100 African Metals (Pty) Ltd Farm-in agreement with BCL Ltd*. 31/03/2018 100 African Metals (Pty) Ltd Farm-in agreement with BCL Ltd*. 31/03/2018 100 African Metals (Pty) Ltd Farm-in agreement with BCL Ltd*. 30/09/2016 100 African Metals (Pty) Ltd Renewal application submitted 30/06/16, to be included in JV with BCL Ltd*. PL186/2020 31/12/2023 PL188/2020 31/12/2023 PL006/2021 30/06/2024 PL007/2021 30/06/2024 100 100 100 100 African Metals (Pty) Ltd African Metals (Pty) Ltd African Metals (Pty) Ltd African Metals (Pty) Ltd PL136/2021 30/09/2024 100 African Metals (Pty) Ltd PL 389/2018 30/09/2021 100 African Metals (Pty) Ltd Pending renewal. *BCL Ltd is currently in liquidation with renewals of licences suspended. 50 EXPLORATION AREAS HELD IN WESTERN AUSTRALIA The Company’s subsidiary, Monument Exploration Pty Ltd holds the following licences in Western Australia: Tenement E39/1846 E39/1866 E39/2024 E39/2035 E39/2036 E39/2139 P39/5456 P39/5457 P39/5519 P39/5837 P39/5855 P39/5880 P39/5899 P39/5910 P39/6051 P39/6052 P39/6053 P39/6054 P39/6055 P39/6056 P39/6057 P39/6058 Renewal / Expiry Date 16/06/2025 1/02/2022 2/07/2023 2/07/2023 2/07/2023 21/07/2025 7/04/2022 7/04/2022 15/06/2023 30/10/2022 3/07/2023 15/05/2023 1/10/2022 30/10/2022 6/04/2024 6/04/2024 6/04/2024 5/08/2024 1/12/2024 1/12/2024 2/12/2024 2/12/2024 Percentage Holding 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 51 52 

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