Taruga Minerals Limited
Annual Report 2023

Plain-text annual report

ACN 153 868 789 ANNUAL REPORT 2023 CONTENTS Company Information Review of Operations Directors’ Report Corporate Governance Statement 3 4 11 22 Auditor’s Independence Declaration 23 Consolidated Statement of Profit or Loss and Other Comprehensive Income 24 Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to Financial Statements Directors’ Declaration Independent Auditor’s Report ASX Additional Information 25 26 27 28 52 53 57 Taruga Minerals Limited Page 2 COMPANY INFORMATION ACN Directors 153 868 789 Gary Steinepreis Paul Cronin Eric de Mori David Chapman Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Company Secretary Daniel Smith Registered Office Level 8, 99 St Georges Terrace Perth, WA 6000 Telephone: Facsimile: +61 8 9486 4036 +61 8 9486 4799 Share Registry Automic Group Level 2, 267 St Georges Terrace Perth, WA 6000 Auditor Bankers Telephone: Facsimile: 1300 288 664 +61 2 8583 3040 HLB Mann Judd (WA Partnership) Level 4, 130 Stirling Street Perth, WA 6000 Telephone: Facsimile: +61 8 9227 7500 +61 8 9227 7533 Westpac Banking Corporation 116 James Street Northbridge Perth, WA 6000 Securities Exchange Listing Taruga Minerals Limited Shares are listed on the Australian Securities Exchange. The home exchange is Perth, Western Australia. ASX Code: TAR Website www.tarugaminerals.com.au Taruga Minerals Limited Page 3 REVIEW OF OPERATIONS REVIEW OF OPERATIONS Company Overview Taruga Minerals Limited (Taruga or the Company) is a greenfields exploration and resource development company with a large portfolio of copper and rare earth elements (REE) focussed exploration projects in South Australia’s mineral rich Gawler Craton and Adelaide Fold Belt, and Western Australia’s Yilgarn Craton. Board and Management Paul Cronin | Non-Executive Director Mr Cronin is a co-founder and the Managing Director of Balkans polymetallic developer Adriatic Metals Ltd (ASX:ADT, LSE:ADT1), which was the best performing IPO of 2018 and recently admitted to the ASX All Ordinaries Index. Mr Cronin has over 20 years of experience in corporate finance, investment banking, funds management, and commodity trading. Currently a Director of Black Dragon Gold (ASX:BDG). Eric de Mori | Non-Executive Director Mr de Mori has over 15 years’ experience in ASX listed corporate finance specialising in natural resources. He has held Directorships with numerous ASX listed companies including as a co-founder and former Director of Balkans polymetallic developer Adriatic Metals (ASX:ADT, LSE:ADT1), which was the best performing IPO of 2018. Gary Steinepreis | Non-Executive Director Chartered Accountant with over 20 years’ experience with ASX-listing rules, corporate governance and equity capital raisings. Gary provides corporate, management and accounting advice to a number of companies involved in the resource, technology and leisure industries. David Chapman I Non-Executive Director Geologist and senior executive with over 40 years of international resource industry experience in diverse roles and commodities covering all aspects of the mining industry from exploration, operations and business development, through to feasibility studies, financing and construction. Daniel Smith | Company Secretary Director of Minerva Corporate, a boutique corporate advisory firm. Has advised on and been involved in over two dozen IPOs, RTOs and capital raisings on the ASX and AIM. Director and/or company secretary of numerous ASX and AIM listed companies. Taruga Minerals Limited Page 4 REVIEW OF OPERATIONS Figure 1. Tenement Map showing Taruga’s South Australian projects and the regional and structural setting including the Gawler Craton outline as published by the Geological Survey of South Australia in purple. The Mt Craig Project (100% TAR) The MCP is situated within the Adelaide Geosyncline (AGS) (Figure 1), and lies at the intersection of the G2 and G8 structural corridors (lineaments). On 5 September 2022, the Company announced that a rotary air blast (RAB) drilling program was underway at Mt Craig. Drilling focussed on testing strike extensions of clay-hosted REEs at Morgans Creek. All drilling is co-funded by the South Australian government under the Accelerated Discovery Initiative (ADI), under which Taruga was awarded $650,000 in funding for REEs and sediment-hosted copper exploration at the Mt Craig Project. Drilling intercepted high-grade clay-hosted REEs from surface, with many holes ending in mineralisation. Results extended the strike at Hydrothermal Hill to 4.3km, with large zones still remaining untested. Multiple peripheral targets remain untested at Morgans Creek, which will may be targeted in future drilling. Metallurgical Test Results (Morgans Creek) In mid-December 2022, Taruga announced preliminary ANSTO metallurgical outcomes with initial results providing extractions of up to 70% MREO, 60% HREO and 59% TREO. Further optimisation work is ongoing. Taruga Minerals Limited Page 5 REVIEW OF OPERATIONS Figure 2. MCP Project outline showing priority exploration targets, the main structural feature being the Worrumba Anticline, and the Analytical Signal magnetics image. Flinders IOCG Project, South Australia Taruga (via Strikeline Resources Pty Ltd) (Strikeline) is awaiting a decision on authorisation under Section 23 of the Aboriginal Heritage Act 1988 (SA). The Section 23 authorisation will resolve uncertainty in areas where Native Title has not been determined at the Flinders Project. This authorisation would confirm full drilling authorisation. On 27 October 2021, a public consultation meeting chaired by the Department of Aboriginal Affairs was held in Port Augusta, where Strikeline presented to interested parties and took questions about the project. Strikeline was advised by the Aboriginal Affairs and Reconciliation (AAR) division of the South Australian Department of Premier and Cabinet of a further extension to the Public Consultation period originally ending Taruga Minerals Limited Page 6 REVIEW OF OPERATIONS 30 September 2021, until 5 December 2021. The further extension was to allow interested parties additional time to consult with AAR and Strikeline regarding the Section 23 and 21 authorisations sought under the Aboriginal Heritage Act 1988 (SA) (authorisations). AAR advised that this extension would not further delay the authorisation process. The State Aboriginal Heritage Committee (SAHC) met on 13 January 2022 to review Strikeline’s applications and prepare a recommendation to the Minister for Aboriginal Affairs (the Minister). Strikeline is still awaiting a decision from the Minister on whether the authorisation will be granted, and if so, any conditions that may apply. Torrens Project, South Australia (100%) Work was limited to further desktop review of historical datasets for the Torrens Project for the period. Curnamona Project, South Australia (100%) On 25 August 2022, the Company announced that the exploration licence application for the Curnamona Project had been offered to Taruga by the South Australian Department of Energy and Mining. The acquisition of the Curnamona Project is consistent with Taruga’s focus on underexplored prolific polymetallic mineral provinces in close proximity to a number of world-class copper, gold and uranium resources. Martins Well Project, South Australia (100%) On 31 August 2022, the Company advised that it has lodged a successful bid for the Martins Well Project under the competitive release process. Taruga competed with other South Australian companies for the project, which Taruga considers may be prospective for clay hosted rare earth elements (REEs), copper- gold-silver, and zinc-lead. Taruga Minerals Limited Page 7 REVIEW OF OPERATIONS Western Australian projects Meekatharra, Western Australia (TAR 20%) The Meekatharra Project (Exploration licence E51/1832) is located 30km southeast of the regional centre of Meekatharra in the Murchison region of Western Australia. Perak Minerals Ltd (ASX: PUA) holds an 80% interest in E51/1832. Peak have since taken responsibility for managing the exploration program at Meekatharra which forms part of Peak’s “Green Rocks Project” (see PUA corporate presentation released on the 21 October 2021). On 20 May 2022, the Company provided an update on the Meekatharra project. Peak identified a strong, previously unidentified, EM conductor (500m x 300m) 250m below surface at Target B. Broad nickel anomalism intersected above the Target B conductor showed 17m @ 0.29% Ni from 56m (GRAC0037) and 10m @ 0.32% Ni from 50m (GRAC0038). Manjimup Project (100% TAR) Taruga holds 3 exploration licence applications in the Greenbushes area of Western Australia (the Manjimup Project). E70/5029 adjoins the Chalice Mining / Venture Minerals JV (announced 21/5/2020) in a similar geological setting to the “Odin Prospect” with identified nickel, copper & PGE mineralisation. Competent Person’s Statement – Exploration Results The information in this report that relates to exploration results is based on, and fairly represents information and supporting documentation prepared by Mr Brent Laws, a Competent Person who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Laws is the Exploration Manager of Taruga Minerals Limited. Mr Laws has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resource and Ore Reserves”. Mr Laws consents to the inclusion in this report of the matters based on their information in the form and context in which it appears. Taruga Minerals Limited Page 8 REVIEW OF OPERATIONS RISK MANAGEMENT The Board of Directors review the key risks associated with conducting exploration and evaluation activities in Australia and steps to manage those risks. The key material risks faced by the Company include: Exploration and development The future value of the Company will depend on its ability to find and develop resources that are economically recoverable. Mineral exploration and development is a speculative undertaking that may be impeded by circumstances and factors beyond the control of the Company. Success in this process involves, among other things; discovery and proving-up an economically recoverable resource or reserve, access to adequate capital throughout the project development phases, securing and maintaining title to mineral exploration projects, obtaining required development consents and approvals and accessing the necessary experienced operational staff, the financial management, skilled contractors, consultants and employees. The Company is entirely dependent upon its projects, which are the sole potential source of future revenue, and any adverse development affecting these projects would have a material adverse effect on the Company, its business, prospects, results of operations and financial condition. Economic Conditions Factors such as (but not limited to) political movements, stock market fluctuations, interest rates, inflation levels, commodity prices, industrial disruption, taxation changes and legislative or regulatory changes, may all have an adverse impact on operating costs, the value of the Company’s projects, the profit margins from any potential development and the Company’s share price. Reliance on key personnel The Company’s success is to a large extent dependent upon the retention of key personnel and the competencies of its directors, senior management, and personnel. The loss of one or more of the directors or senior management could have an adverse effect on the Company’s. There is no assurance that engagement contracts for members of the senior management team personnel will not be terminated or will be renewed on their expiry. If such contracts were terminated, or if members of the senior management team were otherwise no longer able to continue in their role, the Company would need to replace them which may not be possible if suitable candidates are not available. Future funding risk Continued exploration and evaluation is dependent on the Company being able to secure future funding from equity markets. The successful development of a mining project will depend on the capacity to raise funds from equity and debt markets. The Company will need to undertake equity/debt raisings for continued exploration and evaluation. There can be no assurance that such funding will be available on satisfactory terms or at all at the relevant time. Any inability to obtain sufficient financing for the Company’s activities and future projects may result in the delay or cancellation of certain activities or projects, which would likely adversely affect the potential growth of the Company. Unforeseen expenditure risk Exploration and evaluation expenditures and development expenditures may increase significantly above existing projected costs. Although the Company is not currently aware of any such additional expenditure requirements, if such expenditure is subsequently incurred, this may adversely affect the expenditure proposals of the Company and its proposed business plans. Environmental, weather & climate change The highest priority climate related risks include reduced water availability, extreme weather events, changes to legislation and regulation, reputational risk, and technological and market changes. Mining and exploration activities have inherent risks and liabilities associated with safety and damage to the environment, including the disposal of waste products occurring as a result of mineral exploration and production, giving rise to potentially substantial costs for environmental rehabilitation, damage control and Taruga Minerals Limited Page 9 REVIEW OF OPERATIONS losses. Delays in obtaining approvals of additional remediation costs could affect profitable development of resources. Cyber Security and IT The Company relies on IT infrastructure and systems and the efficient and uninterrupted operation of core technologies. Systems and operations could be exposed to damage or interruption from system failures, computer viruses, cyber-attacks, power or telecommunication provider’s failure or human error. CORPORATE Management Changes On 15 February 2023, the Company provided a corporate update and management changes. As a result of this re-alignment of priorities by the Board, Thomas Line, Taruga’s CEO, tendered his resignation. Capital raisings On 13 January 2023, the Company advised that it had issued 8,035,717 fully paid ordinary shares at $0.028 each, raising $225,000. Shareholder Meetings The Company held its 2022 Annual General Meeting on 24 November 2022. All resolutions were passed by way of a poll. Taruga Minerals Limited Page 10 DIRECTORS’ REPORT DIRECTORS’ REPORT Your Directors submit their report on the Group consisting of Taruga Minerals Limited and its controlled entities (Taruga) for the year ended 30 June 2023. DIRECTORS The following persons were Directors of Taruga Minerals Limited during the year and up to the date of this report unless otherwise stated: Gary Steinepreis Paul Cronin Eric De Mori David Chapman Non-executive Director Non-executive Director Non-executive Director Non-executive Director In office from In office to 15 July 2016 27 July 2020 27 July 2020 1 October 2021 present present present present PARTICULARS OF DIRECTORS Gary Steinepreis Non-Executive Director B.Com, CA Qualifications and experience Mr Steinepreis has in excess of 20 years’ experience with ASX-listing rules, corporate governance and equity capital raisings. Mr Steinepreis is a Chartered Accountant and holds a Bachelor of Commerce from University of Western Australia. Mr Steinepreis is currently a Non-Executive Director of CFOAM Limited and Lachlan Star Limited. Interest in Shares and Options Fully Paid Shares – 12,090,719 Performance Rights – Nil Options – 5,000,000 Special Responsibilities None. Directorships held in listed entities Company Name CFOAM Limited Lachlan Star Limited Appointed 30 March 2016 18 January 2018 Resigned - - Paul Cronin Non-Executive Director B.Com, MBA Qualifications and experience Mr Cronin is a co-founder and Managing Director of Balkans polymetallic developer Adriatic Metals PLC (ASX:ADT, LSE:ADT1), which was the best performing IPO of 2018. Mr Cronin has over 20 years of experience in corporate finance, investment banking, funds management, and commodity trading. Mr Cronin was Vice President of RMB Resources, the resource investment arm of First Rand Bank, and has a Taruga Minerals Limited Page 11 DIRECTORS’ REPORT B.Com and MBA from the Queensland University of Technology. Mr Cronin is also a Non-Executive Director of Black Dragon Gold (ASX:BDG) and Global Atomic Corporation (TSX:GLO). Interest in Shares and Options Fully Paid Shares – 9,471,429 Performance Rights – Nil Options – 9,000,000 Special Responsibilities None. Directorships held in listed entities Company Name Adriatic Metals Plc Black Dragon Gold Limited Global Atomic Corporation Appointed 3 February 2017 10 July 2017 December 2017 Resigned - - July 2021 Eric de Mori Non-Executive Director Qualifications and experience Mr de Mori has over 15 years’ experience in ASX listed corporate finance specialising in natural resources. He has held Directorships with numerous ASX listed companies including as a co-founder and former Director of Balkans polymetallic developer Adriatic Metals (ASX:ADT, LSE:ADT1), which was the best performing IPO of 2018. Interest in Shares and Options Fully Paid Shares – 27,771,441 Performance Rights – Nil Options – 13,000,000 Special Responsibilities None. Directorships held in listed entities Company Name Invictus Energy Ltd Appointed 11 December 2017 Resigned 27 November 2020 David Chapman Non-Executive Director Qualifications and experience Mr. Chapman is a Geologist and senior executive with over 40 years of international resource industry experience in diverse roles and commodities covering all aspects of the mining industry from exploration, operations and business development, through to feasibility studies, financing and construction. Most recently, David spent 5 years as the Managing Director of Australia’s leading geophysical consultancy firm, Southern Geoscience Consultants (SGC). Taruga Minerals Limited Page 12 DIRECTORS’ REPORT Interest in Shares and Options Fully Paid Shares – 1,481,095 Performance Rights – Nil Options – 5,000,000 Special Responsibilities None. Directorships held in listed entities None. Information on Company Secretary Daniel Smith Mr Smith is a Chartered Secretary who holds a BA, is a Fellow member of the Governance Institute of Australia, and has in excess of 15 years primary and secondary capital markets expertise. Mr Smith is currently a Director and/or Company Secretary of several AIM-listed and ASX-listed companies. OPERATING AND FINANCIAL REVIEW A review of the operations of the Group during the financial year is contained in the Review of Operations section of this Annual Report. PRINCIPAL ACTIVITIES The principal activity of the Group during the year was mineral exploration in Australia. Operating Results The consolidated loss after tax for the financial year is $964,151 (2022: $1,325,720). Financial Position At 30 June 2023 the Company had cash reserves of $3,220,789 (2022: $2,145,295). Dividends No dividends were paid during the year and no recommendation is made as to dividends. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS In the opinion of the Directors, there were no significant changes in the state of affairs of the Group that occurred during the financial year under review not otherwise disclosed in this report or in the consolidated accounts. Taruga Minerals Limited Page 13 DIRECTORS’ REPORT MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR No matters have arisen since 30 June 2023 that in the opinion of the directors has significantly affected or may significantly affect in future financial years (i) the Group’s operations, or (ii) the results of those operations, or (iii) the Group’s state of affairs. LIKELY DEVELOPMENTS AND EXPECTED RESULTS Exploration and evaluation work on the Company’s projects continues. Subject to approval from the Minister for Aboriginal Affairs under Section 23 of the Aboriginal Heritage Act, drilling would recommence at Flinders IOCG project within the 2023 year. The Yagahong North Project is currently subject to a farm-in agreement with Peak Resources Ltd. It is anticipated that drill testing would be conducted during the current reporting period. MEETINGS OF DIRECTORS The following table sets out the number of meetings of the Company’s Directors held during the year ended 30 June 2023, and the number of meetings attended by each Director. Gary Steinepreis Paul Cronin Eric De Mori David Chapman REMUNERATION REPORT Number eligible to attend Number attended 2 2 2 2 2 2 2 2 This report details the nature and amount of remuneration for each director and “Key Management Personnel” of Taruga Minerals Limited. The report has been subject to audit. Key Management Personnel are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, including any director. Remuneration policy The Board policy is to remunerate Directors at market rates for time, commitment and responsibilities. The Board determines benefits to the Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of Directors’ fees that can be paid is subject to approval by shareholders in general meeting, from time to time. Fees for Non-Executive Directors are not linked to the performance of the Group. However, to align Directors’ interests with shareholders’ interests, the Directors are encouraged to hold securities in the Company. The Company’s aim is to remunerate at a level that will attract and retain high-calibre Directors and employees. Company officers and Directors are remunerated to a level consistent with the size of the Company. The Company has not used external remuneration consultants during the year. Taruga Minerals Limited Page 14 DIRECTORS’ REPORT Performance-based remuneration To ensure that the Company has appropriate mechanisms in place to continue to attract and retain the services of suitable directors and employees, the Company has issued options and performance rights to key personnel. Details of remuneration for year ended 30 June 2023 Directors’ Remuneration No salaries, commissions, bonuses or superannuation were paid or payable to Directors during the year. Remuneration was by way of fees paid monthly in respect of invoices issued to the Company by the Directors or companies associated with the Directors in accordance with agreements between the Company and those entities. Details of the agreements are set out below. Agreements in respect of cash remuneration of Directors: Non-executive Directors The Company’s constitution provides that the Non-executive Directors may collectively be paid as remuneration for their services a fixed sum not exceeding the aggregate sum determined by a general meeting. The aggregate remuneration has been set at an amount of $300,000 per annum. Mr Gary Steinepreis is on a contract dated 15 July 2017, which provides for a fixed fee of $3,000, increasing to $4,000 per month from October 2020. Mr Paul Cronin is on a contract dated 26 July 2020, which provides for a fixed fee of $3,000, increasing to $4,000 per month from October 2020. Mr Eric de Mori is on a contract dated 26 July 2020, which provides for a fixed fee of $3,000, increasing to $4,000 per month from October 2020. Mr David Chapman is on a contract dated 30 September 2021, which provides for a fixed fee of $4,000 per month. All Director’s fees were put on hold from February 2023 to conserve the Company’s cash balance. Fees are not accruing during this period. A Director may be paid fees or other amounts as the Directors determine where a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director. A Director may also be reimbursed for out of pocket expenses incurred as a result of their directorship or any special duties. Executive Directors may be paid on commercial terms as the Directors see fit. Taruga Minerals Limited Page 15 DIRECTORS’ REPORT The total remuneration paid to Key Management Personnel is summarised below: Year ended 30 June 2023 Director Associated Company Gary Steinepreis Paul Cronin Eric de Mori David Chapman Leisurewest Consulting Pty Ltd Parati Pty Ltd Other KMP Thomas Executive Officer)1 Total Line (Chief Short-term Benefits Fees Cash Bonus $ $ Share Based Payments(2) $ Performance Rights (2) $ Post- employment benefits Super- annuation $ Total $ Performance related % 28,000 28,000 25,339 28,000 109,339 236,313 345,652 - - - - - - - - - - 22,709 22,709 55,614 78,323 - - - - - - 2,661 - 2,661 28,000 28,000 28,000 50,709 134,709 - - - 44.78% - 6,865 6,865 19,902 22,563 318,694 453,403 19.60% - Thomas Line resigned on 15 February 2023. (1) (2) Refer to note 22 of the financial statements for further details. Taruga Minerals Limited Page 16 DIRECTORS’ REPORT Year ended 30 June 2022 Director Associated Company Short-term Benefits Fees Cash Bonus $ $ Share Based Payments(2) $ Performance Rights (2) $ Post- employment benefits Super- annuation $ Total $ Performance related % Gary Steinepreis Paul Cronin Eric de Mori David Chapman 1 Leisurewest Consulting Pty Ltd Parati Pty Ltd Other KMP Thomas Executive Officer) Total Line (Chief 48,000 48,000 43,636 36,000 175,636 225,000 400,636 - - - - - - - (1) David Chapman was appointed on 1 October 2021. (2) Refer to note 22 of the financial statements for further details. 30,982 30,982 30,982 86,294 179,240 - - - - - - - 4,364 - 4,364 78,982 78,982 78,982 122,294 359,240 - - - - - - 179,240 18,854 18,854 22,500 26,864 266,354 625,594 7% - Taruga Minerals Limited Page 17 DIRECTORS’ REPORT (4) Performance Rights Valuation In 2021 the company agreed a revised remuneration package with the former Chief Executive Officer, Mr Thomas Line. The terms of Mr Line’s remuneration package were as follows: Remuneration Incentives Short-term (STI) Long-term (LTI) Base Salary of $225,000 per annum plus superannuation, effective 1 July 2021. Effective 1 July 2021, earn up to 100% of Base Salary (excluding super) as measured by performance against annually determined KPI’s, including OH&S, environmental, ESG, stakeholder engagement, and corporate The awarding of 2,000,000 performance rights, vesting over three years (31 August 2022, 31 August 2023, 31 August 2024) on meeting LTI KPI’s. At, or following the Review Date, the Board may, in its absolute discretion, give to the Executive a Vesting Notice in respect of a number of Performance Rights up to, but not exceeding, the maximum Performance Rights amount set out for that Review Date in the Performance Rights vesting table. If the Board gives a Vesting Notice in respect of any Performance Rights, those performance rights will vest on the giving of that Vesting Notice. If the Company has not given a Vesting Notice for an amount of Performance Rights equal to the maximum performance rights amount in respect of a Review Date by the corresponding Expiry Date, that number of Performance Rights that are not the subject of a Vesting Notice will be forfeited on that Expiry Date. The above performance rights were subject to market and non-market based vesting conditions. The performance rights with market-based conditions were valued in the prior year as follows: Item Value of underlying security Exercise price Valuation date Tranche 1 $0.054 nil 15 September 2021 15 September Tranche 2 $0.054 nil 10-Day VWAP barrier Life of the Rights (years) Volatility Risk-free rate Dividend yield Share price targets Value per Right Number of Rights Weighting on total LTIP Weighted no. of securities Taruga Minerals Limited $0.1404-$0.2340 0.79 109% 0.026% nil Note 1 $0.0181 666,666 61.6% 410,666 2021 $0.1404-$0.2340 1.79 109% 0.013% nil Note 1 $0.0342 666,666 61.6% 410,666 Tranche 3 $0.054 nil 15 September 2021 $0.1404-$0.2340 2.79 109% 0.113% nil Note 1 $0.0417 666,666 61.6% 410,666 Page 18 DIRECTORS’ REPORT Value per Tranche Expensed at 30 June 2023 $7,433 ($5,716) $14,045 $3,830 $17,125 $3,022 1 Share price targets – 20-day volume weighted average price of at least $0.0966 (being 50% increase from benchmark VWAP of $0.0644) for 25% to vest, $0.1288 (being 100% increase from benchmark VWAP of $0.0644) for 50% to vest and $0.1610 (being 150% increase from benchmark VWAP of $0.0644) for 100% to vest. Thomas Line resigned on 15 February 2023. No further vesting expense was recognised past this date. Shareholdings of Key Management Personnel: Balance 30 June 2022 Balance on Appointment Additions/ (disposals)1 Balance on Resignation Balance 30 June 2023 Gary Steinepreis Paul Cronin Eric de Mori David Chapman Thomas Line 10,305,004 5,900,000 25,985,726 588,235 - - - - 1,785,715 3,571,429 1,785,715 892,858 - - - - 12,090,719 9,471,429 27,771,441 1,481,093 - 50,814,682 (28,833,644) (28,833,644) 1 Directors participation in Placement following shareholder approval at General Meeting 23 December 2022. 28,833,644 71,612,609 - 8,035,717 - - Option holdings of Key Management Personnel: 2023 Balance 30 June 2022 Balance on appointment Additions Balance on Resignation Balance 30 June 2023 Gary Steinepreis Paul Cronin Eric de Mori David Chapman Thomas Line 5,000,000 9,000,000 13,000,000 5,000,000 - 32,000,000 - - - - - - - - - - - - - - - - - - 5,000,000 9,000,000 13,000,000 5,000,000 - 32,000,000 No options were exercised or lapsed during the year. Taruga Minerals Limited Page 19 DIRECTORS’ REPORT 2022 Balance 30 June 2021 Balance on appointment Additions Balance on Resignation Balance 30 June 2022 Gary Steinepreis Paul Cronin Eric de Mori David Chapman1 Thomas Line 5,000,000 9,000,000 13,000,000 - - - - - 27,000,000 1Mr Chapman was appointed on 1 October 2021. - - - - - - 5,000,000 - 5,000,000 - - - - - - 5,000,000 9,000,000 13,000,000 5,000,000 - 32,000,000 Performance rights holdings of Key Management Personnel: Balance 30 June 2022 Balance on appointment Additions Issues/ (Expiry) Balance on Resignation Balance 30 June 2023 Thomas Line 2,000,000 2,000,000 - (666,666) (666,666) (1,333,334) (1,333,334) - - - 1 See note 23 for details of performance rights and options issued to directors and management. End of remuneration report Taruga Minerals Limited Page 20 DIRECTORS’ REPORT ENVIRONMENTAL ISSUES The Group has conducted exploration activities on mineral tenements. The right to conduct these activities is granted subject to environmental conditions and requirements. The Group aims to ensure a high standard of environmental care is achieved and, as a minimum, to comply with relevant environmental regulations. There have been no known breaches of any of the environmental conditions. OPTIONS At the date of this report, there were 57,750,000 unlisted options on issue. The names of persons who currently hold options are entered in a register pursuant to Section 170 of the Corporations Act 2001. No person entitled to exercise any option has or had, by virtue of the option, a right to participate in any share issue of the Company or any other corporation. Subsequent to year end no options have been issued or exercised. INDEMNIFICATION OF DIRECTORS The Company has in place Deeds of Indemnity with each of the Directors. AUDITOR HLB Mann Judd continues in office in accordance with section 327 of the Corporations Act 2001. NON-AUDIT SERVICES There were no non-audit services provided during the current year by our auditors, HLB Mann Judd. PROCEEDINGS ON BEHALF OF COMPANY No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. AUDITOR’S INDEPENDENCE DECLARATION Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the directors of the company with an Independence Declaration in relation to the review of the financial report. This Independence Declaration is set out on page 23 and forms part of this directors’ report for the year ended 30 June 2023. This report is signed in accordance with a resolution of the Board of Directors made pursuant to section 306(3) of the Corporations Act 2001. Gary Steinepreis Non-Executive Director Dated Perth 29 September 2023 Taruga Minerals Limited Page 21 CORPORATE GOVERNANCE STATEMENT AND CONTROLLED ENTITIES The Company has adopted systems of control and accountability as the basis for the administration of corporate governance. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company's needs. To the extent they are applicable, the Company has adopted the Corporate Governance Principles and Recommendations (4th Edition) as published by ASX Corporate Governance Council. The following corporate governance charters, codes and policies have been implemented and are available on the Company’s website at www.tarugaminerals.com.au: • • • • • • • Board Charter Corporate Code of Conduct Diversity, Nomination and Remuneration Committee Charter Audit and Risk Committee Charter Shareholder Communication Guidelines and Policy Disclosure Policy Securities Trading Policy Taruga Minerals Limited Page 22 AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the consolidated financial report of Taruga Minerals Limited for the year ended 30 June 2023, I declare that to the best of my knowledge and belief, there have been no contraventions of: a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) any applicable code of professional conduct in relation to the audit. Perth, Western Australia 29 September 2023 N G Neill Partner Taruga Minerals Limited Page 23 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2023 AND CONTROLLED ENTITIES Note CONSOLIDATED Year to 30 June 2023 Year to 30 June 2022 2 2 3 Revenue Depreciation Consultants Employee benefits expense Professional fees Travel and accommodation Office and communication costs Share-based payments Exploration expenditure expensed Foreign exchange loss Other expenses Loss from continuing operations before income tax Income tax expense loss Net operations for the period from continuing Loss from discontinued operations net of tax Net loss for the period Other comprehensive income/(loss) Items that may be reclassified to profit or loss Exchange gain/(loss) on translation of foreign subsidiaries Total comprehensive loss for the period $ 44,037 (64,370) (157,787) (154,962) (150,287) (43,361) - (111,473) (89,182) (907) (235,859) $ 1,064 (24,722) (218,528) (442,549) (142,562) (15,505) (1,579) (222,001) (4,589) (1,524) (247,372) (964,151) (1,319,867) - - (964,151) (1,319,867) - (964,151) (5,853) (1,325,720) - (964,151) (5,662) (1,331,382) Basic and diluted loss per share (cents per share) Basic and diluted loss per share from continuing operations (cents per share) 18 18 (0.15) (0.15) (0.25) (0.25) The accompanying notes form part of these financial statements. Taruga Minerals Limited Page 24 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2023 AND CONTROLLED ENTITIES Note 4 5 7 8 9 CONSOLIDATED 30 June 2023 $ 30 June 2022 $ 3,220,789 31,664 2,145,295 56,493 3,252,453 2,201,788 9,334,516 213,713 110,000 8,200,267 87,451 80,000 9,658,229 8,367,718 12,910,682 10,569,506 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Total Current Assets NON CURRENT ASSETS Mineral exploration and evaluation Plant and equipment Other assets Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 10 200,639 290,582 Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY 200,639 290,582 200,639 290,582 12,710,043 10,278,924 11 12 12 35,136,895 3,498,863 (25,925,715) 31,876,464 3,364,024 (24,961,564) 12,710,043 10,278,924 The accompanying notes form part of these financial statements. Taruga Minerals Limited Page 25 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2023 AND CONTROLLED ENTITIES Year to 30 June 2022 As at 1 July 2021 Loss for the year Other comprehensive income/(loss) Total comprehensive loss for the year Issue of shares net of costs - placement Issue of shares net of costs - acquisition Issue of shares net of costs – exercise of options Share-based payments – Performance Rights/Options As at 30 June 2022 Year to 30 June 2023 As at 1 July 2022 Loss for the year Other comprehensive income/(loss) Total comprehensive loss for the year Issue of shares net of costs - placement Issue of shares net of costs – exercise of options Share-based payments – Performance Rights/Options As at 30 June 2023 Issued Capital Accumulated Losses Share Based Payments Reserve Foreign Currency Translation Reserve Total Equity Consolidated $ $ $ $ $ 29,475,236 - - - 2,097,537 194,316 109,375 (23,635,844) (1,325,720) - (1,325,720) - - 3,101,320 - - - - - 40,512 - (5,662) (5,662) - - 8,981,224 (1,325,720) (5,662) (1,331,382) 2,097,537 194,316 - - - 109,375 - 31,876,464 - (24,961,564) 227,854 3,329,174 31,876,464 - - - 3,176,802 (24,961,564) (964,151) - (964,151) - 3,329,174 - - - - - 34,850 34,850 - - - - 227,854 10,278,924 10,278,924 (964,151) - (964,151) 3,176,802 83,629 - - - 83,629 - 35,136,895 - (25,925,715) 134,839 3,464,013 - 34,850 134,839 12,710,043 The accompanying notes form part of these financial statements. Taruga Minerals Limited Page 26 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2023 AND CONTROLLED ENTITIES CONSOLIDATED Note Year to 30 June 2023 $ Year to 30 June 2022 $ CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers Interest income received 21,030 (863,086) 23,007 - (947,811) 1,064 Net cash used in operating activities 15 (819,049) (946,747) CASH FLOWS FROM INVESTING ACTIVITIES Payments for exploration expenditure Payments for property, plant & equipment 7 8 (1,198,621) (190,632) (2,482,522) (32,870) Net cash used in investing activities (1,389,253) (2,515,392) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Share issue transaction costs 3,500,000 (216,204) 2,352,975 (134,893) Net cash provided by financing activities 3,283,796 2,218,082 Net increase/(decrease) in cash held 1,075,494 (1,244,057) Cash and cash equivalents at the beginning of the year 2,145,295 3,390,011 Effect of exchange rate fluctuations on cash held - (659) Cash and cash equivalents at the end of the year 3,220,789 2,145,295 The accompanying notes form part of these financial statements. Taruga Minerals Limited Page 27 NOTES TO THE FINANCIAL STATEMENTS NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Accounting Standards and Interpretations and complies with other requirements of the law. Historical cost is based on the fair values of the consideration given in exchange for assets. The financial report has also been prepared on a historical cost basis. The financial report is presented in Australian dollars. The company is a listed public company, incorporated in Australia and operating in Australia. The entity’s principal activity is mineral exploration. The accounting policies detailed below have been consistently applied to all of the periods presented unless otherwise stated. The financial statements are for the Group consisting of Taruga Minerals and its subsidiaries. For the purposes of preparing the consolidated financial statements, the Group is a for profit entity. The financial report has also been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has been applied. Statement of Compliance The financial report was authorised for issue on 29 September 2023. The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS). Adoption of new and revised standards Standards and Interpretations applicable to 30 June 2023 In the year ended 30 June 2023, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Group’s operations and effective for annual reporting periods beginning on or after 1 July 2022. As a result of this review the Directors have determined that there is no material impact of the new and revised Standards and Interpretations on the Group and, therefore, no change is necessary to Group accounting policies. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2023. The consolidated entity has not yet assessed the impact of these new or amended Accounting Standards and Interpretations. Taruga Minerals Limited Page 28 NOTES TO THE FINANCIAL STATEMENTS Accounting Policies (a) Basis of Consolidation A controlled entity is any entity controlled by Taruga Minerals Limited. Control exists where Taruga Minerals Limited has the capacity to dominate the decision-making in relation to the financial and operating policies of another entity so that the other entity operates with Taruga Minerals Limited to achieve the objectives of Taruga Minerals Limited. All controlled entities have a 30 June financial year-end. All inter-company balances and transactions between entities in the Group, including any unrealised profit or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity. Where controlled entities have entered or left the Group during the year, their operating results have been included from the date control was obtained or until the date control ceased. When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between: • The aggregate of the fair value of the consideration received and the fair value of any retained interest; and • The previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by the applicable AASBs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under AASB 139, when applicable, the cost on initial recognition of an investment in an associate or a joint venture. (b) Going Concern The financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. Notwithstanding the fact that the Group incurred an operating loss of $964,151 for the year ended 30 June 2023, and a net cash outflow from operating activities amounting to $819,049, the Directors are of the opinion that the Company is a going concern and will have access to sufficient cash, from equity issues or loans, as and when required to enable it to fund administrative and other committed expenditure. Income Tax (c) The charge for current income tax expenses is based on the result for the year adjusted for any non- assessable or disallowable items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance date. Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amount in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary difference can be utilised. Taruga Minerals Limited Page 29 NOTES TO THE FINANCIAL STATEMENTS The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. (d) Plant and Equipment Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation. Plant and equipment are measured on the cost basis less depreciation and impairment losses. The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future consolidated benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets including capitalised lease assets, but excluding computers, is depreciated on a reducing balance commencing from the time the asset is held ready for use. Computers are depreciated on a straight line basis over their useful lives to the Group commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset: Plant and Equipment Depreciation Rate: 15 – 50% The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of profit or loss and other comprehensive income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. (e) Exploration and Evaluation Expenditure Exploration and evaluation expenditure incurred is either written off as incurred or accumulated in respect of each identifiable area of interest. Tenement acquisition costs are initially capitalised where the requirements under AASB 6 for so doing are satisfied. Costs are only carried forward to the extent that they are expected to be recouped through the successful development of the areas, sale of the respective areas of interest or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the areas is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Restoration, rehabilitation and environmental costs necessitated by exploration and evaluation activities are expensed as incurred and treated as exploration and evaluation expenditure. Taruga Minerals Limited Page 30 NOTES TO THE FINANCIAL STATEMENTS Impairment of Assets (f) At each reporting date, the Directors review the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the assets, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of comprehensive income. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. (g) Provisions Provisions are recognised where there is a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. (h) Cash and Cash Equivalents Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. Trade and other receivables (i) Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Revenue (j) Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. (k) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expenses. Receivables and payables in the statement of financial position are shown inclusive of GST. Issued Capital (l) Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. (m) Trade and other payables Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. (n) Segment Reporting Taruga Minerals Limited Page 31 NOTES TO THE FINANCIAL STATEMENTS 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 of Directors of Taruga Minerals Limited. Critical accounting estimates and judgements The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Key Estimates – Impairment The Directors assess impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. An impairment of $770,559 (including foreign exchange movement during the year of $19,711) is recognised in respect of prepaid acquisition consideration repayable to the Group (note 6) due to the uncertainty surrounding the timing of the repayment to the Group. Key Estimates – Share-based payment transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a Black- Scholes model, using the assumptions detailed in Note 22. The Group measures the cost of cash-settled share-based payments at fair value at the grant date using the Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. (o) Share based payments – shares and options The fair value of shares and share options granted is recognised as an expense with a corresponding increase in equity. Fair value is measured at grant date and recognised over the period during which the grantees become unconditionally entitled to the shares or share options. The fair value of share grants at grant date is determined by the share price at that time. The fair value of share options at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, any vesting and performance criteria, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk free rate for the term of the option. Upon the exercise of the option, the balance of the share-based payments reserve relating to the option is transferred to share capital. (p) Foreign currency translation Both the functional and presentation currency of Taruga Minerals Limited is Australian dollars. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance date. All exchange differences in the consolidated financial report are taken to profit or loss with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in profit or loss. Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity. Taruga Minerals Limited Page 32 NOTES TO THE FINANCIAL STATEMENTS Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. The functional currency of the subsidiary MGS Ghana is CFA Francs. The functional currency of the subsidiary Taruga Congo SARLU was Congalese Franc. As at the balance date the assets and liabilities of these subsidiaries are translated into the presentation currency of Taruga Minerals Limited at the rate of exchange ruling at the balance date and income and expense items are translated at the average exchange rate for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. The exchange differences arising on the translation are taken directly to a separate component of equity, being recognised in the foreign currency translation reserve. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in profit or loss. In addition, in relation to the partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non- controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates or jointly controlled entities that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss. (q) Parent entity financial information The financial information for the parent entity, Taruga Minerals Limited, disclosed in Note 21 has been prepared on the same basis as the consolidated financial statements, except for Investments in subsidiaries which are accounted for at cost in the parent entity’s financial statements. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments. Taruga Minerals Limited Page 33 NOTES TO THE FINANCIAL STATEMENTS NOTE 2 – LOSS FROM CONTINUING ACTIVITIES BEFORE INCOME TAX Expenses Depreciation of non-current assets continuing operations: Plant and Equipment Office furniture and equipment Motor vehicles Total depreciation of non-current assets Consolidated 2023 $ 2022 $ 58,270 4,796 1,304 64,370 4,176 18,807 1,739 24,722 Share-based payments: Share-based payments to directors and consultants/employees (Note 22) 111,473 222,001 NOTE 3 – INCOME TAX The prima facie tax expense at 30% on loss from continuing activities is reconciled to the income tax expense in the financial statements as follows: 2023 $ 2022 $ Loss from continuing operations (964,151) (1,325,720) Prima facie income tax expense at 30% (2022: 30%) (289,245) (397,716) Tax effect of permanent differences Share-based payments Other non-deductible expenses 33,442 - 66,600 - Income tax expense adjusted for permanent differences (255,803) (331,116) Deferred tax asset not brought to account Income tax expense 255,803 - 331,116 - Taruga Minerals Limited Page 34 NOTES TO THE FINANCIAL STATEMENTS NOTE 3 – INCOME TAX (CONTINUED) Income tax benefit The directors estimate the cumulative unrecognised deferred tax asset attributable to the company and its controlled entity at 30% is as follows: Deferred tax assets Revenue losses after permanent differences Capital losses Capital raising costs yet to be claimed Accruals Exploration Other Deferred tax asset Consolidated 2023 $ 2022 $ 3,539,159 800,113 146,150 7,200 (1,558,355) 6,299 2,940,566 2,881,177 800,113 119,202 9,600 (1,218,080) 8,038 2,600,050 The potential deferred tax asset has not been brought to account in the financial report at 30 June 2023 as the Directors do not believe it is appropriate to regard the realisation of the asset as probable. This asset will only be obtained if: (a) (b) The company and its controlled entity derive future assessable income of an amount and type sufficient to enable the benefit from the deductions for the tax losses and the unrecouped exploration expenditure to be realised; The company and its controlled entity continue to comply with the conditions for deductibility imposed by tax legislation; and (c) No changes in tax legislation adversely affect the company and its controlled entity in realising the benefit from the deductions for the tax losses and unrecouped exploration expenditure. Franking Credits No franking credits are available at balance date for the subsequent financial year. NOTE 4 – CASH AND CASH EQUIVALENTS Cash at bank and on hand 2023 $ 3,220,789 2022 $ 2,145,295 Cash at bank earns interest at floating rates based on daily deposit rates. NOTE 5 – TRADE AND OTHER RECEIVABLES Current GST receivable Other receivables Other current assets No credit losses are expected at balance date. 2023 $ - 29,830 1,834 31,664 2022 $ 28,478 26,181 1,834 56,493 Taruga Minerals Limited Page 35 NOTES TO THE FINANCIAL STATEMENTS NOTE 6 – OTHER ASSETS Share subscription receivable Prepaid acquisition consideration at 1 July 2019 Impairment 1 Consolidated 2023 $ 2022 $ 770,559 (770,559) - 740,336 (740,336) - 1 Prepaid acquisition consideration totalling US$510,000 towards due diligence costs, and the acquisition of the Kamilombe Project and adjacent tenure in the DRC. During 2020, management decided not to pursue completing the acquisition and sought repayment of these advances. Due to concerns on the timing of the repayment, which raises doubts about recoverability, management impaired the balance in full. Management continues to work on a repayment plan for these advances with the unrelated third party. NOTE 7: MINERAL EXPLORATION AND EVALUATION Opening balance Project acquisition costs Capitalised exploration expenditure Acquisition costs in respect of areas of interest in the exploration phase Note (i) (ii) Consolidated 2023 $ 2022 $ 8,200,267 - 1,134,249 5,720,931 189,000 2,290,336 9,334,516 8,200,267 The recoverability of deferred project acquisition costs is dependent upon the successful development and commercial exploitation, or alternately the sale of the areas of interest. (i) On 11 May 2021 the Company completed the acquisition of Strikeline Resources Pty Ltd and the Flinders, Torrens and Mt Craig Projects in South Australia. The acquisition consideration consisted of the issue of 40 million shares at a share price of $0.09 to the vendors of Strikeline and 3,900,000 shares to the advisors of the transaction at a share price of $0.09. Strikeline Resources Pty Ltd’s only asset was exploration assets and no liabilities, and has therefore been accounted for as an acquisition of exploration expenditure. On 15 July 2021 the Company issued an additional 2,100,000 share to the advisors of the transaction at a share price of $0.09. In addition to the above acquisition consideration Taruga will also make the following milestone payments to the sellers of Strikeline. The probability and timing of these milestones cannot be reliably estimated and have not been included in the acquisition consideration in the above table. Performance Milestone 1: Following Taruga delineating a JORC Indicated Resource (as defined in JORC 2012) of 150,000t Cu Equivalent (Cu, Au, Ag) at the Project, Taruga will make a milestone payment to the sellers of A$400,000 which may at the election of Taruga be paid in cash or Ordinary Fully Paid Shares at the 14-day VWAP of Taruga’s Share price as traded on the ASX; Taruga Minerals Limited Page 36 NOTES TO THE FINANCIAL STATEMENTS NOTE 7: MINERAL EXPLORATION AND EVALUATION (CONTINUED) Performance Milestone 2: Following Taruga completing a positive Bankable Feasibility Study (as defined in JORC 2012) in relation to the Project, Taruga will make a milestone payment to the sellers of A$500,000 which may at the election of Taruga be paid in cash or Ordinary Fully Paid Shares at the 14-day VWAP of Taruga’s Share price as traded on the ASX; and Performance Milestone 3: Following Taruga commencing commercial production (being first concentrate sales) at the Project, the Company will make a payment to the sellers of A$500,000 which may at the election of Taruga be paid in cash or Ordinary Fully Paid Shares at the 14-day VWAP of Taruga’s Share price as traded on the ASX. In accordance with the NSR agreement the Company will grant to the Vendors a 1% NSR in respect of all precious, industrial minerals and base metals produced, sold and proceeds received from the Project. Taruga will have the right to buy back the NSR from the sellers for total consideration of A$500,000 which may at the election of Taruga be paid in cash or Ordinary Fully Paid Shares at the 30-day VWAP of Taruga’s Share price as traded on the ASX. (ii) The Company has capitalised exploration costs of $1,134,249 in respect of the above projects. Includes a refund received of $586,889 from the South Australian government during the year for expenditure at the Company’s Mt Craig copper project. The recoverability of the carrying amounts of exploration and evaluation assets is dependent on the successful development and commercial exploitation or sale of the respective area of interest as well as maintaining rights of tenure. Taruga Minerals Limited Page 37 NOTES TO THE FINANCIAL STATEMENTS NOTE 8 – PLANT AND EQUIPMENT Cost 2023 Balance Brought Forward Additions Balance Carried Forward Accumulated Depreciation Balance Brought Forward Charge Balance Carried Forward Net Book Value 30 June 2023 Consolidated Motor Vehicles Computer Equipment $ $ Plant & Equipment $ Total $ 14,033 - 14,033 8,815 1,304 10,119 3,914 19,827 1,551 21,378 7,173 4,796 11,969 98,105 189,081 287,186 131,965 190,632 322,597 28,526 58,270 86,796 44,514 64,370 108,884 9,409 200,390 213,713 Taruga Minerals Limited Page 38 NOTES TO THE FINANCIAL STATEMENTS NOTE 8 – PLANT AND EQUIPMENT (CONTINUED) Cost 2022 Balance Brought Forward Additions Balance Carried Forward Accumulated Depreciation Balance Brought Forward Charge Balance Carried Forward Net Book Value 30 June 2022 Consolidated Motor Vehicles Computer Equipment $ $ Plant & Equipment $ Total $ 98,514 33,451 131,965 19,792 24,722 44,514 14,033 - 14,033 7,076 1,739 8,815 5,218 14,572 5,255 19,827 2,997 4,176 7,173 69,909 28,196 98,105 9,719 18,807 28,526 12,654 69,579 87,451 Taruga Minerals Limited Page 39 NOTES TO THE FINANCIAL STATEMENTS NOTE 9 – OTHER ASSETS Environmental bonds NOTE 10 – TRADE AND OTHER PAYABLES Trade creditors GST Payable Other payables 2023 $ 110,000 110,000 2023 $ 45,241 61,681 93,717 200,639 2022 $ 80,000 80,000 2022 $ 136,593 - 153,989 290,582 Trade payables are non-interest bearing and are normally settled on 30 day terms. NOTE 11 – ISSUED CAPITAL (a) Issued capital Shares fully paid 2023 $ 2022 $ 35,136,895 31,876,464 Movements in ordinary share capital of the Company were as follows: Opening balance at 30 June 2021 Placement Issue of shares - employee Issue of shares – advisor Exercise of options Issue costs - cash Closing balance at 30 June 2022 Opening balance at 30 June 2022 Placement Issue of shares – performance rights Issue of shares – in lieu of employee bonus’ Issue costs - cash Closing balance at 30 June 2023 Movements in options were as follows: Closing balance at 30 June 2021 9-Aug-21 Exercise of options 30-Nov-21 Incentive options issued to directors 22-Feb-22 Options issued to brokers Closing balance at 30 June 2022 11-Nov-22 Options issued to broker (note 22) Taruga Minerals Limited Number 505,476,505 65,988,235 108,500 2,100,000 4,375,000 - 578,048,240 Number 578,048,240 125,000,000 154,000 2,824,545 - 706,026,785 $ 29,475,236 2,243,600 5,316 189,000 109,375 (146,063) 31,876,464 $ 31,876,464 3,500,000 1,717 81,912 (323,198) 35,136,895 Number 48,625,000 (4,375,000) 5,000,000 2,500,000 51,750,000 6,000,000 57,750,000 Page 40 NOTES TO THE FINANCIAL STATEMENTS NOTE 11 – ISSUED CAPITAL (CONTINUED) (b) Voting and dividend rights Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. NOTE 12 – RESERVES AND ACCUMULATED LOSSES Share-based Payments Reserve Foreign Currency Translation Reserve Accumulated Losses Balance at beginning of the year Net loss from ordinary activities Balance at end of the year Share-based Payment Reserve Balance at beginning of the year Reserve arising on share-based payments (expensed) Reserve arising on share-based payments (included in equity) Balance at end of the year Foreign Currency Translation Reserve Balance at beginning of the year Reserve arising on translation of foreign subsidiaries Balance at end of the year Nature and purpose of Reserves Consolidated 2023 $ 2022 $ 3,464,013 34,850 3,498,863 3,323,321 40,703 3,364,024 2023 $ 24,961,564 964,151 25,925,715 2022 $ 23,635,844 1,325,720 24,961,564 2023 $ 3,329,174 27,845 106,994 3,464,013 2023 $ 34,850 - 34,850 2022 $ 3,101,320 216,684 11,170 3,329,174 2022 $ 40,512 (5,662) 34,850 The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. It is also used to record the effect of hedging net investments in foreign operations. This share-based payments reserve is used to record the value of equity benefits provided to employees, Directors and consultants as part of their remuneration. Taruga Minerals Limited Page 41 NOTES TO THE FINANCIAL STATEMENTS NOTE 13 – INVESTMENT IN CONTROLLED ENTITIES Registered Number Country of Incorporation Interest Held Value of investment Parent 2023 2022 2023 $ 2022 $ Taruga Minerals Limited 153 868 789 Australia Subsidiaries Taruga Congo SARLU 01-122- N31711L DRC 100% 100% MGS Ghana Limited CA-80, 601 Ghana 100% 100% - - - - Strikeline Resources Pty Ltd (note 7) 631 241 355 Australia 100% 100% 4,140,000 4,140,000 NOTE 14 – SEGMENT INFORMATION AASB 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker in order to allocate resources to the segment and to assess its performance. The Group’s operating segments have been determined with reference to the monthly management accounts used by the Chief Operating Decision maker to make decisions regarding the Group’s operations and allocation of working capital. Due to the size and nature of the Group, the Board as a whole has been determined as the Chief Operating Decision Maker. The accounting policies of the reportable segments are the same as Group accounting policies. During the period there was only one reportable segment, being the exploration of minerals in Australia. Taruga Minerals Limited Page 42 NOTES TO THE FINANCIAL STATEMENTS NOTE 15 – NOTES TO THE STATEMENT OF CASH FLOWS Reconciliation of loss after income tax to net operating cash flows Loss from ordinary activities Depreciation Exploration expenditure expensed Exchange loss Share-based payments Movement in assets and liabilities Receivables Payables Consolidated 2023 $ 2022 $ 964,151 1,325,720 (64,370) (89,182) (906) (111,473) (24,722) (4,589) (1,524) (222,001) (24,830) 145,659 (51,015) (75,122) Net cash used in operating activities 819,049 946,747 The cashflows for exploration expenditure have been reclassified as investing activity cashflows in the annual report, these cashflows were previously classified as operating activity cashflows in the Appendix 5B quarterly cashflows. NOTE 16 – RELATED PARTY INFORMATION a) Transactions with Key Management Personnel The transactions with key management personnel have been entered into under terms and conditions no more favourable than those the Company would have adopted if dealing at arm's length. b) Directors and Executives Disclosures The aggregate compensation made to directors and other key management personnel of the Group is set out below: Short-term employee benefits Share based payments Performance rights Post-employment benefits 2023 $ 345,652 78,323 6,865 22,563 453,403 2022 $ 400,636 179,240 18,854 26,864 625,594 Taruga Minerals Limited Page 43 NOTES TO THE FINANCIAL STATEMENTS NOTE 17 – REMUNERATION OF AUDITORS Auditing and reviewing of the financial statements of Taruga Minerals Limited and of its controlled entities. 2023 $ 33,662 33,662 2022 $ 35,213 35,213 NOTE 18 – LOSS PER SHARE The loss and weighted average number of ordinary shares used in the calculation of basic loss per share is as follows: Loss for the year Loss for the year from continuing operations Loss for the year from discontinued operations Consolidated 2023 $ 964,151 964,151 - 2022 $ 1,325,720 1,319,867 5,853 Number Number Weighted average number of ordinary shares outstanding during the year used in the calculation of basic loss per share 658,265,186 519,806,220 There are no potential ordinary shares on issue at the date of this report. NOTE 19 – FINANCIAL INSTRUMENTS Financial Risk Management Policies The Group’s financial instruments consist mainly of deposits with banks, accounts receivable, accounts payable and hire purchase liabilities. The Board’s overall risk management strategy seeks to assist the Group in meeting its financial targets, whilst maintaining potential adverse effects on financial performance. The Group has developed a framework for a risk management policy and internal compliance and control systems that covers the organisational, financial and operational aspects of the group’s affairs. The Chairman is responsible for ensuring the maintenance of, and compliance with, appropriate systems. Financial Risk Exposures and Management The main risks the group is exposed to through its financial instruments are interest rate risk, foreign currency risk and liquidity risk. Taruga Minerals Limited Page 44 NOTES TO THE FINANCIAL STATEMENTS NOTE 19 – FINANCIAL INSTRUMENTS Interest Rate Risk The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of change in the market, interest rate and the effective weighted average interest rate on these financial assets, is as follows: Financial Assets Cash at Bank Total Financial Assets Weighted Average Effective Floating Interest Rate Interest Rate Consolidated 2023 2022 1.499% 0.008% 2023 $ 3,220,789 3,220,789 2022 $ 2,145,295 2,145,295 There are no financial liabilities subject to interest rate fluctuations. The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the statement of financial position and in the notes to and forming part of the financial statements. Interest Rate Sensitivity Analysis The Group has performed a sensitivity analysis relating to its exposure to interest rate risk. This sensitivity analysis demonstrates the effect on the current year results and equity which could result in a change in these risks. At 30 June 2023 the effect on the loss and equity as a result of changes in the interest rate with all other variables remaining constant is as follows: Change in Loss • Increase in interest by 1% • Decrease in interest by 1% Change in Equity • Increase in interest by 1% • Decrease in interest by 1% Consolidated 2023 $ 32,207 (32,207) 2022 $ 21,452 (21,452) 32,207 (32,207) 21,452 (21,452) Taruga Minerals Limited Page 45 NOTES TO THE FINANCIAL STATEMENTS NOTE 19 – FINANCIAL INSTRUMENTS (CONTINUED) Foreign Currency Risk The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date is as follows: Currency US Dollars Foreign currency Liabilities 2023 $ - Consolidated Assets 2023 $ - Liabilities 2022 $ - Assets 2022 $ - Other than translational risk the Group has no significant exposure to foreign currency risk at the balance date. Liquidity Risk The group manages liquidity risk by monitoring forecast cash flows. All liabilities are expected to be settled in 3 to 6 months. Credit Risk The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date, is the carrying amount net of any provisions for doubtful debts, as disclosed in the statement of financial position and notes to the financial statement. In the case of cash deposited, credit risk is minimised by depositing with recognised financial intermediaries such as banks, subject to Australian Prudential Regulation Authority Supervision. The Group does not have any material risk exposure to any single debtor or group of debtors under financial instruments entered into by it. Capital Management Risk Management controls the capital of the Group in order to maximise the return to shareholders and ensure that the group can fund its operations and continue as a going concern. Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of expenditure and debt levels and share and option issues. There have been no changes in the strategy adopted by management to control capital of the Group since the prior year. Taruga Minerals Limited Page 46 NOTES TO THE FINANCIAL STATEMENTS NOTE 19 – FINANCIAL INSTRUMENTS (CONTINUED) Net Fair Values For financial assets and liabilities, the net fair value approximates their carrying value. The Group has no financial assets or liabilities that are readily traded on organised markets at balance date and has no financial assets where the carrying amount exceeds net fair values at balance date. NOTE 20 - MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR No matters have arisen since 30 June 2023 that in the opinion of the directors has significantly affected or may significantly affect in future financial years (i) the Group’s operations, or (ii) the results of those operations, or (iii) the Group’s state of affairs. NOTE 21 - PARENT ENTITY DISCLOSURES Financial Position Total Current Assets Total Non-current assets TOTAL ASSETS Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY Financial Performance Loss for the year Total comprehensive loss 2023 $ 2022 $ 3,182,019 1,876,788 9,346,784 8,367,718 12,528,803 10,244,506 141,953 290,581 141,953 290,581 12,386,850 9,953,925 35,136,895 3,464,913 (26,214,958) 31,876,464 3,329,174 (25,251,713) 12,386,850 9,953,925 963,245 963,254 1,650,697 1,650,697 The parent entity has not entered into any guarantees in relation to debts of its subsidiaries, has no contingent liabilities, and has no commitments for acquisition of plant and equipment. Taruga Minerals Limited Page 47 NOTES TO THE FINANCIAL STATEMENTS NOTE 22 – SHARE-BASED PAYMENTS Share Based Payment Expense: Shares issued to employees Share based payments expense – Performance rights Share based payments expense - options Share based payments – capital raising costs Reserve movement: Share based payments Less conversion to shares Performance Rights Valuation 81,912 6,853 22,709 111,474 106,994 136,556 (1,717) 134,839 In 2021 the company agreed a revised remuneration package with the former Chief Executive Officer, Mr Thomas Line. The terms of Mr Line’s remuneration package were as follows: Remuneration Incentives Short-term (STI) Long-term (LTI) Base Salary of $225,000 per annum plus superannuation, effective 1 July 2021. Effective 1 July 2021, earn up to 100% of Base Salary (excluding super) as measured by performance against annually determined KPI’s, including OH&S, environmental, ESG, stakeholder engagement, and corporate The awarding of 2,000,000 performance rights, vesting over three years (31 August 2022, 31 August 2023, 31 August 2024) on meeting LTI KPI’s. At, or following the Review Date, the Board may, in its absolute discretion, give to the Executive a Vesting Notice in respect of a number of Performance Rights up to, but not exceeding, the maximum Performance Rights amount set out for that Review Date in the Performance Rights vesting table. If the Board gives a Vesting Notice in respect of any Performance Rights, those performance rights will vest on the giving of that Vesting Notice. If the Company has not given a Vesting Notice for an amount of Performance Rights equal to the maximum performance the rights amount in respect of a Review Date by corresponding Expiry Date, that number of Performance Rights that are not the subject of a Vesting Notice will be forfeited on that Expiry Date. Taruga Minerals Limited Page 48 NOTES TO THE FINANCIAL STATEMENTS NOTE 22 – SHARE-BASED PAYMENTS (CONTINUED) The above performance rights were subject to market and non-market based vesting conditions. The performance rights with market-based conditions were valued in the prior year as follows: Item Value of underlying security Exercise price Valuation date 10-Day VWAP barrier Life of the Rights (years) Volatility Risk-free rate Dividend yield Share price targets Value per Right Number of Rights Weighting on total LTIP Weighted no. of securities Value per Tranche Expensed at 30 June 2023 Tranche 1 $0.054 nil 15 September 2021 15 September Tranche 2 $0.054 nil $0.1404-$0.2340 0.79 109% 0.026% nil Note 1 $0.0181 666,666 61.6% 410,666 $7,433 ($5,716) 2021 $0.1404-$0.2340 1.79 109% 0.013% nil Note 1 $0.0342 666,666 61.6% 410,666 $14,045 $3,830 Tranche 3 $0.054 nil 15 September 2021 $0.1404-$0.2340 2.79 109% 0.113% nil Note 1 $0.0417 666,666 61.6% 410,666 $17,125 $3,022 1 Share price targets – 20-day volume weighted average price of at least $0.0966 (being 50% increase from benchmark VWAP of $0.0644) for 25% to vest, $0.1288 (being 100% increase from benchmark VWAP of $0.0644) for 50% to vest and $0.1610 (being 150% increase from benchmark VWAP of $0.0644) for 100% to vest. Thomas Line resigned on 15 February 2023. No further vesting expense was recognised past this date. Option Valuation The following options were issued to directors and management during the previous period: Number Grant Date Expiry Date Exercise Price $ Fair Value at grant date $ Vesting date Tranche A Tranche B 5,000,000 30/11/21 30/11/24 0.065 109,003 31/05/22 30/11/22 The fair value of the equity-settled share options is estimated as at the date of grant using the Black-Scholes model taking into account the terms and conditions upon which the options were granted. Taruga Minerals Limited Page 49 NOTES TO THE FINANCIAL STATEMENTS NOTE 22 – SHARE-BASED PAYMENTS (CONTINUED) Value of underlying security Exercise price Valuation date Life of the Rights (years) Volatility Risk-free rate Dividend yield Value per Option Expensed during the 2023 $0.0405 $0.0650 30/11/21 3.00 103% 0.25% nil $0.022 $22,709 The following options were issued to brokers during the year: Number Grant Date Expiry Date Exercise Price $ Fair Value at grant date $ 6,000,000 01/11/22 01/11/25 0.045 106,994 The fair value of the equity-settled share options is estimated as at the date of grant using the Black-Scholes model taking into account the terms and conditions upon which the options were granted. Value of underlying security Exercise price Valuation date Life of the Rights (years) Volatility Risk-free rate Dividend yield Value per Option Expensed during 2023 (included in equity) NOTE 23 – COMMITMENTS Exploration expenditure commitments $0.0290 $0.0450 01/11/21 3.00 116% 0.25% nil $0.018 $106,994 In order to maintain rights of tenure to its Australian located mineral tenements, the Group is required to outlay certain amounts in respect of rent and minimum expenditure requirements. The Group’s commitments to meet this minimum level of expenditure is approximately $836,500 (2022: $278,000) annually. Taruga Minerals Limited Page 50 NOTES TO THE FINANCIAL STATEMENTS NOTE 24 – CONTINGENT LIABILITIES In addition to the acquisition consideration detailed in note 8 the Group will also make the following milestone payments to the sellers of Strikeline Resources Pty Ltd. The probability and timing of these milestones cannot be reliably estimated and have not been included in the acquisition consideration. Performance Milestone 1: Following Taruga delineating a JORC Indicated Resource (as defined in JORC 2012) of 150,000t Cu Equivalent (Cu, Au, Ag) at the Project, Taruga will make a milestone payment to the sellers of A$400,000 which may at the election of Taruga be paid in cash or Ordinary Fully Paid Shares at the 14-day VWAP of Taruga’s Share price as traded on the ASX; Performance Milestone 2: Following Taruga completing a positive Bankable Feasibility Study (as defined in JORC 2012) in relation to the Project, Taruga will make a milestone payment to the sellers of A$500,000 which may at the election of Taruga be paid in cash or Ordinary Fully Paid Shares at the 14-day VWAP of Taruga’s Share price as traded on the ASX; and Performance Milestone 3: Following Taruga commencing commercial production (being first concentrate sales) at the Project, the Company will make a payment to the sellers of A$500,000 which may at the election of Taruga be paid in cash or Ordinary Fully Paid Shares at the 14-day VWAP of Taruga’s Share price as traded on the ASX. In accordance with the NSR agreement the Company will grant to the Vendors a 1% NSR in respect of all precious, industrial minerals and base metals produced, sold and proceeds received from the Project. Taruga will have the right to buy back the NSR from the sellers for total consideration of A$500,000 which may at the election of Taruga be paid in cash or Ordinary Fully Paid Shares at the 30-day VWAP of Taruga’s Share price as traded on the ASX. The Company had no other contingent liabilities at 30 June 2023 or 30 June 2022. Taruga Minerals Limited Page 51 DIRECTORS’ DECLARATION In the opinion of the directors of Taruga Minerals Limited (“the Company”): 1) The attached financial statements and notes thereto are in accordance with the Corporations Act 2001 including: (a) (b) complying with Australian Accounting Standards, the Corporations Regulations 2001, professional reporting requirements and other mandatory requirements; and giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its performance for the period then ended; and 2) 3) 4) 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 financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. This declaration has been made after reviewing the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the financial period ended 30 June 2023. This declaration is signed in accordance with a resolution of the Board of Directors made pursuant to s.303(5) of the Corporations Act 2001. Gary Steinepreis Non-Executive Director Dated Perth 29 September 2023 Taruga Minerals Limited Page 52 INDEPENDENT AUDITOR’S REPORT To the Members of Taruga Minerals Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Taruga Minerals Limited (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2023, 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 statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial performance for the year then ended; and (b) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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. Taruga Minerals Limited Page 53 Key Audit Matter How our audit addressed the key audit matter Carrying value of mineral exploration and evaluation Refer to Note 7 The Group has capitalised mineral exploration and evaluation expenditure of $9,334,516 as at 30 June 2023. of value Our audit procedures determined that the carrying capitalised mineral exploration and evaluation expenditure was a key audit matter as it was an area which required a significant amount of audit effort and those charged with communication with governance and was determined to be of key importance financial the users of statements. the to Our procedures included but were not limited to the following: - We obtained an understanding of the key processes associated with management’s the review of capitalised mineral and evaluation expenditure; the carrying value of exploration - We tested a sample of mineral exploration and evaluation expenditure capitalised during the year; - We considered the Directors’ assessment of potential indicators of impairment; - We obtained evidence that the Group has current rights to tenure of its areas of interest; - We examined the exploration budget and discussed with management the nature of planned ongoing activities; and - We examined the disclosures made in the financial report. Information Other than the Financial Report and Auditor’s Report Thereon The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2023, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. Taruga Minerals Limited Page 54 In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: − − − − − Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Taruga Minerals Limited Page 55 We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. REPORT ON THE REMUNERATION REPORT Opinion on the Remuneration Report We have audited the Remuneration Report included within the directors’ report for the year ended 30 June 2023. In our opinion, the Remuneration Report of Taruga Minerals Limited for the year ended 30 June 2023 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. HLB Mann Judd Chartered Accountants Perth, Western Australia 29 September 2023 N G Neill Partner Taruga Minerals Limited Page 56 ASX Additional Information ANALYSIS OF SHAREHOLDING as at 21 September 2023 1 1,001 5,001 10,001 100,001 Total - - - - - 1,000 5,000 10,000 100,000 or more AND CONTROLLED ENTITIES Shareholders 206 86 114 627 445 1,478 Shares 71,089 276,869 937,738 27,295,454 677,445,635 706,026,785 The number of shareholdings held in less than marketable parcels is 789, holding 10,762,850 shares. Voting Rights Article 16 of the Constitution specifies that on a show of hands every member present in person, by attorney or by proxy shall have: a) b) for every fully paid share held - one vote for every share which is not fully paid a fraction of the vote equal to the amount paid up on the share over the nominal value of the shares Substantial Shareholders The following substantial shareholders have notified the Company in accordance with Corporations Act 2001. Nil. Directors’ Shareholding The interest of each director in the share capital of the Company is detailed in the director’s report. Securities Subject to Escrow Nil. Taruga Minerals Limited Page 57 ASX Additional Information AND CONTROLLED ENTITIES TOP TWENTY SHAREHOLDERS Position Holder Name 1 2 3 4 5 6 7 MR PHILIP ALAN SPEAKMAN GLAMOUR DIVISION PTY LTD MR THOMAS LINE MOUTIER PTY LTD TWO TOPS PTY LTD MR DONG CHEN RANCHLAND HOLDINGS PTY LTD 8 9 10 11 12 13 14 15 15 16 17 18 19 19 20 EQUITY TRUSTEES LIMITED MCNEIL NOMINEES PTY LIMITED BNP PARIBAS NOMS PTY LTD CITICORP NOMINEES PTY LIMITED ADRA FUTURE CO LIMITED MR MARK GASSON BOTSKY PTY LTD REPLAY HOLDINGS PTY LTD SL CURTIS PTY LTD OAKHURST ENTERPRISES PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED MR MATTHEW DAVID DUNN & MRS TRACY JANE DUNN SDMO AUSTRALIA PTY LTD SAMLISA NOMINEES PTY LTD MR EDWARD FRANK DAVISON Total Total issued capital - selected security class(es) Holding 30,000,000 27,771,441 26,442,870 20,029,120 19,982,512 19,527,609 16,146,903 16,071,429 15,469,068 15,415,249 14,474,611 11,527,892 11,500,000 10,206,176 10,000,000 10,000,000 9,004,049 8,388,501 8,000,000 7,000,000 7,000,000 6,555,059 320,512,489 706,026,785 % IC 4.25% 3.93% 3.75% 2.84% 2.83% 2.77% 2.29% 2.28% 2.19% 2.18% 2.05% 1.63% 1.63% 1.45% 1.42% 1.42% 1.28% 1.19% 1.13% 0.99% 0.99% 0.93% 45.40% 100.00% The name of the Company Secretary is Daniel Smith. The address of the registered office is: Level 8, 99 St Georges Terrace, Perth WA 6000. Registers of securities are held by Automic Group, Level 2/267 St Georges Terrace WA 6000 Quotation has been granted for all the ordinary shares of the Company on the Australian Securities Exchange Ltd (ASX:TAR). There are nil securities currently subject to escrow. Unquoted Securities Options There are 26,250,000 unlisted options exercisable at $0.025 each on or before 18 February 2024 and 18,000,000 unlisted options exercisable at $0.065 each on or before 1 December 2024. Options Exercisable at $0.025 expiring 18/02/24 % Interest Taruga Minerals Limited Page 58 ASX Additional Information AND CONTROLLED ENTITIES Glamour Division Pty Ltd Talltree Holdings Pty Ltd Options Exercisable at $0.065 expiring 1/12/24 Gary Steinepreis Paul Cronin Glamour Division Pty Ltd 30.48% 25.71% % Interest 27.78% 27.78% 27.78% Performance Rights There are 2,000,000 performance rights on issue subject to various vesting conditions Interests in tenements held directly by Taruga Minerals or subsidiary company Tenements Held State / Country E51/1832 E70/5029 E70/5030 E70/5031 EL6362 (Flinders) EL6437 (Torrens) EL6541 (MCP) EL6695 (MCP) ELA2022/00071 (Martins Well) EL6828 (Curnamona Project) EL6836 (Curnamona Project) EL6829 (MCP) 20% 100% (In application) 100% (In application) 100% (In application) 100% 100% 100% 100% 100% 100% 100% 100% Western Australia Western Australia Western Australia Western Australia South Australia South Australia South Australia South Australia South Australia South Australia South Australia South Australia Taruga Minerals Limited Page 59 

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