Titan Minerals Limited
Annual Report 2021

Plain-text annual report

www.titanminerals.com.au ANNUAL REPORT 1 2 0 2 1/35 Richardson Street WEST PERTH WA 6005 Phone: +61 08 6375 2700 E-mail: info@titanminerals.com.au Focussed on the exploration and development of the rich copper and gold deposits in the prolifically mineralised cordilleras of Southern Ecuador’s Andean Terrain. CORPORATE DIRECTORY BOARD OF DIRECTORS Mr Peter Cook Non-Executive Chairman Mr Laurence Marsland Managing Director (Resigned 31/3/2022) Mr Matthew Carr Acting CEO and Executive Director Mr Nicholas Rowley Non-Executive Director Mr Barry Bourne Non-Executive Director COMPANY SECRETARY Mr Zane Lewis REGISTERED OFFICE 1/35 Richardson Street WEST PERTH, WA 6005 Phone: +61 8 6555 2950 Fax: +61 8 6166 0261 Email: info@titanminerals.com.au Website: www.titanminerals.com.au SHARE REGISTRY Automic Share Registry Level 2, 267 St Georges Terrace PERTH, WA 6000 AUSTRALIAN BUSINESS NUMBER 97 117 790 897 STOCK EXCHANGE LISTING ASX: TTM AUDITORS Stantons International Audit and Consulting Pty Ltd Level 2, 1 Walker Avenue West Perth Western Australia 6005 ANNUAL REPORT CONTENTS PAGE 02 MESSAGE FROM THE CHAIRMAN & EXECUTIVE DIRECTOR 04 06 OUR COMPANY OVERVIEW BOARD OF DIRECTORS 08 DYNASTRY PROJECT 28 12 LINDEROS PROJECT 34 CORPORATE GOVERNANCE 20 26 COPPER DUKE PROJECT JERUSALEN GOLD PROJECT CORPORATE OVERVIEW 37 CONSOLIDATED FINANCIAL STATEMENT 42 NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT 82 ADDITIONAL INFORMATION 95 AUDITOR’S INDEPENDENT DECLARATION 97 INDEPENDENT AUDITOR'S REPORT 104 ASX ADDITIONAL INFORMATION 1 Annual Report 2021 has joined as a Non-executive Director. Tamara who, with her mining engineering and corporate development background as well as Ecuadorian experience rounds out the required skilled set on the Board to get the best from these assets for our shareholders. The Company is now well equipped and positioned to focus our exploration strategy and application of funds toward the task of creating wealth for our shareholders through the discovery of metals within our fantastic group of projects as we move into the 2022 year. I thank all our shareholders and stakeholders for their loyalty, commitment and backing of the Titan team in the past year. I can assure you of our best intentions to serve and deliver upon your demands in the year ahead. PETER COOK CHAIRMAN MESSAGE FROM THE CHAIRMAN Dear Shareholders, On behalf of the board it is my pleasure to present you the Titan Mineral Limited Annual Report for the financial year ending December 31, 2021. This year has been a successful one for your Company as it put behind it the takeover of Core Gold, dealt with the legacy issues associated with that began to progress exploration on the Company’s exciting suite of assets. I joined as Chairman of the Company on 31 August 2021, replacing Mr Michael Hardy who as the previous Chairman had overseen a legal restructuring and corporate restructuring of the Group. I truly thank Michael for the service he provided the Company. My engagement signaled a shift for the group to adjust its focus on the technical expertise required to manage and explore for the epithermal and porphyry copper type deposits in developing countries was pleased to also join alongside Mr Michael Skead who as Executive Vice President of Exploration significantly increased the technical capacity and capability of our in-country team in Ecuador. I was also thrilled that for reasons driven by the remarkable prospectively and opportunity these prospects showed that highly regarded international geologist and geophysicist, Mr Barry Bourne joined the Board on October 19, 2020 as Non-Executive Director to provide further guidance over the works programs and the focus of our exploration dollars in Ecuador. Since year end the lure of success and the outstanding prospectively has also lured two additional highly skilled and experience professionals to the team. We have welcomed highly experienced Latin American geologist; Mr Pablo Morelli who joined as Exploration Manager in early January 2022. We also welcome Tamara Brown to the team who 2 MESSAGE FROM THE EXECUTIVE DIRECTOR Dear Shareholders, It is my pleasure to update you on progress of the Company during the past financial year. The first half of the year was focussed on the organisation restructuring of the assets in Ecuador to resolve all historic and legacy issue relating to the previous owner. The Company completed and successfully started to receive staged payments for the sale of its Zaruma assets which had been the burden on progress for the previous owner. By mid-year Titan had re-established matters relating to our social licence and community endorsement and commenced our inaugural drilling program at the Dynasty Gold Project. We had up to 6 man- portable diamond rigs drilling away with an objective to infill and expand upon the known mineralisation at Dynasty with the first focus on the more extensively tested Cerro Verde area where previous NI43-101 resource estimate was completed and had also been validated by small-scale open pit mining and processing. Exploration activities were disrupted during the year due to COVID-19 and long delays in receiving assay results however, by the end of 2021 we had completed nearly 22,000m of diamond drilling, the majority in the Cerro Verde and Iguana Prospect areas of the Dynasty Gold Project. Under the direction of our new Chairman we have completed a capital raising (A$18m) and with the support of loyal shareholders converted the vast majority of our loan funds and outstanding legacy debts to equity. It is pleasing that so many have aligned themselves with our exploration objectives through owning shares in the Company. We continued to receive deferred payments from the Zaruma sale of the previous year with the remainder due over the first half of 2022. A small residual amount of loan funds will be paid out in full in the ensuing year on receipt of further due payments leaving the group completely un-encumbered. The initial objective of the resource definition drilling at Dynasty was to infill drill density and align the previously reported NI43-101 estimate of the previous owner with the JORC 2012 standards. Whilst this remains an objective, the results received from the first half of the program suggest that the mineralisation was more extensive at Cerro Verde. This created a shift in strategy later in the year to first define and understand the magnitude of the ore system before finessing a reporting quantity. Excellent progress was also made at the Linderos Project, in particular the two most advanced prospects within it, being the Meseta Gold Prospect and the Copper Ridge Prospect. Channel sampling and other detailed ground reconnaissance works significantly extended the strike length of known epithermal veining in the high sulphidation prosect at Meseta. Intense ground reconnaissance, geophysical and geochemical works were completed at Copper Ridge with a well-defined text-book style porphyry copper anomaly outlined. Extensive trench sampling peripheral to the anomaly has returned strong copper and gold grades from phyllic and propylitic alteration of surrounding country rock. Our team is very excited by this prospect, and we look forward to drill testing it in the ensuing year. The team at Titan continued to build up base datasets with layers of geology, geochemistry, mapping and geophysics over within the broader Copper Duke Project. Just before year-end we embarked on a very preliminary diamond drill program of two holes. The first hole was designed with an objective to test the gold mineralisation previously defined by the drilling of the UN in the 1970’s. The second hole a wildcat to orientate our thinking about what was causing the magnetic anomalies in the area. Significant alteration and minor-sulphidation as a broad overprint was logged. Assays are pending. Our in-country team has been invigorated with a more scientific approach being adopted. We have the technical capability and financial capacity to make great progress in the ensuing year. I too thank our dedicated and committed staff for their efforts during the year and sincerely thank those shareholders who believe in our projects and who have continued to support our efforts. Matthew Carr MATTHEW CARR ACTING CEO & EXECUTIVE DIRECTOR 3 Annual Report 2021 OUR COMPANY OVERVIEW The Company’s main undertaking is exploration and development for gold and copper in Southern Ecuador ASSETS The Dynasty Gold Project The Linderos Project The Copper Duke Project The Jerusalen Project The Copper Field Prospect All the Ecuadorian titles are owned by wholly owned Ecuadorian Company’s, top-hatted by Panamanian public Company’s enabling transactional flexibility for each asset which allow decisions about investment into each project to be made independently of the others. The assets lie proximal to a major flexure of the Andean Terrane where porphyry copper and epithermal gold-silver are associated with early to late Miocene aged magmatism along the margin of the extensive Cretaceous aged Tangula Batholith. Access to the main projects is excellent, within close proximity to Pan American and coastal highways as well as paved regional all-weather roads. Regional airports exist approximately two hours by road from the projects with daily connections to Ecuador’s capital city, Quito. Topography at the projects is moderate to steep with deeply incised streams and elevations range from approximately 900m to just over 2,200m across concession areas. 4 5 Annual Report 2021 BOARD OF DIRECTORS THE PEOPLE PETER COOK CHAIRMAN MATTHEW CARR ACTING CEO AND NON EXECUTIVE DIRECTOR NICHOLAS ROWLEY NON EXECUTIVE DIRECTOR BARRY BOURNE NON EXECUTIVE DIRECTOR Mr Carr has over 10 years experience working in South America and is currently a Director of Titan Minerals Limited, having lead the hostile takeover of Coregold Inc. Mr Carr is also a founding Director of Private Equity and Financing Company Urban Capital Group. He has experience across debt finance, equity markets and restructuring, with a particular focus on Resources and Property assets. Mr Rowley is an experienced resource executive with a career spanning more than 17 years in corporate development and commercial roles specialising in M&A transactions, corporate advisory and equities markets. Mr Rowley has worked for a number of small to mid cap mining and exploration companies with his most recent role as Director – Corporate Development for Galaxy Resources where he oversaw sales and marketing, business development and investor relations for 7 years. Mr Rowley currently serves as a Non-Executive Director of Cyprium Metals Limited (ASX:CYM) Mr Cook is a Geologist and Mineral Economist with over 35 years of experience in the field of exploration, project, operational and corporate management of mining companies. Over the past two decades, Peter has founded or served as Managing Director or Chairman for many successful mining and resource development companies in gold and base metals. He is currently the Non-Executive Chairman of Castile Resources Limited (ASX: CST) and Breaker Resources NL (ASX: BRB). He just retired from a long career as founder of Westgold Resources Limited (ASX:WGX) where he had served as Managing Director, Executive and Non- executive Chairman. Over his distinguished career Peter has been recognised by the industry, being awarded the GMJ Mining Executive of the year in 2001, the Asia-Mining Executive of the year awarded at the Mines and Money Conference in Hong Kong in 2015, the Mining News CEO of the Year award in 2018 and the Gavin Thomas Mining Award in 2019 Mr Bourne is a Geologist and the Principal Consultant at Terra Resources Pty Ltd which specialises in geophysical survey design, acquisition, processing, modelling, inversion, data integration, interpretation, and drill hole targeting. Mr Bourne has significant exploration success and strong leadership qualities alongside his technical abilities. Mr Bourne worked for over 12 years with Barrick Gold which included six years in-country experience in developing nations (Papua New Guinea, East/West Africa, South America) and three years working on the Carlin trend in the USA. Prior to Barrick Gold, Mr Bourne was principal geophysicist of Homestake Gold. Mr Bourne was shortlisted for the Australian innovation Awards in 2012 and was the Advance Global Australian of the Year for Mining and Resources in 2013. Mr Bourne holds BSc (Hons), is a Fellow of the Australian Institute of Geoscientists, is on the technical advisory committee for UWA Centre for Exploration Targeting, and a member of the Australian Institute of Company Directors. 6 7 Annual Report 2021 TITAN DYNASTY GOLD PROJECT 100% DYNASTY GOLD PROJECT The Dynasty Gold Project is an advanced exploration and development prospect covering five concessions and 1 3,909 hectares of land with previous explorer Core Gold Ltd defining a Canadian NI43-101 compliant resource (“NI43-101” or “foreign”) estimate publicly released on 6 May 2019 estimating total resource of 2.1 million oz of gold and 16.82 million ounces of silver (refer to appendix 1 for detail). Whilst considered to be a foreign estimate and not reported in accordance with JORC 2012 standards, it nonetheless shows the vein swarms at Dynasty to be of substantial magnitude and relevance. For the second half of the year Titan has operated up to 6 man-portable diamond rigs methodically increasing drill density as part of the validation process. A number of significant drill intercepts have unsurprisingly been returned and so far, all veins vein proved to have mineralisation and continuity as predicted by the NI43-101 estimate. The new drill cores also reveal epithermal textures evidencing multiple phases of fluid flow, and variable gold-silver ratios and coincident metal associations which positively complicate the story. A competent person has not done sufficient work to classify the foreign estimates as a mineral resource in accordance with JORC. It is uncertain that following evaluation and/or further exploration work that the foreign estimates will be able to be reported as mineral resources in accordance with the JORC Code. The main area of drilling has been at the Cerro Verde prospect in the southern par of the known vein cluster. Only a few holes being completed so far in the central Iguana and northern Papayal areas. The following table summarises drilling statistics for the year. However, this resource estimate was somewhat validated by open pit mining on upper parts of the veins with over 650,000 tonnes at 3.46 g/t being produced after processing at Core’s Zaruma plant. Compared to the resource estimate, 40% more gold was produced than the NI43-101 estimate in this area. The resultant reconciliation of 169% of the tonnes at 85% of the grade being explained as the result of more extensive alteration halo’s and addition veins being discovered. Titans exploration strategy during 2021 has been a process of infill drilling to further validate the NI43-101 estimate which was done by polygonal methods with somewhat wide spaced drilling. Drilling / Trenching Project Prospect Number of completed drill holes Total metres drilled Number of Trenches Completed Total metres trenches Total metres of trench channel sampled Cerro Verde 93 20,161.46 Dynasty Gold Project Iguana Papayal- Trapichillo 5 8 614.94 1,030 34 18 4 1,196 1,017 97 8.7 97 8.7 A number of excellent drill intercepts have been returned from assays with the better tabulated below. At year end assay data for half the program was still outstanding. As is essential in the terrain and for these outcropping veins, extensive trench and channel sampling is also an excellent tool for defining vein geometry and assay results. This style of trenching is essentially a horizontal core of the veins as they outcrop. The attached image shows this style of trench cutting in previous work. Over the past year more than 1.3km of channels these trenches have been cut across the outcropping vein cluster at Dynasty. 8 9 Annual Report 2021 TITAN DYNASTY GOLD PROJECT 100% DYNASTY GOLD PROJECT The following cross section and the subsequent plan of vein swarms, drill hole traces, and new intercepts show the complexity of the vein cluster on a field scale but also the immense potential of the ore system to contain significantly more mineralisation. Cerro Verde Prospect It was a busy year of activity which significantly increased the Company’s confidence and knowledge of the ore system within the overall Dynasty Gold Project. Whilst not a complete list, the following selected drill intercepts returned from Diamond holes within the prospect show the continued potential of this gold-silver epithermal system: CV19-010 9m @ 5.35g/t gold and 20g/t silver from 37m, and 25m @ 1.51g/t gold and 9g/t silver from 66m in hole, with multiple intercepts CV19-015 4.75m @ 5.65g/t gold and 8g/t silver from 14.6m CV19-028 4.25m @ 6.37g/t gold and 11g/t silver from 56.85m and 10.8m @ 2.06g/t gold and 10g/t silver from 89.5m CV19-030 5.35m @ 2.23 g/t gold and 46g/t silver from 112.1m CVD016 CVD014 CVD003 1.54m @ 13.5g/t gold and 21g/t silver from 131.15m within 5.68m @ 4.63g/t gold and 10g/t silver 25m @ 1.30g/t gold and 11g/t silver from 19.44m and 1.54m @ 4.73g/t gold and 25g/t silver from 53.16m 6.4m @ 2.29g/t gold and 9.2g/t silver within 13.29m @ 1.3g/t gold and 8.0g/t silver from 181.04m CVD008 1.99m @ 4.24g/t gold and 15g/t silver within 10.72m @ 1.83g/t gold and 29g/t silver from 118.74m CVD012 2.08m @ 3.9g/t gold and 39g/t silver within 7.21m @ 1.73g/t gold and 23g/t silver from 53.79m CVD011 7.07m @ 2.60g/t gold and10g/t silver from 28.77m, 2.5m @ 7.51g/t gold and 363g/t silver from 408.8m and 2.33m @ 4.04g/t gold and 84g/t silver from 594.12m CVD023 5.49m @ 5.33g/t gold with 259g/t silver from 58.3m CVD022 9.22m @ 2.46g/t gold with 11g/t silver from 169.1m CVD027 3.12m @ 4.57g/t gold with 10g/t silver from 154.97m 43.06m @ 2.56g/t gold with 6.9g/t silver from 84.94m (including 14.14m @ 6.42g/t gold with 16g/t silver from 87.09m CVD073 1.98m @ 51.2g/t gold with 9.1g/t silver from 135.5m CVD033 7.27m @ 9.89g/t gold with 28g/t silver from 118.78m CVD039 18.1m @ 3.83g/t gold with 50g/t silver and,4.39m @ 3.63g/t gold with 35g/t silver from 73.05m CVD069 4.60m @ 5.83g/t gold with 25g/t silver from 61.9m CVD068 6.59m @ 4.24g/t gold with 12g/t silver from 68.45m 10 CVD072 14.14m @ 6.42g/t gold with 16.4g/t silver from 87.09m (within 102.7m @ 1.48g/t gold at a lower 0.2g/t Au cut-off) 11 Annual Report 2021 TITAN DYNASTY GOLD PROJECT 100% DYNASTY GOLD PROJECT Iguana Prospect Cerro Verde Trench & Channel Samples IGD007 4.94m @ 6.28g/t gold and 16 g/t silver from 82.22m CVC010 11.52m @ 3.32g/t gold and 11g/t silver IGD010 2.28m @ 6.82g/t gold and 88g/t silver from 24.52m IGD013 2.69m @ 7.54g/t gold and 38g/t silver from 125.76m IGD015 3.80m @ 6.92g/t gold and 30g/t silver from 117.20m CVC004 10.56m @ 4.14g/t gold and 10g/t Silver from 84.61m , 6.66m @ 4.16g/t gold and 21 g/t Silver from 37.53m and 7.38m @ 2.12g/t gold and 14 g/t silver CVC001 2.60m @ 11.2g/t gold and 224 g/t Silver from 26.25m, 6.66m @ 4.41g/t gold and 30 g/t Silver from 53.58m and 6.32m @ 4.13g/t gold and 65 g/t silver Coincident with the diamond drilling, over 1,300m of channels cut from which 1,123m were sampled. The breakdown being: CVC007 4.34m @ 3.83g/t gold and 44g/t silver • 1,017 metres sampled from the Cerro Verde Prospect; • 97m sampled from the Iguana Prospect and • 9m from The Papayal-Trapichilo Prospect. Better results returned and previously advised to the ASX up to the time of reporting include: IGD007 4.94m @ 6.28g/t gold and 16g/t silver from 82.22m IGD010 2.28m @ 6.82g/t gold and 88g/t silver from 24.52m IGD013 2.69m @ 7.54g/t gold and 38g/t silver from 125.76m IGD015 3.80m @ 6.92g/t gold and 30g/t silver from 117.20m CVD023 5.49m @ 5.33g/t gold with 259g/t silver CVD022 9.22m @ 2.46g/t gold with 11g/t silver CVD027 3.12m @ 4.57g/t gold with 10g/t silver Iguana Trench and Channels IGC019 5.71m @ 3.95g/t gold with 15g/t Silver from 1.3m in trench channel IGC020 3.11m @ 4.48g/t gold with 8.2 g/t Silver from 1.26m in trench channel IGC022 4.73m @ 3.57g/t gold with 73.4 g/t Silver from 0.0m in trench Works on vein modelling commenced in a process to further validate the previous NI43-101 estimate completed by the previous owner at Dynasty. At year end there was a significant number of assay results outstanding which are required to complete this process. 2022 Work Program In the ensuing year the work programmes at Dynasty will continue with an increased technical emphasis on detailed rock chemistry, textural and structural interpretation of the veins. More spectral works are planned to vector the drilling toward expected alteration and boiling zone areas where metal density (grades of gold and silver) are higher. Drilling will continue later in the year aided by these technical studies. 12 13 Annual Report 2021 TITAN LINDEROS PROJECT 100% The Linderos Project covers four concessions and 14,317 hectares of area and is located near the regional centre Macara and has good road and infrastructure access and water sourced from the Catamayo River. The Linderos Project is located approximately 20 km southwest of the Dynasty Gold Project. The structural setting at Linderos also sits proximal to a major flexure in Andean Terrane. The tenure straddles the Western contact of the Tangula batholith and cretaceous volcano-sedimentary rocks. Local geology reveals outcropping multi-phase diorite intrusions considered to be of Miocene age which appear to straddle the margin of the Batholith. During the year Titan defined several key prospect areas as the primary focus of immediate exploration including: The Meseta Gold Camp The Copper Ridge Prospect Nueva Esperanza Prospect Capa Rosa Prospect The Loma Alta Prospect The Victoria Prospect Exploration activities during 2021 included completion of 3,191.4 metres of trenching and 294 rock chip samples. In addition to the prospect scale trenching, Titan commenced a systematic soil sampling program on grid patterns planning the cover the whole of the Linderos concession. By year end 566 soil samples were collected with sampling ongoing. LINDEROS PROJECT Copper Ridge Prospect Copper Ridge is an outcropping porphyritic intrusion complex hosting copper and molybdenum anomalism in zoned phyllic and argillic alteration associated with a porphyry copper intrusion. Surface soil geochemistry has defined a strong copper- molybdenum (Cu-Mo-Au) anomaly centered on a quartz-diorite porphyry intrusion mapped to be approximately 1km in diameter. The porphyry stock hosts and is haloed by a significant footprint of quartz stockworks and typical porphyry related alteration covering an area of approximately 3 square kilometres. Previous drill campaigns with surface holes conveniently positioned from existing tracks have returned highly anomalous copper results from various levels of phyllic and potassic alteration overprinted with a later argillic alteration. Better results from this drilling includes: ERIKA01 99.75m @ 0.26% copper from 255m drilled depth ERIKA02 84.85m @ 0.32% copper (from surface to end of hole) ERIKA02A 20m @ 0.21% copper from 181mto EOH DHW05 77.05m @ 0.19% copper (from surface to EOH) DHW06 50.25m @ 0.33% copper (from surface to EOH) 14 15 Annual Report 2021 TITAN LINDEROS PROJECT 100% The deepest of the holes was ERIKA01, revealing increasingly higher grades of copper, up to 0.4% within phyllic alteration towards the bottom of the hole. Re-processed and re-interpreted historic geophysical data has shown a potential conducting body deeper in the system. A 3-D Induced Polarisation (IP) survey s planned later in 2022 before drill testing this exciting target. Recent channel and rock chip sampling results over the Copper Ridge prospect has defined an area of significantly more pervasive copper mineralisation in argillic alteration at Copper Ridge prospect, a great signal that indicates the erosional level of the outcropping porphyry copper body is high in the system with scope for higher grades with depth. Better results from initial channel sampling in un-drilled areas indicating higher grade mineralisation within the prospect returned surface values that include: Channel - CRC022 42m @ 0.31% copper and 0.12g/t gold including 12m @ 0.39% copper Channel - CRC023 42m @ 0.29% copper and 0.08g/t gold including 8m @ 0.53% copper Channel CRC003 90m @ 0.26% copper and 0.13g/t gold LINDEROS PROJECT Meseta Gold Camp The Meseta Gold Camp is located approximately 2 km north of the Copper Ridge Prospect and occurs as series of sub- parallel epithermal veins interpreted to exist in a high sulphidation environment proximal and above a postulated porphyry copper system at Copper Ridge. The prospect has good access and moderate terrain. Meseta Gold Prospect hosts gold mineralisation in steep to sub-vertical fault structures at the margins of the porphyry stock and is associated with strong silicification and oxidation of the sulphides. Several features suggesting the presence of an intermediate to high-sulphidation gold system at these areas have been observed. Including several zones of very high-grade results, such as an area of previous trenching just southwest of hole LDH004 where trench results within a 150m x 100m zone of sampling include a number of bonanza gold results including: These results confirm an expanding footprint of copper mineralisation further demonstrated in channel sample results located 500m to the northeast of hole ERIKA02, where a 360m wide zone of copper mineralisation averaging over 0.2% copper on a northwest to southeast trend is reported in channels CHRC01-02, CRC003, CRC004-007 and CRC010-013. The extensive zone of copper mineralisation is hosted within a mapped quartz stockwork zone hosted in the quartz-diorite stock within the multi-phase intrusion complex at Copper Ridge. Linderos - 13 21m @ 18.5g/t gold in trench Linderos - 16 19.95m @ 14.3g/t in trench Linderos Linderos -14 18.2m @ 14.7g/t gold in trench Linderos 16 17 Annual Report 2021 TITAN LINDEROS PROJECT 100% LINDEROS PROJECT Peak assay results of individual samples in the channel sampled area include up to 326g/t gold with 141g/t silver, and 161g/t gold with 87g/t silver. Previous drilling confirmed mineralisation in fresh rock below the zone of channel sampling and tested for extensions of mineralisation to the east under very thin transported cover for up to 1km under the geochemically blind plateau. All eleven holes drilled at the Meseta Gold Prospect intersected extensive epithermal style and hydrothermal related alteration with the main vein intercepts including: At the surface the continuity of the outcropping veins is blanketed by what appears to be an alluvial terrace, however the new works reveal the veins outcropping out both ends of the covered terrace indicating a blind target for epithermal veins with a potential strike length of more than 1 kilometre. Whilst more work is required here, it is shaping up as an exciting prospect. LDH004 5.94m @ 10.8g/t gold from 36.4m LDH004A 8.88m @ 4.70g/t gold from 40.65m LDH003 14.32m @ 1.43g/t gold from 45.44m Surface reconnaissance works, channel sampling and rock chips continued to enhance the interpretation of this area during the year. 18 19 Annual Report 2021 TITAN COPPER DUKE PROJECT 100% Copper Duke is an early-stage exploration project comprised of 13 concessions located approximately 18km east of the Company’s more advanced Dynasty Gold Project in the Loja Province of southern Ecuador. The project is located near the regional centre of Catacocha, has good road infrastructure and water is sourced from the Catamayo River. The Copper Duke Project is owned by Ecuadorian wholly owned subsidiary, Helles Mining Corporation which is wholly owned by Helles Mining Corporation (Panama) and upstream to Titans Minerals Limited. Regionally, the project lies at the northern contact of the Tangula batholith, situated adjacent to Cretaceous volcano-sediments. Local geology comprises outcropping diorite and quartz-diorite composed rocks with small alteration zones. Outcropping copper and gold mineralisation is hosted in veins and tectonic breccias and outcropping copper-gold bearing skarns are located at the contact with the Tangula Batholith and Celica Formation. Exploration target deposit models are porphyry copper gold systems, intrusion related gold and gold bearing skarns. COPPER DUKE PROJECT Work to date has confirmed it is host to multiple porphyritic textured intrusions associated with extensive copper-gold anomalism and quartz hosted gold veining outcropping at surface. The scale, geometry and extent of geophysical anomalism identified at the Copper Duke Project shows resemblance to many major porphyry districts around the world. Magnetic surveys reveal clusters of intrusion related anomalism over an area greater than 12km2. Recent surface exploration has confirmed a relatively high tenor of geochemical anomalism outcropping at surface which is exposed through several hundred metres of vertical relief across the project area. During the year Titan has continued to build systematic exploration datasets with follow-up geochemistry surveys and channel sampling, extending surface geochemistry coverage a further 12km2. The field reconnaissance programme assessing the geophysical interpretation has further enhanced targeting at the El Huato and Catamayo prospects and outlined additional clusters of intrusion centers outlined in the geophysical anomalism extending beyond the footprint of known surface mineralisation. To the north of the contiguous trend of prospects hosting multiple clusters of intrusion centers, the underexplored Ningomine Prospect has the largest footprint of geophysical anomalism featuring vein hosted gold and copper mineralisation across several scattered outcrop areas. Geophysical results are interpreted to be associated with magnetite alteration often corresponding with broad zones of high tenor surface geochemistry. Since 1968 the area was the subject of several non-systematic exploration campaigns completed by state-owned and private groups. During this period different types of mineralisation have been discovered and mapped, but never been systematically drill-tested. 20 21 Annual Report 2021 COPPER DUKE PROJECT TITAN COPPER DUKE PROJECT 100% Copper Duke is currently in the early exploration stage with new systematic exploration focussed on identification of porphyry/ epithermal copper and gold targets. Exploration activities during 2021 consisted mainly of reconnaissance geological works. Works this year also included a two-hole drilling program (540 metres) to validate a previous hole drilled in the 1970’s by the UN and stratigraphically test the source of magnetic anomalism. In addition, 2,148 metres of trenching and three hundred and seventy-five (375) rock chip samples were completed. To date multi -phase outcropping porphyry targets, including porphyry copper-gold mineralisation and epithermal gold bearing quartz-magnetite vein systems have been identified. The surface geochemistry anomalism in soil and rock sampling is open-ended. Titan has sharpened its focus to 8 prospect areas within the concession: El Huato Prospect Identified as a copper-gold epithermal/porphyry system. Most work was done on this prospect by Core Gold Loma Redonda Prospect Identified as a copper-gold system in massive sulfide filled structures Landanuma Prospect 8 channels totaling 509 metres have been completed without significant metal grade. El Palton Prospect Outcropping silica-pyrite-sericite alteration located close to the active mine, Chapadero Ningomine Prospect Not covered by mapping with quartz gold veins highlighted in historic reports Blanquillo Prospect Outcropping stockwork veining hosted in rhyolite porphyry. Currently, the surface rights status is unclear Barbasco Prospect Yet to be explored Rio Catamayo Prospect Porphyry intrusions highlighted in historic reports with outcropping fresh strong magnetic diorite dykes. 22 23 Annual Report 2021 TITAN COPPER DUKE PROJECT 100% COPPER DUKE PROJECT During 2021, Titan commenced a systematic soil sampling program over the key prospect areas within Copper Duke and at year end it was 70% complete. Concurrently, geological mapping at scale of 1:20,000 of the main area, approximately 7,200Ha of Copper Duke commenced. Broad scale geology is ongoing. During the mapping programs numerous different styles of mineralised outcrop have been mapped including: In December, Titan commenced an inaugural round of reconnaissance drilling at the Copper Duke project (ASX Announcement 13 December 2021) for a planned 540 metre campaign. The two main objectives of the programme were to validate the drill hole results from historical drill holes completed in 1978 as follow-up work to a U.N. survey to identify strategic base metal potential in the region and to test the magnetic anomalism highlighted in 3D inversion modelling of the high-resolution magnetic datasets generated earlier this year. Assay results pending. • • • • • • Stockwork quartz veins related to porphyritic textured intrusions Intrusive semi-massive sulphide breccias Copper-gold bearing skarns Copper bearing veins/breccias Oxidised gossanous structures Massive sulphide filled structure During the year 36 channel samples for a total of 1,917 metres has been completed with results outstanding at year end. 24 25 Annual Report 2021 TITAN JERUSALEN PROJECT 100% JERUSALEN GOLD PROJECT The Jerusalen Project is a high-grade epithermal gold and silver discovery located on a single concession, named the Jerusalen concession, located approximately 150km due east of the Dynasty Gold Project in south-eastern Ecuador, 400km south-east of the capital Quito in the province of Zamora-Chinchipe, within 45km of the provincial capital Zamora, close to the border with Peru. The single concession covers 2.25km² in a readily accessible region of southern Ecuador within 70km of the nearest regional airport located near the city of Loja. To date 47 diamond holes have been drilled into these veins to define an orebody with a foreign resource estimate containing 1.2 million ounces of gold at 14.5 g/t gold and 8.6 million ounces of silver grading 98g/t. Of this total foreign resource estimate reported in accordance with Canadian NI43-101 some 423,000oz of gold and 2.86 million ounces of silver (955,000 tonnes at 13.8g/t gold and 93 g/t silver) has been classified in the measured and indicated category (refer to ASX release dated 21 September 2020). The Jerusalen concession is held by wholly owned Ecuadorian subsidiary, Cloudstreet International Corporation which is in turn wholly owned by Cloudstreet International Corporation (Panama) and then upstream to Titan Minerals Ltd. The project is located on the margins of the Zamora batholith, a middle to late Jurassic age intrusion up to 100km wide and exposed for 200km in the prolific Zamora copper-gold metallogenic belt. The belt hosts several epithermal gold deposits including the Condor project and the 13.9Moz Fruta del Norte mine, and multiple copper to gold enriched copper porphyry systems including Mirador and Santa Barbara projects. The remainder is inferred and sparsely drilled. The orebody remains open at depth and to the north a series of other targets on the small concession are identified for further work. The concession is strategically located as keyhole in neighbouring, Luminex Resources Condor Project No active exploration was completed on the permit during the year. Jerusalen Gold Project - Foreign Resource Estimate The project area has been the focus of several exploration campaigns, reporting several mineral resource estimations since the late 1990’s and host to artisanal mining activity since the early 1980’s. Several mineral resource estimations completed and two such estimates reported under the Canadian National Instrument NI43-101, with the most recent technical report titled “Jerusalen Gold Project, Zamora Chinchipe - Ecuador” dated 24 October 2014 and released on the SEDAR platform on 5 November 2014 (Table 9). The information in this annual report relating to Mineral Resource Estimates for the Jerusalen Gold Project is a foreign estimate and is not reported in accordance with the JORC Code. A competent person has not done sufficient work to classify this foreign estimate as a mineral resource in accordance with the JORC Code and it is uncertain that following further exploration work that this foreign estimate will be able to be reported as a mineral resource in accordance with the JORC Code. Category Measured Indicated Total Measure & Indicated Inferred Total Tonnes (000’s) 379 576 956 1775 2,731 Au (g/t) 14.2 13.5 13.8 15.0 14.5 Ag (g/t) 90 95 93 101 98 Contained Au (ozs) Contained Ag (ozs) (000’s) (000’s) 173 249 422 856 1,098 1,760 2,857 5,764 1,278 8,621 The existing drill datasets for the project are reported to include 52 holes of drilling inside or intersecting the Jerusalen Gold project. Titan has identified available files and assay logs for 47 diamond holes totalling 13,383m drilled, of which 30 holes are collared inside the Jerusalen Gold Project area. The average length of the holes is 267m and the depth of the deepest hole collared in Jerusalen Concession is 614.76m. 26 27 Annual Report 2021 CORPORATE OVERVIEW COVID-19 During the year, industry wide there were extended turn- around times for assay results due to COVID-19 related curfews on laboratory operating hours, shipping and delivery delays. Titan’s daily COVID monitoring activities, quarantine and testing policies were effective in maintaining a good health record for both the Company’s team and the local communities Titan engage with. In Ecuador, exploration and mining activities have been defined as essential activities and were permitted under COVID restrictions in Ecuador subject to each operation’s development and implementation of COVID-19 related safety policies. As required, these policies were lodged at Federal, Provincial, and Municipal levels of government. SALE OF ZARUMA MINE As announced 26 July 2021, Titan has completed the sale of the Zaruma Mine concessions and the Portovelo Process Plant assets to Pelorus Minerals Limited (Pelorus). The consideration of US$15.0 million is payable in staged cash payments. Titan retains a 2% net smelter return royalty on future copper production from the Zaruma mine concessions (for Transaction Summary refer to Quarterly Activities Report 30th July 2021). Completion of the asset sale will enable Titan to resolve the balance sheet issues it inherited following the acquisition of Core Gold Inc. in 2020 and to focus its full attention on the development of its flagship Dynasty Gold Project, and exploration at the Copper Duke Project and the high-grade Linderos Gold Project in Ecuador. CORPORATE OVERVIEW KEY APPOINTMENTS During the second half of the year several key appointments were announced that add a substantial amount of experience and technical capability to the Company. These include: Mr. Michael Skead appointed as Executive Vice- President of Exploration Mike was appointed to oversee all exploration, development, and economic evaluation of Titan’s exploration portfolio in Ecuador with an initial focus on advancing the Dynasty Gold Project. Subsequent to year end Mr. Skead was promoted to the position of In Country Manager – Ecuador. Mr. Peter Cook appointed as Non-Executive Chairman Mr. Cook brings a great skillset that significantly enhances the Board which now has an impressive mix of essential skills and experience across geology, mining, business development, operations, and capital markets. Mr. Barry Bourne appointed as Non-Executive Director Barry has advanced knowledge for targeting both epithermal and porphyry mineralisation the likes of that which our prospects in Ecuador have revealed. Resignation of Mr Laurie Marsland as Managing Director Post year end on April 1, 2022 the Company advised that Mr. Laurie Marsland was stepping down as a Director and Managing Director of the Company with immediate effect by mutual agreement with the Board. Mrs. Tamara Brown appointed as Non-Executive Director Tamara has extensive corporate, mining and development skillsets and an advanced knowledge of the Ecuadorian exploration and mining scene. Tamara rounds out a board skillset to enable the advancement of the projects in the best interests of our shareholders. 28 29 Annual Report 2021 CORPORATE OVERVIEW CORPORATE OVERVIEW During the year, industry wide there were extended turn- CAPITAL RAISING On 7 October 2021, Titan completed an at market placement of 180 million shares at A$0.10 per fully paid ordinary share to raise A$18,000,000. The Placement was strongly supported by existing and new domestic and offshore institutional investors outside of Australia. In addition, the expects to receive a further US$7.5m in staged payments as proceeds of the Zaruma asset sale (ASX release 15th April 2021), ensuring the Company is well funded for its ensuing exploration programs. CONVERSION OF FEES AND DEBT TO EQUITY Canaccord Lead Manager Services Canaccord Genuity (Australia) Limited (“Canaccord”), the lead manager from the Company’s recent A$18,000,000 placement (“Placement”), has requested to be paid a portion of its lead manager fees in fully paid ordinary shares in the Company (“Shares”) (refer to the Company’s ASX announcement on 14 October 2021 and accompanying Appendix 3B dated 7 October 2021 or further details on the Placement and Canaccord’s engagement). The Company has issued Canaccord 8,000,000 Shares at the same issue price as Shares under the Placement, being A$0.10 per Share, in satisfaction of A$800,000 of Canaccord’s fees for lead manager services. In addition certain debt holders have agreed to convert A$3,017,148 of debt to equity, resulting in the issue of a further 34,838,149 shares. This includes the conversion of A$703,801 by Director Matthew Carr, which was approved the shareholder meeting held in on 8 December 2021. Director Participation and Debt Conversion In addition to the Placement, Non-Executive Director Nick Rowley subscribed for an additional A$185,000 of new shares that were approved the shareholder meeting held in on 8 December 2021. Furthermore, Mr Cook purchased 10,000,000 shares for A$1,000,000 and Mr Rowley purchased 3,150,000 for A$315,000 on market purchase at the Placement price from a debt holder who converted their debt to equity. The Company has now retired approximately A$6.3 million of debt and associated interest through the debt settlement agreement with SilverStream SEZC (refer to Quarterly Activities Report 31st October 2021) and the aforementioned issue of Shares at the Placement issue price of A$0.10 per Share (refer to the Company’s ASX announcement dated 7 October 2021). RESTRUCTURE OF FINANCE TEAM Debt for Equity Arrangements Titan has further strengthened its balance sheet through the issue of 15,000,000 Shares at the Placement issue price of A$0.10 per Share in satisfaction of the principal under the RM Hunter line of credit. On 14 October 2021 the Company announced the resignation of its Chief Financial Officer, David Sadgrove. Mr Sadgrove made significant contributions to Titan since joining in August 2020, such as his involvement with the Core Gold Inc. acquisition, divestment of the non-core Peruvian operations and restructuring of the Ecuadorian operations. The Company made a number of significant additions to its in-country team. As part of Titan’s focus on bolstering management capability and capacity in Ecuador, the finance team will now be operating out of Ecuador, with continued independent financial consulting support that has been present from the commencement of divestment of the Peruvian assets and restructuring of Core Gold’s Ecuadorian businesses. VOX SILVERSTREAM ROYALTY In the second quarter, Titan executed binding agreements with Vox Royalty Corp whereby Vox acquired four gold, silver, and copper royalties from Titan for total cash consideration of US$1,000,000. The tenements are non-core early-stage exploration projects located in Peru. In addition, Titan will pay Vox US$1,000,000 in cash pursuant to the terms of a debt settlement agreement between Vox’s subsidiary, SilverStream SEZC, and a subsidiary of Titan, Mantle Mining Peru S.A.C, extinguishing all debt owed by Mantle to SilverStream. CASH As at 31 December 2021, Titan had a reported cash position of US$8,750,000. In addition, the Company held US$8,600,000 of receivables and liquid assets. 30 31 Annual Report 2021 TITAN TENEMENTS OUR COMPANY TENEMENTS CORPORATE OVERVIEW PROJECT LOCATION TENEMENT INTEREST AT END OF YEAR PROJECT LOCATION TENEMENT INTEREST AT END OF YEAR Dynasty Dynasty Dynasty Dynasty Dynasty Copper Duke Copper Duke Loja, Ecuador Loja, Ecuador Loja, Ecuador PILO 9 ZAR ZAR 1 Loja, Ecuador CECILIA 1 Loja, Ecuador Loja, Ecuador ZAR TRES A BARBASCO Loja, Ecuador BARBASCO 1 Copper Duke Loja, Ecuador BARBASCO 2 Copper Duke Loja, Ecuador BARBASCO 4 Copper Duke Loja, Ecuador CAROL Copper Duke Loja, Ecuador CATACOCHA Copper Duke Loja, Ecuador COLANGA Copper Duke Loja, Ecuador COLANGA 2 Copper Duke Loja, Ecuador Copper Duke Loja, Ecuador Copper Duke Loja, Ecuador GLORIA GLORIA 1 GONZA 1 Copper Duke Loja, Ecuador LUMAPAMBA Copper Duke Loja, Ecuador LUMAPAMBA 1 Linderos Loja, Ecuador CHORRERA 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Linderos Linderos Linderos Alce Phoebe Phoebe Phoebe Phoebe Phoebe Phoebe Phoebe Cart Copper Field Loja, Ecuador Copper Field Loja, Ecuador Loja, Ecuador DYNASTY 1 Loja, Ecuador LINDEROS E Loja, Ecuador Southern Peru Southern Peru Southern Peru Southern Peru Southern Peru Southern Peru NARANJO COOPER 1 COOPER 4 ALCE PHOEBE 1 PHOEBE 2 PHOEBE 3 PHOEBE 4 PHOEBE 5 Southern Peru TOROLUMI Southern Peru TOROLUMI II Central Peru CART01 Colossus Central Peru COLOSSUS01 Jaw Jaw Southern Peru Southern Peru JAW01 JAW02 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 32 33 Annual Report 2021 CORPORATE GOVERNANCE CORPORATE GOVERNANCE STATEMENT The directors of Titan Minerals support and adhere to the principles of corporate governance, recognising the need for the highest standard of corporate behaviour and accountability. Please refer to the corporate governance statement and the appendix 4G released to ASX and posted on the Company website at www.titanminerals.com.au. The directors are focused on fulfilling their responsibilities individually, and as a Board, for the benefit of all the Company’s stakeholders. That involves recognition of, and a need to adopt, principles of good corporate governance. The Board supports the guidelines on the “Principles of Good Corporate Governance and Recommendations – 4th Edition” established by the ASX Corporate Governance Council. Given the size and structure of the Company, the nature of its business activities, the stage of its development and the cost of strict and detailed compliance with all of the recommendations, it has adopted a range of modified systems, procedures and practices which enables it to meet the principles of good corporate governance. The Company’s practices are mainly consistent with those of the guidelines and where they do not correlate with the recommendations in the guidelines the Company considers that its adopted practices are appropriate to it. CANADIAN SHAREHOLDERS The Company advises that is a designated foreign issuer as that term is defined in National Instrument 71-102 – Continuous Disclosure and other Exemptions Relation to Foreign Issuers and it is subject to the foreign regulatory requirements of the Australian Securities Exchange. Notes to Mineral Resource Dynasty Gold Project The information in this announcement relating to Mineral Resource Estimates for the Dynasty Gold Project is a foreign estimate and is not reported in accordance with the JORC Code and it is uncertain that following further exploration work that this foreign estimate will be able to be reported as a mineral resource in accordance with the JORC Code. The Foreign Estimate initially reported in the document titled “Quarterly Activities Report for the Three Months Ended 31 March 2020”, dated 30 April 2020 (Initial Dynasty Announcement) is not reported in accordance with the JORC Code and a competent person has not done sufficient work to classify the foreign estimate as mineral resources in accordance with the JORC Code. Titan’s intention is to continue undertaking further exploration work planned for the Dynasty Gold Project to underpin a mineral resource estimation report in accordance with the principles of the JORC Code. The work plan outlined in the Initial Dynasty Announcement to achieve an updated resource estimation included: (i) Comprehensive re-logging of archived historical core available and digital photograph acquisition of core material previously drilled on the project (ii) Additionally drilling to define geometry of mineralisation and underpin 3D geological modelling, confirm confidence in projected mineralisation and selective twinning of previous drilling for verification purposes (iii) Additional metallurgical studies to underpin assumption or predictions in preliminary economic assessments Titan has commenced the proposed comprehensive re-logging campaign, and recently completed an initial campaign of oriented diamond core drilling to define vein orientations across most areas of foreign resource estimation, with final assays results from drilling pending analyses and development of a 3D geological model in progress at the time of reporting. The foreign resource estimate is comprised of three prospect areas, Cerro Verde, Iguana, and Papayal prospects. Initial drill tests to define vein orientations and continuity over the northernmost areas of the Cerro Verde and Papayal area remain subject to finalising surface access agreements with local community groups and land owners. Preliminary metallurgical study work has not yet been initiated. In addition to the exploration activities proposed in the Initial Dynasty Announcement, the Company has also completed a significant number of bulk density measurements within the drilled areas, and several petrographic samples for lithologic definition and gold deportment studies have been completed. With receipt of final assays and completion of a structural analysis and accompanying 3D geological modelling, Titan plans to move ahead with updating the Dynasty Minerals Resource Estimate in accordance with the JORC code during the Company’s 2022 fiscal year. As outlined above, Titan has collected additional information and data in relation to the Dynasty Gold Project, Titan Minerals confirms however, that exploration results to date do not appear to have a material impact on the reliability of the Foreign Mineral Resource Estimate under the previous estimation methods for the Dynasty Gold Project or the results from previous exploration activity included in the Initial Dynasty Announcement. Titan confirms that the supporting information provided in the Initial Jerusalen announcement continues to apply and have not materially changed Jerusalen Project The information in this announcement relating to Mineral Resource Estimates for the Jerusalen Project is a foreign estimate and is not reported in accordance with the JORC Code and it is uncertain that following further exploration work that this foreign estimate will be able to be reported as a mineral resource in accordance with the JORC Code. The Foreign Estimate initially reported in the document titled “Titan Minerals Jerusalen Project Concession in Ecuador Reinstated to 100% Ownership”, dated 21 September 2020 (Initial Jerusalen Announcement) is not reported in accordance with the JORC Code and a competent person has not done sufficient work to classify the foreign estimate as mineral resources in accordance with the JORC Code. Titan’s intention is to continue undertaking further exploration work proposed for the Jerusalen Project to underpin a mineral resource estimation report in accordance with the principles of the JORC Code. The work plan outlined in the Initial Jerusalen Announcement to achieve an updated resource estimation included: i. audit, verification and re-logging program of historical diamond core stored at the Jerusalen Project site, ii. where available, compilation of underground mine surveys to assess impact of previous mining on the foreign resource estimate completed in 2014 in-fill drilling to define geometry of mineralisation and underpin development of a 3D geological model (to iii. 34 35 Annual Report 2021 establish controls for geostatistical modelling techniques in resource estimation), confirm confidence in projected mineralisation, and selective twinning of previous drilling for verification purposes, and iv. additional metallurgical studies to underpin assumption or predictions in preliminary economic assessments As at the time of reporting Titan had not yet initiated the proposed work program. Titan has not been able to progress the Jerusalen Project. Artisanal and illegal mining activity has constrained access and progress but the matter is being resolved by local authorities. With successful access to the project area, commencement of field exploration activities will remain subject to completion of an environmental audit of the project area following a hiatus in continuity of title on the project area and assessment of impact by illegal mining activity on the property. Proposed field work will follow-on from community engagement, socialisation, and environmental baseline study work in accordance with statutory requirements in Ecuador and industry best practices. Titan confirms that it is not in possession of any new information or data that materially impacts on the reliability of the Foreign Mineral Resource Estimate for the Jerusalen Project or results included in the Initial Jerusalen Announcement. Titan confirms that the supporting information provided in the Initial Jerusalen announcement continues to apply and have not materially changed. COMPETENT PERSON’S STATEMENT The information in this report that relates to Exploration Results is based on information compiled by Mr Travis Schwertfeger, who is a Member of The Australian Institute of Geoscientists. Mr Schwertfeger is Consulting Geologist for the Company and has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the JORC 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Schwertfeger consents to their inclusion in the report of the matters based on his information in the form and context in which it appears. Mr. Schwertfeger confirms that the technical information in this release and information provided relating to the Mineral Resource Estimates for the Dynasty Gold Project and Jerusalen Project have been provided under ASX Listing Rules 5.12.2 to 5.12.7 and is an accurate representation of the available data and studies for the Dynasty Gold Project located in southern Ecuador as a Foreign Estimate. CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements 36 37 Annual Report 2021 Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position For the year ended 31 December 2021 Performance rights / options CONTINUING OPERATIONS EXPENSES General and administration Salary and wages Professional fees Note 31-Dec-21 US$000’s Compensation 31-Dec-20 US$000’s 5(a) (1,920) (2,795) (844) (1,920) (1,688) (1,196) Share based payments – directors and employees 24 (1,070) (3,607) As at 31 December 2021 Consolidated CURRENT ASSETS Cash and cash equivalents Receivables and prepaid expenses Inventories Financial assets (5,522) (9,518) Assets classified as held for sale Loss from operations Finance costs Derivative liability gain – warrants Impairment Foreign exchange gain / (loss) Fair value movements of financial assets Other income Gain / (loss) on extinguishment of financial liabilities Gain on disposal of subsidiary Corporate transaction expense Loss before income tax from continuing operations Income tax expense Loss after income tax from continuing operations DISCONTINUED OPERATIONS Profit/(Loss) for the year from discontinued operations Profit/(Loss) for the year OTHER COMPREHENSIVE INCOME Items that may be reclassified subsequently to profit or loss - Exchange differences on translating foreign operations Total comprehensive profit / (loss) for the year EARNINGS PER SHARE (cents) Basic and diluted earnings per share From continuing operations Basic and diluted earnings per share From discontinued operations 5(b) 5(c) 5(d) 6 7 (816) (55) 421 (1,073) 410 1,253 5,261 (936) 70 (2,625) (50) 538 1,228 (3,599) - - (17,677) (121) (32,569) - - (121) (32,569) 7,644 (3,066) 7,523 (35,635) 1,127 (414) 8,650 (36,049) 16 16 (0.01) (2.93) 0.638 (0.28) TOTAL CURRENT ASSETS NON-CURRENT ASSETS Receivables and prepaid expenses Property, plant and equipment Exploration and evaluation expenditure TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Accounts payable and accrued liabilities Loans payable Lease liabilities Liabilities classified as held for sale TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Lease liabilities Provisions for closure and restoration TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY CONSOLIDATED FINANCIAL STATEMENT Note 19(a) 8 9 7 8 10 11 12 13 7 14 15 31-Dec-21 US$000’s Compensation 31-Dec-20 US$000’s 8,762 9,108 - 228 872 18,970 1,783 171 28,133 30,087 49,057 6,552 1,088 - 2,543 10,183 - 494 494 10,677 38,380 3,272 2,501 95 2,300 1,145 9,313 470 472 18,374 19,316 28,629 11,007 5,819 22 2,413 19,261 51 508 559 19,820 8,809 170,383 150,494 22,117 19,958 (154,120) (161,643) 38,380 8,809 The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 38 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. 39 Annual Report 2021 Consolidated Statement of Changes in Equity For the year ended 31 December 2021 Issued Capital US$000’s Foreign Currency translation reserve US$000’s BALANCE AT 1 JANUARY 2020 EXPENSES 110,949 Net loss for the year Other comprehensive income Total comprehensive loss for the year TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS Issue of shares - acquisition of Core Gold Inc. Issue of shares Capital raising costs Share based payments As at 31 December 2020 BALANCE AT 1 JANUARY 2021 Net loss for the year Other comprehensive income Total comprehensive loss for the year TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS Issue of shares Capital raising costs Share based payments - - - 19,834 20,300 (589) - 150,494 150,494 - - - 20,578 (689) - - - (414) (414) - - - - (414) (414) - 1,127 1,127 - - - Share Based Payment Reserve US$000’s 16,437 - 35 35 - - - 3,900 20,372 20,372 - - - - - 1,032 As at 31 December 2021 continuing 170,383 713 21,404 Convertible Debenture Reserve US$000’s Accumulated Losses US$000’s Total Equity US$ 000’s 35 - (35) (35) (126,008) 1,413 (35,635) (35,635) - (414) (35,635) (36,049) - - - - - - - - - - - - - - - - - (161,643) (161,643) 7,523 - 7,523 - - - 19,834 20,300 (589) 3,900 8,809 8,809 7,523 1,127 8,650 20,578 (689) 1,032 (154,120) 38,380 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. Consolidated Statement of Cash Flows For the year ended 31 December 2021 CONSOLIDATED FINANCIAL STATEMENT CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest and other costs of finance paid NET CASH (USED IN) IN OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Payments for property, plant & equipment Proceeds from the sale of property, plant and equipment Proceeds from the sale of financial assets Payments of exploration and evaluation costs Proceeds from the sale of exploration assets Proceeds from repayments of loans provided Net cash inflow as a result of acquisition Net cash inflow as a result of disposal of subsidiaries NET CASH PROVIDED BY INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares (net of capital raising costs) Proceeds from borrowings Repayment of borrowings NET CASH PROVIDED BY FINANCING ACTIVITIES Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Effects of exchange rate changes on the balance of cash held in foreign currencies CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR YEAR ENDED 31-Dec-21 US$000’s 31-Dec-20 US$000’s - (8,212) (590) (8,802) (133) 273 781 20,858 (29,162) (222) (8,526) (36) - - (9,759) (4,053) - - - 8,850 12 13,421 4,366 (3,258) 14,529 5,739 3,272 (249) 8,762 1,500 241 3,094 612 1,358 9,459 3,412 (2,813) 10,058 2,890 181 201 3,272 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. 40 41 Annual Report 2021 NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS acquisition of 100% of the common shares in Core on 26 May 2020. NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT 1. GENERAL INFORMATION Corporate Information The consolidated financial statements of Titan Minerals Limited (“Parent Entity”, “Titan” or “Company”) and its controlled entities (collectively as “Consolidated Entity” or “the Group”) for the year ended 31 December 2021 were authorised for issue in accordance with a resolution of the directors on 31 March 2022. The Parent Entity is a for-profit company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. Further information on the nature of the operations and principal activities of the Group is provided in the directors’ report. Information on the Group’s structure and other related party relationships are provided in Notes 17 and 22. The Group’s registered office is in Level 1, 35 Richardson Street, West Perth, WA 6005 Australia. 2. a. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Statement of compliance The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. The consolidated financial statements and notes also comply with International Financial Reporting Standards as issued by the International Accounting Standard Board (IASB). Material accounting policies adopted in the preparation of the financial statements are presented below. They have been consistently applied unless otherwise stated. b. Basis of preparation The consolidated financial statements have been prepared on the basis of historical cost, except for certain financial assets carried at fair value. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in United States Dollars unless otherwise noted. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. c. Critical accounting judgements and key sources of estimation uncertainty In the application of accounting standards management is required to make 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 various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgements. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Refer to Note 3 for a discussion of critical judgements in applying the entity’s accounting policies and key sources of estimation uncertainty. d. Reverse acquisition (comparative year) Titan is listed on the Australian Securities Exchange. Titan Minerals Limited acquired control of greater than 50% of the common shares and voting rights of Core Gold Inc (“Core”) on 30 January 2020 and completed the legal 42 Under the principles of AASB 3, with the previous shareholders of Core holding a larger portion of voting rights of the combined entity than the continuing Titan shareholders and Core reflecting larger assets and revenues than Titan, the transaction between Titan and Core is treated as a reverse acquisition. As such, the assets and liabilities of the legal subsidiary (the accounting acquirer), being Core, are measured at their pre-combination carrying amounts. The assets and liabilities of the legal parent (accounting acquiree), being Titan are measured at fair value on the date of acquisition. The date of acquisition has been assessed on the basis of the change in shareholdings in Titan as a result of the transaction between Titan and Core and has been considered to be 30 January 2020. Accordingly, the consolidated financial statements of Titan have been prepared as a continuation of the financial statements of Core from 30 January 2020. The impact of the reverse acquisition on each of the primary statements is as follows: • The consolidated statement of profit or loss and other comprehensive income: - - For the year to 31 December 2021 comprises 12 months of both Core and Titan; and For the comparative period comprises the 12 month period to 31 December 2020 of Core and the period from 30 January 2020 to 31 December 2020 of Titan. • The consolidated statement of financial position: - - As at 31 December 2021 represents both Titan and Core as at that date; and As at 31 December 2020 represents both Titan and Core as at that date. • • The consolidated statement of changes in equity: - - For the year ended 31 December 2021 comprises 12 months of both Core and Titan; and For the year ended 31 December 2020 comprises Core’s balance sheet at 1 January 2020, its loss for the period and transactions with equity holders for 12 months. It also comprises Titan’s transactions within equity from 30 January 2020 to 31 December 2020 and the equity value of Core and Titan at 31 December 2020. The number of shares on issue at year end represent those of Titan only; and The consolidated statement of cash flows: - - For the year to 31 December 2021 comprises 12 months of both Core and Titan; and For the comparative period comprises 1 January 2020 to 31 December 2020, comprises: ƒ ƒ The cash balance of Core as at 1 January 2020; The cash transactions for the 12 months to 31 December 2020 of months of Core and the period from 30 January 2020 to 31 December 2020 of Titan; and The cash balances of Core and Titan at 31 December 2020. ƒ e. New and Revised Standards that are effective for these Financial Statements The Group applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2021 (unless otherwise stated). The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. Interest Rate Benchmark Reform – Phase 2: Amendments to AASB 9, AASB 139, AASB 7, AASB 4 and AASB 16 The amendments provide temporary reliefs which address the financial reporting effects when an interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR). The amendments include the following practical expedients: • A practical expedient to require contractual changes, or changes to cash flows that are directly required by the reform, to be treated as changes to a floating interest rate, equivalent to a movement in a market rate of interest • Permit changes required by IBOR reform to be made to hedge designations and hedge documentation without the hedging relationship being discontinued • Provide temporary relief to entities from having to meet the separately identifiable requirement when an RFR instrument is designated as a hedge of a risk component 43 Annual Report 2021 These amendments had no impact on the consolidated financial statements of the Group. The Group intends to use the practical expedients in future periods if they become applicable. The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries. Control is achieved when the Company: NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT AASB 2021-3 Amendments to Australian Accounting Standards - Covid-19-Related Rent Concessions beyond 30 June 2021 Amendments to AASB 16. The amendments provide relief to lessees from applying AASB 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the Covid-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a COVID-19 related rent concession from a lessor is a lease modification. A lessee that makes this election accounts for any change in lease payments resulting from the Covid-19 related rent concession the same way it would account for the change under AASB 16 16, if the change were not a lease modification. The amendment was intended to apply until 30 June 2021, but as the impact of the Covid-19 pandemic is continuing, on 31 March 2021, the AASB extended the period of application of the practical expedient to 30 June 2022.The amendment applies to annual reporting periods beginning on or after 1 April 2021. However, the Group has not received Covid-19-related rent concessions, but plans to apply the practical expedient if it becomes applicable within allowed period of application. f. Standards issued but not yet effective and not early adopted by the Group Certain new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for 31 December 2021 reporting periods and have not been early adopted by the group. These standards, amendments or interpretations are not expected to have a material impact on the Group in the current or future reporting periods. g. Going Concern The consolidated financial statements have been prepared on a going concern basis, which contemplates the continuity of normal business activity, realisation of assets and the settlement of liabilities in the normal course of business. The Consolidated Entity incurred a net loss from continuing operations for the 31 December 2021 financial year of $121 thousand (2020: $32,569 thousand) and had a net operating cash outflow of $8,802 thousand (2020: $8,526 thousand). The directors have prepared a cash flow forecast, which indicates that Group will have sufficient cash flows to meet all commitments and working capital requirements for the 12 month period from the date of signing this financial report. Included in the forecast are receipts of consideration receivable expected to be received within the next 12 months. Should there be any delays in receiving these funds, the Company may need to raise additional capital through debt or equity raisings. The Directors are confident that the Group will have sufficient cash to fund its activities within the next 12 months from the date the financial statements are approved and will be able to meet existing commitments as they fall due. The Directors will also continue to carefully manage discretionary expenditure in line with the Group’s cashflow. Should the Group be unsuccessful in its plans detailed above, there is uncertainty as to whether the Group would continue as a going concern and therefore whether it would realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or to the amount and classification of liabilities that might result should the Group be unable to continue as a going concern and meet its debts as and when they fall due. Significant Accounting Policies The following significant policies have been adopted in the preparation of the Financial Report: • Has power over the investee; • • Has the ability to use its power to affect those returns. Is exposed, or has rights, to variable returns from its involvement with the investee; and The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary. Profit or loss and each component of other comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. 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 (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) 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 applicable IFRSs). The fair value of any investment retained in the former subsidiary as 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 joint venture. i. Revenue recognition The Group’s primary product is gold and silver bullion. Revenue is recognised at an amount that reflects the consideration to which the group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. j. Interest revenue Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset. h. Principles of consolidation k. Cash and cash equivalents 44 45 Annual Report 2021 Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash, which are subject to an insignificant risk of changes in value and have a maturity of three months or less at the date of acquisition. information. NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT Bank overdrafts are shown within borrowings in current liabilities in the balance sheet. l. Trade and other receivables Trade receivable (without a significant financing component) are initially recognised at their transaction price and all other receivables are initially measured at fair value. Receivables are measured at amortised cost if it meets both of the following conditions and is not designated as at fair value through profit or loss: • it is held within a business model with the objective to hold assets to collect contractual cash flows; and • its contractual terms give rise on specified dates to cash flows that are solely payments of principal • and interest on the principal amount outstanding. For the purposes of the assessment whether contractual cash flows are solely payments of principal and interest, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin. In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers: • contingent events that would change the amount or timing of cash flows; • terms that may adjust the contractual coupon rate, including variable rate features; • prepayment and extension features; and • terms that limit the Group’s claim to cash flows from specified assets (e.g. non recourse features). The Group recognises an allowance for expected credit losses (“ECLs”) for all receivables not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate (“EIR”). ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). For trade receivables and other receivables due in less than 12 months, the Group applies the simplified approach in calculating ECLs, as permitted by AASB 9. Therefore, the Group does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset’s lifetime ECL at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. For any other financial assets carried at amortised cost (which are due in more than 12 months), the ECL is based on the 12-month ECL. The 12-month ECL is the proportion of lifetime ECLs that results from default events on a financial instrument that are possible within 12 months after the reporting date. However, when there has been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECL. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment including forward-looking m. Property, plant and equipment Property, plant and equipment are stated at cost less depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition. Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation is calculated on a straight-line basis so as to write off the net cost of each asset over its expected useful life to its estimated residual value commencing from the date the asset is available for use. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period. Depreciation on assets utilised in exploration, evaluation and mine development during the pre-production phase is included in the carrying value of Deferred Exploration Expenditure and Mine Assets reflected on the balance sheet. On commencement of production, depreciation is expensed to the Income Statement, and recognised on a units of production basis. The following estimated useful lives / methodologies are used in the calculation of depreciation: Plant and equipment Computer equipment Buildings 20 years 3 – 10 years 3 years Impairment of assets At each reporting date, the Consolidated Entity reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Consolidated Entity estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing fair value less costs of disposal, the Consolidated entity considers any relevant quoted market prices and/or subsequent arms-length transactions between two willing parties in determining fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately. n. Exploration expenditure 46 47 Annual Report 2021 Exploration and evaluation expenditure for each area of interest is carried forward as an asset provided that one of the following conditions is met: • Such costs are expected to be recouped through successful development and exploitation of the area of interest or, alternatively, by its sale; or • Exploration activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in relation to the area are continuing. Exploration and evaluation expenditure, which fails to meet at least one of the conditions outlined above, is written off. Identifiable exploration assets acquired from another mining company are carried as assets at their cost of acquisition. Exploration assets acquired are reassessed on a regular basis and these costs are carried forward provided that at least one of the conditions outlined above are met. Exploration and evaluation expenditure incurred subsequent to acquisition in respect of an exploration asset acquired, is accounted for in accordance with the policy outlined above for exploration incurred by or on behalf of the entity. Exploration and evaluation expenditure assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years. Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to mine assets. o. Investments in associates and joint ventures An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The results and assets and liabilities of associates or joint ventures are incorporated in these consolidated financial statements using the equity method of accounting, except with the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with AASB 5. Under the equity method, an investment in an associate or joint venture is initially recognised in the consolidated statements of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture. When the Group share of losses of an associate or a joint venture exceeds the Group’s interest in that associate or joint venture, the Group discontinue recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired. NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or a joint venture, or when the investment is classified as held for sale. When a group entity transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions with the associate or joint venture are recognised in the Group’s consolidated financial statements only to the extent of interest in the associate or joint venture that are not related to the Group. p. Business combinations Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquire and the equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that: • • • deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with AASB 112 ‘Income Taxes’ and AASB 119 ‘Employee Benefits’ respectively; liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with AASB 2 ‘Share-based Payment’ at the acquisition date; and assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ are measured in accordance with that Standard. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is remeasured at subsequent reporting dates in accordance with AASB 139 ‘Financial Instruments: Recognition and Measurement; or AASB 137 ‘Provisions, Contingent Liabilities and Contingent Assets’, as appropriate, with the corresponding gain or loss being recognised in profit or loss. Where a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of. 48 49 Annual Report 2021 If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date. q. Trade and other payables Trade payables and other accounts payable are recognised when the Consolidated Entity becomes obliged to make future payments resulting from the purchase of goods and services. r. Provisions Provisions are recognised when the Consolidated Entity has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. Provision for closure and restoration A provision for closure and restoration is recognised when there is a present obligation as a result of exploration, development, production, transportation or storage activities undertaken, it is probable that an outflow of economic benefits will be required to settle the obligation and the amount of the provision can be measured reliably. The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle the restoration obligation as at the reporting date. Future restoration costs are reviewed annually and any change in the estimates are reflected in the present value of the restoration provision at reporting date. The initial estimate of the restoration and rehabilitation provision relating to exploration, development and production facilities is capitalised into the cost of the related asset and amortised on the same basis as the related asset, unless the present value arises from the production of inventory in the period, in which case the amount is included in the cost of production for the period. Changes in the estimate of the provision for restoration and rehabilitation are treated in the same manner, except that the unwinding of the effect of discounting on the provision is recognised as a finance cost rather than being capitalised into the cost of the related asset. s. Employee benefits Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required and they are capable of being measured reliably. NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT other comprehensive income (OCI), and fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model. The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset. Subsequent measurement For purposes of subsequent measurement, financial assets are classified in four categories: • Financial assets at amortised cost (debt instruments) • Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments) • Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) • Financial assets at fair value through profit or loss Financial assets at amortised cost (debt instruments) Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Group’s financial assets at amortised cost includes trade receivables and loans receivable. Provisions made in respect of employee benefits expected to be settled wholly within twelve months, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Financial assets at fair value through OCI (debt instruments) Provisions made in respect of employee benefits which are not expected to be settled within twelve months are measured as the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date. Defined contribution plans Contributions to defined contribution superannuation plans are expensed when incurred. t. Financial assets For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognised in the statement of profit or loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit or loss. Financial assets designated at fair value through OCI (equity instruments) Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under AASB 132 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by instrument basis. Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other 50 51 Annual Report 2021 income in the statement of profit or loss when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment. The Group’s financial assets carried at fair value through OCI are listed equity instruments. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss. This category includes derivative instruments and listed equity investments which the Group had not irrevocably elected to classify at fair value through OCI. Dividends on listed equity investments are recognised as other income in the statement of profit or loss when the right of payment has been established. A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category. Impairment The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. u. Financial Liabilities Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables and loans and borrowings. The Group has no hedging instruments. NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT Subsequent measurement For purposes of subsequent measurement, financial liabilities are classified in two categories: • Financial liabilities at fair value through profit or loss • Financial liabilities at amortised cost (loans and borrowings) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by AASB 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the statement of profit or loss. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in AASB 9 are satisfied. The Group has not designated any financial liability as at fair value through profit or loss. Financial liabilities at amortised cost (loans and borrowings) This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss. This category generally applies to interest-bearing loans and borrowings. For more information, refer to Note 13. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss. v. Issued Capital Ordinary share 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. w. Foreign currency Foreign currency transactions The individual financial statements of each group entity are presented in its functional currency being the currency of the primary economic environment in which the entity operates. For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in United States dollars. All foreign currency transactions during the financial year are brought to account using the exchange rate in effect at the date of the transaction. Foreign currency monetary items at reporting date are translated at the exchange rate existing at reporting date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Exchange differences 52 53 Annual Report 2021 are recognised in profit or loss in the year in which they arise except that exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned or likely to occur, which form part of the net investment in a foreign operation, are recognised in the foreign currency translation reserve in the consolidated financial statements and recognised in consolidated profit or loss on disposal of the net investment. Foreign operations On consolidation, the assets and liabilities of the Consolidated Entity’s overseas operations are translated at exchange rates prevailing at the year end closing rate. Income and expense items are translated at the average exchange rates for the year unless exchange rates fluctuate significantly. Exchange differences arising, if any, are recognised in the foreign currency translation reserve, and recognised in profit or loss on disposal of the foreign operation. x. Goods and services tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except: i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or ii. for receivables and payables which are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. y. Share-based payments Equity-settled share-based payments with employees are measured at the fair value of the equity instrument at the grant date. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest. Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods and services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service. For cash-settled share-based payments, a liability equal to the portion of the goods or services received is recognised at the current fair value determined at each reporting date. z. Income tax Income tax expense represents the sum of the tax currently payable and deferred tax. Current tax Current tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statement of comprehensive income because of items of income or expense that are taxable or deductible in other periods and items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting year. Deferred tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the company intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax for the period Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items that are recognised outside profit or loss (whether in other comprehensive income or directly in equity), in which case the tax is also recognised outside profit or loss, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is included in the accounting for the business combination. aa) Leases The Group as lessee At inception of a contract, the Group assesses if the contract contains or is a lease. If there is a lease present, a right- of-use asset and a corresponding lease liability are recognised by the Group where the Group is a lessee. However, all contracts that are classified as short-term leases (ie a lease with a remaining lease term of 12 months or less) and leases of low-value assets are recognised as an operating expenses on a straight-line basis over the term of the lease. Initially the lease liability is measured at the present value of the lease payments still to be paid at the commencement date. The lease payments are discounted at the interest rate implicit in the lease. If this rate cannot be readily determined, the Group uses the incremental borrowing rate. Lease payments that may be included in the measurement of the lease liability are as follows: • fixed lease payments less any lease incentives; • variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; the amount expected to be payable by the lessee under residual value guarantees; lease payments under extension options, if the lessee is reasonably certain to exercise the options; and • • 54 55 Annual Report 2021 • payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease. The right-of-use assets comprise the initial measurement of the corresponding lease liability, any lease payments made at or before the commencement date and any initial direct costs. The subsequent measurement of the right-of- use assets is at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the lease term or useful life of the underlying asset, whichever is the shortest. Where a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group anticipates to exercise a purchase option, the specific asset is depreciated over the useful life of the underlying asset. Rounding of Amounts bb) The Parent Entity has applied the relief available to it under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. Accordingly, amounts in the financial statements have been rounded off to the nearest $1,000. 3. UNCERTAINTY CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION The following are the key estimates that management has made in the process of applying the Group’s accounting policies and that have the most significant effects on the amounts recognised in the financial statements. a. Impairment of property, plant and equipment The Group reviews for impairment of property, plant and equipment, in accordance with its accounting policy. The recoverable amount of these assets has been determined based on the higher of the assets’ fair value less costs to sell and value in use. These calculations require the use of estimates and judgements. In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent it is available. The Group may engage the assistance of third parties to establish the appropriate valuation techniques and inputs to the valuation model. NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT costs of abandoning sites, removing facilities and restoring the affected areas. The provision for future restoration costs is the best estimate of the present value (including an appropriate discount rate relevant to the time value of money plus any risk premium associated with the liability) of the expenditure required to settle the restoration obligation at the reporting date. Future restoration costs are reviewed annually and any changes in the estimate are reflected in the present value of the restoration provision. The initial estimate of the restoration and rehabilitation provision is capitalised into the cost of the related asset and amortised on the same basis as the related asset, unless the present obligation arises from the production of inventory in the period, in which case the amount is included in the cost of production for the period. Changes in the estimate of the provision for restoration and rehabilitation are treated in the same manner, except that the unwinding of the effect of discounting on the provision is recognised as a finance cost rather than being capitalised into the cost of the related asset. 4. SEGMENT INFORMATION Identification of Reportable Segments The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board (the chief operating decision-maker) in assessing performance and in determining the allocation of resources. In the prior year, the Group reported two operating segments, being gold sales in Ecuador and Exploration in Ecuador and Peru. Following the disposal of the gold sales in Ecuador segment as described in Note 7, the Group’s principal activities is exploration and development of gold and copper assets in Ecuador. These activities are all located in the same geographical area being Ecuador and Peru. Given there is only one segment being in one geographical area, the financial results from this segment are equivalent to the financial statements of the Consolidated Entity as a whole. 5. REVENUE AND EXPENSES The following is an analysis of the Group’s revenue for the year from continuing operations: b. Exploration expenditure For the year ended 31 December 2021 The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage that permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded. Such capitalised expenditure is carried at the end of the reporting period at $28,133 thousand. c. Impairment of Exploration expenditure The future recoverability of deferred exploration and evaluation expenditure is dependent on several factors, including whether the Group decides to exploit the related tenement/lease/concession itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, costs of drilling and production, production rates, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices. d. Provision for closure and restoration costs A provision for restoration and rehabilitation is recognised when there is a present obligation as a result of development activities undertaken, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the provision can be measured reliably. The estimated future obligations include the 56 a. General and Administration expenses Compliance expenses Insurance costs Advertising and investor relations Travel and accommodation Municipal taxes Fines and penalties Depreciation and amortisation Other Administration costs TOTAL CONSOLITATED 31-Dec-21 US$000’s 31-Dec-20 US$000’s 117 104 332 32 - - 53 1,282 1,920 288 162 754 144 202 101 17 1,127 2,795 57 Annual Report 2021 Impairment b. Impairment expense of totalling $55 thousand relates to the impairment of VAT in Ecuador no longer considered recoverable. The prior year included impairment of VAT of $2,274 thousand and impairment of property, plant and equipment of $351 thousand. c. Gain / (loss) on extinguishment of financial liabilities a. General and Administration expenses Loss on extinguishment – issue of Titan Mineral Shares Gain on extinguishment – issue of financial assets Gain on extinguishment – Silverstream liability TOTAL (i) (ii) (1,490) (3,599) 124 2,619 1,253 - - (3,599) In consideration for the settlement $4,273 thousand (2020: $2,966 thousand) of financial liabilities (being (i) loans and associated accrued fees and interest), Titan Minerals Limited issued 67,218,337 shares (2020: 69,521,000 shares). As a result of the settlement of these liabilities in equity, a loss on extinguishment of $1,490 thousand (2020: $3,599 thousand) representing the difference between the fair value of the shares at settlement and the carrying value of the loans and interest. (ii) During the year, the Group agreed to a Deed of Settlement with Silverstream SECZ (“Silverstream”) whereby liabilities owed by Titan Minerals Limited of $2,619 thousand (after payment of US$1,000 thousand) were extinguished in exchange for a gross smelter royalty over four Peru exploration concessions. The Peru exploration concessions had no carrying value at the date of extinguishment. Gain on disposal of subsidiary b. During the year the Company completed the restructuring of its Ecuadorian operations. This resulted in the disposal of two Ecuadorian subsidiaries (refer to Note 26). The Management have determined that the operations of these subsidiaries were within the operations of the group and not material to the group. The sale of the subsidiaries is considered a corporate transaction. As such these have not been reported as discontinued operations. The net gain on disposal represents the net liabilities of the subsidiaries as at 7 June 2021 of US$5,261 thousand. 58 NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT 6. INCOME TAX EXPENSE Income tax recognised in profit or loss Tax expense comprises: Current tax expense Deferred tax expense Total tax expense CONSOLIDATED 31-Dec-21 US$000’s 31-Dec-20 US$000’s - - - - - - The prima facie income tax expense on pre-tax accounting loss from continuing operations reconciles to the income tax expense in the consolidated financial statements as follows: (Loss) from continuing operations Income tax benefit calculated at 30% (2020: 30% Canada) Expenses that are (not deductible) / income that is exempt in determining taxable profit Effect of different tax rates of subsidiaries operating in other jurisdictions Tax benefit not recognised as recovery not probable (121) 36 1,886 - (1,922) - (33,124) 9,937 (6,620) (122) (3,195) - The tax rate used in the above reconciliation is the tax rate of 30% (2020: 30%) payable by Australian corporate entities on taxable profits under Australian tax law. The corporate tax rate in Peru is 29.5%, Canada 27.0% and Ecuador 25.0%. Deferred tax balances as at 31 December 2021 were not recognised in the consolidated statement of financial position. The deferred tax balances relate to the Parent entity and the Australian tax group. The Australian deferred tax assets not recognised relate to the following accounts: Temporary differences Tax losses – revenue Tax losses – capital TOTAL 2,427 12,346 16,407 31,180 926 9,482 16,816 27,224 59 Annual Report 2021 7. DISCONTINUED OPERATIONS Assets and liabilities classified as held for sale CONSOLIDATED 31-Dec-21 US$000’s 31-Dec-20 US$000’s Assets classified as held for sale PP&E – Land surface rights: Zaruma & Portovelo1 872 1,145 Liabilities classified as held for sale Tax liabilities: Coriorcco and Las Antas Tax liabilities: Zaruma & Portovelo Provision for closure and restoration: Zaruma & Portovelo1 Net Liabilities classified as held for sale (563) (756) (1,224) (1,671) - - (1,850) (705) (1) These balances represent the assets and liabilities requiring the legal transfer of title to Pelorus Minerals Limited under the Share Sale Agreement as described below. The transfer process is awaiting completion by the relevant government authorities. Profit / (Loss) from discontinued operations Loss on disposal - Coriorcco and Las Antas (Peru) Loss on disposal - Vista Gold S.A.C Profit on disposal - Zaruma mine & Portovelo plant (Ecuador) Gain / (Loss) from discontinued operations CONSOLIDATED 31-Dec-21 US$000’s 31-Dec-20 US$000’s - - 7,644 7,644 (325) (2,186) (555) (3,066) Prior year disclosures have been restated to reflect the results of discontinuing operations. A summary of the material terms is as follows: Current year: Zaruma mine & Portovel plant (Ecuador) On 26 July 2021, the Consolidated Group competed the sale of Zaruma mine and Portovelo process plant In Ecuador for US$15.0 million pursuant to a Share Sale Agreement with Pelorus Minerals Limited. The schedule of staged cash payments under the Share Sale Agreement is: • US$2.0 million non-refundable cash deposit received on 30 April 2021 60 NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT • • • US$3.5 million Initial Consideration payment received in August 2021 US$2.0 million First Deferred Consideration Payment received in September 2021 $2.5 million Second Deferred Consideration Payment, due upon the earlier of: - - 1 December 2021; and receipt by Pelorus of the capital raising proceeds from its IPO, which Pelorus is proposing to complete by 31 October 2021. However, this was not received as at balance date. • US$2.5 million Third Deferred Consideration Payment due by 1 March 2022. As at the date of this report, this has not yet been received.US$2.5 million Fourth Deferred Consideration Payment due by 1 June 2022 As at 31 December 2021, the consideration amount receivable is US$7.5 million. No provision for impairment has been made at the reporting date. Loss for the period from discontinued operations Revenue Cost of goods sold Gross profit Other expenses Loss before income tax Sale consideration Less: carrying value at disposal and costs to sell Attributable income tax expense Net gain on disposal Profit/(Loss) for the period from discontinued operations (attributable to owners of the company) Cash flows from discontinued operations Cash flows from discontinued operations Net cash outflows from operating activities Prior year: Coriorcco and Las Antas: CONSOLIDATED 31-Dec-21 US$000’s 31-Dec-20 US$000’s - - - (1,122) (1,122) 15,000 (5,300) (934) 8,766 7,644 6,025 (4,376) 1,649 (2,204) (555) - - - - (555) CONSOLIDATED 31-Dec-21 US$000’s 31-Dec-20 US$000’s - (1,122) 6,025 (3,342) Western Pacific Resources Corp (“Western Pacific”, and subsequently renamed Oro X Limited) acquired Titan’s legal and beneficial right, title, and interest in options to acquire: (a) 100% of the legal and beneficial and interest in a 2,000-hectare concession known as the Coriorcco property pursuant to a cession and option agreement; and (b) 61 Annual Report 2021 up to 85% of the legal and beneficial and interest in a 1,400-hectare concession known as the Las Antas Property pursuant to an earn-in agreement (together, the “Properties”) . As consideration for the sale of the option rights over the Properties, Titan received: a. cash consideration of US$1,500,000; and b. 4,250,000 common shares in the capital of Western Pacific (the “Shares”). In the event that Western Pacific exercises its option to acquire the Coriorcco property: a. Western Pacific will grant to Titan a 1% NSR over the Coriorcco property; and b. Western Pacific has agreed to make a conditional payment to Titan (in cash, Shares (priced at a 10-day VWAP of Shares prior to the relevant technical report) or a combination of both, at Western Pacific’s option) on the basis of the size of any mineral resource (in the measured and indicated category) that is established on the Coriorcco property in a technical report prepared in accordance with National Instrument NI43-101 as follows: i. US$1,000,000 (cash and/or shares) if a measured and indicated resource of 500,000 to 999,999 ounces of gold is established; ii. US$1,500,000 (cash and/or shares) if a measured and indicated resource of 1,000,000 to 1,499,000 ounces of gold is established; and iii. US$2,000,000 (cash and/or shares) if a measured and indicated resource in excess of 1,500,000 ounces of gold is established. The transaction was completed during the prior year, with the Group recognising a loss on disposal of the exploration assets after income tax of $325 thousand. Vista Gold Plant: The sale was completed on 24 December 2020 via the sale 100% of the Group’s shares in its wholly owned subsidiary, Vista Gold S.A.C, to AC 081 S.A.C. The consideration for the sale receivable by Titan is: a. a non-refundable payment of US$300,000 in cash, received in the prior year b. a further US$1,000,000 instalment due on 31 December 2020, of which US$500,000 was received in the prior year and US$500,000 was received in January 2021. c. further instalments totalling US$1,670,000 due approximately quarterly over the coming 18 month period. As at 31 December 2021, the consideration amount receivable is US$820 thousand. 62 NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT Loss for the period from discontinued operations 31-Dec-21 US$000’s 31-Dec-20 US$000’s Revenue Cost of goods sold Gross profit Other expenses Profit before income tax Loss on disposal Attributable income tax expense (Loss) for the period from discontinued operations (attributable to owners of the company) Cash flows from discontinued operations Net cash inflow from operating activities 8. RECEIVABLES AND PREPAID EXPENSES - - - - - - - - 15,074 (13,522) 1,552 (772) 780 (2,966) - (2,186) 31-Dec-21 US$000’s 31-Dec-20 US$000’s - 368 Loss for the period from discontinued operations 31-Dec-21 US$000’s 31-Dec-20 US$000’s CURRENT Other receivables Prepaid – taxes Prepaid – other Consideration receivable (refer Note 7) Advances – suppliers NON CURRENT Other receivables1 Consideration receivable (refer Note 7) (Loss) for the period from discontinued operations (attributable to owners of the company) 697 - 91 8,320 - 9,108 - 1,783 - 1,783 293 347 80 1,700 81 2,501 - - 470 470 63 Annual Report 2021 The Group does not hold any trade receivables as at 31 December 2021 (2020: nil). None of the receivables disclosed above are past due or impaired, other than as described in Note 7. (1) Other receivables (non-current) relate to VAT recoverable from foreign taxation authorities. The recoverability of this VAT is based on the commencement of mining operations and as such, have been classified as non-current assets. 9. FINANCIAL ASSETS Net cash inflow from operating activities 31-Dec-21 US$000’s 31-Dec-20 US$000’s 228 228 2,300 2,300 The shares held as at 31 December 2021 was 1.0 million shares (2020: 4.25 million shares) in Silver X Mining Corp (TSXV: AGX). These shares are classified as at fair value through profit or loss. These financial assets have been valued based on the share price at the reporting date (Level 1). 64 10. PROPERTIES, PLANT AND EQUIPMENT NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT Amounts denominated in US$000’s Zaruma Mines Plant and Equipment Dynasty Goldfields Land and Buildings Total Cost: Balance as at 31 December 2019 Additions Right of use asset – head office lease Acquired as part of business combination Transferred assets to held for sale Transferred to exploration and evaluation Balance as at 31 December 2020 Additions Disposed Balance as at 31 December 2021 Accumulated Depreciation and Amortisation: 29,104 34,350 15,041 3,129 81,624 - - - 36 - 48 (29,104) (34,350) - - - - - 80 - 36 80 48 (2,791) (66,245) - - - - - (15,041) - (15,041) 84 133 - 217 - - - 418 - (418) - 502 133 (418) 217 Balance as at 31 December 2019 Depreciation and amortisation / impairment Acquired as part of business combination Transferred to held for sale assets Transferred to exploration and evaluation Balance as at 31 December 2020 Depreciation and amortisation Disposed Balance as at 31 December 2021 Net Book Value As at 31 December 2020 As at 31 December 2021 (29,104) (34,350) (792) (360) (64,606) - - (9) (4) 29,104 34,350 - - - - - - - (13) (33) - (46) 71 171 (54) (1,303) (1,366) - - 846 - - - - - - (4) 1,646 65,100 - (17) (20) 37 - 401 - 846 (30) (53) 37 (46) 472 171 65 Annual Report 2021 11. EXPLORATION AND EVALUATION EXPENDITURE 13. LOANS PAYABLE NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT Capitalised exploration and evaluation expenditure CONSOLIDATED 31-Dec-21 US$000’s 31-Dec-20 US$000’s 28,133 18,374 Reconciliation of the carrying amounts of exploration and evaluation assets at the beginning and end of the current financial year: Carrying amount at the beginning of the year - additions - acquisitions through business combination (Peru) - impairment - disposals - transferred from property, plant and equipment Carrying amount at the end of the year 12. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 18,374 9,814 - (55) - - 28,133 248 3,719 3,492 - (3,280) 14,195 18,374 CURRENT Silverstream SECZ loan (i) Sophisticated and professional investors loan – December 2020 (ii) Sophisticated and professional investors loan – August 2021 (iii) TOTAL i. Silverstream SECZ Loan CONSOLIDATED Notes 31-Dec-21 US$000’s 31-Dec-20 US$000’s (i) (ii) (iii) - - 1,088 1,088 2,619 3,200 - 5,819 As described in Note 5(c)(ii), Titan completed a settlement agreement with Silverstream SEZC whose parent company is Vox Royalty Corp. whereby Titan paid US$1.0 million in full and final settlement of the Silverstream SEZC loan. As part of the agreement Titan received royalties in advance on four prospective tenement or concession areas held by Titan subsidiaries in Peru. A 3% revenue royalty is payable on any production from these four concession areas. ii. Sophisticated and professional investors – December 2020 On 21 December 2020, the Group entered into a secured debt facility with a group of sophisticated and professional investors. CONSOLIDATED The material terms of the debt facility are: CURRENT Trade payable Government payable – IVA, Taxes, Royalty, Concessions Other payables TOTAL 31-Dec-21 US$000’s 31-Dec-20 US$000’s 5,948 249 355 6,552 9,602 202 1,203 11,007 • Amount: A$4,155,280 • • Security: the Loan amount is secured against the Dynasty Gold, Copper Duke & Linderos assets of Titan in Interest: 15% interest per annum payable at the repayment date. Ecuador. • Repayment: the Company must repay the Loan Amount it has drawn and all other amounts accrued or outstanding by 28 February 2022 (Termination Date). This facility was fully repaid during the year. iii. Sophisticated and professional investors – August 2021 In August 2021, the Group entered into an unsecured debt facility with a group of sophisticated and professional investors. The material terms of the debt facility are: • Amount: A$1,500,000 • Repayment date: 1 April 2022 • • Facility establishment fee: 5% Interest: 15% per annum payable at repayment date Finance costs: Sophisticated and professional investors – December 2020 66 67 Annual Report 2021 During the year, interest of A$412 thousand (US$309 thousand) was repaid at settlement. RM Hunter Fund Pty Ltd On 2 January 2020 Titan entered into an unsecured debt facility with RM Hunter Fund Pty Ltd, an entity controlled by Mr Raymond Meadowcroft, an experienced debt funding investor. The key terms of the Loan Facility are: • the amount available to be drawn is US$10 million; • amounts drawn may be repaid and redrawn over the term; repayment date has been extended to 31 December 2021; • • the interest rate on amounts drawn is 12% per annum (and no interest or fees accrue on undrawn amounts); • Titan can use the amounts drawn as it chooses; • no security has been, or is required to be, provided to the Lenders in connection with the Loan Facility; and • as consideration for the Lenders agreeing to provide the Loan Facility, Titan issued to the Lenders fully paid ordinary shares in Titan having an aggregate value equal to US$500,000, which is 5% of the total loan amount. These shares were issued on 24 August 2020. During the year, the Company drew down US$1.1 million of this loan, and repaid during the year via the issue of 15,000,000 shares in Titan Minerals Limited. Interest of US$82 thousand was paid in cash as part of settlement. Director loan During the year, the Group received a loan from Director Matthew Carr of A$660,000, under the following terms: • • Unsecured; and • Repayment date: within 10 business day of 1 December 2021 Interest of 12% per annum; Following obtaining shareholder approval on 8 December 2021, the loan and accrued interest was settled via the issue of 7,157,723 shares (valued at A$751,561) in Titan Minerals Limited. The interest component on this amount was A$62 thousand (US$47 thousand). Sophisticated and professional investors – August 2021 As at 31 December 2021, A$76 thousand (US$55 thousand) of interest was accrued in relation to the current loan from sophisticated and professional investors and recognised as finance costs. Facility establishment fees of A$75 thousand (US$56 thousand) were paid during the year and recognised as finance costs. NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT 14. ISSUED CAPITAL (a) Issued capital reconciliation Issued capital Ordinary shares fully paid Movements in shares on issue 31 DECEMBER 2021 NUMBER 31-Dec-20 US$000’s 1,409,720,582 170,383 249 202 Balance at the beginning of the financial year 1,139,452,483 150,494 Shares issued 26 July 2021 to lenders and suppliers in lieu of cash Shares issued 8 October 2021 to lenders in lieu of cash Shares issued 13 October 2021 for share placement Shares issued 14 October 2021 to lenders and suppliers in lieu of cash Shares issued 22 December 2021 to suppliers in lieu of cash Shares issued 31 December 2021 for Director participation in share placement Shares issued 31 December 2021 to lenders in lieu of cash Less: capital raising costs Balance at end of the year Terms and conditions of contributed equity 21,060,927 27,800,137 180,000,000 23,000,000 9,399,762 1,850,000 7,157,273 - 1,861 2,346 13,212 1,810 670 134 545 (689) 1,409,720,582 170,383 Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company. (b) Shares under option – unlisted Recipient Canaccord Genuity (Australia) Limited Canaccord Genuity (Australia) Limited Number of shares under option 10,000,000 10,000,000 Canaccord Genuity (Australia) Limited 14,000,000 $0.15 31 Dec 2023 Directors, Management and Consultants 57,120,000 $0.0001 24 August 2024 Exercise Expiry Date Vested $0.125 $0.175 31 Dec 2023 31 Dec 2023 100% 100% 100% 0% 68 69 As at 31 December 2021, there are 34,000,000 unlisted options issued to corporate advisors, and 57,120,000 incentive options issued to Directors, Managements and Consultants (refer Note 24 for further details). Annual Report 2021 Unquoted share options granted carry no rights to dividends and no voting rights and details of the movement in unissued shares or interests under option as at the date of this report are: Recipient Total number of options outstanding as at 1 January 2021 Share options issued Share options cancelled Share options expired Total number of options outstanding as at 31 December 2021 No options were exercised during the year. Total number of performance rights outstanding as at 1 January 2021 Performance rights expired Total number of performance rights outstanding as at 31 December 2021 15. RESERVES Share based payments reserve Foreign currency translation reserve Movements in Share based payments reserve At the beginning of the financial year Share based payments for the year Transfer from convertible debenture reserve Number of Options (Unlisted) 75,620,000 21,500,000 (1,500,000) (4,500,000) 91,120,000 Number of Performance Rights 15,000,000 (15,000,000) - CONSOLIDATED 31-Dec-21 31-Dec-20 21,404 713 22,117 20,372 1,032 - 20,372 (414) 19,958 16,437 3,900 35 21,404 20,372 The share based payments reserve is used to accumulate the fair value of share based payments issued, including options and performance rights. 70 Movements in Foreign currency translation reserve At the beginning of the financial year Movement 16. EARNINGS PER SHARE NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT CONSOLIDATED 31-Dec-21 31-Dec-20 (414) 1,127 713 - (414) (414) CONSOLIDATED 31-Dec-21 Cents 31-Dec-20 Cents Basic and diluted earnings per share from continuing operations (0.01) (2.934) US$000’s US$000’s Cents Loss from Continuing Operations Attributable to Equity Holders of Titan Minerals Ltd (121) (32,569) Weighted average number of ordinary shares used in the calculation of basic EPS 1,199,032,047 1,110,085,798 Potential ordinary shares not considered to be dilutive at year end - - No. No. Cents Basic and diluted earnings / (loss) per share from discontinued operations Cents 0.638 Cents (0.276) US$000’s US$000’s Cents Profit / (Loss) from Discontinued Operations Attributable to Equity Holders 7,644 (3,066) of Titan Minerals Weighted average number of ordinary shares used in the calculation of basic EPS 1,199,032,047 1,110,085,798 No. No. Cents Potential ordinary shares not considered to be dilutive at year end - There were no potential ordinary shares considered to be dilutive at year end. - 71 Annual Report 2021 17. SUBSIDIARIES Name of entity Country of incorporation Ownership interest 2021 Ownership interest 2020 Principal Activity a. Reconciliation of cash and cash equivalents 19. NOTES TO THE CASH FLOW STATEMENT NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT Mundo Minerals USA Inc Compañía Minera Aus-trandina S.A.C Compañía Minera Santa Raquel S.A.C Compañía Minera Santa Carmela S.A.C USA Peru Peru Peru Andina Resources Limited Australia Mantle Mining S.A.C Andean Metals S.A.C Porphyry Assets S.A.C Core Gold Inc. 1165412 B.C. Ltd GV Gold Holdings Limited Empire Sun Investment Limited Elipe S.A Green Valley Resources – GVR S.A Golden Valley Planta S.A. Greentrade Ecuador Overseas Inc. Minsupport S.A.(in administration) Helles Mining Corp Mooro Mining Inc. Black Flag Minerals Inc. Cloudstreet International Corp. Titan Minerals S.A.S. Peru Peru Peru Canada Canada British Virgin Islands Ecuador Ecuador Ecuador Panama Ecuador Ecuador Ecuador Ecuador Ecuador Ecuador 100% 100% 100% 100% 100% 100% 100% 100% 100% -% -% 100% - - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% - - - - Administrative holding company Administrative holding company Administrative holding company Administrative holding company Administrative holding company Administrative holding company Administrative holding company Administrative holding company Holding company Holding company Holding company Holding company Mineral exploration and concession holder Plant operator and producer Plant owner Holding company General and administration Mineral concession holder Mineral concession holder Mineral concession holder Mineral concession holder 100% Operating company for exploration service NEK Development Corp. Panama 100% 100% Mineral concession holder 18. CONTINGENCIES AND COMMITMENTS All contingent liabilities as previously disclosed in the annual financial statement as at 31 December 2020, were disposed of with the relinquishment of control over certain Ecuadorian subsidiaries. The Ecuadorian restructuring is detailed in Note 26 below. The Group has no other significant commitments or contingent liabilities as at 31 December 2021. 72 For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in banks and investments in money markets instruments. Cash and cash equivalents at the end of the financial year as shown in the cash flow statement is reconciled to the related items in the balance sheet as follows: Cash at bank and deposits at call Cash in transit b. Reconciliation of loss for the year to net cash flows used in operating Profit / (Loss) for the year Adjustments for: Depreciation and amortisation of non-current assets Share based payments Foreign exchange Finance costs Finance costs – Asset Retirement Obligations Impairment Gain/Loss on extinguishment of financial liabilities Fair value movement of financial assets Derivative liability gain – warrants Corporate Transaction Expense Profit on disposal of property, plant and equipment Gain on disposal of subsidiaries (Increase)/decrease in assets: CONSOLIDATED 31-Dec-21 US$000’s 31-Dec-20 US$000’s 7,377 1,385 8,762 2,772 500 3,272 Parent 31-Dec-21 US$000’s 31-Dec-20 US$000’s 7,523 (35,635) 53 1,070 (421) 190 - 55 (1,253) 1,073 - - (399) (5,261) 1,175 3,607 50 936 136 2,625 3,599 (538) (70) 17,677 - - Trade and other receivables, prepaid expenses and long-term assets (7,920) (818) 73 Annual Report 2021 Inventories Increase/(decrease) in liabilities: Trade and other payables Current tax liability Net cash used in operating activities 95 1,048 (4,363) (2,882) 756 564 (8,802) (8,526) c. Non-cash financing and investing activities During the year, a total of US$4,272 thousand of financial liabilities, fees and interest was settled in equity. As a result of the settlement of these liabilities in equity, the Company recognised a loss on extinguishment of US$1,491 thousand. Other liabilities of US$320 thousand were paid with investments in listed entities. As a result of the settlement of these liabilities in financial assets, the Company recognised a gain on extinguishment of US$105 thousand. As part of the deed of settlement with Silverstream SECZ as described in Note 5(c), the Company extinguished liabilities of US$2,619 thousand in exchange for a gross smelter return royalty over four Peru exploration concessions. There were no other non-cash financing activities. 20. EVENTS AFTER THE REPORTING PERIOD There have not been any matters or circumstances that have arisen since the end of the financial year, that have significantly affected or may significantly affect, the operations of the Group, the results of the operations, or the state of the affairs of the Group in the future financial years. 21. KEY MANAGEMENT PERSONNEL Remuneration of key management personnel Short term employee benefits Post-employment benefits Share based payments Termination benefits 31-Dec-21 US$000’s 31-Dec-20 US$000’s 746,652 24,447 672,023 13,087 955,066 1,611,760 67,030 - 1,793,195 2,296,870 The disclosure above represents the full financial years ending 31 December 2021 and 31 December 2020 for the key management personnel of Titan Minerals Limited. Other transactions: As described in Note 13, during the year, the Group received a loan from Director Matthew Carr of A$660,000. Following obtaining shareholder approval on 8 December 2021, the loan and accrued interest was settled via the issue of 7,157,723 shares in Titan Minerals Limited. The interest component on this amount was A$62 thousand (US$47 thousand). 74 NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT Refer to the Remuneration Report on pages 7 to 10 of the Directors Report for further details. 22. RELATED PARTY TRANSACTIONS a. Subsidiaries The ultimate parent entity of the group is Titan Minerals Limited. Details of the ownership of ordinary shares held in subsidiaries are disclosed in Note 17 to the Consolidated Financial Statements. Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in the Note. Details of transactions between the Group and other related parties, if any, are disclosed below. Transactions and balances between the Company and its subsidiaries were eliminated in the preparation of consolidated financial statements of the Group. b. Parent entity The ultimate parent entity of the Group is Titan Minerals Limited. The Statement of Comprehensive Income and Financial position on the parent entity are summarised below: Statement of Financial Position Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net Assets Issued capital Reserves Accumulated losses Shareholder Equity Statement of Comprehensive Income Loss after tax Total comprehensive loss Parent 31-Dec-21 US$000’s 31-Dec-20 US$000’s 7,772 228 8,000 1,929 14,374 16,303 (8,303) 181,810 7,789 2,259 2,458 4,717 6,473 4,701 11,174 (6,457) 161,920 5,668 (197,902) (174,045) (8,303) (6,457) Parent 31-Dec-21 US$000’s 31-Dec-20 US$000’s 7,772 2,259 (23,857) (83,356) 75 Annual Report 2021 c) Expenditure commitments by the parent entity: Not longer than 1 year Longer than 1 year and not longer than 5 years Total comprehensive loss - - - - - - There are no material guarantees by the Parent Company to its subsidiaries. 23. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, price and foreign exchange risks and ageing analysis for credit and liquidity risk. Risk management is carried out by senior management under direction of the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific areas. The consolidated entity is not materially exposed to changes in interest rates in its activities. Trade and other receivables; The material financial instruments to which the Group has exposure include: i. Cash and short-term deposits; ii. iii. Financial assets iv. Accounts payable v. Borrowings The carrying values of these financial instruments approximate their fair values. The carrying values of the Group’s financial instruments are as follows: Financial Assets Cash and Cash Equivalents Receivables Financial assets Total Financial Assets Financial Liabilities Trade and other payables Borrowings Total Financial Liabilities Net Exposure Parent 31-Dec-21 US$000’s 31-Dec-20 US$000’s 8,762 9,1081 228 18,098 5,948 1,088 7,036 11,062 3,272 2,463 2,300 8,035 11,007 5,892 16,899 (8,864) NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT 31-Dec-21 US$000’s 31-Dec-20 US$000’s Receivables and prepaid expenses maturing as follows: Less than 6 months 6 months to 1 year Later than 1 year but not longer than 5 years Over 5 years Trade and other payables maturing as follows Less than 6 months 6 months to 1 year Later than 1 year but not longer than 5 years Over 5 years Borrowings maturing as follows Less than 6 months 6 months to 1 year Later than 1 year but not longer than 5 years Over 5 years a. Market Risk Foreign Exchange Risk 9,108 1,993 - - - 470 - 9,108 2,463 5,948 11,007 - - - - - - 5,948 11,007 1,088 5,830 - - - 11 51 - 1,088 5,892 The Group operates internationally and is exposed to foreign exchange risk arising primarily from its parent company operating in Australian dollars and raising equity on the ASX in Australian dollars while its principal operations are all denominated in US dollars. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency of US dollars. The carrying amounts of the Group’s foreign currency denominated assets and monetary liabilities at the end of the reporting year are as follows: ASSETS LIABILITIES 31-Dec-21 US$000’s 31-Dec-20 US$ 000’s 31-Dec-21 US$000’s 31-Dec-20 US$000’s (1) Excludes VAT receivable of US$1,783 thousand. The table reflects the undiscounted contractual settlement terms for financial instruments of a fixed period of maturity as well as management’s expectations of settlement period for all other financial instruments. Australian (AUD) Canadian (CAD) dollars dollars 1,992 1 2,463 23 (1,566) (2,019) 76 (4,570) (2,699) 77 Annual Report 2021 Interest Rate Risk All the consolidated entity’s financial instruments that are exposed to interest rate risk are either non-interest bearing, bear interest at commercial interest rates or at fixed rates. The weighted average interest rate on cash and short-term deposits at 31 December 2021 was 0.05% (31 December 2020: 0.05%). All trade and other receivables, other financial assets and trade payables are non-interest bearing. Interest bearing liabilities include short term loans. The interest rate on short term loans payable is currently 15.0% (2020:15%), refer Note 13. A change in interest rate on short term loans of +/- 1.0% would result in an increase (decrease) in interest expenses of US$11 thousand. Credit Risk b. Financial instruments, which potentially subject the consolidated entity to credit risk, consist primarily of cash and short-term deposits. Credit risk on cash, short term deposits and trade receivables is largely minimised by dealing with companies with acceptable credit ratings. The group is exposed to credit risk with regard to the consideration receivable from the Zaruma/Portovelo sale and the Vista Gold SAC sale (refer Notes 7 and 8) totalling US$8.3 million. Titan has assessed the credit risk of the purchaser and concluded that there is no impairment of the receivable as at 31 December 2021. The consolidated entity has no reason to believe credit losses will arise from any of the above financial instruments. However, the maximum amount of loss, which may possibly be realised, is the carrying amount of the financial instrument. Cash in Australia is held with National Australia Bank Limited which is an appropriate financial institution with an external credit rating of AA-. Cash in Ecuador is held with Banco Pichincha Quito Ecuador which is an appropriate financial institution with an external credit rating of B-. Liquidity Risk c. Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. Management monitors the rolling forecasts of the Group’s cash and fair value assets based on expected cash flows. This is generally carried out at a local level in the operating companies of the Group in accordance with the practice and limits set by the Group. Capital Risk management d. The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so that the Group can continue to maintain a suitable capital structure and fulfil the objectives of the Group. 24. SHARE-BASED PAYMENTS Incentive Options Incentive Options Share options cancelled 31 December 2021 Number 57,120,000 57,120,000 During the year, the Company issued incentive options with the following terms to Directors and staff. Movements in incentive options Balance at the beginning of the year Issued on 8 December 2021 – Directors and staff Cancelled during the year Balance at the end of the year 78 37,120,000 21,500,000 (1,500,000) 57,120,000 NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT Vesting Category Vesting Condition Options Exercise Price (AUD) Expiry Date A B C D The Company announcing on its ASX Market Announcements Platform a minimum 2,000,000 ounces of gold (Au) or gold equivalent (in accordance with clause 50 of the JORC code) at the Dynasty Gold Project in Ecuador. The Company announcing on its ASX Market Announcements Platform a minimum 2,500,000 ounces of gold (Au) or gold equivalent (in accordance with clause 50 of the JORC code) at the Dynasty Gold Project in Ecuador. 5,375,000 $0.0001 24 August 2024 5,375,000 $0.0001 The VWAP of Company Shares is at least $0.15 for 10 consecutive trading days 5,375,000 $0.0001 The VWAP of Company Shares is at least $0.30 for 10 consecutive trading days or at 24 months after the issue of the Incentive Options. 5,375,000 $0.0001 24 August 2024 24 August 2024 24 August 2024 Below is a summary of the key inputs and valuation methodology of the incentive options issued: Directors, Key Management Personnel and Consultants – granted on 8 December 2021 Vesting Category A B C D Valuation model Black-Scholes Black-Scholes Hoadleys Hybrid ESO Model 24 August 2024 Options exercisable at (AUD): $0.0001 $0.0001 $0.0001 24 August 2024 Grant date Expiry date Estimated volatility Risk-free interest rate Fair value (AUD): 8 December 2021 8 December 2021 8 December 2021 8 December 2021 24 August 2024 24 August 2024 24 August 2024 24 August 2024 90% 1.16% $0.099 90% 1.16% $0.099 90% 1.16% $0.0677 90% 1.16% $0.05 79 Annual Report 2021 NOTES ON THE CONSOLIDATED FINANCIAL STATEMENT • Round House Mining Inc. – Zone 1 • Third Ridge Corp. – Zone 3 • Block Minerals Corp. – Los Cipreces • Bulla Resources Corp. – Machay Wholly owned Ecuadorian subsidiaries (of Titan Minerals Limited) – entities sold as part of the Zaruma mine & Portovelo plant sale (refer Note 7): Lone Pine S.A.S. – Zone 2 • • Hartog S.A.S. – Zone 4 • Sugarloaf S.A.S. – Malvas 1 • Sandlewood AU25 S.A.S. – Portovelo plant and related assets (being transferred) Wholly owned Ecuadorian subsidiary (of Titan Minerals Limited) – the main operating and service company in Ecuador, which employs the majority of the local staff: • Titan Minerals S.A.S. Previous wholly owned Ecuadorian subsidiaries, per the acquisition of Core Gold consolidated group. Control was relinquished on the transfer of concessions and completion of the business reorganisation* : • Green Valley Resources GVR S.A. (in administration) • Elipe S.A. (in administration) * the intermediate Canadian holding companies., 1165412 B.C. Ltd and GV Gold Holdings Limited were also disposed of. Expenses Arising from Share-based Payment Transactions Total expenses arising from share-based payment transactions recognised during the year were as follows: Performance rights Incentive options Options Total share-based payments expense Impact of foreign exchange translation Total share based payments impact on the share based payment re-serve 31-Dec-21 US$000’s 31-Dec-20 US$000’s 20 1,050 - 1,070 (38) 1,032 16 1,671 1,920 3,607 293 3,900 During the year, the Company issued shares to the lead manager and consultants for services rendered. The fair value of these shares amounted to US$1,640 thousand, which have been allocated to: • US$1,049 thousand • Professional fees: Capital raising costs: US$591 thousand 25. REMUNERATION OF AUDITORS Auditor of the consolidated entity Audit and review of the annual and half year financial report Audit and review of other financial reports Other auditors Audit or review of the financial report 26. BUSINESS REORGANISATION & SUBSIDIARIES 31-Dec-21 US$000’s 31-Dec-20 US$000’s 107 - 107 92 125 - 125 182 On 9 June 2021 the Company announced it had completed a restructuring of its Ecuadorian operations as part of it’s strategic review. The following key subsidiary companies of the Titan consolidated group were impacted: Wholly owned Panamanian subsidiaries with Ecuadorian branches – entities which now hold Ecuadorian projects and mining concessions which are being retained by Titan: • NEK Development Corp. – Dynasty Gold project • Helles Mining Corp. – Copper Duke project • Mooro Mining Inc. – Linderos project • Black Flag Minerals Inc. – Copperfield project • Cloudstreet International Corp. – Jerusalen Gold project Wholly owned Panamanian subsidiaries (of NEK Development Corp.) with Ecuadorian branches – entities sold as part of the Zaruma mine sale (refer Note 7): 80 81 Annual Report 2021 ADDITIONAL INFORMATION 1. DIRECTORS’ INFORMATION The directors and company secretary of Titan Minerals Limited (the “Company” or “Titan”) and its controlled entities (together the “Group” or “Consolidated Entity”) during the financial year end until the date of this report were as follows: 2. DIRECTORS AND COMPANY SECRETARY Peter Cook - appointed as director on 31 August 2021, current Laurence Marsland – appointed as director on 15 July 2019, resigned 31 March 2022 Matthew Carr – appointed as director on 3 February 2017, current Barry Bourne – appointed as director on 19 October 2021, current Nicholas Rowley – appointed as a director on 9 August 2016, current Michael Hardy – appointed as director on 15 July 2019, resigned 31August 2021 Zane Lewis – appointed as company secretary on 11 August 2016, current 3. DIRECTORS’ MEETINGS Five meetings of the directors of the Company have been held during the financial year ended 31 December 2021. 4. PRINCIPAL ACTIVITIES The Company’s main undertaking is exploration and development of gold and copper assets in Southern Ecuador. The Company’s main are assets are: 1. 2. 3. 4. 5. The Dynasty Gold Project The Linderos Project The Copper Duke Project The Jerusalen Project The Copper Field Prospect ADDITIONAL INFORMATION The assets lie proximal to a major flexure of the Andean Terrane where porphyry copper and epithermal gold -silver are associated with early to late Miocene aged magmatism along the margin of the extensive Cretaceous aged Tangula Batholith. Access to the main projects is excellent. all within close proximity to the Pan American and costal highways. Well paved regional all-weather roads enable access to the projects. Regional airports exist approximately two hours by road from the projects with daily connections to Ecuador’s capital city, Quito. Over the past year the Company re-invigorated the activity within its key projects following the completion of the takeover of Core Gold Ltd and the divestment of the troubled Zaruma Project. The Zaruma sale was completed on 26 July 2021 with Titan to receive staged payments of US$15 million in cash and hold a 2% NSR royalty on copper production from the Zaruma concessions. During the year US$7.5million of funds had been received which enabled Titan to deal with many of the legacy debts owed by Core Gold. A number of other legacy issues were attended to and the Company’s social licence to operate in the tenure, it’s Government standing and support were re-established enabling exploration works to again recommence. Along with significant corporate enhancements, a new technical team of highly gifted explorers was injected toward the end of the year enabling a very strong technical focus to endure into future developments at the projects. 5. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS AND REVIEW OF OPERATIONS The following significant changes in the state of affairs of the Consolidated Entity occurred during the financial year: The profit of the Consolidated Entity for the year ended 31 December 2021 amounted to US$7,523 thousand (31 December 2020: US$35,635 thousand loss). DYNASTY GOLD PROJECT (100%) The Dynasty Gold Project was the main focus of the Company during the past year. After receiving the requisite statutory and community approvals drilling recommenced with a focus on infill and extensional drilling of the previously defined mineralisation. By year end the Company had completed 22,400m of diamond drilling using man-portable diamond rigs. The majority of this was at Cerro Verde Prospect in the southern part of the Dynasty Gold Project with minor amounts of drilling completed at Iguana Prospect (615m) and Papayal-Trapichillo (1,030m). Assay results from the drilling have been slowly filtering through due to long delays at international laboratories due to Covid impacts. By year-end approximately half of the results from the program were received returning typical high-grade gold and silver assays which verify, validate and expand upon results from previous drill programs. Coincident with the drilling over 1,300m of channels were cut from which 1,123m were sampled. The breakdown being: 1,017 metres sampled from the Cerro Verde Prospect; 97m sampled from the Iguana Prospect and 9m from the Papayal-Trapichilo Prospect. Simar to the drilling, this trench channel sampling has returned excellent high-grade gold and silver assays from the epithermal veins and their alteration halo’s. LINDEROS PROJECT (100%) All the Ecuadorian concessions are owned by wholly owned Ecuadorian Company’s top-hatted by Panamanian public Company’s and enabling transactional flexibility for each asset allowing decisions about investment into each project to be made independently of the others. Works at Linderos started again with the collation and aggregation of layer geochemical, mapping and geophysical datasets as a baseline in conjunction with dataset validation as part of a systematic process of exploration of porphyry (copper, gold) and epithermal (gold, silver) targets. A significant campaign of surface reconnaissance works was initiated at Linderos in the second half of the year with 82 83 Annual Report 2021 a key focus on the advanced Copper Ridge Prospect and Meseta Gold Prospects within the concessions. Exploration activities during 2021 included completion of three thousand one hundred and ninety-one (3,191.4) metres of trenching and two hundred and ninety-four (294) rock chip samples mainly on the Copper Ridge prospect. COPPER RIDGE PROSPECT Copper Ridge is a postulated outcropping porphyritic intrusion complex manifested by strongly coincident copper, gold and molybdenum anomalism all surrounded by distal base metal anomalism. Surface work has revealed strong zonation of phyllic and argillic alteration of country rock around and within a mapped quartz-diorite porphyry intrusion of approximately 1km in diameter. Previous drill campaigns proximal to the intrusion has returned highly anomalous copper results which are considered to be peripheral to a main body of copper mineralisation. The re-processing and interpretation of historic geophysical data has revealed a conducting body deeper in the system at a postulated 250-300m depth. A detailed airborne magnetic survey is planned for early 2022 along with an additional 3-D Induced Polarisation (IP) survey before drill testing this exciting target. Additional reconnaissance works by channel and rock chip sampling over the Copper Ridge prospect continues to refine an area of significantly more pervasive and higher tenor copper mineralisation in argillic alteration. Indications suggest the erosional level of the outcropping porphyry copper body is high in the system with scope for higher grades with depth. Better results from initial channels sampling in un-drilled areas indicating higher grade mineralisation within the prospect returned surface values that include: • 2m @ 0.31% copper and 0.12g/t gold including 12m @ 0.39% copper (Channel - CRC022) • 42m @ 0.29% copper and 0.08g/t gold including 8m @ 0.53% copper (Channel - CRC023) • 90m @ 0.26% copper and 0.13g/t gold (Channel - CRC003) ADDITIONAL INFORMATION Copper Duke is an early-stage exploration project comprised of thirteen (13) concessions located approximately 18km east of the Company’s more advanced Dynasty Gold Project in the Loja Province of southern Ecuador. The scale, geometry and extent of geophysical anomalism identified at the Copper Duke Project is like many major porphyry districts. Results of the geophysical survey results show clusters of intrusion related anomalism over an area greater than 12km2, on par with many tier-one deposits around the world. Recent surface exploration has confirmed a relatively high tenor of geochemical anomalism outcropping at surface which is exposed through several hundred metres of vertical relief across the project area. Regionally, the project lies at the northern contact of the Tengula batholith, which comprise Cretaceous volcano- sediments. Local geology comprises outcropping diorite and quartz-diorite composed rocks with small alteration zones. Outcropping copper and gold mineralisation is hosted in veins and tectonic breccias and outcropping copper- gold bearing scans are located at the contact with the Batholite/Celica Formation. Exploration target deposit models are porphyry copper gold systems, intrusion related gold and gold bearing skarns. During the year Titan has continued to build systematic exploration datasets with follow-up geochemistry surveys and channel sampling, extending surface geochemistry coverage a further 12km2. Toward the end of the year two reconnaissance holes (total of 540 metres) were drilled to oreitate and validate results from two previous diamond holes drilled by the United Nations in the 1970’s and assays are still pending. Elsewhere on the concessions some two thousand one hundred and forty-eight (2,148) metres of trenching and three hundred and seventy-five (375) rock chip samples were collected with many showing elevated gold and copper mineralisation. A systematic soil sampling program over the key areas was approximately 60% complete by year end. JERUSALEN PROJECT (100%) Only desktop works were completed on the Jerusalen Prospect during the year. The area is currently subject to illegal mining activity by organised artisanal networks. The Company is working with the Government to re-gain access to the concessions for addition exploration and mining studies. MESETA GOLD PROSPECT COPPER FIELD PROJECT (100%) Meseta Gold Prospect hosts gold mineralisation in steep to sub-vertical epithermal veins at the margins of the porphyry stock. Several features at the prospect suggest the presence of an intermediate to high-sulphidation gold system. Numerous zones of very high-grade gold exists. One specific area was prepared by previous owners for small scale mining which didn’t eventuate. In this area intense channel sampling over a 150m x 100m zone revealed a number of bonanza grade veins. During the year Titan continued with surface reconnaissance works including mapping, channel and rock chip sampling returning excellent high-grade gold and silver results. Previous drilling has confirmed mineralisation extending into fresh rock. A thin transported cover over the main veins persists for about 1km and makes for a geochemically blind plateau but with predicted veins continuing at each end. Better peak assay results from the rock chip results on outcropping veins collected during 2021 included: • 64g/t gold with >1,500 g/t silver and 26.9g/t gold with 715g/t silver located 500m east of the nearest drilling. • 61g/t gold with 103g/t silver and 42g/t gold with 9g/t silver located on the western margin of the Meseta Prospect, confirming presence of grade at location of 2017 channel sampling • 3g/t gold with 16g/t silver and 7.3g/t gold with 11g/t silver on new veining identified 2.3 kilometre southeast of the 2017 channel sampling. Further work is required to follow-up results of the rock chips received to date that show the gold system at Meseta is clearly far more extensive than what has been previously defined. Drilling is planned for the ensuing year along with baseline water studies to determine the background levels of metal associated with the known high sulphidation mineralisation. COPPER DUKE PROJECT (100%) 84 Initial desk top study and prelim surface reconnaissance work to locate the prospect is all that occurred during the year. 6. SHARE OPTIONS AND PERFORMANCE RIGHTS As at the date of this report there are 34,000,000 unquoted options to corporate advisors and 57,120,000 incentive options to Directors and employees on issue. Refer Note 24 to the financial statements for further details. 7. INDEMNIFICATION AND INSURANCE OF OFFICERS During or since the end of the financial year the Company has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay insurance premiums as follows: The Company has entered into agreements to indemnify all directors and provide access to documents, against any liability arising from a claim brought by a third party against the Company. The agreement provides for the Company to pay all damages and costs which may be awarded against the directors. The Company has paid premiums to insure each of the directors against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director of the company, other than conduct involving a wilful breach of duty in relation to the Company. The amount of the premium was US$42,996 which was paid during the financial year. No indemnity has been sought for or paid to auditors. 85 Annual Report 2021 8. Events Subsequent to Reporting Date There have not been any matters or circumstances that have arisen since the end of the financial year, that have significantly affected or may significantly affect, the operations of the Group, the results of the operations, or the state of the affairs of the Group in the future financial years. 9. Dividends No dividends have been paid or declared since the start of the financial year by the Company. The directors have recommended that no dividend be paid by the Company in respect of the year ended 31 December 2021. 10. LIKELY DEVELOPMENTS ADDITIONAL INFORMATION Directors meetings attended (where eligible): 1 of 1 held during the financial year Appointed: 31 August 2021 Laurence Marsland Director (Managing Director & Chief Executive Officer) Qualifications and Experience: Mr Marsland is a graduate of the Western Australia Institute of Technology where he completed a Bachelor of Applied Science in Mechanical Engineering and is a graduate of the Stanford Sloan Fellows Program at the Stanford University Graduate School of Business where he completed a Master of Science in Management degree. Mr Marsland is a Fellow of the Institution of Engineers Australia, a Chartered Professional Engineer. The Group will continue to pursue its principal activity of minerals exploration in Ecuador, particularly in respect to its key projects being the Dynasty Gold project, Copper Duke project and the Linderos Gold project plus the divestment of non-core assets. The Company will also continue to evaluate new business opportunities in South America. Directorships of other listed companies in the 3 years prior to the end of the Financial Year: N/A 11. ENVIRONMENTAL ISSUES The Group’s operations comply with all relevant environmental laws and regulations and have not been subject to any action by environmental regulators. 12. PROCEEDINGS ON BEHALF OF COMPANY No person has applied for leave of any court to bring proceedings on behalf of the ultimate parent 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. All contingent liabilities as previously disclosed in the annual financial statemen as at 31 December 2020, were disposed of with the relinquishment of control over certain Ecuadorian subsidiaries. The Ecuadorian restructuring is detailed in Note 26 of the financial statements. 13. INFORMATION ON DIRECTORS AND COMPANY SECRETARY Peter Cook Director (Non-Executive Chairman) Qualifications and Experience: Peter Cook is a geologist (B Sc Applied Geology – Ballarat 1983) and a mineral economist (MSc Min. Econ WASM 1995), MAusIMM with more than 35 years experience in mineral exploration, mine development, mining operations and corporate management or resource entities. Directorships of other listed companies in the 3 years prior to the end of the Financial Year: Non-Executive Chairman of Westgold Resources (AS:WGX) Non-Executive Chairman of Castile Resources Ltd (ASX:CST) Non-Executive Chairman of Breaker Resources NL Limited Interest in shares and options of the Company as at the date of resignation: 13,100,962 Fully Paid Ordinary Shares 9,000,000 Incentive Options Interest in shares and options of the Company as at the date of resignation: 5,696,154 Ordinary Shares 10,000,000 options Directors meetings attended (where eligible): 5 of 5 held during the financial year Appointed: 15 July 2019 Matthew Carr Director (Executive Director) Qualifications and Experience: Mr Carr is a successful and experienced company director having founded Urban Capital Group. Urban Capital Group is a private equity company with a strong focus on property backed investment and security. Directorships of other listed companies in the 3 years prior to the end of the Financial Year: N/A Interest in shares and options of the Company 21,051,774 Ordinary Shares 7,000,000 options Directors meetings attended (where eligible): 5 of 5 held during the financial year Appointed: 3 February 2017 Nicholas Rowley Director (Non-Executive Director) Qualifications and Experience: Mr Rowley is an experienced corporate executive with a strong financial background having previously worked in the financial services industry for over 10 years where he gained widespread experience in corporate advisory, M&A transactions and equities markets, advising domestic and international Institutional sales and high net worth individuals. He also advised on the equity financings of numerous ASX and TSX listed companies predominantly in the mining and resources sector. Mr Rowley most recently served as Director of Corporate Development for Galaxy Resources Ltd (ASX:GXY). 86 87 Annual Report 2021 Directorships of other listed companies in the 3 years prior to the end of the Financial Year: Non-Executive Director of Cyprium Metals Limited appoint 31 May 2018 (ASX: CYP). Non-Executive Director of Oro X Mining Corp (TSV:OROX) appoint 8 October 2020 – resigned 28 February 2022 Interest in shares and options of the Company 10,157,460 Ordinary Shares 5,000,000 options Directors meetings attended eligible): (where 5 of 5 held during the financial year Appointed: 9 August 2016 Barry Bourne Director (Non-Executive Director) Qualifications and Experience: Mr. Bourne is an innovator, who has designed, proposed and implemented a full range of initiatives via his experience gained whilst working within the mining industry. He was shortlisted for the Australian Innovation Awards in 2012 and was the Advance Global Australian of the Year for Mining and Resources in 2013. He is a Fellow of the Australian Institute of Geoscientists and is on the technical advisory committee for UWA Centre for Exploration Targeting. Directorships of other listed companies in the 3 years prior to the end of the Financial Year: N/A Interest in shares and options of the Company 5,000,000 options Directors meetings attended (where eligible): 1 of 1 held during the financial year Appointed: 19 October 2021 Michael Hardy Director (Non-Executive Chairman) Qualifications and Experience: Mr Hardy is a graduate of the University of Western Australia with degrees in Arts and Law. He has practiced as a barrister and solicitor for 40 years, having been a partner of Robinson Cox (subsequently Clayton Utz) from 1983 to 2002 before establishing the firm Hardy Bowen in 2002. Mr Hardy is a former Chairman and Director of Fleetwood Corporation Limited. Directorships of other listed companies in the 3 years prior to the end of the Financial Year: N/A Interest in shares and options of the Company as at the date of resignation: 835,531 Ordinary Shares 5,000,000 options ADDITIONAL INFORMATION Directors meetings attended eligible): (where 4 of 4 held during the financial year Appointed: Resigned Zane Lewis Company Secretary 15 July 2019 31 August 2021 Qualifications and Experience: Mr Lewis has over 20 of years corporate advisory experience with various ASX and AIM listed companies. Mr Lewis is a fellow of Chartered Secretaries Australia and is a Non-Executive Director and Company Secretary for a number of ASX Listed companies. Appointed as company secretary on 11 August 2016. 14. REMUNERATION REPORT (AUDITED) The Directors present the remuneration report for the Company and the Consolidated Entity for the year ended 31 December 2021. This remuneration report forms part of the Directors’ Report and has been audited in accordance with section 300A of the Corporations Act 2001 and details the remuneration arrangements for the key management personnel. Key management personnel are those persons who, directly or indirectly, have authority and responsibility for planning, directing and controlling the major activities of the Company and the Consolidated Entity. Remuneration is based on fees approved by the Board of Directors. There is no relationship between the performance or the impact on shareholder wealth of the Company for the current financial year or the previous financial years excluding the remuneration of directors and executives or the issue of options to directors. Remuneration is set at levels to reflect market conditions and encourage the continued services of directors and executives. The names and positions of key management personnel of the Company and of the Consolidated Entity who have held office during the financial year are: Peter Cook Non-Executive Chairman (appointed 31 August 2021) Laurence Marsland Managing Director & Chief Executive Officer Matthew Carr Executive Director Nicholas Rowley Non-Executive Director Barry Bourne Non-Executive Director (appointed 19 October 2021) Michael Hardy Non-Executive Chairman (resigned 31 August 2021) Michael Skead Executive Vice-President of Exploration (appointed 1 October 2021) 88 89 Annual Report 2021 Travis Schwertfeger Chief Geologist (resigned 8 June 2021 David Sadgrove Chief Financial Officer (resigned 11 October 2021) SERVICE AGREEMENTS Remuneration and other terms of employment for the Executive Directors and other officers are formalised in a service agreement. For Non-Executive Directors these terms are set out in a Letter of Appointment. The major provisions of the agreements relating to remuneration per year are set out below. Name Peter Cook Laurence Marsland Matthew Carr Nicholas Rowley Barry Bourne Michael Hardy (resigned 31 August 2021) Michael Skead Travis Schwertfeger (resigned 8 June 2021) David Sadgrove (resigned 11 October 2021) (1) Termination benefits: CONSULTING FEES / SALARY 2018 $120,000 No fixed term 2109 N/A $240,000 4 years 2/12 months(1) $180,000 No fixed term 6/12 months(1) $72,000 No fixed term $72,000 No fixed term $108,000 plus superannuation No fixed term N/A N/A N/A $250,000 CAD per annum 2 years 2 months $240,000 No fixed term 3 months $275,000 plus superannuation No fixed term 3 months Mr Laurence Marsland: In the case of termination without cause by the Company, the required notice period is 12 months. In the case of termination without cause by Mr Marsland, the required notice period is 2 months. Mr Matthew Carr: In the case of termination without cause by the Company Mr Carr is entitled to receive 12 months’ salary. In the case of termination without cause by Mr Carr then he is entitled to receive 6 months’ salary on top of the entitlements outlined below. Matthew Carr is entitled to an additional 1 months’ salary on top of the notice period for each year of continuous service to the company (pro-rata up to the date of leaving the entity). Mr David Sadgrove: In the case of termination without cause by the Company, the required notice period is 3 months. In the case of termination without cause by Mr Sadgrove, the required notice period is 3 months. ADDITIONAL INFORMATION Details of Remuneration Compensation 12 months to 31 December 2021 Compensation of key management based on fees approved by the Board of directors Peter Cook (appointed 31 August 2021) Laurence Marsland Matthew Carr Nicholas Rowley Barry Bourne (appointed 19 October 2021) Michael Hardy (resigned 31 August 2021) Michael Skead (appointed 1 October 2021) Travis Schwertfeger (resigned 8 June 2021) David Sadgrove (resigned 11 October 2021) TOTAL COMPENSATION – FOR KEY MANAGEMENT PERSONNEL Short Term Benefits $ USD Super- annuation $ USD Share based payments $ USD Total $ USD Percentage of remuneration that is equity based 30,058 180,348 135,261 54,104 4,590 - - - - - 283,847 313,905 102,949 283,297 72,064 207,325 51,474 105,578 157,693 162,283 54,104 5,207 34,316 93,627 50,000 83,185 - - 236,637 286,637 16,086 99,271 222,0321 19,240 -2 241,272 90% 36% 35% 49% 97% 37% 83% 16% - 813,682 24,447 955,066 1,793,195 53% Included in Mr Sadgrove’s Short Term Benefits are termination benefits totalling $67,030. During the year, as a result of the cancellation of incentive options, $43,716 was recognised in the profit or (1) (2) loss as a result of the cancellation. 90 91 Annual Report 2021 Compensation 12 months to 31 December 2020 Compensation of key management based on fees approved by the Board of directors Short Term Benefits $USD Super- annuation $USD Share based payments $USD Total $USD Percentage of remuneration that is equity based $USD Michael Hardy 69,060 5,905 251,750 326,715 Laurence Marsland Matthew Carr Nicholas Rowley Travis Schwertfeger 165,744 145,026 48,342 164,708 - - - - 503,499 669,243 352,449 497,475 251,750 300,092 176,084 340,792 David Sadgrove 79,143 7,182 76,228 162,553 TOTAL COMPENSATION – FOR KEY MANAGEMENT PERSONNEL 672,023 13,087 1,611,760 2,296,870 77% 75% 71% 84% 52% 47% 70% Shares and performance rights held by Key Management Personnel Shareholdings 1 January 2021 or Appointment Issued as compensation Net change other 31 December 2021 ADDITIONAL INFORMATION (1) (2) Number of shares held as at date of appointment. Number of shares held at date of resignation / date of ceasing to be a key management personnel. Number of Performance Rights / Options Performance rights / options 1 January 2021 or Appointment Number of Performance Issued as Compensation Rights / Options Net Change 31 December 2021 Peter Cook - 9,000,000 Laurence Marsland 10,000,000 - - - 7,000,000 5,000,000 - 5,000,000 - - - - - 9,000,000 10,000,000 7,000,000 5,000,000 5,000,000 5,000,000 - (5,000,000)1 - - 7,500,000 - 7,500,000 4,500,000 3,000,000 - - (4,500,000) 1 (3,000,000)1 - - Matthew Carr Nicholas Rowley Barry Bourne Michael Hardy Michael Skead Travis Schwertfeger David Sadgrove Peter Cook Laurence Marsland Matthew Carr Nicholas Rowley Barry Bourne Michael Hardy Michael Skead Travis Schwertfeger David Sadgrove 3,100,9621 5,696,154 9,314,493 5,157,460 -1 836,231 -1 11,000 - TOTAL 24,116,300 - - - - - - - - - - 10,000,000 13,100,962 - 5,696,154 11,737,281 21,051,774 TOTAL 34,500,000 21,500,000 (12,500,000) 43,500,000 (1) These amounts represent performance rights held as at the date of resignation. For further details on Performance rights and options please refer to Note 24 to the financial statements “Share based payments”. 5,000,000 10,157,460 Other Information - (836,231)2 - (11,000)2 -2 - - - - - During the year, the Group received a loan from Director Matthew Carr of $660,000 AUD. Following obtaining shareholder approval on 8 December 2021, the loan and accrued interest was settled via the issue of 7,157,723 shares in Titan Minerals Limited. The interest component on this amount was A$62 thousand (US$47 thousand). Refer Note 13 for further information regarding this loan. There were no other loans made to any Key Management Personnel during the year or outstanding at year end. Refer to Notes 21 and 22 for further detail regarding transactions with Key Management Personnel during the year. During the year the Company did not engage remuneration consultants to review its remuneration policies. 25,890,050 50,006,350 End of Remuneration Report (Audited) 92 93 Annual Report 2021 15. BUSINESS RISKS AND UNCERTAINTIES There are a number of risks that may have a material and adverse impact on the future operating and financial performance of the Company. These include the risks discussed in Note 23 of the consolidated financial statements, along with risks that are widespread and associated with any form of business and specific risks associated with the Company’s business and its involvement in the exploration and mining industry generally. While most risk factors are largely beyond the control of the Company, the Company will seek to mitigate the risks where possible. 16. NON-AUDIT SERVICES The Board of Directors is satisfied that the provision of any non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. All non-audit services are reviewed and approved by the Board prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and the nature of the services provided does not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board 17. LEAD AUDITOR’S INDEPENDENCE DECLARATION In accordance with the Corporations Act 2001 section 307C the auditors of the Company have provided a signed Auditor’s Independence Declaration to the directors in relation to the year ended 31 December 2021. A copy of this declaration appears on page 51. Signed in accordance with a resolution of the directors. Matthew Carr Executive Director 31st day of March 2022 Perth, Western Australia AUDITORS INDEPENDENCE DECLARATION PO Box 1908 West Perth WA 6872 Australia Level 2, 40 Kings Park Road West Perth WA 6005 Australia Tel: +61 8 9481 3188 Fax: +61 8 9321 1204 ABN: 84 144 581 519 www.stantons.com.au 31 March 2022 Board of Directors Titan Minerals Limited Level 1, 35 Richardson Street WEST PERTH WA 6005 Dear Directors RE: TITAN MINERALS LIMITED In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Titan Minerals Limited. As Audit Director for the audit of the financial statements of Titan Minerals Limited for the year ended 31 December 2021, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. Yours sincerely STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International) (An Authorised Audit Company) Samir Tirodkar Director Liability limited by a scheme approved under Professional Standards Legislation Stantons Is a member of the Russell Bedford International network of firms 94 95 Annual Report 2021 DIRECTORS’ DECLARATION In accordance with a resolution of the directors of Titan Minerals Limited A.C.N. 117 790 897 (“Company”), In the opinion of the directors As set out in Note 2, the Directors are of the opinion that the consolidated financial statements: 1)  give a true and fair view of the consolidated entity’s financial position as at 31 December 2021 and of its performance for the year ended 31 December 2021; and complying with Australian Accounting Standards and the Corporations Act 2001; The consolidated financial statements and notes also comply with the International Financial Reporting 2) Standards as disclosed in Note 2; and 3) become due and payable. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 31 December 2021. On behalf of the Board of Directors. Matthew Carr Executive Director 31st day of March 2022 Perth, Western Australia INDEPENDENT AUDITOR’S REPORT 96 97 Annual Report 2021 PO Box 1908 West Perth WA 6872 Australia Level 2, 40 Kings Park Road West Perth WA 6005 Australia Tel: +61 8 9481 3188 Fax: +61 8 9321 1204 ABN: 84 144 581 519 www.stantons.com.au INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TITAN MINERALS LIMITED Report on the Audit of the Financial Report Opinion We have audited the financial report of Titan Minerals Limited (“the Company”), and its subsidiaries (“the Group”), which comprises the consolidated statement of financial position as at 31 December 2021, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial 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: (i) (ii) giving a true and fair view of the Group’s financial position as at 31 December 2021 and of its financial performance for the year then ended; and complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company 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 (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. Material Uncertainty Relating to Going Concern Without modifying our audit opinion expressed above, attention is drawn to the following matter. As referred to in Note 2(g) to the financial statements, the consolidated financial statements have been prepared on the going concern basis. At 31 December 2021, the Group had cash and cash equivalents of US$8,762,000, and incurred a loss from continuing operations after income tax of US$121,000 and had net operating cash outflows of US$8,802,000. These events or conditions, along with other matters as set Liability limited by a scheme approved under Professional Standards Legislation Stantons Is a member of the Russell Bedford International network of firms INDEPENDENT AUDITOR’S REPORT forth in Note 2(g) indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. The ability of the Group to continue as a going concern and meet its planned exploration, administration and other commitments is dependent upon the Group receiving the outstanding balances from the sale of Projects amounting to US$8,320,000, raising further working capital, successfully recommencing profitable operations and/or exploiting the Group’s mineral and other assets. The recent market uncertainty arising from the financial effects of the COVID-19 virus, may impact on the Group’s ability to raise further working capital and or to commence profitable operations. In the event that the Group is not successful in receiving the outstanding balances from the sale of Projects, raising further equity or successfully recommencing profitable operations and /or exploiting the Group’s mineral and other assets, the Group may not be able to meet its liabilities as and when they fall due and the realisable value of the Group’s current and non-current assets may be significantly less than book values. Key Audit Matters In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matter described below to be Key Audit Matter to be communicated in our report. Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matters How the matter was addressed in the audit Carrying Value of Exploration and Evaluation Assets The Group has capitalised exploration and evaluation expenditure totalling US$28,133,000 (refer to Note 11) in terms of the application of the Group’s accounting policy for exploration and evaluation expenditure, as set out in Note 2(n). The carrying value of Capitalised Exploration and Evaluation expenditure is a key audit matter due to: • • • The significance of the total balance (54% of total assets); The necessity to assess management’s application of the requirements of the accounting standard Exploration for and Evaluation of Mineral Resources (“AASB 6”), in light of any indicators of impairment that may be present; The assessment of significant judgements made by management in relation to the Capitalised Exploration and Evaluation Expenditure. Inter alia, our audit procedures included the following: i. Assessing the Group’s right to tenure over exploration areas of interest by corroborating the ownership of the relevant licences for mineral resources to government registries and relevant third party documentation; ii. We tested the additions to capitalised exploration and evaluation expenditure by evaluating a sample of recorded expenditure for consistency to the underlying records, the capitalisation requirements of the Group’s accounting policy and requirements of AASB 6; iii. Reviewing the directors’ assessment of the carrying value of the exploration and evaluation expenditure, ensuring the veracity of the data presented and that management has considered the effect of potential impairment indicators, commodity prices and the stage of the Group’s projects against AASB 6; 98 99 Annual Report 2021 iv. Evaluation intentions of Group documents for for consistency with the the continuing of exploration and evaluation activities in certain areas of interest and corroborated with enquiries of management. Inter alia, the documents we evaluated included: ▪ Minutes of meetings of the board and management; ▪ Announcements made by the Company to the Australian Securities Exchange; ▪ Cash forecasts; and ▪ Agreements entered into by the Company in relation to disposal of exploration and evaluation assets. v. Consideration of requirements of the accounting standard AASB 6. We assessed the financial statements in relation to AASB 6 to ensure appropriate disclosures are made. Inter alia, our audit procedures included the following: i. Reviewing the relevant agreements to obtain an understanding of the contractual nature and terms and conditions of the share-based payment arrangements; ii. Reviewing management’s determination of the fair value of the share-based payments granted, considering the appropriateness of the valuation models used and assessing the valuation inputs, the underlying assumptions used and discussed with management the justification for inputs used (share price of the underlying equity, risk free rate and volatility); iii. Assessing the allocation of the share-based payment expense over the relevant vesting period; iv. We assessed the accounting treatment and its application in accordance with AASB 2; and Valuation of Share Based Payments As disclosed in Note 24, during the year the Company granted a number of share options and performance rights to employees, directors, and consultants to conserve cash and provide them with long-term incentives. Certain share options were cancelled during the year. The Company and an independent consultant of the Company prepared the valuation of the options and expensed the related share-based payment expense its accounting policy and with AASB 2 Share Based the consolidated Payment in loss and other statement of profit or comprehensive income. in accordance with (“AASB 2”) Accounting for share-based payments was identified as a key audit matter due to the complexity and judgemental estimates used in determining the fair value of the share-based payments. v. We assessed whether disclosures met accounting standards. the the Group’s requirements of Issued Capital As disclosed in Note 14, the Group’s Issued Capital amounted to US$170,383,000. During the reporting period, 270,286,099 ordinary shares were issued resulting in an increase in Issued Capital of US$19,889,000 (net of capital raising costs). The shares issued during the year included a share placement, shares issued to settle liabilities (including repayment of Debt Facilities) and for consulting services. Contributed Equity is a key audit matter due to: • • the quantum of share capital issued during the year; and the varied nature of the movements during the year. We spent significant audit effort on ensuring the Issued Capital was appropriately accounted for and disclosed. INDEPENDENT AUDITOR’S REPORT Inter alia, our audit procedures included the following: i. Obtaining an understanding of the underlying transactions; ii. Verifying all issued capital movements to the relevant ASX announcements; iii. Vouching proceeds from capital raisings to bank relevant supporting statements and other documentation; iv. Verifying underlying capital raising costs and appropriately costs were these ensuring recorded; v. Ensuring consideration for services provided were measured in accordance with AASB 2 Share- Based Payments and agreed the related costs to relevant supporting documentation; vi. Ensuring that the ordinary shares issued to extinguish financial liabilities were accounted for in accordance with the AASB Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments and agreed to relevant supporting documentation; and vii. Ensuring the relevant requirements of accounting standards and disclosures achieve fair presentation financial statements to ensure appropriate disclosures are made. reviewing and the the Other Information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 31 December 2021 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 opinion 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. 100 101 Annual Report 2021 Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor's Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the financial report that gives a true and fair view 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 entity's internal control. 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report. We 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. We 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. INDEPENDENT AUDITOR’S REPORT We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in Internal control that we identify during our audit. The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements. 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 key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 7 to 10 of the directors’ report for the year ended 31 December 2021. In our opinion, the Remuneration Report of Titan Minerals Limited for the year ended 31 December 2021 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (An Authorised Audit Company) Samir Tirodkar Director West Perth, Western Australia 31 March 2022 102 103 Annual Report 2021 ASX ADDITIONAL INFORMATION NUMBER OF HOLDERS ORDINARY SHARES 1 — 1,000 1,001 — 5,000 5,001 — 10,000 10,001 — 100,000 100,001 — and over TOTAL 159 304 366 1055 631 2,515 Holdings of less than a marketable parcel 469 VOTING RIGHTS For all ordinary shares, voting rights are one vote per member on a show of hands and one vote per share in a poll. There are no current on market buy back arrangements for the Company. REGISTERED OFFICE OF THE COMPANY 1 / 35 Richardson St West Perth, Western Australia 6005 Tel: Fax: +61 (8) 6555 2950 +61 (8) 6166 0261 There are no current on market buy back arrangements for the Company. 104 CONVERSION OF FEES AND DEBT TO EQUITY SHARE REGISTRY The registers of shares and options of the Company are maintained by:- Automic Share Registry Level 2 267 St Georges Terrace Perth WA 6000 Telephone (within Australia): 1300 992 916 Telephone (outside Australia): +61 3 9315 2333 COMPANY SECRETARY The name of the Company Secretary is Zane Lewis. TAXATION STATUS Titan Minerals Limited is taxed as a public company. TOP TWENTY HOLDERS OF ORDINARY SHARES The information set out below was current as at 6 April 2022 ASX ADDITIONAL INFORMATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 14 15 16 17 18 19 20 HOLDER NAME HOLDING CITICORP NOMINEES PTY LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED UBS NOMINEES PTY LTD BUTTONWOOD NOMINEES PTY LTD BNP PARIBAS NOMINEES PTY LTD MRS JENNY MARY BAGULEY & MR JOHN RICHARD BAGULEY 174,388,217 75,067,983 56,313,241 38,082,435 37,779,053 35,964,110 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 35,308,761 TAZGA TWO PTY LTD J P MORGAN NOMINEES AUSTRALIA PTY LIMITED BNP PARIBAS NOMS PTY LTD BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED CS THIRD NOMINEES PTY LIMITED SYNERGY METALS AND MINING FUND I LP SAMALUCA HOLDINGS PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED BACCHUS CAPITAL ADVISERS LIMITED BRISPOT NOMINEES PTY LTD MCNEIL NOMINEES PTY LIMITED ROSA MARIA DE LA CAMPA MARQUEZ LUIS RICARDO REYES DE LA CAMPA Total 35,017,129 33,269,228 28,944,867 27,862,737 27,198,804 26,314,844 25,000,000 25,000,000 24,854,185 24,136,491 20,671,409 20,000,000 18,792,200 18,135,000 808,100,694 Total issued capital - selected security class(es) 1,409,720,533 % IC 12.37% 5.33% 3.99% 2.70% 2.68% 2.55% 2.50% 2.48% 2.36% 2.05% 1.98% 1.93% 1.87% 1.77% 1.77% 1.76% 1.71% 1.47% 1.42% 1.33% 1.29% 57.32% 100.00% 105 Annual Report 2021 1/35 Richardson Street WEST PERTH WA 6005 Phone: +61 08 6375 2700 E-mail: info@titanminerals.com.au 

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