Torque Metals Limited
Annual Report 2020

Plain-text annual report

Director’s Report 30 June 2020 Torque Metals Limited TORQUE METALS LIMITED ACN 621 122 905 Financial statements for the year ended 30 June 2020 Financial statements for the period from 16 August 2017 (date of incorporation) through to 30 June 2018 Financial Statements 30 June 2020 Torque Metals Limited Corporate Directory Board of Directors Ian D. Finch Neil W. McKay Antony L. Lofthouse Non-Executive Director (appointed 30 January 2020) Managing Director Executive Director Company Secretary Neil W. McKay Principal Place of Business 4 Glencoe Road Ardross West Perth WA 6153 Postal Address PO Box 27 West Perth, Western Australia 6872 Auditors Bentleys Audit & Corporate (WA) Pty Ltd P.O. Box 7775 Cloister Square WA 6850 Share Register Advanced Share Registry Services 110 Stirling Highway, Nedlands, WA 6010 Stock Exchange Listing Sydney Stock Exchange L41/259 George St, Sydney NSW 2000 Code : 8TM Banker Westpac Banking Corporation 1257 Hay Street West Perth, Western Australia 6005 1 Financial Statements 30 June 2020 Torque Metals Limited Contents Corporate Directory .............................................................................................................................. 1 Contents ............................................................................................................................................... 2 Director’s Report .................................................................................................................................. 3 Independent Declaration .................................................................................................................... 15 Independent auditor’s report ............................................................................................................. 16 Director’s Declaration ......................................................................................................................... 21 Statement of profit or loss and other comprehensive income for the year ended 30 June 2020 ....... 22 Statement of financial position as at 30 June 2020 ............................................................................ 23 Statement of changes in equity for the year ended 30 June 2020 ...................................................... 24 Statement of cash flow for the year ended 30 June 2020 .................................................................. 25 Notes to the financial statements for the Year 30 June 2020 ............................................................. 26 Additional Shareholders Information.................................................................................................. 47 Tenements ......................................................................................................................................... 50 2 Director’s Report 30 June 2020 Torque Metals Limited Director’s Report The directors of Torque Metals Limited (“Torque” or “the Company”) present their report on Torque for the year ended 30 June 2020 (“the Year”). Directors The names of the directors of the Company during the year are: Ian D. Finch Neil W. McKay Anthon (Tony) L. Lofthouse Appointed 30 January 2020 Tshung H. Chang Removed 30 January 2020 Directors have been in office since the start of the Year to the date of this report unless otherwise stated. Ian D. Finch Managing Director (appointed 16 August 2017) Qualifications Experience BSc (Hons) in Geology from the University of Birmingham (England), Member of the Australasian Institute of Mining and Metallurgy. Mr. Finch’s career spans 50 years of mining and exploration. He worked extensively throughout Southern Africa between 1970 and 1981—from the Zambian Copper Belt and Zimbabwean Nickel and Chrome fields to the Witwatersrand Gold Mines in South Africa. In 1982 he joined CRA Exploration as a Principal Geologist, before joining Bond Gold as its Chief Geologist in 1987. In 1993 Mr. Finch established Taipan Resources Ltd, a company which successfully pioneered the exploration for large gold deposits in the Ashburton District of Western Australia—when it discovered a resource of approximately 1.0 million ounces at the Paulsen’s Project. In 1999 Mr. Finch founded Templar Resources Limited, which became a 100% owned subsidiary of Canadian listed company Goldminco Corporation. As President/CEO for Goldminco until May 2005, Mr. Finch established an extensive exploration portfolio in New South Wales where the Company actively explored for large porphyry copper / gold deposits. During his presidency, Mr. Finch forged strong strategic ties with the major mining houses and financial institutions in Vancouver, Toronto and London. Interest in Shares 10,000,000 fully paid ordinary shares. 50% beneficial interest in Turf Moor Pty. Ltd. a company in which he is a shareholder. Interest in Performance Rights 4,000,000 Directorships held in None. other listed entities Director’s Report 30 June 2020 Torque Metals Limited Neil W. McKay Executive Director (appointed 16 August 2017) Company Secretary (appointed 16 August 2017) Qualifications Bachelor of Business (Sec Admin) Experience Mr. McKay is a former Chartered Accountant and has been involved in the resources industry for more than 30 years. He has been Company Secretary for several listed resource public companies and held senior administrative and accounting positions for a number of other resource companies. Since 1995, he has operated as an independent consultant specializing in the incorporation and administration of resource companies with special focus in South East Asia. Interest in Shares 10,000,000 fully paid ordinary shares. 50% beneficial interest in Turf Moor Pty. Ltd., a company in which he is a shareholder Interest in Performance Rights 4,000,000 Directorships held in None. other listed entities Antony L Lofthouse Non-Executive Director (appointed 30 January 2020) Qualifications Bachelor of Science (Hons) Geology from the University of London and a Master of Business Administration from the University of Western Australia Experience With more than 43 years of working in the resources sector in Australia, Saudi Arabia and the United Kingdom, Mr. Lofthouse has developed expertise in an extensive range of relevant disciplines that together deliver a skillset ideally suited to the particular challenges of an emerging mineral exploration company. Mr. Lofthouse has worked as a field geologist, a resources equity analyst in stockbroking, a corporate banker managing a portfolio of resource and infrastructure customers (providing services that included project finance, mezzanine debt, corporate advisory, transactional banking facilities, credit analysis and legal documentation). Mr. Lofthouse has also worked as a provider of internet-based geotechnical information services, and most recently as the CEO of Ora Gold (formerly Thundelarra) an ASX-listed Australian exploration company. He also has previous ASX-listed company non-executive director experience. Interest in Shares Nil Interest in Performance Rights 2,000,000 Directorships held in None. other listed entities 4 Director’s Report 30 June 2020 Torque Metals Limited Directors Remuneration Report- Audited This report details the nature and amount of remuneration for each director of the Company. No director since the date of formation of the Company has received any cash remuneration either before or after the Company listed. Remuneration Policy. The remuneration policy of Torque has been designed to align Director and executive objectives with shareholder and business objectives by providing a fixed remuneration component which is assessed on an annual basis in line with market rates. The further tailoring of goals between shareholders and the Directors and executives is achieved through the issue of equity to the directors and executives to encourage the alignment of personal and shareholder interest. The Board of the Company believes the remuneration policy is below accepted industry standards but appropriate and effective while the Company is in the initial phase of being listed on a Stock Exchange. The remuneration policy, setting the terms and conditions for the Directors and executives was developed by the Directors and approved by the Board. The Board recognises that the remuneration rates are below competitive remuneration rates of local and international trends among comparative companies and industry generally. The Group is exploration and development focussed, and therefore speculative in terms of performance. The Directors and executives are paid below market rates associated with individuals in similar positions, within the same industry. Options and performance incentives will be issued in the event that the entity moves from an exploration entity to a producing entity, and key performance indicators such as profits and market value can be used as measurements for assessing Board and executive performance. All remuneration paid to Directors and executives is valued at the cost to the Company and expensed or carried forward on the balance sheet for time that is attributable to exploration and evaluation. The Board policy is to remunerate, where possible, non-executive directors at market rates for comparable companies for time, commitment and responsibilities. The Managing Directors, in consultation with independent advisors as necessary, determine payments to the non-executive Directors and review their remuneration annually, based on market practice, duties and accountability. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive Directors are not linked to the performance of the Company. However, remuneration of non-executive directors at this present time are below comparable market expectations. Employment Contracts of Directors and Senior Executives. The employment conditions of the Managing Director is formalised in a contract of employment. The contract commenced on 21 August 2018 and may be terminated at any time by the Company giving the Managing Director 6 months’ notice. The contract provided Mr. Finch with a commencement annual salary of $240,000 with an annual review on 1 October upon the Company being admitted to the ASX. The contract has standard termination clauses. In the event of termination, the fixed proportion of remuneration is payable up until the date of the termination. On 11 May 2020 the employment contract was varied by reducing the annual salary to $150,000. After year end, by mutual consent the $150,000 remuneration was deferred and temporarily replaced with a a range between $50,000 to $75,000 a year. Until such time that the Company raises additional capital at which time the difference will be paid The employment conditions of Mr. McKay is formalised in a contract of employment. The contract commenced on 21 August 2018 and may be terminated at any time by the Company giving Mr. McKay 6 5 Director’s Report 30 June 2020 Torque Metals Limited months’ notice. The contract provided Mr. McKay with a commencement annual salary of $200,000 with an annual review on 1 October upon the Company being admitted to the ASX. The contract has standard Directors Remuneration Report (Cont’d) termination clauses. In the event of termination, the fixed proportion of remuneration is payable up until the date of the termination. On 11 May 2020 the employment contract was varied by reducing the annual salary to $125,000. After year end, by mutual consent the $125,000 remuneration was deferred and temporarily replaced with a range between $40,000 to $62,500 a year until such time as the Company raised additional capital at which time the difference will be paid. An employment contract has been in place for the Non-Executive Director, Antony Lofthouse since his appointment 30 January 2020. . Mr Lofthouse’s annual fee was $30,000 per annum. After year end, by mutual consent the remuneration was deferred and temporarily replaced with to a range between $10,000 to $15,000 a year until such time as the Company raised additional capital at which time the difference will be paid. The employment contracts stipulate a six-month resignation period. The Company may terminate an employment contract without cause by providing six months written notice or making payment in lieu of notice, based on the individual’s annuals alary component. Termination payments are not payable on resignation or under the circumstances of unsatisfactory performance Details of remuneration for the years ended 30 June 2020 and 30 June 2019 The remuneration for each key management personnel of the Company during the year was as follows Post- employment Benefits Other Long- term Benefits Share based Payment Superannuation Other Equity Performance Rights Total Value of Performance Rights Remuneration Performance Related $ $ $ % % Short-term Benefits Cash, salary & commissions $ Ian D. Finch Managing Director 2020 2019 - - Neil W. McKay – Executive Director 2020 2019 - - $ - - - - $ - - - - Antony L. Lofthouse – Non Executive Director appointed 30 January 2020) 2020 2019 - - - - - - Tshung H. Chang – Non Executive Director (removed 30 January 2020) 2020 2019 Total Remuneration 2020 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 42,374 45,881 42,374 45,882 6,549 - (45,881) 45,881 45,416 137,644 100% 100% 100% 100% 100% - - 100% 100% 100% 2019 Key Management Personnel (KMP) Share and Performance Rights - - - 30 June 2020 Balance 1/07/19 Granted as Remuneration Options Exercised Balance 30/06/20 Turf Moor Pty. Ltd1. 1 10,000,000 Antony L Lofthouse Tshung H. Chang - 7,150,000 17,150,000 - - - - - - - - 10,000,000 - 7,150,000 17,150,000 6 Director’s Report 30 June 2020 Torque Metals Limited Directors Remuneration Report (Cont’d) 30 June 2019 Balance 1/07/18 Granted as Remuneration Options Exercised Balance 30/06/19 Turf Moor Pty. Ltd1. 1 10,000,000 Tshung H. Chang 7,150,000 17,150,000 - - - - - - 10,000,000 7,150,000 17,150,000 1 Mr. Finch and Mr. McKay are equal 50% shareholders in Turf Moor Pty. Ltd. which holds 10,000,000 Shares Performance Rights 2 million Performance Rights were issued to a Director during the current financial year and represents the only share based payments issued by the Company. No Performance Rights have vested during the financial year ended 30 June 2020. When the performance or price criteria are met, all share rights can then be converted into ordinary shares only on a 1 : 1 basis. In accordance with the Performance Rights Agreement, Mr. Chang’s Performance Rights were cancelled on 30 January 2020 Performance Rights Ian D. Finch Total Neil W. McKay Total Antony L. Lofthouse2 Total Granted Number Grant Date 1,000,000 1,333,333 1,666,667 4,000,000 1,000,000 1,333,334 1,666,666 4,000,000 500,000 666,667 833,333 2,000,000 10,000,000 4 Sept. 2018 4 Sept. 2018 4 Sept. 2018 4 Sept. 2018 4 Sept. 2018 4 Sept. 2018 11 May 2020 11 May 2020 11 May 2020 Expiry Date Vested Number Fair Value Performance Rights $0.05918 $0.0646 $0.10025¹ 12 mths from listing 24 mths from listing 36 mths from listing $0.05918 $0.0646 $0.10025¹ 12 mths from listing 24 mths from listing 36 mths from listing 12 mths from listing 24 mths from listing 36 mths from listing - - - - - - - - - ¹Tranche 3 being a non-market condition has a 0% probability of being met. Nil Value recorded. 2Performance Rights issued to Mr. Lofthouse are subject to shareholder approval but have been accrued based upon the 11 May 2020 issue date. Once approval is obtained the expense will be recognised (shareholder approval date). Other transaction with Directors of the Company On 21 August 2018, the Company entered into a $75,000 unsecured loan agreement at an interest rate of 5% p.a. with Mr. T. Chang. The loan agreement was approved by shareholders at the Annual General Meeting held 30 November 2018. The unsecured loan with outstanding accrued interest was repaid after year end by way of the Company obtaining Unsecured Convertible Notes from the families of two directors (Finch and McKay) on the following terms and conditions and from an unrelated 3rd party. These are subject to shareholder approval. 7 Director’s Report 30 June 2020 Torque Metals Limited Directors Remuneration Report (Cont’d) The Convertibles Notes were re-issued after the 6 month term for a further 6 months commencing 3 March 2020 on the same terms and conditions. Terms Date of Issue Sum Term Security Interest Rate Exercise Catherine A. Finch 3 September 2019 $33,000 6 months from date of issue None 7.5 % p.a. Convertible at any time Giovanna C. McKay 3 September 2019 $15,200 6 months from date of issue None 7.5% p.a. Convertible at any time Review of Operations The loss of the Company for the Year after providing for income tax, amounted to $221,734 (period ended 30 June 2019: $387,787). The expenditure incurred during the Year related to corporate and administration expenditure, Initial Public Offering expenses and non-capitalized expenses relating to tenement acquisition. End of Remuneration Report (Audited) Significant changes in state of affairs There were no significant changes in state of affairs of the Company during the Year. Principal Activities Torque Metals Limited was incorporated on 16 August 2017 as an Australian private company for the purpose of being listed on the Australian Securities Exchange (“ASX”). On 5 January 2018, it was converted to a public unlisted company. The Company lodged a Prospectus with A.S.I.C. on 18 October 2018 but prevailing market circumstances, at that time, resulted in the Prospectus being formally withdrawn 11 December 2018. Since that date the Company has continued its mineral exploration programme awaiting a favourable upturn in the market. On 3 June 2020 Torque lodged a Prospectus with the intention of listing on the Sydney Stock Exchange. Review of Operations Projects. The Paris Gold Project. During the year Torque negotiated an exclusive option to purchase the Paris / HHH gold mining centre from Austral Pacific Py. Ltd. .(Austral). The project, which comprises 9 mining leases and two prospecting leases aggregating ~68km2, is located approximately 100Km South Southeast of Kalgooorlie in Western Australia. (“The Paris Project”), The project lies within the highly prospective Parker and Kambalda geological domains which are noted for high grade gold occurrences. The Kambalda Domain is also a world class Nickel Province. Option Conditions The exercise of the Option and the ensuing Tenement Sales Agreement is conditional upon Torque being granted listing on an accredited Stock Exchange. 1. Consideration The consideration for the sale and purchase of the Tenements is the: a. Payment by Torque to Austral of the Option Fee of $100,000. 8 Director’s Report 30 June 2020 Torque Metals Limited b. Payment of $650,000, less the Option Fee, within 5 business days of Torque listing on an accredited stock exchange; c. The issue of $1,200,000 in ordinary fully paid shares in Torque within 5 business days of Torque listing on an accredited stock exchange; 2. Milestone / Performance Payments Torque will pay Austral the following amounts upon successfully reporting an additional resource, in any JORC category: a. The first 50,000 ozs - $100,000 :- 50% in cash and 50% in shares, calculated at the previous 7 day VWAP: b. Total 100,000 ozs - $200,000 :- 50% in cash and 50% in shares, calculated at the previous 7 day VWAP; c. Total 200,000 ozs - $400,000 :- 50% in cash and 50% in shares, calculated at the previous 7 day VWAP; d. Total 500,000 ozs - $1,000,000 :- 50% in cash and 50% in shares, calculated at the previous 7 day VWAP; 3. Royalty Torque and Austral to agree the terms of, and enter into, a separate Royalty Deed that sets out the terms on which the Royalty is to be paid. a. The Royalty commences after the first 2,500 ozs of gold produced; b. A 1.75% Net Smelter Royalty on gold and an agreed industry recognized royalty on all valuable minerals if the Net Smelter Royalty is not applicable. In total up to $2.0 million; c. Torque shall have the right at any time to purchase the royalty from Austral. 4. Pro Rata reimbursement of rentals and rates Torque and Austral will agree upon any final adjustment to rentals and rates, if for any reason, the Tenement Sales Agreement is extended beyond its anticipated period. A February 2019 scoping study (BMGS & Minecomp) confirms potential for ongoing profitable operations. The study used a base case gold price of AUD$1,650. There is a clear opportunity to increase gold inventory via brownfields exploration, around and below the existing Paris and HHH pits as well as from walk up drill targets elsewhere on the leases. As part of Torque’s due diligence programme, the Company interrogated the large, tier 1 historical database from previous work carried out by Western Mining, Goldfields Ltd. and Austral. The Bullfinch Project Torque controls approximately 600 Km2 of highly prospective, contiguous title within the Bullfinch Goldfield, centered 34kms north of the mining town of Southern Cross in Western Australia. During the year the Company carried out interrogation of its detailed data base with a view to identifying suitable gold targets for a scout drilling programme and a bulk sampling exercise. An early programme of bulk sampling is planned, in order to better define the grade, attitude and distribution of the wide spread gold mineralization. A possible benefit of such sampling is to create an ongoing income stream from gold sales. Under certain circumstances, a total of up to 50,000 tonnes of material can be extracted for bulk sampling purposes without the necessity for a granted mining lease. There are two, under capacity, processing plants within 80Km of the Bullfinch Project area. A desk top study was undertaken which indicated that significant cash income may be generated as a result of implementing such a programme. 9 Director’s Report 30 June 2020 Torque Metals Limited A study of applicable, detailed, geophysical techniques, including sub audio magnetics (SAM) was undertaken to ascertain the optimum technique to assist in identifying the location of gold lodes beneath shallow cover. The Company also acquired additional, detailed aeromagnetic / radiometric data which was analysed for the purpose of identifying additional scout drilling targets. Disucssions with third parties, including drilling and metalurgical contractors, commenced as planning for upcoming field work. Tribal Mining Tenement Acquisition (Bullfinch) The Company entered into an Acquisition Agreement with Tribal to wholly acquire the Tribal Tenement (EL77/2607) in consideration for $50,000 cash and 10% of any gold recovered from the Tribal Tenement during an approved bulk sampling programme. Jindalee Joint Venture Torque entered into a Farm-in and Joint Venture Agreement on 4 May 2020 with Jindalee Resources Limited. 1. Key Terms a) Torque to pay Jindalee $10,000 for past expenditure on the Tenements. b) Jindalee grants the Company a sole and exclusive right to enter upon the Jindalee Tenements during the farmin period (being 3 years after the date the Company obtains consent from the Minister with respect to the transfer of the Jindalee Tenements from Jindalee) in order to carry out exploration. c) The Company to earn an 80% interest in the Jindalee Tenements by spending $200,000 on the Jindalee Tenements within three years of execution of the Jindalee JV Agreement, with a minimum of $50,000 to be spent within 12 months of execution of the Jindalee JV Agreement d) Once the Company has earned an 80% interest in the Jindalee Tenements, Jindalee’s 20% interest is free carried to completion of a pre-feasibility study. 2. Jindalee Royalty Agreement Torque agrees to pay Jindalee a 1.5% Net Smelter Royalty. Risks There are specific risks associated with the activities of the Company and general risks which are largely beyond the control of the Company and the Directors. The risks identified below, or other risk factors, may have a material impact on the future financial performance of the Company and the market price of the Company’s shares. Exploration and Development Mineral exploration and development is a speculative and high-risk undertaking that may be impeded by circumstances and factors beyond the control of the Company. Success in this process involves, among other things: • • • • discovery and proving-up, or acquiring, an economically recoverable resource or reserve; access to adequate capital throughout the acquisition/discovery and project development phases; securing and maintaining title to mineral exploration projects; obtaining required development consents and approvals necessary for the acquisition, mineral exploration, development and production phases; and 10 Director’s Report 30 June 2020 Torque Metals Limited • recruiting skilled contractors, consultants and employees. accessing the necessary experienced operational staff, the applicable financial management and There can be no assurance that exploration on the Projects, or any other exploration properties that may be acquired in the future, will result in the discovery of an economic mineral resource. Even if an apparently viable mineral resource is identified, there is no guarantee that it can be economically exploited. The future exploration activities of the Company may be affected by a range of factors including geological conditions, limitations on activities due to seasonal weather patterns, unanticipated operational and technical difficulties, industrial and environmental accidents, changing government regulations and many other factors beyond the control of the Company. Grant of Future Authorisation to Explore and Mine If the Company discovers an economically viable mineral deposit that it then intends to develop, it will, among other things, require various approvals, licences and permits before it will be able to mine the deposit. There is no guarantee that the Company will be able to obtain all required approvals, licences and permits. To the extent that required authorisations are not obtained or are delayed, the Company’s operational and financial performance may be materially adversely affected. Land Access There is a substantial level of regulation and restriction on the ability of exploration and mining companies to have access to land in Australia. Negotiations with both Native Title and land owners/occupiers are generally required before the Company can access land for exploration or mining activities. Inability to access, or delays experienced in accessing, the land may impact on the Company’s activities. The effect of present laws in respect of Native Title that apply in Australia is that the Tenements and Tenement applications may be affected by Native Title claims or procedures. This may prevent or delay the granting of exploration and mining tenements, or affect the ability of the Company to explore, develop and commercialise the resources on the Tenements. The Company may incur significant expenses to negotiate and resolve any Native Title issues, including compensation arrangements reached in settling Native Title claims lodged over any of the Tenements held or acquired by the Company. The Tenements are subject to the provisions of the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth) and the Aboriginal Heritage Act 1972 (WA). Accordingly, any destruction or harming of such sites and artefacts may result in the Company incurring significant fines and court injunctions, which may adversely impact on exploration and mining activities. Environment The Company’s proposed operations will be subject to State and Commonwealth laws and regulations relating to the environment. As with most exploration projects and mining operations, the Company’s proposed operations are expected to have an impact on the environment, particularly if advanced exploration or mine development proceeds. Such impact may give rise to substantial costs for environmental rehabilitation, damage and losses. The potential environmental impacts of the Company’s proposed operations and any future projects could be expected to require statutory approvals to be obtained by the Company. There is no guarantee that such approvals would be granted and failure to obtain any environmental approvals that may be required from relevant government or regulatory authorities may impede or prevent the Company from undertaking its future operations. Although it is the Company’s intention to conduct its activities to the highest standard of environmental obligation, including in compliance in all material respects with relevant environmental laws, if such laws are breached, the Company could be required to cease its operations and/or incur significant liabilities. 11 Director’s Report 30 June 2020 Torque Metals Limited Resource and Reserve Estimates Whilst the Company intends to undertake exploration activities with the aim of upgrading existing resources or defining new resources, no assurances can be given that the exploration will result in the determination of a resource. Even if a resource is identified, no assurance can be provided that this can be economically extracted. Resource and reserve estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates which were valid when initially calculated may alter significantly when new information or techniques become available. In addition, by their very nature, resource and reserve estimates are imprecise and depend, to some extent, on interpretation which may prove to be inaccurate. Corporate The Company raised a total of $462,850 via a placement to professional and sophisticated investors of 6,908,209 shares at an issue price of $0.067 per share. Meeting of Directors The number of directors' meetings held and conducted during the financial year that each director held office during the financial year and the number of meetings attended by each director is: Director Number Eligible Number Attended Directors Meetings I. D. Finch N.W. McKay A.L. Lofthouse T.H. Chang 10 10 1 9 10 10 1 9 The Company does not have a formally constituted audit and risk committee or remuneration and nomination committee as the Board considers that the Company’s size and type of operation do not warrant the formation of such committees Likely developments and expected results Likely developments in the operations of the Company and the expected results of those operations in future financial periods have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the Company. Environmental Issues The Company’s operations are subject to environmental regulations under a law of the Commonwealth or state or territory of Australia. Dividends No amounts have been paid or declared by way of dividend shares since the date of incorporation Options No options over issued shares or interests in the Company were granted during the Year. Indemnification and insurance of directors and officers The Company has entered into Deeds of Indemnification with the directors and officers of the Company. . The Company has insurance policies in place for Directors and Officers insurance. 12 Director’s Report 30 June 2020 Torque Metals Limited Proceedings on behalf of the Company No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the Period. Events arising since the end of the Year 3 July 2020 • 3 June 2020 Prospectus withdrawn 24July 2020 • The Company entered into an Underwriting Agreement with Martin Place Securities Pty. Ltd. to raise a proposed capital raising of $600,000 (minimum subscription) and $900,000 (maximum subscription) no later than 30 September 2020. The Underwriter will receive a fee of 6% and a management fee of 1% on terms considered normal for such an agreement 28 July 2020 • 16,346,507 ordinary shares were allotted at 6.7 cents to raise $1,095,216 before costs of $64,838. • The company entered into a Promissory Note with Martin Place Securities for an amount of $290,000 of which $215,070 has been received, leaving an outstanding balance of $74,930 that is payable no later than 19 November 2020. • The Company was admitted to the Sydney Stock Exchange • 2,000,000 unlisted options exercisable at 15 cents on or before three years from the date of issue, issued to Martin Place Securities Pty. Ltd. 29 July 2020 • The Company acquired 100% ownership of the Paris Gold Project by: a) Exercising the Austral Pacific Option Agreement with a payment of $550,000 +GST b) Issuing 12,000,000 ordinary shares at a deemed value of 10 cents to Austral Pacific Pty. c) Reimbursement of tenement expenses $223,867 • Upon completion the Company’s issued capital increased to 60,171,382 ordinary shares 19 August 2020 • The Company issued a Prospectus for an offer of up to 9,000,000 Shares at an issue price of $0.10 each to raise up to $900,000 before costs, with a minimum subscription requirement to raise at least $600,000 before costs. The Minimum Subscription amount of the Public Offer being underwritten by Martin Place Securities Pty Ltd. 10 September 2020 • The Company issued a Replacement Prospectus to that dated 19 August 2020. 17 September 2020 The Company issued a Supplementary Prospectus to that dated 10 September 2020. 30 September 2020 • The Company issued a Second Supplementary Prospectus to that dated 10 September 2020. Non-Audit Services During the period ending 30 June 2020, the Company’s Auditor, Bentleys Audit & Corporate (WA) Pty Ltd did not perform any non-audit services, except for taxation services ($2,000) 13 Director’s Report 30 June 2020 Torque Metals Limited Auditor’s Independence Declaration The auditor’s independence declaration for the Period ended 30 June 2020 forms part of the Director’s Report and can be found on page 15. Signed in accordance with a resolution of directors. On behalf of the directors Ian D Finch Managing Director 14 Financial Statements 30 June 2020 Torque Metals Limited Independent Declaration Financial Statements 30 June 2020 Torque Metals Limited Independent auditor’s report 16 Financial Statements 30 June 2020 Torque Metals Limited 17 Financial Statements 30 June 2020 Torque Metals Limited Independent audit report continued 18 Financial Statements 30 June 2020 Torque Metals Limited 19 Financial Statements 30 June 2020 Torque Metals Limited Independent audit report cont. 20 Financial Statements 30 June 2020 Torque Metals Limited Director’s Declaration In accordance with a resolution of the directors of Torque Metals Limited, the directors of the Company declare that: 1. the financial statements and notes, as set out, are in accordance with the Corporations Act 2001 and: a. comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes compliance with International Financial Reporting Standards (IFRS); and b. give a true and fair view of the financial position as at 30 June 2020 and of the performance for the year ended on that date of the consolidated group; 2. in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and 3. the directors have been given the declarations required by s 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer On behalf of the Directors Ian D. Finch Managing Director Perth 30 September 2020 Financial Statements 30 June 2020 Torque Metals Limited Statement of profit or loss and other comprehensive income for the year ended 30 June 2020 Year Ended 30 June 2020 $ Year Ended 30 June 2019 $ Note 2 2 13 2 2 4 Revenue from continuing operations Other income Total revenue and other income Corporate administrative expenses Financial expense interest Share Based Payments Exploration expense written off Prospectus expense written off Loss before income tax Income tax expense Loss for the period Other comprehensive income, net of income tax Total comprehensive loss for the period Loss attributable to: Owners of Torque Metals Limited Total comprehensive loss attributable to: Owners of Torque Metals Limited Earnings/(loss) per share from continuing and discontinuing operations - - (74,125) (16,191) (45,416) (43,567) (42,435) (221,734) - (221,734) - (221,734) - - (110,148) (3,750) (137,644) (40,236) (96,009) (387,787) - (387,787) - (387,787) (221,734) (387,787) (221,734) (387,787) Basic weighted average earnings/(loss) per share Diluted weighted average earnings/(loss) per share 16 16 Cents Cents (0.008) (0.008) (0.016) (0.016) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 22 Financial Statements 30 June 2020 Torque Metals Limited Statement of financial position as at 30 June 2020 Current assets Cash and cash equivalents Trade and other receivables Total current assets Non current assets Exploration and evaluation expenditure Total non-current assets Total assets Current liabilities Trade and other payables Convertible Notes Unsecured loans Total current liabilities Total liabilities Net assets Equity Issued capital Performance Reserve Equity Reserve Accumulated losses Total equity 30 June 2020 $ Note 30 June 2019 $ 6 7 8 9 10 11 12 13 14 2,056 69,649 71,705 921,299 921,299 993,004 165,679 74,615 43,476 283,770 283,770 709,234 1,161,404 183,060 13,592 (648,822) 709,234 24,109 837 24,946 668,608 668,608 693,554 146,078 - 116,620 262,698 262,698 430,856 720,300 137,644 - (427,088) 430,856 The above statement of financial position should be read in conjunction with the accompanying notes 23 Financial Statements 30 June 2020 Torque Metals Limited Statement of changes in equity for the year ended 30 June 2020 Accumulated Performance Equity Rights Reserve Reserve $ $ - Issued Capital $ 540,600 Balance as at 1 July 2018 Total comprehensive Income/loss for the Period Issue of ordinary shares Performance Rights issued Transaction costs Balance as at 30 June2019 - 195,000 - (15,300) 720,300 720,300 Balance as at 1 July 2019 Total comprehensive Income/loss - for the Period 462,850 Issue of ordinary shares - Performance Rights issued - Equity Reserve Transaction costs (21,746) Balance as at 30 June2020 1,161,404 Losses $ (39,301) (387,787) - - - (427,088) (427,088) (221,734) - - - - (648,822) Total $ 501,299 (387,787) 195,000 137,644 (15,300) 430,856 430,856 (221,734) 462,850 45,416 13,592 (21,746) 709,234 - - - - - - - - - - 13,592 - 13,592 - - 137,644 - 137,644 137,644 - - 45,416 - - 183,060 The above Statement of Changes in Equity should be read in conjunction with the accompanying notes 24 Financial Statements 30 June 2020 Torque Metals Limited Statement of cash flow for the year ended 30 June 2020 Cash flow used in operating activities Payments to suppliers and employees Net cash (used) in operating activities Cash flow used from investing activities Tenement acquisition Exploration and evaluation Net cash (used) in investing activities Cash flow from financing activities Proceeds from share issue Directors’ loans Repayment with Interest Unsecured Advance Convertible Notes Associates Other Interest Paid to Other than a Director Net cash from financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents 30 June 2020 Notes 30 June 2020 $ 30 June 2019 $ (150,231) (150,231) (125,592) (125,592) 5 (219,799) (88,959) (308,758) 441,104 - (80,600) 1,856 48,200 30,000 (3,624) 436,936 (22,053) 24,109 2,056 (262,500) (83,497) (345,997) 179,700 16,210 - - - - - 195,910 (275,681) 299,790 24,109 The above statement of cash flow should be read in conjunction with the accompanying notes 25 Financial Statements 30 June 2020 Torque Metals Limited Notes to the financial statements for the Year 30 June 2020 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES These consolidated financial statements and notes represent those of Torque Metals Limited (the Company or Torque). Torque Metals Limited is a listed public company, incorporated and domiciled in Australia. The financial statements were authorised for issue on 29 September 2020 by the Directors of the Company. Basis of preparation 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 and the Corporations Act 2001. The Company is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Australian Accounting Standards set out in accounting policies that the AASB has concluded would result in financial statements containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards as issued by the IASB. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless otherwise stated. These financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities Going Concern The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business. The Company incurred a net loss of $221,734 (2019: $387,787) and experienced net cash outflows from operations of $150,231 (2019: $125,592). The Company has liabilities of $283,770 (2019: $262,698) and cash on hand of $2,056(2019: $24,109). The ability of the Company to continue as a going concern is dependent upon the success of the fundraising under a prospectus yet to be issued. This requirement gives rise to a material uncertainty that may cast a significant doubt over the Company’s ability to continue as a going concern and therefore that it will be able to realise its assets and discharge its liabilities in the normal course of business, and at the amount stated in the financial report. The directors believe that the Company will continue as a going concern for the following reasons: • • • • Refer to Note 20. Events After the Reporting Period and Directors Report Page 13 The Company will finalise its current capital raising of up to $900,000 (before costs); The Company plans to undertake a further capital raising of up to $2.2 M (before costs); The significant borrowings that the Company has are unsecured loans with the Directors of the Company and Unsecured Convertible Notes with their associates. Should the Company not be able to continue as a going concern, it may be required to realise its assets and discharge its liabilities other than in ordinary course of business, and at amounts that differ from those stated in the financial statements. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or liabilities that might be necessary should the entity not continue as a going concern. 26 Financial Statements 30 June 2020 Torque Metals Limited STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (a) Exploration, Evaluation and Development Expenditure Costs incurred during exploration and evaluations relating to an area of interest are accumulated. Costs are carried forward to the extent they are expected to be recouped through successful development, or by sale, or where exploration and evaluation activities have not yet reached a stage to allow a reasonable assessment regarding the existence of economically recoverable reserves. In these instances the entity must have rights of tenure to the area of interest and must be continuing to undertake exploration operations in the area. Accumulated costs carried forward in respect of an area of interest that is abandoned are written off in full against profit in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest will be amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to capitalise costs in relation to that area of interest. Costs of site restoration are provided over the life of the project from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been estimated of future costs, current legal requirements and technology on an undiscounted basis. (b) Financial Instruments Financial Assets Initial Recognition and Measurement Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through 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 Company’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient, the Company 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. The Company’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. 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 Company commits to purchase or sell the asset. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. 27 Financial Statements 30 June 2020 Torque Metals Limited STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) 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 listed equity investments which the Group had not irrevocably elected to classify at fair value through OCI. Dividends on listed equity investments are also recognised as other income in the statement of profit or loss when the right of payment has been established. Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position) when: • • The rights to receive cash flows from the asset have expired; or The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. The Company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows 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 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 Company’s financial liabilities include trade and other payable and convertible notes. The accounting policy on convertible notes are at (q). (c) Cash and cash equivalents For the purpose of the statement of cash flow, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, high liquid investments with original maturities of three (3) months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and bank overdrafts Trade and Other Receivables (d) Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowances for impairment. Trade receivables are generally due for settlement within 30 days. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is sued when there is objective evidence that the Company will not 28 Financial Statements 30 June 2020 Torque Metals Limited STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy or financial reorganisation and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivables is impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The amount of impairment loss is recognised in the statement of comprehensive income within impairment losses – financial assets. When a trade receivable for which an impairment allowance has been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against impairment losses – financial assets in the statement of comprehensive income. (e) Revenue and Other Income Revenue from the sale of goods is recognised upon the delivery of goods to customers. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. All revenue is stated net of the amount of goods and services tax (GST). (f) Impairment of Assets At the end of each reporting period, the Company assesses whether there is any indication that an asset may be impaired. The assessment will include the consideration of external and internal sources of information including dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with another standard (e.g. in accordance with the revaluation model in AASB 116). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that other standard. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives (g) Trade and other payables Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Company. Interest, when charged by the lender, is recognised as an expense on an accrued basis. (h) Provisions Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. 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. 29 Financial Statements 30 June 2020 Torque Metals Limited STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (i) Goods and service tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. (j) Income tax The income tax expense/ (benefit) for the year comprises current income tax expense/ (benefit) and deferred tax expenses/ (benefit). Current and deferred income tax expenses/(benefit) is charge or credited directly to other comprehensive income instead of the profit or loss when the tax relates to items that are credited or charged directly to other comprehensive income. Current tax Current income tax expense charge to profit or loss is the tax payable on taxable income using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities/ (assets) are therefore at the amounts expected to be paid to/ (recovered from) the relevant taxation authority. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax Deferred income tax expense reflects movements in deferred tax assets and deferred tax liability during the Period as well as unused tax losses. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of asset and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantially enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is possible that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. 30 Financial Statements 30 June 2020 Torque Metals Limited STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (k) Share Based Payments The Company operates equity-settled share-based payment employee share and option schemes. The fair value of the equity to which employees become entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding increase to an equity account. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the good or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is shown in the option reserve. The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained using a Black–Scholes pricing model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest. (l) Contributed equity Ordinary issued share capital is recognised at fair value of the consideration received by the Company. Any transaction costs arising on the issue of the ordinary shares are recognised directly in equity as a reduction in share proceeds received. (m) Earnings Per Share Basic earnings per share is calculated as net earnings attributable to members, adjusted to exclude costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for an bonus element. Diluted earnings per share is calculated as net earnings attributable to members, adjusted for costs of servicing equity (other than dividends) and preference share dividends; the after tax effect of dividends and interest associated with dilutive potential ordinary shares that would have been recognised as expenses; and other non- discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. (n) Interest in Joint Operations A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the 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 When the Company undertakes its activities under joint operations, the Company as a joint operator recognises in relation to its interest in a joint operation: • • • • • its assets, including its share of any assets held jointly; its liabilities, including its share of any liabilities incurred jointly; its revenue from the sale of its share of the output arising from the joint operation; its share of the revenue from the sale of the output by the joint operation; and its expenses, including its share of any expenses incurred jointly. The Company accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the AASBs applicable to the particular assets, liabilities, revenues and expenses. 31 Financial Statements 30 June 2020 Torque Metals Limited STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) When the Company transacts with a joint operation in which the Company is a joint operator (such as a sale or contribution of assets), the Company is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the transactions are recognised in the Group's consolidated financial statements only to the extent of other parties' interests in the joint operation. When the Company transacts with a joint operation in which the Company is a joint operator (such as a purchase of assets), the Company does not recognise its share of the gains and losses until it resells those assets to a third party (o) Critical Accounting Estimates and Judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. 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 and in any future periods affected. The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group. Key Judgements –Exploration and evaluation expenditure Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current. These costs are carried forward in respect of an area that has not at balance sheet date reached a stage that permits reasonable assessment of the existence of economically recoverable reserves, refer to the accounting policy stated in note 1(a). Key Judgements -Share based payment transactions The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model. Key Judgments–Environmental issues Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental legislation, and the directors understanding thereof. At the current stage of the company’s development and its current environmental impact the directors believe such treatment is reasonable and appropriate Key Estimate –Taxation Balances disclosed in the financial statements and the notes thereto, related to taxation, are based on the best estimates of directors. These estimates take into account both the financial performance and position of the company as they pertain to current income taxation legislation, and the directors understanding thereof. No adjustment has been made for pending or future taxation legislation. The current income tax position represents that directors’ best estimate, pending an assessment by the Australian Taxation Office. (p) Fair value measurements The Group measures and recognises the asset, ‘Financial assets held for trading’ at fair value on a 32 Financial Statements 30 June 2020 Torque Metals Limited STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) Fair Value Hierarchy recurring basis after initial recognition. The Group does not subsequently measure any liabilities at fair value on a non-recurring basis. (i) AASB 13: Fair Value Measurement requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level that an input that is significant to the measurement can be categorised into as follows Level 1 Level 2 Level 3 Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. on Measurements unobservable inputs for the asset or liability. based The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant inputs are not based on observable market data, the asset or liability is included in Level 3. Valuation techniques (ii) The Company selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset or liability being measured. The valuation technique selected by the Company is the Market approach whereby valuation techniques use prices and other relevant information generated by market transactions for identical or similar assets or liabilities. When selecting a valuation technique, the Company gives priority to those techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly available information on actual transactions) and reflect the assumptions that buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for which market data is not available and therefore are developed using the best information available about such assumptions are considered unobservable. The following table provides the fair values of the Company’s assets and liabilities measured and recognised on a recurring basis after initial recognition and their categorisation within the fair value hierarchy: (q) Convertible Notes The component parts of convertible loan notes issued by the Company are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. A conversion option that will be settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Consolidated Entity’s own equity instruments is an equity instrument. Transaction costs that relate to the issue of the convertible loan notes are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognised directly in equity. Transaction costs relating to the equity component are included in the carrying amount of the liability component and are amortised over the lives of the convertible loan notes using the effective interest method. If the embedded derivative is separated from its host contract (because it is not closely related to the host), then it must be accounted for as if it were a standalone derivative. The embedded derivative should be recognised in the statement of 33 Financial Statements 30 June 2020 Torque Metals Limited STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) financial position at fair value, with changes in fair value recognised in profit or loss as they arise, unless it is designated as an effective hedging instrument in a cash flow or a net investment hedge. New, revised or amending accounting standards and interpretations adopted (r) .The Company has considered the implications of new or amended Accounting Standards which have become applicable for the current financial reporting period. The Group had to change its accounting policies and make adjustments as a result of adopting the following Standard: AASB 16: Leases Changes in Accounting Policies This note describes the nature and effect of the adoption of AASB 16: Leases on the Group’s financial statements and discloses the new accounting policies that have been applied from 1 July 2019, where they are different to those applied in prior periods. a. Leases The Company as lessee At inception of a contract, the Company 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 Company where the Company is a lessee. However, all contracts that are classified as short-term leases (i.e., a lease with a remaining lease term of 12 months or less) and leases of low-value assets are recognised as an operating expense 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 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; the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; lease payments under extension options, if the lessee is reasonably certain to exercise the options; and 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. 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. The Company as lessor Upon entering into each contract as a lessor, the Company assesses if the lease is finance or operating lease. 34 Financial Statements 30 June 2020 Torque Metals Limited STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) A contract is classified as a finance lease when the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases not within this definition are classified as operating leases. Rental income received from operating leases is recognised on a straight-line basis over the term of the specific lease. Initial direct costs incurred in entering into an operating lease (for example, legal cost, costs to set up equipment) are included in the carrying amount of the leased asset and recognised as an expense on a straight-line basis over the lease term. Rental income due under finance leases are recognised as receivables at the amount of the Group’s net investment in the leases. When a contract is determined to include lease and non-lease components, the Group applies AASB 15 to allocate the consideration under the contract to each component. b. Initial Application of AASB 16: Leases The Company has adopted AASB 16: Leases retrospectively with the cumulative effect of initially applying AASB 16 recognised at 1 July 2019. In accordance with AASB 16 the comparatives for the 2018 reporting period have not been restated. Based on the assessment by the Group, it was determined there was no impact on the Company. As such, the Company has not recognised a lease liability and right-of-use asset for all leases (with the exception of short-term and low-value leases) recognised as operating leases under AASB 117: Leases where the Group is the lessee. There has been no significant change from prior year treatment for leases where the Company is a lessor. Lease liabilities are measured at the present value of the remaining lease payments, where applicable. The Company's incremental borrowing rate as at 1 July 2019 was used to discount the lease payments. The right-of-use assets, where applicable for the remaining leases have been measured and recognised in the statement of financial position as at 1 July 2019 by taking into consideration the lease liability and the prepaid and accrued lease payments previously recognised as at 1 July 2019 (that are related to the lease). 2. Expenses Administrative expenses Exploration written off Exploration expenses Initial Public Offering expenses Interest Paid Share Based Payments 30 June 2020 30 June 2019 74,125 43,567 - 42,435 16,191 45,416 221,734 110,148 39,936 300 96,009 3,750 137,644 387,787 35 Financial Statements 30 June 2020 Torque Metals Limited 3. Key Management Personnel Interests of Key Management Personnel Refer to the remuneration report contained in the directors’ report for details of remuneration paid or payable to each member of the Company’s key management personnel for the year ended 30 June 2020.The totals of remuneration paid to key management personnel of the Company during the year are as follows Short term employee benefits Post-employment benefits Other long term benefits Share based payments 30 June 2020 $ 30 June 2019 $ - - - 45,416 45,416 - - - 137,644 137,644 No compensation was paid in respect to Key Management Personnel in termination benefits Related Party Information Family associates of Mr. I.D. Finch and Mr. N.W. McKay entered into Convertible Notes of $33,000 and $15,200 and received interest of $2,048 and $943 respectively. Mr. T. H. Chang was repaid an unsecured loan of $75,000 and interest of $5,559 4. Income tax benefit/(expense) (a) Income tax (benefit)/expense Current tax Deferred tax Year Ended 30 June 2020 $ Year Ended 30 June 2019 $ - - - - - - (b) Reconciliation of income tax expense to prima facie tax payable Profit/(Loss) from ordinary activities before income tax (221,734) (387,787) The prima facie tax payable on profit from ordinary activities before income tax is reconciled to the income tax expense as follows: Prima facie tax on operating profit at 27.5% (2019: 30%) (60,977) (116,336) Add tax effect of: Non-deductible expenses Capital Raising Costs Capitalised exploration Deferred tax assets not brought to account Income tax reported in the statement of comprehensive Income Income tax benefit/(expense) (Cont’d) 36 13,625 (12,263) (12,483) 72,098 53,401 (8,667) (13,068) 84,670 - - Financial Statements 30 June 2020 Torque Metals Limited (c) Deferred tax assets Tax losses Provisions and Accruals Capital Raising Costs Other Total deferred assets Set-off deferred tax liabilities pursuant to set-off provisions Net deferred tax assets Less: Deferred tax assets not recognised Net tax assets (d) Deferred tax liabilities Exploration Expenditure Other Non-recognition of deferred tax assets (e) Tax Losses 193,239 3,001 39,285 - 235,525 (88,413) 147,112 (147,112) - 135,688 2,100 32,681 - 170,469 (90,317) 80,152 (80,152) - 88,413 90,316 - - (88,413) - (90,316) - Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit @ 27.5% (2019: 30.0%) 702,686 193,239 452,292 135,688 5. Reconciliation of loss for the Period to net cash flows from Operating Activities Net (loss) Loss for the period Interest expense Exploration expense written off Performance Rights Net Movement 30 June 2020 30 June 2019 (221,734) (387,787) 16,191 43,567 45,416 3,750 39,936 137,644 Operating loss before changes in working capital (116,560) (206,457) Decrease / (Increase) in receivables Increase / (Decrease )in payables Net cash used in operating activities (68,812) 35,141 555 80,310 (150,231) (125,592) Non-cash financing and investing activities No non-cash financing and investing activities occurred during the Period. Financing facilities available As at 30 June 2020, the Company has three financing facility available. For the purposes of the statement of cash flow, cash includes cash on hand and in bank. 6. Cash on Hand and Equivalents 30 June 2020 30 June 2019 37 Financial Statements 30 June 2020 Torque Metals Limited 7. Trade Receivables G.S.T. receivables Other 8. Tenements Tenement Acquisition Represented by: Acquisition of Bullfinch Project From Talga Resources Ltd. Acquisition of Paris Gold Project from Austral Pacific Pty. Ltd.1 Joint Venture with Jindalee Resources Ltd.2 1 Non Refundable Deposit and stamp duty Exploration and evaluation expenditure Opening Balance Expenditure for the period4 Expenditure written off3 Closing Balance Total Exploration and Expenditure 1 Paris Gold Project 2,056 24,109 26,535 43,114 69,649 837 - 837 599,799 392,500 397,493 192,116 10,190 599,799 392,500 - - 392,500 276,108 88,959 (43,567) 321,500 921,299 232,548 83,796 (40,236) 276,108 668,608 The Company entered into an Option Agreement on 1 November 2019, to acquire The Paris Gold Project, 100km south of Kalgoorlie by way of a $20,000 non-refundable deposit to be followed by a further $80,000 within 14 days of signing the Option Agreement, as amended 9 April 2020. Where upon the Company has 9 months exclusivity to list the Company and the acquired assets on an Australian Stock Exchange or via a Reverse Takeover. At which time the Company will pay the vendor, cash of $550,000 and shares to the value of $1.2 million in the listed entity. Upon commencing production Austral Pacific is entitled to receive a Net Smelter Royalty based on the number of ounces produced. The Royalty may be purchased by the Company by way of a lump sum, or at any time after the payment of $2.9 million for $1,000. The Option was exercised 29 July 2020. 2 Jindalee Joint Venture The Company entered into a Farm-in and Joint Venture Agreement on 4 May 2020 with Jindalee Resources Limited.Torque to pay Jindalee $10,000 for past expenditure on the Tenements. The Company can earn an 80% interest in the Jindalee Tenements by spending $200,000 on the Jindalee Tenements within three years of execution of the Jindalee JV Agreement, with a minimum of $50,000 to be spent within 12 months of execution of the Jindalee JV Agreement Once the Company has earned an 80% interest in the Jindalee Tenements, Jindalee’s 20% interest is free carried to completion of a pre- feasibility study. Torque agrees to pay Jindalee a 1.5% Net Smelter Royalty Tenements (Cont’d) 38 Financial Statements 30 June 2020 Torque Metals Limited 3 Expenditure Written Off during the year • PL77/04106 was relinquished and associated capitalised costs of $3,514 were written off and expensed • EL77/02221 was surrounded during the year and associated capitalised costs of $40,018 were written off and expensed. 4 $53,750 relates to exploration license E77/2251 subject to renewal and as of date of report, still to be processed. 9. Trade and other payables Trade Creditors Other creditors and accrued expenses 30 June 2020 154,767 10,912 165,679 30 June 2019 121,636 24,442 146,078 Trade and other payables are non-interest bearing liabilities stated at cost. 10. Convertible Notes (a) Associates of Directors (b) Other Less Equity Component Present Value of Convertible Notes Issued 48,200 30,000 (13,592) 64,608 Unsecured, interest at 7.5% p.a. repayable in cash or conversion to shares at 6.7 cents by 3 September 2020 at the election of the Note Holder Opening Balance Present Value of Convertible Notes issued Unwinding of equity component Closing Balance 11 .Unsecured Loans (i) Loan from Director (ii) Advances from Directors - - - - - - - - 64,608 10,007 74,615 - 43,476 43,476 75,000 41,620 116,620 (i) Unsecured, repaid during the year at an interest rate of 5% p.a. (ii) Working capital advances, with no fixed term of repayment and without interest Reconciliation of liabilities arising from financing activities Borrowings 1 July 2019 $ Cash flows Non-cash changes Inflow Outflow Adjustments FX 30 June Movement 2020 Unsecured Loans 116,620 1,856 (75,000) Convertible Notes Liabilities from - 78,200 - - (3,585) financing activities 116,620 80,056 (75,000) (3,585) 12. Issued Capital Year ended 30 June 2020 Year ended 30 June 2019 39 $ 43,476 74,615 118,091 - - - Financial Statements 30 June 2020 Torque Metals Limited a. Ordinary Shares Opening balance for the period Placement at $0.067 Placement at $0.10 Placement to Adviser Cost relating to share issue No. $ No. $ 24,916,667 6,908,209 - - - 720,300 462,850 - - (21,746) 22,933,333 - 1,950,000 33,334 540,600 - 195,000 3,333 - (18,633) ` 31,824,876 1,161,404 24,916,667 720,300 Year ended 30 June 2020 Year ended 30 June 2019 b. Performance Rights No. $ No. $ Balance at beginning of reporting period 12,000,000 137,644 Adjustment for year ended 30 June 2020 - 84,748 Performance rights cancelled (4,000,000) (45,881) - - - - - - Performance rights issued to directors 2,000,000 6,549 12,000,000 137,644 12,000,000 183,060 12,000,000 137,644 Capital risk management The Board controls the capital of the Company in order to provide the shareholders with adequate returns and ensure that the Company can fund its operations and continue as a going concern. The Company’s capital includes ordinary share capital. There are no externally imposed capital requirements. The Working Capital position of the Company for year endings 30 June 2020 and 2019 are as follows: Working Capital Cash and Cash Equivalents Trade and Other Receivables Current Liabilities Working Capital Deficit Position 13 Performance Rights 30 June 2020 2,056 69,649 30 June 2019 24,109 837 (283,770) (262,698) (212,065) (237,752) The Company issued 12,000,000 performance rights to the Directors on 4 September 2018.The share rights are divided into three classes of 3,000,000, 4,000,000 and 5,000,000 respectively , where each class will convert into ordinary shares upon satisfaction of the relevant milestone as set out below and in accordance with the terms and conditions. 4,000,000 performance rights were cancelled upon the termination of Mr. T. Chang. 2,000,000 performance rights were issued to Mr. A. Lofthouse on 11 May 2020. These rights have not met the vesting criteria and have not been converted to ordinary shares during the period. Performance Rights (Cont’d) 40 Financial Statements 30 June 2020 Torque Metals Limited Tranche Number of Performance Condition Expiry Date 1 2 3 Performance Rights 2,500,000 3,333,334 4,166,666 20 Day VWAP equals 25% or above admission price. 20 Day VWAP equals 50% or above admission price. Announcement by the Company of the completion of commercial gold pours of at least 5,000 oz. 12 months from the Admission Date 24 months from the Admission Date 36 months from the Admission Date Tranche Grant Date Milestone Expiry Date Share based payment 8,000,000 Performance 1 2 3 Rights 4 September 2018 4 September 2018 4 September 2018 20 Day VWAP equal 25% or above admission price. 20 Day VWAP equals 50% or above admission price Announcement by the Company of the completion of commercial gold pours of at least 5,000 oz. 12 months from the Admission Date 24 months from the Admission Date 36 months from the Admission Date 41,458 43,290 - 84,748 Performance rights granted to a former director were forfeited and previous amount of $45,881 was reversed to the profit and loss. Tranche Grant Date Milestone Expiry Date Share based payment 2,000,000 Performance 1 2 3 Rights 11 May 2020 11 May 2020 11 May 2020 20 Day VWAP equal 25% or above admission price 20 Day VWAP equals 50% or above admission price Announcement by the Company of the completion of commercial gold pours of at least 5,000 oz. 12 months from the Admission Date 24 months from the Admission Date 36 months from the Admission Date 4,728 1,821 - 6,549 The fair value of performance rights granted were independently valued using standard valuation techniques (including Monte Carlo simulation and probability distribution) taking into account the terms and conditions upon which the rights were granted as detailed below: Performance Rights (Cont’d) 41 Financial Statements 30 June 2020 Torque Metals Limited Tranche Grant Date Period Valuation (years) Per right 8,000,000 Performance Rights Expected Volatility Risk Free Interest Rate Dividend Yield 1 2 3¹ 4-Sep-18 4-Sep-18 4-Sep-18 2.5 3.5 4.5 2,000,000 Performance Rights 1 2 11-May-20 11-May-20 3¹ 11-May-20 2.5 3.5 4.5 $0.06 $0.06 $0.10 $0.06 $0.06 $0.10 100% 100% 100% 100% 100% 100% 1.97% 2.02% 2.11% 1.97% 2.02% 2.11% ¹Tranche 3 being a non-market condition has a 0% probability of being met. - - - - - - (i) The Company issued current Directors with 10,000,000 Performance Rights. These Performance Rights were independently valued in accordance to the probability of achieving the required performance milestones at grant date. 14. Accumulated Losses Opening Balance Net Loss attributable to members Closing Balance 15 Financial Risk Management 30 June 2020 $ 30 June 2019 $ (427,088) (221,734) (39,301) (387,787) (648,822) (427,088) The Company’s principal financial instruments comprise receivables, payables, and cash The Board of Directors has overall responsibility for the oversight and management of the Company’s exposure to a variety of financial risks (including fair value interest rate risk, credit risk, liquidity risk and cash flow interest rate risk). The Company’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 Company. Interest rate risks The Company’s exposure to market interest rates relates to cash deposits held at variable rates. The Board constantly analyses its interest rate exposure. Within this analysis consideration is given to potential renewals of existing positions Credit risk The maximum exposure to credit risk at balance date is the carrying amount (net of provision of doubtful debts) of those assets as disclosed in the Statement of Financial Position and notes to the financial statements. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit risk related to balances with banks and other financial institutions is managed by the board. The Financial Risk Management (Cont’d) board’s policy requires that surplus funds are only invested with counterparties with a Standard & Poor’s rating of at least A+. Financial Risk Management (Cont’d) 42 Financial Statements 30 June 2020 Torque Metals Limited Liquidity risk The responsibility for liquidity risk management rests with the Board of Directors. The Company’s liquidity risk by maintaining sufficient cash or credit facilities to meet the operating requirements of the business and investing excess funds in highly liquid short term investments Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return Maturity profile of financial instruments The following tables detail the Company’s exposure to interest rate risk as at 30 June 2020 and 30 June 2019: 30 June 2020 Financial Assets Cash and Cash Equivalents Trade and Other Receivables Weighted average effective interest rate Financial Liabilities Trade and Other Payables Unsecured Loans Convertible Notes 30 June 2019 Financial Assets Cash and Cash Equivalents Trade and Other Receivables Weighted average effective interest rate Financial Liabilities Trade and Other Payables Unsecured Loans Financial Risk Management (Cont’d) Floating Fixed Interest Non Interest Interest Rate Maturing in Bearing $ 1 year or less $ $ 2020 Total $ - - - nil - - - - - - - 2,056 69,649 71,705 2,056 69,649 71,705 - - 74,615 74,615 165,679 43,476 - 209,155 165,679 43,476 74,615 283,770 Floating Fixed Interest Interest Rate Maturing in 1 year or less $ $ Non Interest Bearing 2019 Total $ $ - - - 24,109 837 24,946 24,109 837 24,946 - 75,000 75,000 146,078 41,620 187,698 146,078 116,620 262,698 - - - nil - - - 43 Financial Statements 30 June 2020 Torque Metals Limited Net Fair Value The carrying value and net fair values of financial assets and liabilities at balance date are: Financial Assets Cash and Deposits Receivables Financial Liabilities Payables Unsecured Loans Convertible Notes 2020 2019 Carrying Net Fair Carrying Net Fair Value $ Value $ Value $ Value $ 2,056 69,649 71,705 2,056 69,649 71,705 165,679 165,679 43,476 74,615 43,476 74,615 24,109 837 24,946 146,078 116,620 - 24,109 837 24,946 146,078 116,620 - 283,770 283,770 262,698 262,698 The financial instruments recognised at fair value in the statement of financial position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. All financial instruments measured at fair value are level one, meaning fair value is determined from quoted prices in active markets for identical assets. Sensitivity Analysis Interest Rate Risk The Company has performed sensitivity analysis relating to its exposure to interest rate risk at balance date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks Sensitivity Change in Loss - Increase in interest rate by 100 basis points - Decrease in interest rate by 100 basis points Change in Equity - Increase in interest rate by 100 basis points - Decrease in interest rate by 100 basis points 16. Earnings per Share a) Reconciliation of earnings to profit or loss: Loss for the year Loss used to calculate the basic and diluted EPS b) Basic and diluted weighted average number of ordinary shares outstanding during the year used in calculating dilutive EPS 44 30 June 30 June 2020 $ 21 (21) 21 (21) 2019 $ 241 (241) 241 (241) (221,734) (221,734) (387,787) (387,787) 27,277,176 24,223,611 Financial Statements 30 June 2020 Torque Metals Limited 17. Commitments In order to maintain rights of tenure to mining tenements, the Company would have the following discretionary exploration expenditure requirements up until expiry of leases. These obligations, which are subject to renegotiation upon expiry of the leases, are not are not provided for in the financial statements and are payable: Tenement Commitments Not longer than one year Longer than one year but not longer than five years Longer than five years 30 June 2020 $ 30 June 2019 $ 288,000 642,378 - 930,378 210,000 209,000 - 419,000 The Company currently has commitments in excess of cash, however the Board believes it will be able to raise the additional funds to satisfy the commitments for the future. Tenement Commitments (Cont’d) If the Company decides to relinquish certain leases and/or does not meet these obligations, assets recognised in the statement of financial position may require review to determine the appropriateness of carrying values. The sale, transfer or farm-out of exploration rights to third parties will reduce or extinguish these obligations. 30 June 2020 $ 30 June 2019 $ Tenement Capital Commitments Not longer than one year The Company has entered into a sale and purchase agreement with Tribal Mining Pty Ltd on 13 May 2020 to purchase tenement EL 77/2607 for a consideration of $50,000 (plus GST) payable 3 days after the Company is granted listing on an Australian Stock Exchange. 50,000 - 18. Operating Segments The Company operates in Western Australia, Australia 19. Contingencies The directors are not aware of any contingent liabilities or assets as at 30 June 2020. 20. Events after the reporting period 3 July 2020 • 3 June 2020 Prospectus withdrawn 24 July 2020 • The Company entered into an Underwriting Agreement with Martin Place Securities Pty. Ltd. to raise a proposed capital raising of $600,000 (minimum subscription) and $900,000 (maximum subscription) no later than 30 September 2020. The Underwriter will receive a fee of 6% and a management fee of 1% on terms considered normal for such an agreement 28 July 2020 • 16,346,507 ordinary shares were allotted at 6.7 cents to raise $1,095,216 before costs of $64,838. 45 Financial Statements 30 June 2020 Torque Metals Limited Events after the reporting period (Cont’d) • The company entered into a Promissory Note with Martin Place Securities for an amount of $290,000 of which $215,070 has been received, leaving an outstanding balance of $74,930 that is payable no later than 19 November 2020. • The Company was admitted to the Sydney Stock Exchange • 2,000,000 unlisted options exercisable at 15 cents on or before three years from the date of issue, issued to Martin Place Securities Pty. Ltd. 29 July 2020 • The Company acquired 100% ownership of the Paris Gold Project by: a) Exercising the Austral Pacific Option Agreement with a payment of $550,000 +GST b) Issuing 12,000,000 ordinary shares at a deemed value of 10 cents to Austral Pacific Pty. c) Reimbursement of tenement expenses $223,867 • Upon completion the Company’s issued capital increased to 60,171,382 ordinary shares 19 August 2020 • The Company issued a Prospectus for an offer of up to 9,000,000 Shares at an issue price of $0.10 each to raise up to $900,000 before costs, with a minimum subscription requirement to raise at least $600,000 before costs. The Minimum Subscription amount of the Public Offer being underwritten by Martin Place Securities Pty Ltd. 10 September 2020 • The Company issued a Replacement Prospectus to that dated 19 August 2020. 17 September 2020 • The Company issued a Supplementary Prospectus to that dated 10 September 2020. 30 September 2020 • The Company issued a Second Supplementary Prospectus to that dated 10 September 2020. 46 Financial Statements 30 June 2020 Torque Metals Limited Additional Shareholders Information information required by Sydney Stock Exchange Limited and not shown elsewhere in this Annual Report is as follows. The information is provided as at 30 September 2020. DETAILS OF HOLDERS OF EQUITY SECURITIES ORDINARY SHAREHOLDERS There are 60,171,382 fully paid ordinary shares on issue, held by 100 individual shareholders. Each member entitled to vote may vote in person or by proxy or by attorney and on a show of hands every person who is a member or a representative or a proxy of a member shall have one vote and on a poll every member present in person or by proxy or attorney or other authorised representative shall have one vote for each share held 20 LARGEST SHAREHOLDERS AS AT 30 SEPTEMBER 2020 Rank Name AUSTRAL PACIFIC PTY LTD TURF MOOR PTY LTD GROUP # 1456530 MR TSHUNG HUI CHANG TSHUNG HUI CHANG GROUP # 1456508 MR SEAGER REX HARBOUR MR SEAGER REX HARBOUR GROUP # 1456506 BEARAY PTY LTD BEARAY PTY LTD Units 11,640,000 10,000,000 6,705,000 730,000 5,975,000 3,738,806 746,195 2,992,611 2,985,074 994,926 1,990,148 TRIBAL MINING PTY LTD 2,292,537 LEET INVEST (#1485626) LEET INVESTMENTS PTY LTD LEET INVESTMENTS PTY LIMITED LEET INVESTMENTS PTY LIMITED 2,200,000 200,000 333,300 333,300 LEET INVESTMENTS PTY LIMITED 666,700 LEET INVESTMENTS PTY LIMITED GROUP # 1456517 MARTIN PLACE SECURITIES NOMINEES PTY LTD MARTIN PLACE SECURITIES NOMINEES PTY LTD GROUP # 1456520 PATINA RESOURCES PTY LTD PATINA RESOURCES PTY LTD GROUP # 1456523 MR NEIL FRANCIS STUART MR NEIL FRANCIS STUART SEISTEND PTY LTD GROUP # 1456512 LADYMAN SUPER PTY LTD LADYMAN SUPER PTY LTD GROUP # 1456526 MS SERENELLA TONELLO MS SERENELLA TONELLO GROUP # 1456528 MR JAMES PATRICK TUITE & MRS WENDY TUITE MR JAMES PATRICK TUITE + MRS WENDY TUITE MR LUO QI MR DANIEL JAMES GREENE KITSILANO INVESTMENTS PTY LTD TELAN SUPER PTY LTD LIEN PTY LTD Totals: Top 20 holders Total Remaining Holders Total Holders VOTING RIGHTS 450,000 149,985 300,015 450,000 149,985 300,015 450,000 49,772,312 10,399,070 60,171,382 Subject to any rights or restrictions for the time being attached to any class or classes (at present there are none) at general meetings of shareholders or classes of shareholders: (a)each shareholder entitled to vote, may vote in person or by proxy, attorney or representative; (b)on a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a shareholder has one vote; and (c)on a poll, every person present who is a shareholder or a proxy, attorney or representative of a shareholder shall, in respect of each fully paid share held, or in respect of which he/she has appointed a proxy, attorney or representative, have one vote for the share, but in respect of partly paid shares shall have a fraction of a vote equivalent to the proportion which the amount paid up bears to the total issue price for the shares. HOLDERS OF NON-MARKETABLE PARCELS There are 2 shareholders who hold less than a marketable parcel of shares. STOCK EXCHANGE INFORMATION DISTRIBUTION OF SHARE HOLDERS (AS AT 30 SEPTEMBER 2020) 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over TOTAL SUBSTANTIAL SHAREHOLDERS Ordinary Shares - 5,000 10,000 1,410,099 58,746,283 60,171,382 As at report date, the following shareholders are recorded as Substantial Shareholders Substantial Shareholder Austral Pacific Pty. Ltd. Turf Moor Pty. Ltd. Tshung H. Chang Seager Rex Harbour Bearay Pty. Ltd. Ordinary Shares Held 11,640,000 10,000,000 6,705,000 3,738,806 2,985,074 % Held 19.3% 16.6% 11.1% 6.2% 5.0% 48 Financial Statements 30 June 2020 Torque Metals Limited UNLISTED OPTIONS 2,000,000 unlisted options exercisable at 15 cents each on or before 27 July 2023 issued to Martin Place Securities Pty. Ltd. SHARE BUY-BACKS There is no current on-market buy-back scheme. OTHER INFORMATION Torque Meals Limited is incorporated and domiciled in Australia and is a Public Listed Company limited by Shares. 49 Financial Statements 30 June 2020 Torque Metals Limited Tenements INTEREST IN MINING TENEMENTS as at 25 September 2020 Tenement Registered Holder 4 Tenement Name Beneficial Interest M 15/1175 Austral Pacific Pty. Ltd. 1 Paris Gold Project M 15/479 Austral Pacific Pty. Ltd. 1 Paris Gold Project M 15/480 Austral Pacific Pty. Ltd. 1 Paris Gold Project M 15/481 Austral Pacific Pty. Ltd. 1 Paris Gold Project M 15/482 Austral Pacific Pty. Ltd. 1 Paris Gold Project M 15/496 Austral Pacific Pty. Ltd. 1 Paris Gold Project M 15/497 Austral Pacific Pty. Ltd. 1 Paris Gold Project M 15/498 Austral Pacific Pty. Ltd. 1 Paris Gold Project M 15/1719 Austral Pacific Pty. Ltd. 1 Paris Gold Project P 15/5992 Austral Pacific Pty. Ltd. 1 Paris Gold Project P 15/6149 Austral Pacific Pty. Ltd. 1 Paris Gold Project E15/1736 Jindalee Resources Ltd 2 Paris Gold Project AEL15/1747** Jindalee Resources Ltd 2 Paris Gold Project AEL15/1752** Jindalee Resources Ltd 2 Paris Gold Project E77/2522 Torque Metals Limited E77/2222 Talga Resources Ltd. 3 E77/2251 Talga Resources Ltd. 3 E77/2350 Talga Resources Ltd. 3 Bullfinch Bullfinch Bullfinch Bullfinch 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 0% 0% 0% 100% 100% 100% 100% Note 1 Austral Pacific Pty. Ltd. Tenements acquired 29 July 2020 Awaiting Stamp Duty Assessment before tenements may be transferred Note 2 Note 3 into the name of Torque Metals Limited Jindalee Resources Limited 1st year Farm-In earning interest Talga Resources Limited Tenements acquired July 2018 Stamp Duty assessed and awaiting transfer into Torque Metals Note 4 Torque Metals Limited is the Manager of all Tenements ** P E M Applications waiting for grant Prospecting Licence Exploration Licence Mineral Licence 50 

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