Torque Metals Limited
Annual Report 2022

Plain-text annual report

ACN 621 122 905 Financial statements for the year ended 30 June 2022 Corporate Directory Board of Directors Ian D. Finch Antony L. Lofthouse Patrick N. Burke Executive Chairman Non-Executive Director Non-Executive Director Company Secretary Neil W. McKay Principal Place of Business Unit 8 16 – 18 Nicholson Road Subiaco WA 6008 Postal Address PO Box 27 West Perth, Western Australia 6872 Auditors Hall Chadwick WA Audit Pty. Ltd. 283 Rokeby Road Subiaco WA 6008 Share Register Advanced Share Registry Services Pty. Ltd. 110 Stirling Highway, Nedlands, WA 6010 Stock Exchange Listing Australian Stock Exchange Perth Exchange: Code : TOR Banker Westpac Banking Corporation 1257 Hay Street, West Perth Western Australia 6005 2 Torque Metals Limited 30 June 2022 Contents Corporate Directory ................................................................................................................................ 2 Contents .................................................................................................................................................. 3 Chairman’s Report .................................................................................................................................. 4 Directors’ Report ..................................................................................................................................... 5 Corporate Governance Statement ........................................................................................................ 22 Auditor’s Independent Declaration ...................................................................................................... 23 Independent Auditor’s Report .............................................................................................................. 24 Director’s Declaration ........................................................................................................................... 30 Statement of profit or loss and other comprehensive income for the year ended 30 June 2022 ....... 31 Statement of financial position as at 30 June 2022 .............................................................................. 32 Statement of changes in equity for the year ended 30 June 2022 ....................................................... 33 Statement of cash flow for the year ended 30 June 2022 .................................................................... 34 Notes to the financial statements for the Year 30 June 2022 .............................................................. 35 Additional Shareholders Information ................................................................................................... 56 Tenements ........................................................................................................................................... 58 3 Torque Metals Limited 30 June 2022 Chairman’s Report Dear Members, . In the fifteen months since listing we achieved our stated objectives of finding new, high grade gold discoveries at our flagship Paris project. We also demonstrated that further significant opportunities remained within the Paris leases to rapidly increase the high-grade gold resource. We have continued that search unabated. Early exploratory intersections at Paris including 24m @ 10.7g/t au (inc. 6m @ 34.6 g/t) and 27m @ 8.16 g/t (inc. 6m @ 21.95 g/t) extended the major high-grade zone at the Paris pit area up to the West. In addition, we are also following up interpreted easterly resource extensions as well as opportunities to the South of the pit and at depth. In March we received the assay results from our extensive surface geochemical survey to the South of the Paris mine. The results highlighted a further three distinct gold anomalies – now called “Paris South”, “Carreras”, and “Pavarotti”. Importantly the three anomalies lie within the clear trend, now known as the “Paris Gold Corridor”. Equally as important is the fact that these results are instrumental in establishing a “pipeline” of gold prospects to augment ongoing exploration at Paris – another early objective that the Company has achieved. In March we were fortunate to acquire the services of Mr. Cristian Moreno, a highly credentialled geoscientist. He holds a BSc (Geology) and BEng (Agri. Eng.) and recently gained a high distinction MSc (Geophysics) from Curtin University. In addition, he is currently completing an MSc in Statistics and Data Science from the prestigious KU Leuven University in Belgium. In April Cristian became our CEO and set about growing the Company in its quest to become a significant contributor to the resource industry in Australia. Anyone who has met Cristian will know that these are far from “idle boasts”! Your board has a strong belief that our Paris Project has the potential to become a major addition to the world-renowned Eastern Goldfields of Western Australia. None of our success would be possible without the backing of Euroz-Hartleys, our lead broker and advisor. I thank them for their ongoing support. Once again, I thank you for your support. Yours Sincerely, Ian D Finch Chairman 4 Torque Metals Limited 30 June 2022 Directors’ Report The directors of Torque Metals Limited (“Torque” or “the Company”) present their report on Torque for the year ended 30 June 2022 (“the Year”). Directors The names of the directors of the Company during the year are: Ian D. Finch Antony (Tony) L. Lofthouse Patrick N. Burke Directors have been in office since the start of the Year to the date of this report unless otherwise stated. Ian D. Finch Executive Chairman (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 more than 51 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 2,796,268 fully paid ordinary shares. 1,311,567 30 cent Options exercisable 30 November 2023 50% beneficial interest in Turf Moor Pty. Ltd. a company in which he is a shareholder. Directorships held in other listed entities None. Antony L Lofthouse Qualifications Non-Executive Director 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 44 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 5 Torque Metals Limited 30 June 2022 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. 100,000 fully paid ordinary shares. 12,500 30 cent Options expiring 30 November 2023 25,000 30 cent Options exercisable 28 December 2023 50% beneficial interest in Porites Pty. Ltd. a company which acts as trustee for investments on his behalf. Interest in Shares Directorships held in other listed entities None. Patrick N. Burke Non-Executive Director Qualifications Experience Interest in Shares Directorships held in Other listed entities LLB Mr Burke holds a Bachelor of Laws from the University of Western Australia. He has extensive legal and corporate advisory experience and over the last 15 years has acted as a director for a large number of ASX, NASDAQ and AIM listed companies. His legal expertise is in corporate, commercial and securities law in particular capital raisings and mergers and acquisitions. Mr Burke’s corporate advisory experience includes identification and assessment of acquisition targets, strategic advice, deal structuring and pricing, funding, due diligence and execution.4 4 4 4 nil Current Western Gold Limited: Appointed 21 March 2021 Lycanon Resources Limited: Appointed 10 February 2021 Province Resources Limited: Appointed 9 November 2020 Meteoric Resources NL: Appointed 1 December 2017 Triton Minerals Limited: Appointed 22 July 2016 Past Three Years Mandrake Resources Limited: Appointed 4 August 2019: Resigned 24 March 2022 Koppar Resources Limited: Appointed 5 February 2018: Resigned 31 December 2019 Vanadium Resources Limited: Appointed 1 July 2017: Resigned 29 November 2019 Transcendence Technologies Limited: Appointed 28 September 2018: Resigned 20 November 2019 Company Secretary Neil W. McKay Company Secretary Qualifications Experience B.Bus (Sec Admin) Mr McKay is an accountant with more than 40 years in senior accounting, finance and in Australia and the company secretarial roles. His career has concentrated Philippines. After becoming an Associate Member of the Institute of Chartered Accountants in Australia, he ventured into the mineral exploration industry, where at 6 Torque Metals Limited 30 June 2022 Interest in Shares various times he was Company Secretary for a successful oil and gas company and held senior accounting positions within the exploration Industry 2,613,433 fully paid ordinary shares. 1,278,359 30 cent Options exercisable 30 November 2023 50% beneficial interest in Turf Moor Pty. Ltd. a company in which he is a shareholder. Chief Executive Officer Cristian Moreno Chief Executive Officer Mr Moreno specialises in the emerging field of advanced machine learning in order to process new and existing geoscientific data to improve the potential for exploration success. With over five years international experience, Mr Moreno has served in various roles including as an exploration and project geologist for gold exploration/producing companies and for oil and gas companies. He holds a high distinction in Masters of Science majoring in Geophysics from Curtin University (2020 – 2021), a Bachelor of Science with First Class Honours in Geology (2013– 2017) and Bachelor of Engineering with First Class Honours in Agricultural Engineering (2007-2013) both from The National University of Colombia. He is currently enrolled in Masters of Science majoring in Statistics and Data Science from KU Leuven University.. Mr Moreno is also a member of the Australasian Institute of Mining and Metallurgy (AusIMM), the Australian Society of Exploration Geophysics and the Curtin Society of Petroleum Engineering (SPE) Interest in Shares Nil Significant changes in state of affairs During the Year the company issued participating Shareholders 12,634,092 entitlement options exercisable at 30 cents prior to 30 November 2023 and a further 7,500,000 attaching options exercisable prior to 28 December 2023 also at 30 cents per option were issued to sophisticated investors together with 15,000,000 ordinary shares. Principal Activities During the financial year the principal activities of the consolidated entity consisted of mineral exploration. 7 Torque Metals Limited 30 June 2022 Review of Operations Perth-based, Western Australian-focused gold explorer Torque Metals Limited (“Torque” or “the Company”) (ASX: TOR) is pleased to report on its activities for the 12-month period ending June 2022. During the year, the Company was focused on progressing its flagship Paris Gold Project in Western Australia where drilling confirmed very strong, broad zones of high-grade gold at Paris, indicating significant potential for growth in gold resources below and adjacent to the existing pit. Additional phases of drilling confirmed high-grade gold intercepts and multiple new exploration targets within the Paris Gold Corridor. Torque also progressed the exploration activities for Nickel at the Paris Project. The Company commissioned a Ground Moving Loop Electromagnetic (MLEM) survey to test for conductive nickel sulphides at the Domingo and Melchior nickel prospects. This survey commenced subsequent to the period and included an additional target “Melchior West” south of Domingo as result of improvements to the initial survey. The Company commenced the maiden Reverse Circulation (RC) drill program at Withers Find prospect at the Bullfinch Project area, near Southern Cross, in Western Australia. The Torque program completed 1,260m of RC drilling. An intensive data review also identified several high-quality follow up targets. Exploration of these targets will be scheduled for attention early next year. 1. Paris Gold Project Project Background – The Paris Project Torque’s Paris Project lies within the area known as the Boulder-Lefroy Fault Zone (Figure 1). This prolific gold- bearing structure is host to numerous mines that have produced many millions of ounces of gold, including the world famous “Super Pit” in Kalgoorlie. Figure 1: The Boulder-Lefroy Fault Torque’s Paris Project area remains vastly underexplored, with past drilling limited in extent and generally restricted to the top 50 metres. Significant opportunities for discovery of gold mineralisation by the application of modern-day exploration techniques and the undertaking of more extensive, and deeper, drilling exists at the project. Torque undertook three drilling campaigns at Paris during the year with the objective of better 8 Torque Metals Limited 30 June 2022 defining the zones most likely to rapidly increase the project’s gold resource base. As a result, Torque has discovered six new prospects within the “Paris Gold Corridor”1 (Figure 2). Figure 2: The Paris Gold Corridor 1 Refer to ASX announcement dated 15 March 2022 - Gold Anomalies Provide Evidence of a Paris Gold Corridor 9 Torque Metals Limited 30 June 2022 Paris Project First Pass Drilling First pass drilling commenced at the Paris Project in Q1 for a total of 102 Reverse Circulation (RC) holes, aggregating 7427m 2,3,4 Broad, high-grade gold was intersected in 6 of the 8 targeted prospects and the eight prospects drilled by Torque at the Paris Project were:  Observation (22 holes for 1,688m)  Strauss (24 holes for 1,722m)  HHH South (11 holes for 804m)  Paris North (6 holes for 402m)  HHH Pit (3 holes for 308m)  Paris Pit (4 holes for 619m)  Marmaracs (21 holes for 1,116m)  Lady Doris (11 holes for 768m) Follow-up Drilling at Gold Discoveries Observation, Strauss, Caruso, Paris & HHH Pits Further follow-up holes were drilled in Q2 of the period at the Paris Project 5,6,7,8. The supplementary drilling tested new gold discoveries at the Observation and Strauss prospects and adjacent to existing open pits at Paris and HHH6 Results from the drilling at Paris and HHH confirmed very strong, broad zones of high-grade gold along strike and both up and down dip, demonstrating considerable potential for growth in gold resources below and adjacent to the existing pits. Assay highlights from drilling adjacent to HHH open pit included an intersection of 3m @ 3.89 g/t Au from 87m in hole 21HRC003. Drilling at the Observation Prospect delivered high grade intercepts at shallow depth, including9    6m @ 9.86g/t Au from 57m (21ORC031) 6m @ 8.45g/t Au from 51m (21ORC036) 3m @ 9.87g/t Au from 72m (21ORC037) A further new discovery, subsequently named the Caruso Prospect, came from drilling centred 200m northeast of the HHH open pit mine10. 9 holes for 798 metres were drilled at Caruso returning strong results, including:    15m @ 3.12 g/t Au from 15m (HRC023) 9m @ 3.47 g/t Au from 30m (HRC018) 6m @ 1.37 g/t Au from 24m (HRC016) Further High-Grade Gold Intercepts from Phase 3 Drilling at Paris Prospect Phase 3 RC drilling commenced during Q311 and reaffirmed a very strong, broad zone of high-grade gold extending approximately 50m westbound of Torque’s first discovery that intersected a wide gold zone of 24m @ 10.7 g/t Au12 13 (Figure 3). 2 Refer to ASX announcement dated 1 July 2021 - Drilling for Resource Extension at Paris and HHH Completed 3 Refer to ASX announcement dated 14 July 2021 - Paris First Phase Drilling Report 4 Refer to ASX announcement dated 18 August 2021 Broad, High Grade Gold hits at Paris 5 Refer to ASX announcement dated 18 October 2021 – New High-Grade Discovery at Paris Gold Mine 6 Refer to ASX announcement dated 15 September 2021 - New Gold Discovery at Paris Project 7 Refer to ASX announcement dated 16 November 2021 – Follow-up drilling begins at Paris Gold Discoveries 8 Refer to ASX announcement dated 15 December 2021 – Paris Gold Project Drilling Update 9 Refer to ASX announcement dated 20 January 2022 – Outstanding gold intercepts from Paris Project 10 Refer to ASX announcement dated 27 January 2022 – New Gold discovery at Paris Project 11 Refer to ASX announcement dated 7 February 2022 – Drilling recommences at Paris Gold Project Discoveries 12 Refer to ASX announcement dated 28 April 2022 – High Grade Gold Zones Intersected Paris Gold Project 13 Refer to ASX announcement dated 24 May 2022 – Further wide high-grade gold intercepts at Paris 10 Torque Metals Limited 30 June 2022 Figure 3: Wide High-grade continues at Paris Prospect Drilling also confirmed very strong, broad zones of high-grade gold both up and down dip at Paris, indicating significant potential for growth in gold resources below and adjacent to the existing pit13,14. Assay results from the Phase 3 drill program confirmed a mineralised zone covering a minimum strike length of ~120 metres. The Company notes that historical drill results from its database demonstrate that there is strong potential for a strike extent in excess of 300 metres to the west. This too remains open to the northwest, southeast, and at depth (Figure 4). Figure 4: Wide High-grade continues northwest 14 Refer to ASX announcement dated 21 February 2022 – Emerging high grade gold zone adjacent to Paris pit 11 Torque Metals Limited 30 June 2022 Paris Gold Corridor In March 2022, Torque announced highly anomalous auger geochemistry results (up to 249ppb), with ~600m continuous NNW trending gold anomaly on and south-east of the “Paris South” prospect15 16. Two additional gold anomalies were also identified in a previously unexplored area, approximately 3.7kms to the SSE of the Paris Mine – “Pavarotti” and “Carreras”. All anomalies line up in an NNW orientation and provide further confirmation for the existence of a “Paris Gold Corridor” (Figures 5 and 6). Figure 5: Location of auger sample points and gold geochemical anomalies 15 Refer to ASX announcement dated 15 March 2022 – New gold anomalies provide further evidence of a Paris Gold Corridor 16 Refer to ASX announcement dated 28 April 2022 – High grade gold zones intersected Paris Gold Project 12 Torque Metals Limited 30 June 2022 Figure 6: Paris Gold Corridor 1.2 Nickel Potential at Paris The Company announced during Q4 that following extensive search of its datasets, 10 historical drill holes had been identified with significant elevated and anomalous nickel values17 18 19. This further encouraged Torque’s view of the prospective nickel at the Company’s 100% owned Paris Project. The holes were drilled on, or adjacent to, a large positive magnetic anomaly (“Domingo”) located approximately 10km NNW from defined Electro Magnetic (EM) anomalies (the “Melchior Anomalies”). These large EM anomalies occur approximately 2km west of the HHH/Caruso gold prospects at Paris and resemble the AEM anomaly seen at Mincor Resources Cassini prospect approximately 25 km to the West. The Company commissioned Resource Potentials (ResPot) and GAP Geophysics to conduct a moving loop electromagnetic (MLEM) survey over the Melchior Anomalies20 (Figure 7). 17 Refer to ASX announcement dated 06 April 2022 – Nickel Potential Upgraded at Paris 18 Refer to ASX announcement dated 05 May 2022 – Electromagnetic Survey of New Nickel Targets 19 Refer to ASX announcement dated 13 July 2022 – Nickel Exploration commences at Paris Project 20 Refer to ASX announcement dated 05 May 2022 – Electromagnetic Survey of New Nickel Targets 13 Torque Metals Limited 30 June 2022 Subsequent to the period, the Ground Moving Loop Electromagnetic (MLEM) survey commenced to test for conductive nickel sulphides at the Domingo and Melchior nickel prospects21. Furthermore, Torque included an additional target “Melchior West” south of Domingo as result of developments to the initial survey (Figure 8). Figure 7: Potential conductive anomalies at the Paris Project Figure 8: Ground Electromagnetic Survey Design 21 Refer to ASX announcement 13 July 2022 – Nickel Exploration commences at Paris Project 14 Torque Metals Limited 30 June 2022 2. Bullfinch Gold Project Torque controls approximately 600 Km2 of highly prospective, contiguous title within the Bullfinch Gold field, 34kms north of the mining town of Southern Cross in Western Australia. They are collectively known as the Bullfinch Project (Figure 9). Figure 9: Bullfinch Project Subsequent to the period, the Company announced the commencement of a maiden Reverse Circulation (RC) drill program at Withers Find prospect at the Bullfinch Project area22. Designed to complete a total of 1260m of RC drilling informed by extensive compilation and review of historical exploration activity, Torque’s program involves the reprocessing of magnetics, radiometric, and gravity geophysics, and the collection of geochemical samples with extensive multi-element assays and proprietary machine learning analysis. Recent, intensive data review carried out by the Company identified several high-quality follow up targets. Exploration of these targets will be a focal point of attention throughout the next half year. (Figure 10). 22 Refer to ASX announcement 06 July 2022 – Drilling starts at Bullfinch Gold Project 15 Torque Metals Limited 30 June 2022 Figure 10: The Bullfinch Project Exploration Potential This Annual Report has been authorised by the Board of Torque Metals. Competent Person Statement – Exploration Results The information in this annual report that relates to Exploration Results is based on information compiled by Mr Ian Finch, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Finch is an employee of Torque Metals Limited (“the Company”). Mr Finch is eligible to participate in short and long-term incentive plans in the Company and holds shares and performance rights in the Company as has been previously disclosed. Ian Finch has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr. Finch consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears. Forward Looking Statements This report may contain certain “forward-looking statements” which may not have been based solely on historical facts, but rather may be based on the Company’s current expectations about future events and results. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward looking statements are subject to risks, uncertainties, assumptions and other factors which could cause actual results to differ materially from future results expressed, projected or implied by such forward- looking statements. Readers should not place undue reliance on forward looking information. The Company does not undertake any obligation to release publicly any revisions to any “forward-looking statement” to reflect events or circumstances after the date of this report, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Overview of Company Performance The table below sets out information about the Company’s earnings and movements in shareholder wealth for the past two years from the date of listing on ASX up to and including the current financial year. 16 Torque Metals Limited 30 June 2022 NLAT ($'m) Share price at year end (cents) Basic EPS (cents) Directors Remuneration Report- Audited 2022 (2.15) 2021 (1.82) ASX 24.0 (0.033) ASX 21.5 (0.04) This report details the nature and amount of remuneration for each director of the Company. Options No director or Key Management Personnel has been granted options in the Company as part of their remuneration. 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, and key performance indicators such as share price, 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 Executive Chairman 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. Details of remuneration for the years ended 30 June 2022 and 30 June 2021 The remuneration for each key management personnel of the Company during the year was as follows 17 Torque Metals Limited 30 June 2022 2022 Fixed Remuneration Variable Remuneration Super Total Performance Rights Total Directors Ian Finch Tony Lofthouse Pat Burke Senior Management Cristian Moreno1 Neil McKay Salaries Consulting Fees 225,229 36,861 40,547 302,637 107,273 179,183 286,456 589,093 Total Cristian Moreno appointed 15 November 2021 22,256 3,686 - 25,942 10,727 17,913 28,640 54,582 247,485 40,547 40,547 328,579 118,000 197,096 315,096 643,675 290,113 145,056 145,056 580,225 110,464 123,053 233,517 813,742 537,598 185,603 185,603 908,804 228,464 320,149 548,613 1,457,417 Value of Rights as % of remuneration 53.96% 78.15% 78.15% 48.35% 38.44% 2021 Fixed Remuneration Variable Remuneration Salaries Director/ Consulting Fees Super Total Performance Rights Total Value of Rights as % of remuneration 50,536 38,397 861 947 90,741 Directors Ian Finch Neil McKay* Tony Lofthouse Pat Burke** Total Performance Rights were cancelled on 28 May 2021 as part of ASX listing requirements Mr. Finch Mr. McKay* Mr. Lofthouse Mr. Burke** Resigned 23 June 2021 Appointed 30 January 2020 Appointed 8 February 2021 Executive Chairman Director Director Director 51,062 42,065 947 947 95,021 526 3,668 86 0 4,280 - - - - - 51,062 42,065 947 947 95,021 - - - - Number acquired during the year - Key Management Personnel (KMP) Equity Holdings and Performance Rights Shares 30 June 2022 Balance 1/07/2021 Performance Rights Exercised Balance 30/06/2022 - 5,000,000 296,268 50,000 - Turf Moor Pty. Ltd1 Ian Finch Tony Lofthouse Pat Burke Senior Management Cristian Moreno Neil McKay 1 Mr. Finch and Mr. McKay are equal 50% shareholders in Turf Moor Pty. Ltd. which holds 5,000,000 Shares - 50,000 - 113,433 - - - - - - - - 5,000,000 296,268 100,000 - - 113,433 30 June 2021 Turf Moor Pty. Ltd1 Ian Finch Tony Lofthouse Pat Burke Senior Management Cristian Moreno Neil McKay` Balance 1/07/2020 5,000,000 - 50,000 - Number acquired during the year - 296,268 - - - - - 113,433 Performance Rights Exercised Balance 30/06/2021 - 5,000,000 296,268 50,000 - - 113,433 - - - - - 18 Torque Metals Limited 30 June 2022 Options 30 June 2022 Balance 1/07/2021 Turf Moor Pty. Ltd1. Ian Finch Tony Lofthouse Pat Burke Senior Management Cristian Moreno Neil McKay Number acquired during the year 1,250,000 61,567 37,500 - - 28,359 - - - - - - Performance Rights Exercised Balance 30/06/2022 - - - - - - 1,250,000 61,567 37,500 - - 28,359 1 Mr. Finch and Mr. McKay are equal 50% shareholders in Turf Moor Pty. Ltd. which holds 1,250,000 Options 30 June 2021 Turf Moor Pty. Ltd1 Ian Finch Tony Lofthouse Pat Burke Senior Management Cristian Moreno Neil McKay` Balance 1/07/2020 Number acquired during the year Performance Rights Balance Exercised 30/06/2021 - - - - - - - - - - - - - - - - - - - - - - - - Performance Rights Granted Number Grant Date Fair Value Performance Rights Expiry Date Vested Number Ian D. Finch Total Patrick N. Burke Total Antony L. Lofthouse Total Cristian Moreno Total Neil W. McKay Total Total 2,000,000 2,000,000 4,000,000 1,000,000 1,000,000 2,000,000 1,000,000 1,000,000 2,000,000 1,000,000 1,000,000 2,000,000 1,000,000 1,000,000 2,000,000 12,000,000 23 November.2021 23 November 2021 $0.15153 $0.25000 3 Years from date of Issue 23 November. 2021 23 November 2021 $0.15153 $0.25000 3 Years from date of Issue 23 November 2021 23 November 2021 $0.15153 $0.25500 3 Years from date of Issue 1 May 2022 1 May 2022 $0.13800 $0.23000 3 Years from date of Issue 23 November 2021 23 November 2021 $0.15153 $0.25000 3 Years from date of Issue - - - - - - - - - - - - Transactions with key management personnel During the year, there were no other transactions with key management personnel. End of Remuneration Report 19 Torque Metals Limited 30 June 2022 Review of Operation The loss of the Company for the Year after providing for income tax, amounted to $2,154,5041 (year ended 30 June 2021: $1,820,026). The expenditure incurred during the Year related to corporate and administration expenditure, and non-capitalized expenses relating to tenement acquisition. Unlisted options issued during the year to providers of financial services related to capital raising have been valued in accordance with the Black and Scholes and expensed in the year $215,138 (2021: $1,120,372) Corporate The Company raised a total of $2,946,340 (after costs): Description Quantity Price $ Total $ Placement Ordinary Shares Cost of Capital Placement 30 cent Options to shareholders Total Meeting of Directors 15,000,000 $0.20 12,634,092 $0.01 3,000,000 (180,001) 2,818,999 126,341 $2,946,340 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 A.L. Lofthouse P. N. Burke 11 11 11 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 11 11 11 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 20 Torque Metals Limited 30 June 2022 Options The following options over issued shares in the Company were granted during the Year. Date Number Entity Terms 1 Dec 2021 18 Feb 2022 29 June 2022 29 June 2022 29 June 2022 Total 12,634,092 2,000,000 7,500,000 3,000,000 750,000 25,884,092 Entitlement Issue Zenix Nominees Pty. Ltd. Attaching Option Zenix Nominees Pty. Ltd Harshell Investments Pty Ltd. 30 cents 30 November 2023 30 cents 17 February 2024 30 cents 28 December 2023 30 cents 28 December 2023 30 cents 28 December 2023 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. 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 Year. Events arising since the end of the Year There have been no significant events arising since the end of the year. Non-Audit Services During the period ending 30 June 2022, the Company’s Auditor, Hall Chadwick WA Audit Pty Ltd performed the non-audit services totaling $5,995 Auditor’s Independence Declaration The auditor’s independence declaration for the year ended 30 June 2022 forms part of the Director’s Report and can be found on page 23 Signed in accordance with a resolution of directors. On behalf of the directors Ian D. Finch Executive Chairman 21 Torque Metals Limited 30 June 2022 Corporate Governance Statement The Company has established a corporate governance framework, the key features of which are set out in its Corporate Governance statement which can be found on the Company’s website at www.torquemetals.com, under the section marked “Corporate Governance”. In establishing its corporate governance framework, the Company has referred to the recommendations set out in the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations 4th edition (Principles & Recommendations). The Company has followed each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its corporate governance practices. Where the Company’s corporate governance practices follow a recommendation, the Board has made appropriate statements reporting on the adoption of the recommendation. In compliance with the “if not, why not” reporting regime, where, after due consideration, the Company’s corporate governance practices do not follow a recommendation, the Board has explained its reasons for not following the recommendation and disclosed what, if any, alternative practices the Company has adopted instead of those in the recommendation. In the 12 months ending 30 June 2022, the Company used the cash it had at the time of admission in a way consistent with its business objectives. 22 Torque Metals Limited 30 June 2022 Auditor’s Independent Declaration 23 Torque Metals Limited 30 June 2022 Independent Auditor’s Report 24 Torque Metals Limited 30 June 2022 25 Torque Metals Limited 30 June 2022 26 Torque Metals Limited 30 June 2022 27 Torque Metals Limited 30 June 2022 28 Torque Metals Limited 30 June 2022 29 Torque Metals Limited 30 June 2022 Director’s Declaration In accordance with a resolution of the directors of Torque Metals Limited, the directors of the Company declare that:    the financial statements and notes, as set out, are in accordance with the Corporations Act 2001 and 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 give a true and fair view of the financial position as at 30 June 2022 and of the performance for the year ended on that date of the Company; 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 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 Executive Chairman Perth 30 September 2022 30 Torque Metals Limited 30 June 2022 Statement of profit or loss and other comprehensive income for the year ended 30 June 2022 Revenue from continuing operations Other income Total revenue and other income Corporate administrative expenses Depreciation and amortisation 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 Basic weighted average earnings/(loss) per share Diluted weighted average earnings/(loss) per share Year Ended 30 June 2022 Year Ended 30 June 2021 Note $ - 2 2 2 2 2 5 (870,801) (24,932) (2,228) (1,084,707) (171,836) - (2,154,504) - (2,154,504) - (2,154,504) $ - 50,000 (390,892) - (14,813) (1,291,326) - (172,995) (1,820,026) - (1,820,026) - (1,820,026) (2,154,504) (1,820,025) (2,154,504) (1,820,026) 22 22 (0.033 ) (0.033 ) (0.04) (0.04) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 31 Torque Metals Limited 30 June 2022 Statement of financial position as at 30 June 2022 Current assets Cash and cash equivalents Trade and other receivables Total current assets Non current assets Plant and Equipment Right of use assets Exploration and evaluation expenditure Total non-current assets Total assets Current liabilities Trade and other payables Lease Liabilities Unsecured loans Total current liabilities Non-Current liabilities Lease Liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital Options Option Reserves Performance Reserve Accumulated losses Total equity 30 June 2022 $ 30 June 2021 $ Note 7 8 9 10 11 12 10 13 10 14 16 17 19 20 3,440,943 21,893 3,462,836 99,966 59,253 6,665,101 6,824,320 10,287,156 302,880 26,859 180 329,920 34,010 34,010 363,930 5,084,472 37,108 5,121,580 - - 3,695,023 3,695,023 8,816,603 769,920 - - 769,920 - - 769,920 9,923,226 8,046,683 11,491,768 126,341 1,704,885 1,223,584 (4,623,352) 9,041,144 - 1,120,372 354,015 (2,468,848) 9,923,226 8,046,683 The above statement of financial position should be read in conjunction with the accompanying notes 32 Torque Metals Limited 30 June 2022 Statement of changes in equity for the year ended 30 June 2022 Issued Capital Options on Issue Accumulated Performance Option Reserve Losses Equity Reserve Total $ $ $ $ $ $ Rights Reserve $ 1,161,404 (648,822) 183,060 13,592 709,234 (1,820,026) - - - - - (2,468,848) - - - - - - - 170,955 - - 1,120,372 - - - - 354,015 1,120,372 - - (13,592) - - Balance as at 1 July 2020 Total comprehensive Income/loss for the Period Issue of ordinary shares Performance Rights issued Option Reserve Equity Reserve Transaction costs 8,357,008 (477,268) 9,041,144 9,041,144 - - - - - - - - - - - - - - - - - Balance as at 1 July 2021 Total comprehensive Income/loss for the Period Issue of ordinary shares Issue of Options Performance Rights issued Option Reserve Transaction costs Balance as at 30 June2022 - - (549,376) 3,000,000 - - 126,341 11,491,768 126,341 (2,468,848) 354,015 1,120,372 (2,154,504) - - - - - - - - - - 869,569 - - - 584,513 - (4,623,352) 1,223,584 1,704,885 - - - - - - - - (1,820,026) 8,357,008 170,955 1,120,372 (13,592) (477,268) 8,046,683 8,046,683 (2,154,504) 3,000,000 126,341 869,569 584,513 (549,376) 9,923,226 The above Statement of Changes in Equity should be read in conjunction with the accompanying notes 33 Torque Metals Limited 30 June 2022 Statement of cash flow for the year ended 30 June 2022 Cash flow used in operating activities Payments to suppliers and employees Net cash (used) in operating activities Cash flow from investing activities Tenement acquisition Exploration and evaluation Plant and Equipment Net cash (used) in investing activities Cash flow from financing activities Proceeds from share issue Proceeds from option issue 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 Notes 30 June 2022 30 June 2021 $ $ (1,224,483) (1,224,483) 6 (2,684) (2,684) (119,607) (3,117,907) (104,268) (3,341,782) (601,045) (827,099) - (1,428,144) 2,819,999 126,341 (23,784) 180 - - - 2,922,736 (1,643,529) 5,084,472 6,646,148 - (43,476) (48,200) (30,000) (11,228) 6,513,244 5,082,416 2,056 Cash and cash equivalents 30 June 2022 3,440,943 5,084,472 The above statement of cash flow should be read in conjunction with the accompanying notes 34 Torque Metals Limited 30 June 2022 Notes to the financial statements for the Year 30 June 2022 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES These 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 30 September 2022 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 $2,154,504 (2021: net loss $1,820,026) and experienced net cash outflow from operations of $1,224,483 (2021: outflow $2,684). The Company has liabilities of $ 363,930 (2021: $769,920) and cash on hand of $3,440,943 (2021: $5,084,472). The Directors have prepared a cash flow forecast which indicates that the Company will have sufficient cash flows to meet all commitments and working capital requirements for the 12 month period from the date of signing this financial report. The Directors believe it is appropriate to prepare these accounts on a going concern basis because of the following factors: • the Company has the ability to curtail discretionary expenditure as and when required in order to manage its cash flows. Based on the cashflow forecast and other factors referred to above, the Directors are satisfied that the going concern basis of preparation is appropriate Exploration, Evaluation and Development Expenditure (a) 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. 35 Torque Metals Limited 30 June 2022 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. Financial Instruments Financial Assets (b) 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. 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 Company’s statement of financial position) when:  The rights to receive cash flows from the asset have expired; or  The Company 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 36 Torque Metals Limited 30 June 2022 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). Cash and cash equivalents (c) 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 overdraft 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 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 reorganization 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 recogognised 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. Revenue and Other Income (e) 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). Impairment of Assets (h) 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. 37 Torque Metals Limited 30 June 2022 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. Trade and other payables (g) 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 38recognized as an expense on an accrued basis. Provisions (h) 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. Goods and service tax (GST) (i) Revenues, expenses and assets are 38recognized 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 38ecognized 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. Income tax (j) 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 are simultaneous recognised 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 recognised 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. 38 Torque Metals Limited 30 June 2022 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 recognised. 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. Share Based Payments (k) 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. Contributed equity (l) Ordinary issued share capital 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) Earnings Per Share (m) 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 a 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. Interest in Joint Operations (n) 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. 39 Torque Metals Limited 30 June 2022 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. Critical Accounting Estimates and Judgements (o) 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. Fair value measurements (p) The Group measures and recognises the asset, ‘Financial assets held for trading’ at fair value on a Recurring basis after initial recognition. The Group does not subsequently measure any liabilities at fair value on a non-recurring basis. Fair Value Hierarchy (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 40 Torque Metals Limited 30 June 2022 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. Measurements based on unobservable inputs for the asset or liability. 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: Convertible Notes (q) 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 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 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 41 Torque Metals Limited 30 June 2022 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. 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 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. 42 Torque Metals Limited 30 June 2022 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). (s) Recognition and measurement of fixed assets Items of plant and equipment are measured at cost less accumulate depreciation and accumulated impairment losses. When pats of an item of plant and equipment have different useful lives, they are accounted for as separate items of plant and equipment. Depreciation is recognised in profit and loss on a straight-line basis over the estimated useful lives of each part of an item of plant and equipment. Depreciation, methods, useful lives and residual values are reviewed at each reporting date. The depreciation rates used for each class of depreciable asset are: Class of Fixed Asset Vehicles Camp Infrastructure Depreciation Rate 33 1/3 % 10 2. Expenses Administrative expenses Depreciation and amortisation Exploration written off Initial Public Offering expenses Interest Paid Share Based Payment Net Movement 2a Share Based Payments Performance Right - Movement for the year Performance Rights brought to account in accordance with AASB2 (28) upon cancellation Options issued during the year 3. Key Management Personnel Short term employee benefits Share based payments No termination benefits were paid to any Key Management Persons Year Ended 30 June 2022 $ Year Ended 30 June 2021 $ 870,801 24,932 171,836 - 2,228 1,084,707 2,154,504 390,892 - - 172,995 14,813 1,291,326 1,870,026 869,569 - - 215,138 1,084,707 643,675 813,742 1,457,417 170,954 1,120,372 1,291,326 95,021 - 95,021 2a 15 Names and positions held of the Company’s key management personnel in office at any time during the 2021/2022 financial year are: Key Management Personnel Ian D. Finch Position Executive Chairman Patrick N. Burke Antony L. Lofthouse Cristian Moreno Neil W. McKay Non-Executive Director Non-Executive Director Chief Executive Officer Company Secretary/CFO 43 Torque Metals Limited 30 June 2022 Refer to the Remuneration Report contained in the Director’s Report for details of the shares and rights held and remuneration paid of payable to each member of the Company’s key management personnel for the year ended 30 June 2022. 4. Auditors Remuneration Remuneration of the auditor for: Auding or reviewing the financial report 5. Income tax benefit/(expense) (a) Current Tax Expense Current Year Under/(over) provided in prior years Total (b) Reconciliation of income tax expense to prima facie tax payable Profit before tax Income tax expense/(benefit) using the domestic corporation tax rate of 25% (2021: 26%) Tax effect of permanent differences: Non-deductible expenses Capital Raising Costs Capitalised exploration Other temporary differences not brought to account Income tax attributable to operating loss (c) Deferred tax assets Tax losses Provisions and Accruals Capital Raising Costs 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 44 Torque Metals Limited 30 June 2022 27,500 27,500 15,000 15,000 - - - - - - (2,154,505) (1,820,026) (538,626) (473,207) 271,648 (53,345) (735,176) 336,760 (24,090) 5,431 8,024 (1,050,068) - (252,512) - 1,564,291 16,215 149,558 1,730,064 (313,026) 1,417,038 (1,417,038) 532,215 16,215 164,219 712,650 (313,026) 399,624 (399,624) - - 30 June 2022 $ 313,026 (313,026) - 30 June 2021 $ 313,026 - (313,026) - (e) Tax Losses Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit @ 25% (2021 : 26%) 6,257,164 1,564,291 2,046,982 532,215 The benefit for tax losses will only be obtained if: (a) The company and consolidated entity derive future assessable income of a nature and an amount sufficient to enable the benefit from the deductions for the losses to be realised; (b) The company and the consolidated entity continue to comply with the conditions for deductibility imposed by law; and (c) No changes in tax legislation adversely affect the ability of the Company to realise these 30 June 2022 $ 30 June 2021 $ 6. Reconciliation of loss for the Period to net cash flows from Operating Activities Net (loss) Loss for the period Interest expense Depreciation and amortisation Exploration expense written off Performance Rights Net Movement Option Reserve Movement Issue of Shares (2,154,504) 4,771 24,932 171,836 869,569 215,138 - Operating loss before changes in working capital Decrease / (Increase) in receivables and prepayments Increase / (Decrease) in payables and accruals Net cash used in operating activities (868,258) 15,214 (371,439) (1,224,483) (1,820,026) 12,901 0 0 170,955 1,120,372 20,000 (495,798) 32,542 460,572 (2,684) 7. Cash on Hand and Equivalents 3,440,943 5,084,472 8. Trade Receivables G.S.T. receivables Other 9. Plant and equipment Plant and equipment as at 30 June 2021 Cost Accumulated Depreciation Net Book Value 45 Torque Metals Limited 30 June 2022 19,911 1,982 21,893 17,374 19,734 37,108 Vehicle $ Camp $ Total $ - - - - - - - - - Plant & equipment (continued) Year ended 30 June 2022 Opening net book amount Additions Depreciation Charged Closing book amount As at 30 June 2022 Cost Accumulated Depreciation Net book amount 10. Right of use assets - Leases a. Amounts recognised in the balance sheet Right of use asset Opening Balance Less Depreciation Closing balance Lease Liabilities Opening Balance - Current Opening Balance - Non-Current Opening Balance - Total Add : Interest Less : Payments Closing balance - Total Closing Balance - Current Closing Balance - Non-Current Vehicle $ - 22,127 (4,302) 17,825 22,127 (4,302) 17,825 Camp $ - 82,141 - 82,141 Total $ - 104,268 (4,302) 99,966 82,141 - 82,141 104,268 (4,302) 99,966 30 June 2022 $ 30 June 2021 $ 83,321 (24,068) 59,253 22,071 61,250 83,321 4,771 (23,784) 64,308 26,859 34,010 - - - - - - - - - - - 10,315 2,543 b. Amounts recognised in the income statement Depreciation of right of use asset Interest expense on lease liabilities c. Leasing Activities The Company entered into an office lease for the premises at Unit 8/16 Nicholson Road, Subiaco, WA 6008. The lease commenced on 15 May 2021 with an option to extend for a further 36 months ending 14 May 2025. The Company intends to exercise the option. The lease is recognised as a right of use asset and a corresponding liability at the date at which the leased asset is available for use by the Company. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right of use asset is amortised over the shorter of the asset's useful life and the lease term on a straight line basis. - - 46 Torque Metals Limited 30 June 2022 Initial measurement Assets and liabilities from a lease are initially measured on a present value basis. The lease liability included the present value of the fixed payments and variable lease payments that depend on an index, initially measured using the index as at the commencement date (reconciled and adjusted for actual index each year). The lease payments are discounted using an incremental borrowing rate of 6.66%. The right of use asset is measured at cost comprising of the initial measurement of the lease liability. Subsequent measurement The right of use asset is subsequently measure at cost less any accumulated amortisation and any accumulated impairment losses and adjusted for any re-measurement of the lease liability accumulated impairment losses and adjusted for any re-measurement of the lease liability. The lease liability is subsequently measured to reflect the interest on the lease liability, the lease payments made and any reassessment of the variable payments. 11. Exploration and Evaluation Expenditure Tenement Acquisition Represented by: Acquisition of Bullfinch Project from Talga Resources Ltd Less written off Acquisition of Bullfinch Project from Tribal Mining Pty Ltd. Acquisition of Paris Gold Project from Austral Pacific Pty. Ltd. Joint Venture from Jindalee Resources Ltd. (a) Exploration and evaluation expenditure Opening Balance Expenditure for the period Expenditure written off Closing Balance Total Exploration and Expenditure 30 June 2022 30 June 2021 6,665,101 3,695,023 2,450,518 2,491,079 397,493 (69,933) 327,560 51,045 2,031,306 40,607 2,450,518 1,203,944 3,112,542 (101,903) 4,214,583 6,665,101 397,493 - 397,493 52,090 2,031,306 10,190 2,491,079 321,500 882,444 - 1,203,944 3,695,023 The Company entered into an Option Deed to purchase the Paris Tailings from Austal Pacific Pty. Ltd. by way of a $50,000 non refundable 4 month option fee with the ability to extend for a further one month by payment of an additional $10,000 and subsequently extended for a further 1 month. the Company informed Austal Pacific Pty. Ltd. that it did not intend to further extend the Option Period and wrote off $101,903 in the year ended 30 June 2022. 12. Trade and other payables Trade Creditors Other creditors and accrued expenses 30 June 2022 30 June 2021 226,514 76,366 302,880 555,000 214,920 769,920 Trade and other payables are non-interest bearing liabilities stated at cost. 47 Torque Metals Limited 30 June 2022 13. Unsecured Loans (i) Advances (to)/from Directors 30 June 2022 (180) (180) 30 June 2021 - - (i) Working capital advances, with no fixed term of repayment and without interest 14. Issued Capital Year ended 30 June 2022 Year ended 30 June 2021 a. Ordinary Shares Opening balance for the period Placement at $0.067 Convertible Note at $0.067 Placement at $0.05 Placement to Vendor Cost relating to share issue 2 : 1 Consolidation Issue to Financier Placement at $0.20 Placement at $0.20 Cost relating to share issue No. $ No. $ 62,818,519 9,041,144 31,824,876 16,346,506 1,167,164 9,000,000 12,000,000 - 1,161,404 1,095,216 91,792 450,000 1,200,000 - 70,338,546 3,998,412 35,169,266 149,253 27,500,000 3,998,412 20,000 5,500,000 15,000,000 3,000,000 (549,376) - (477,268) 77,818,519 11,491,768 62,818,519 9,041,144 b. 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 2022 and 2021 are as follows: 15. Working Capital Cash and Cash Equivalents Trade and Other Receivables Current Liabilities Working Capital Position 16. Option Entitlement 1 cent Opening Balance Entitlement Issue 1 cent Closing Balance 30 June 2022 $ 3,440,942 21,893 (329,740) 3,133,095 30 June 2021 $ 5,084,472 37,108 (769,920) 4,351,660 Year ended 30 June 2022 No. $ Year ended 30 June 2021 No. $ - 12,634,092 12,634,092 - 126,341 126,341 - - - - Pro Rata Loyalty Option issued 1 December 2021 in accordance with Prospectus dated 8 November 2021 48 Torque Metals Limited 30 June 2022 17. Option Reserve Opening Balance Issuance of Options Financial Services Closing Balance 30 June 30 June 2022 $ 1,120,372 584,513 1,704,085 2021 $ - 1,120,372 1,120,372 18 Share Based Payments (a) Unlisted Options i) 1,000,000 (post consolidation) options with an expiry date of 27 July 2023 were issued on 28 July 2020 pursuant to the Martin Place Securities Pty. Ltd. Corporate Advisory letter dated 22 April 2020 at an exercise price of $0.30 each The options were valued at $0.0534 and during the year ended 30 June 2021 $106,857 was expensed as share based payments. ii) 3,875,000 (post consolidation) options with an expiry date of 1 June 2024 were issued on 2 June 2021 to the Euroz Harletys I.P.O. Capital Raising Mandate dated 17 December 2020. The options were valued at $0.1102 cents and during the year ended 30 June 2021 $426,939 was expensed as share based payments at an exercise price of $0.275 each iii) 5,500,000 (post consolidation) options with an expiry date of 1 June 2024 were issued on 2 June 2021 pursuant to the Euroz Harleys I.P.O. Capital Raising Mandate dated 17 December 2020. The options were valued at $0.1067 cents and during the year ended 30 June 2021 $586,576 was expensed as share based payments at an exercise price of $0.30 each. iv) 2,250,000 options with an expiry date of 22 December 2023 were issued on 23 December 2020 pursuant to a 1 for 2 free attaching option to raise $450,000 to sophisticated Investors on 22 December 2020 at an exercise price of $0.25 each. v) 12,634,092 options with an expiry date of 30 November 2023 were issued on 1 December 2021 pursuant to a Loyalty Entitlement Prospectus dated 8 November 2021 at an exercise price of $0.30 each. vi) 2,000,000 options with an expiry date of 17 February 2024 were issued on 18 February 2022 to Euroz Hartleys in part payment of the Loyalty Entitlement Prospectus. vii) 7,500,000 options with an expiry date of 28 December 2023 were issued on 29 June 2022 pursuant to a 1 for 2 free attaching option to raise $3,000,000 to participating shareholders at an exercise price of $0.30 each. vii) 3,750,000 options with an expiry date of 28 December 2023 were issued on 29 June 2022 pursuant to a Capital Raising Agreement dated 24 May 2022 as a Broker Fee for the capital raising of $3,000,000. The options expire on 28 December 2022. (b) Option valuation assumptions The fair value of the options granted we estimated as at the date of grant using a Black-Scholes option valuation model and a Monte Carlo simulation valuation model. The following table lists the inputs to the models: Options issued 27 July 2020 Options issued 2 June 2021 Options issued 2 June 2021 Options issued 22 Dec 2020 Options issued 1 Dec 2021 Options issued 17 Feb 2022 Options issued 29 June 2022 Options issued 29 June 2022 Expected ASX Volatility (%) Code 100 TORAF 100 TORAG 100 TORAH 100 TORAE 100 TORAI TORAL 100 TORAM 100 TORAM 100 Risk Free Interest Rate (%) 7 7 7 7 7 7 7 7 Expected Share life (years) 3 3 3 2 2 2 1.5 1.5 Price at grant date $0.20 $0.20 $0.20 $0.07 $0.23 $0.21 $0.24 $0.24 Exercise Price $0.30 $0.275 $0.30 $0.25 $0.30 $0.30 $0.30 $0.30 49 Torque Metals Limited 30 June 2022 c Options outstanding at end of year The following table illustrate the number and weighted average exercise prices (WAEP)of share options granted as share based payments on issue during the year Outstanding at 1 July Granted during the year Outstanding 30 June 2022 Number 12,625,000 25,884,092 38,509,092 2022 WAEP $ $0.283 $0.30 2021 Number 2021 WAEP 12,625,000 12,625,000 $0.283 - The weighted average remaining contractual life for options outstanding as at 30 June 2022 is 1.6 years (2021 2.5 years). (d) Share based Payments Summary Class Quantity Grant Date Value recognised during year $ Exercise Price $ Vesting Date Value recognised in future years $ 2021 Options Options Options Options 2022 Options Options Options Options 1,000,000 2,500,000 5,500,000 3,875,000 28/07/2020 23/12/2020 2/06/2021 2/06/2021 12,634,092 2,000,000 7,500,000 3,750,000 1/12/2021 18/02/2022 29/06/2022 29/06/2022 106,857 - 586,576 426,939 1,120,372 126,341 215,138 - 369,375 710,854 0.300 0.250 0.300 0.275 0.30 0.30 0.30 0.30 27/07/2023 22/12/2023 1/06/2024 1/06/2024 30/11/2023 17/02/2024 28/12/2023 28/12/2023 - - - - - - - - - 19. Performance Rights The Company has the following Performance Rights issued to Directors and staff in existence during the current and prior reporting periods. Class Grant Expiry Opening Date Date balance 1 July 2021 Performance Rights 2022 Granted during the Vested During the Exercised year year A A A B B B 23/11/21 22/11/24 1/05/22 30/04/25 1/06/22 31/05/25 23/11/21 22/11/24 1/05/22 30/04/25 1/06/22 31/05/25 - 5,000,000 - 1,000,000 - 500,000 - 5,000,000 - 1,000,000 500,000 - - - - - - - - - - - - - 50 Torque Metals Limited 30 June 2022 Rights Rights Rights Rights Expired Vested at 30 June 2022 Unvested at 30 June 2022 - - - - - - - 5,000,000 - 1,000,000 - 500,000 - 5,000,000 - 1,000,000 500,000 - Class Grant Expiry Opening Date Date balance 1 July 2020 Performance Rights 2021 Granted during the Vested During the Exercised year year Rights Rights Rights Rights Cancelled Vested at 30 June 2021 Unvested at 30 June 2021 1 1,000,000 1 250,000 2 1,333,333 2 333,333 3 1,666,667 416,667 3 1 4/09/2018 1 11/05/2020 4/09/2018 2 2 11/05/2020 3 4/09/2018 3 11/05/2020 - - - - - - Valuation of the Class A performance rights was undertaken with factors and assumptions being used in determining the fair value of each right on the grant date. Note1 12 months from admission date Note2 24 months from admission date Note3 36 months from admission date Valuation of the he Class B performance rights was undertaken with factors and assumptions being used in determine the fair value of the rights after taking into consideration the drilling and assay results achieved to date. (1,000,000) (250,000) (1,333,333) (333,333) (1,666,667) (416,667) - - - - - - - - - - - - - - - - - - 2022 Class A Finch, Burke, Lofthouse, McKay A Moreno A Meshesha Total Class A B Finch, Burke, Lofthouse, McKay B Moreno B Meshesha Total Class B TOTAL Number Fair Grant Date Value S Expiry Date Expense During the Period 757,650 23/11/2021 22/11/2024 129,528 5,000,000 1,000,000 500,000 6,500,000 5,000,000 1,000,000 500,000 127,090 63,545 948,285 1 /05/2022 1/06/2022 30/04/2025 31/05/2025 6,964 1,827 1,277,500 23/11/2021 1 /05/2022 230,000 22/11/2024 30/04/2025 115,000 1/06/2022 31/05/2025 54,000 138,319 573,750 103,500 6,500,000 1,622,500 13,000,000 2,570,785 731,250 869,569 Performance Valuation Directors/CFO Tranche Exercise Price Grant Date 23/11/21 Value per PR $0.15153 5,000,000 Number of PRs Vesting Date 22/11/24 P.R. Hurdle CEO A nil Other Directors/CFO Other Total CEO B nil 1/05/22 $0.12709 1,000,000 1/06/22 $0.1380 500,000 23/11/21 $0.25 5,000,000 1/05/22 $0.23 1,000,000 1/06/22 $0.24 500,000 13,000,000 30/04/25 31/05/25 22/11/24 40 cents 30/04/25 250,000 Oz JORC 31/05/25 51 Torque Metals Limited 30 June 2022 20. Accumulated Losses Opening Balance Net Loss attributable to members Closing Balance 30 June 2022 $ 30 June 2021 $ (2,468,848) (2,154,504) (648,822) (1,820,026) (4,623,352) (2,468,848) 21. Financial Risk Management 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 board’s policy requires that surplus funds are only invested with counterparties with a Standard & Poor’s rating of at least A+. 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. 52 Torque Metals Limited 30 June 2022 Maturity profile of financial instruments The following tables detail the Company’s exposure to interest rate risk as at 30 June 2022 and 30 June 2021: 30 June 2022 Financial Assets Cash and Cash Equivalents Trade and Other Receivables Weighted average effective interest rate Financial Liabilities Trade and Other Payables Lease Liabilities 30 June 2021 Financial Assets Cash and Cash Equivalents Trade and Other Receivables Weighted average effective interest rate Financial Liabilities Trade and Other Payables Floating Interest Rate $ Fixed Interest Maturing in 1 year or less $ - - - nil - 60,869 60,869 - - - - - - Floating Interest Rate $ Fixed Interest Maturing in 1 year or less $ - - - nil - - - - - - - Non Interest Bearing $ 3,440,943 21,893 3,462,836 2022 Total $ 3,440,943 21,893 3,462,836 302,880 - 302,880 302,880 60,869 363,749 Non Interest Bearing $ 5,084,472 37,108 5,121,580 2021 Total $ 5,084,472 37,108 5,121,580 769,920 769,920 769,920 769,920 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 2022 2021 Carrying Value $ Net Fair Value $ Carrying Value $ Net Fair Value $ 3,440,943 21,893 3,462,836 3,440,943 21,893 3,462,836 5,084,472 37,108 5,121,580 5,084,472 37,108 5,121,580 302,880 60,869 302,880 60,869 769,920 - 769,920 - 53 Torque Metals Limited 30 June 2022 363,749 363,749 769,920 769,920 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 22. 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 30 June 2022 $ 34,409 (34,409) 34,409 (34,409) 30 June 2021 $ 50,845 (50,845) 50,845 (50,845) (2,154,504) (1,820,025) (2,154,504) (1,820,025) 65,318,519 43,985,566 23. 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 54 Torque Metals Limited 30 June 2022 30 June 2022 $ 1,010,534 3,373,764 3,531,823 7,916,121 30 June 2021 $ 1,010,534 3,280,468 4,138,600 8,429,602 The Company currently has commitments in excess of cash, however the Board believes will be able to raise the additional funds to satisfy the commitments for the future. 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. Tenement Capital Commitments Not longer than one year 30 June 2022 $ 30 June 2021 $ - 50,000 24. Operating Segments The Company operates in Western Australia, Australia. 25. Contingencies The directors are not aware of any contingent liabilities or assets as at 30 June 2022. 26. Events after the reporting period No material event has occurred after the reporting period. 55 Torque Metals Limited 30 June 2022 Additional Shareholders Information Information required by Australian Stock Exchange Limited and not shown elsewhere in this Annual Report is as follows. The information is provided as at 20 September 2022. DETAILS OF HOLDERS OF EQUITY SECURITIES ORDINARY SHAREHOLDERS There are 77,818,519 fully paid ordinary shares on issue, held by 407 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 20 SEPTEMBER 2022 Rank Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 AUSTRAL PACIFIC PTY LTD TURF MOOR PTY LTD MR TSHUNG HUI CHANG MR PHILLIP RICHARD PERRY MR DARREN CARTER TWO TOPS PTY LTD JOJO ENTERPRISES PTY LTD BEARAY PTY LTD INJI INVESTMENTS PTY LTD BLUE COASTERS PTY LTD FAIRBROTHER HOLDINGS PTY LTD OCEAN REEF HOLDINGS PTY LTD MANDOLIN NOMINEES PTY LTD ATKINS SUPERANNUATION FUND PTY LTD CERTANE CT PTY LTD KHE SANH PTY LTD MR SEAGER REX HARBOUR OCEANIC CAPITAL PTY LTD LADYMAN SUPER PTY LTD FLOREANT AMBO PTY LTD Units 5,820,000 5,000,000 3,352,500 2,964,697 2,850,000 1,750,000 1,625,000 1,492,537 1,405,000 1,250,000 1,250,000 1,250,000 1,150,000 1,000,000 850,000 850,000 840,000 797,323 773,134 750,000 % of Units 7.48 6.43 4.31 3.81 3.66 2.25 2.09 1.92 1.81 1.61 1.61 1.61 1.48 1.29 1.09 1.09 1.08 1.02 0.99 0.96 Totals: Top 20 holders of TOR ORDINARY FULLY PAID Total Remaining Holders Balance Total Holders Balance 37,020,191 40,798,328 77,818,519 47.57% 52.43% 100% Stock Exchange Information as at 20 September 2022 DISTRIBUTION OF SHAREHOLDER 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - and over TOTAL NUMBER OF HOLDERS NUMBER OF UNITS 13 37 39 180 138 407 3,134 132,682 328,966 8,890,827 68,462,910 77,818,519 % TOTAL ISSUED ISSUED CAPITAL 0.00% 0.17% 0.42% 11.43% 87.98% 100% As at report date, the following shareholders are recorded as Substantial Shareholders 7.48% 6.43% Austral Pacific Pty. Ltd. Turf Moor Pty. Ltd. 5,820,000 5,000,000 VOTING RIGHTS 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; 56 Torque Metals Limited 30 June 2022 (b) of a shareholder has one vote; and (c) on a show of hands, every person present who is a shareholder or a proxy, attorney or representative 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 19 shareholders who hold less than a marketable parcel of shares. UNLISTED OPTIONS Date Number Entity Terms 28/7/2020 23/12/2020 1,000,000 Martin Place Securities Pty. Ltd. 2,250,000 Seed Capital 30 cents 3years to 27 July 2023 25 cents 3 years to 22 Dec 2023 2/6/2021 2/6/2021 3,875,000 Zenix Nominees Pty. Ltd. 5,500,000 Zenix Nominees Pty. Ltd. 27.5 cents 3 years to 1 June 2024 30 cents 3 years to 1 June 2024 1/12/2021 12,634,092 Shareholder Entitlement 2,000,000 Zenix Nominees Pty. Ltd. 18/2/2022 30 cents 3 years to 30 November 2023 30 cents 2 years to 17 February 2024 Date Number Entity Terms 29/6/2022 29/6/2022 29/6/2022 3,000,000 Zenix Nominees Pty. Ltd. 750,000 Harshell Investments Pty Ltd 25,000 Porites Pty. Ltd. 30 cents 18 months to 28 December 2024 30 cents 18 months to 28 December 2023 30 cents 18 months to 28 December 2023 Total 38,509,092 SHARE BUY-BACKS There is no current on-market buy-back scheme. OTHER INFORMATION Torque Metals Limited is incorporated and domiciled in Australia and is a Public Listed Company limited by Shares. 57 Torque Metals Limited 30 June 2022 Tenements INTEREST IN MINING TENEMENTS as at 20 September 2022 Tenement Project Name Registered Holder M 15/1175 M 15/479 M 15/480 M 15/481 M 15/482 M 15/496 M 15/497 M 15/498 M 15/1719 P 15/5992 P 15/6149 E 15/1736 E 15/1747 E 15/1752 E 77/2522 E 77/2222 E 77/2251 E 77/2350 E 77/2607 Paris Gold Paris Gold Paris Gold Paris Gold Paris Gold Paris Gold Paris Gold Paris Gold Paris Gold Paris Gold Paris Gold Paris Gold Paris Gold Paris Gold Bullfinch Bullfinch Bullfinch Bullfinch Bullfinch Torque Metals Ltd Torque Metals Ltd Torque Metals Ltd Torque Metals Ltd Torque Metals Ltd Torque Metals Ltd Torque Metals Ltd Torque Metals Ltd Torque Metals Ltd Torque Metals Ltd Torque Metals Ltd Jindalee Resources Ltd* Jindalee Resources Ltd* Jindalee Resources Ltd* Torque Metals Ltd Torque Metals Ltd Torque Metals Ltd Torque Metals Ltd Torque Metals Ltd Beneficial Interest 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 0% 0% 0% 100% 100% 100% 100% 100% *Jindalee Resources Ltd = first year farm-in earning interest Torque Metals Limited is the Manager of all Tenements P: Prospecting Licence E: Exploration Licence M: Mineral Licence 58 Torque Metals Limited 30 June 2022 

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