Varian Medical Systems Inc.
Annual Report 2022

Plain-text annual report

ASX Announcement – 31 October 2022 2022 ANNUAL REPORT Variscan Mines Limited ("Variscan" or the "Company" or the “Group”) (ASX:VAR) is pleased to attach the Annual Report for the year ending 30 June 2022. ENDS For further information: Variscan Mines Limited Stewart Dickson T: +61 8 9316 9100 E: info@variscan.com.au This announcement has been authorised for issue by Mr Mark Pitts Company Secretary, Variscan Mines Limited. Notes Variscan Mines Limited (ASX:VAR) is a growth oriented, natural resources company focused on the acquisition, exploration and development of high quality strategic mineral projects. The Company has compiled a portfolio of high-impact base-metal interests in Spain, Chile and Australia. The Company’s name is derived from the Variscan orogeny which was a geologic mountain building event caused by Late Paleozoic continental collision between Euramerica (Laurussia) and Gondwana to form the supercontinent of Pangea. ASX:VAR Web - www.variscan.com.au Annual Report 2022 ABN 87 095 092 158 DIRECTORS Dr Foo Fatt Kah Non-Executive Chairman Mr Stewart Dickson Managing Director & CEO Mr Michael Moore Non-Executive Director Mr Nicholas Farr-Jones AM Non-Executive Director Dr Frank Bierlein* Non-Executive Director Mr Anthony Wehby* Non-Executive Director COMPANY SECRETARY Mr Mark Pitts REGISTERED OFFICE Suite 8, 7 The Esplanade Mount Pleasant WA 6153 Australia Telephone: +61 8 9316 9100 Email: info@variscan.com.au Website: www.variscan.com.au SHARE REGISTRY Boardroom Pty Ltd GPO Box 3993 Sydney NSW 2001 Australia Telephone: +61 2 9290 9600 AUDITORS HLB Mann Judd (WA) Partnership Level 4, 130 Stirling Street Perth WA 6000 Australia Telephone: +61 8 9227 7500 SECURITIES EXCHANGE LISTING Variscan Mines Limited’s shares are listed on the Australian Securities Exchange (ASX: VAR) * Directors appointed subsequent to the end of the Financial Year on 20 October 2022 2 VARISCAN MINES Annual Report 2022 Contents Corporate Directory Chairman’s Letter Operational Review Directors’ Report Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement Of Cash Flows Consolidated Statement Of Changes In Equity Notes To The Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report ASX Additional Information 2 4 6 18 34 35 36 37 38 39 65 66 70 VARISCAN MINES Annual Report 2022 3  Chairman’s Letter Chairman’s Letter Variscan Mines has achieved a host of development milestones over the year, culminating in the recent release of a JORC exploration target for our Spanish-based Novales-Udias Mine Project. On behalf of your Board of Directors, it gives me great pleasure to Castilla-La Mancha, central Spain. These assays returned high- present the annual report of Variscan Mines Limited (“Variscan” grade zinc, lead and silver results. or “the Company”) for the year ended 30 June 2022. Looking ahead, the coming 12 months will see Variscan enter the Over the course of this year, the Variscan team has worked next stage of its stepwise exploration and development strategy hard to prove up the prospectivity of our Spanish assets. These for its Spanish assets. sustained efforts are headlined by the announcement, made just after year end, of a sizable preliminary JORC Exploration Target for our Zinc-Lead Novales-Udias Project. While the potential quantity and grade of this Exploration Target is conceptual in nature, it indicates the potential for a mid-to-large scale, high- grade deposit at this promising asset. At San Jose, underground and surface drilling campaigns are being planned. We are now working on the delivery of approvals to undertake further surface drilling in and around the historic mine and the start-up of a Phase 3 underground infill and resource definition drilling program. The Company is, at the same time, also working towards the publication of a focussed The delivery of this JORC Exploration Target would not have JORC compliant Mineral Resource Estimate and the completion been possible without the successful completion of multiple of a Mine Re-Start Concept Study for the San Jose Mine. exploration programs at the Novales-Udias Project, where the historic San Jose Mine is located, over the past 12 months. Amid this hive of exploration activity, Variscan has maintained engagement across its environmental, social and governance At the start of the year, we undertook a structural mapping (“ESG”) responsibilities. Recent activities have included survey at the San Jose Mine which, whilst confirming existing supporting the Novales Lemon Fiesta and employing local staff drill targets, also identified 18 additional infill and step-out drill within all areas of the Company. targets. On the back of these results, the Company commenced a Phase 2 underground drilling campaign which subsequently confirmed the discovery of multiple stacked lenses of high-grade zinc mineralisation in the Southwest Zone and Los Caracoles Trend of the San Jose Mine, separate from the Central Zone reported previously. During this year past, we have unambiguously succeeded in identifying and discovering near-term zinc production opportunities and mineral resources at our projects in Spain. I wish to express my heartfelt gratitude to our Board of Directors, service providers and all our staff for their hard work and persistence in a year where we have made solid progress - not Assay results from the Phase 2 drilling programme started to only in our exploration activities, but also as a company. We will flow through from late in the Company’s third quarter, with more continue to change and evolve as necessary to put our company successful results being announced to the market after the end of the financial year. These assays have effectively expanded in the best possible position to optimise shareholder value from the resources we have identified. With our outstanding team and new areas of high-grade zinc mineralisation in the Central Zone supportive shareholders, I have every confidence that Variscan’s of San Jose. future will be as exciting as it will be successful. We commenced surface drilling upon the Buenahora Exploration Yours sincerely Licence after receiving our surface drilling permits from the Government of Cantabria’s Department of Mines during the fourth quarter of the financial year. This drill campaign is currently on-going, and we look forward to updating the market as we progress. Outside of our Novales-Udias project, we also announced new high-grade assay results from grab sampling conducted around former mine areas and prospects within the Guarajaz Project in Dr Foo Fatt Kah Chairman 4 VARISCAN MINES Annual Report 2022  VARISCAN MINES Annual Report 2022 5  Operational Review Operational Review f Group Highlights – Year in Review It is my pleasure to report that the development of Variscan Mines’ highly prospective Spanish assets have been materially advanced over the Company’s financial year ended 30 June 2022. A run of highly successful exploration activities over the past 12 months underwrote this success, which, just after the end of the financial year, culminated in the delivery of a sizable, preliminary JORC Exploration Target for the Novales-Udias Project. The latter announcement took Variscan much closer to its target of creating a regionally significant mineral resource. f Spain Novales-Udias project (Cantabria, northern Spain) The Novales-Udias project has been the Company’s main effort during the reporting period. Our work programme has advanced the project towards our stated objective of seeking early production opportunities. Figure 1. Simplified Lithology of the Novales-Udias Project and proximity of the Reocin Mine & San Juan de Nieva Smelter 6 VARISCAN MINES Annual Report 2022  Operational Review In late July 2022, the Company released details of a sizable, preliminary JORC Exploration Target defined for its Novales-Udias Project (See ASX announcement, dated 28 July 2022). Although conceptual in nature, this Target indicates the potential for a mid-to-large scale, high-grade deposit. The following table outlines the Target’s range and tonnage parameters. Range Lower Estimate Upper Estimate Tonnage (Mt) Zinc (%) Lead (%) 16.5 34 6.3 9.1 1.1 1.8 The potential quantity and grade of the Exploration Target is conceptual in nature. There has been insufficient exploration to estimate a Mineral Resource for all target areas reported. It is uncertain if further exploration will result in the estimation of a Mineral Resource. The Exploration Target has been prepared and reported in accordance with the 2012 edition of the JORC Code. Figure 2. Plan view of Novales-Udias Project with Exploration Target areas (red) VARISCAN MINES Annual Report 2022 7  Operational Review Putting this Target in perspective, a benchmarking exercise against a selection of other publicly reported Zinc (Zn)-Lead (Pb) Exploration Targets suggests the Novales-Udias Project has significant potential for a Mineral Resource over a mid-to-large scale, high-grade deposit. Ongoing exploration is planned to test this target. Figure 3. Historical Mine and Workings Locations Over the Novales-Udias Project Delivery of the preliminary JORC Exploration Target for Novales- Udias just after year’s end was made possible by a range of exploration activities at this Project over the course of the year. These mostly revolved around the Phase 2 drill campaign that got underway earlier in the year. It saw Variscan enter another exciting phase of fieldwork at San Jose. During the third quarter, Variscan announced to the market that drill results from the Phase 2 programme had continued to deliver high-grade discoveries beyond historical mine workings at San Jose (See ASX announcement dated 15 March 2022). This simultaneously expanded zones of mineralisation and created new opportunities to expand tonnages by connecting mineralised trends within the deposit. 8 VARISCAN MINES Annual Report 2022  Operational Review Figure 4. Plan view of selected mineralised intersections from drilling in the 168 Trend and the Los Caracoles Trend The prospectivity uplift provided by these results was highly significant - prior to the commencement of underground exploration drilling by Variscan, the existence of these lower mineralised lenses was completely unknown. The continuing occurrences of high- grade zinc mineralisation immediately below the main gallery level in multiple sections of the mine is very important for defining the Company’s high-grade inventory and future development scenarios. Earlier in the year, Variscan identified new zones of high-grade zinc mineralisation in the Central Zone of the San Jose Mine from its underground drilling programs (See ASX announcement dated 20 December 2021). These findings continued to demonstrate the potential for more high-grade discoveries beyond the historical mine workings. They also far exceeded our original expectations. VARISCAN MINES Annual Report 2022 9  Operational Review In August 2021, results from underground drilling undertaken ahead of the Phase 2 drill campaign confirmed the discovery of multiple stacked lenses of high-grade zinc mineralisation in the South West Zone and Los Caracoles Trend of the San Jose Mine, separate from the Central Zone reported previously (See ASX announcement dated 4 August 2021). In addition, the discovery of new high-grade mineralised lenses above and below the main gallery in two distinct areas of the mine hinted at its considerable scale and tonnage potential. Figure 5. Diamond Drill Core from NOVDD058 in SW Zone illustrating massive sphalerite in dolostone Note: Hole depth shown from 9.7m to 23.4m 10 VARISCAN MINES Annual Report 2022  Operational Review Buenahora Exploration License (Cantabria, northern Spain) The Buenahora Exploration License is within the Novales-Udias Zn-Pb Project in northern Spain. Exploration activities undertaken during the year at this exciting prospect have backed our belief that mineralisation in Novales-Udias extends well beyond the historic San Jose mine. During the fourth quarter, Variscan detected multiple new, extensive and intense chargeable bodies in a 12-line Direct Current Induced Polarization (DCIP) survey over the Buenahora Exploration License (See ASX announcement dated 4 May 2022). These comprised strong, undrilled, chargeability anomalies that were near surface with potential for additional targets at depth due to the strata bound, vertically-stacked nature of orebodies in the district. The expectation is that high priority targets will yield a number of new discoveries. The quantity and quality of targets derived from this survey added further scale potential to this highly prospective licence area. Figure 6. Location of DCIP survey lines over the Buenahora Exploration Licence In the very same quarter, Variscan commenced surface drilling on the Buenahora Exploration Licence (See ASX announcement dated 11 May 2022). This after the award of the ‘licencia de actividad’ from the local municipal authority, which gave Variscan approval for an initial surface drill program of up to 50 drillholes. This diamond drilling campaign is expected to comprise over 2,000 drill-metres. The immediate exploration strategy is to focus on targets that have the potential to deliver regionally significant resources (See ASX announcement dated 20 October 2021). Specifically, drilling will target: 1. Interpreted anomalous chargeability zones derived from recent DCIP survey results; 2. Zinc-rich mineralization adjacent to known historical mine workings; and 3. New discoveries in untested areas of the licence area. This drill campaign directly supports a key stated objective of Variscan’s exploration plan, which is to define a regionally significant mineral resource similar in size and grade to the former producing and proximal Reocín Mine. We will be testing for zinc mineralization along strike and at depth over the 9km Novales Trend and 3km sub-parallel mineral trend over the Novales-Udias Project area. The strong working relationship we built with the Government’s Department of Mines over the course of surface drilling license approval process has been a definite positive. We will continue to work closely with the Department over time Variscan progresses the Project’s development. VARISCAN MINES Annual Report 2022 11  Operational Review Guarajaz Project (central Spain) While the Novales-Udias Project remains our immediate and main focus, Variscan is undertaking targeted efforts aimed at proving up the prospectivity of the Guarajaz Project, located in Castilla-La Mancha (central Spain) (See ASX announcement dated 27 September 2021). Very little exploration work has been undertaken in this license area for nearly 40 years. Late in the Company’s first quarter of the financial year, the Company announced that assay results from grab samples collected during follow-up geological field work at Variscan’s zinc-rich polymetallic Guarajaz Project had returned high-grade zinc, lead and silver results. These demonstrated excellent potential for the recently identified drill targets to have good depth extensions and to aggregate into a substantial strike-extensive mineralised systems. Figure 7. Plan view of Guarajaz project area showing new grab sample assay results for zinc, lead and silver Variscan believes Guarajaz represents an excellent, de-risked brownfield polymetallic project. Reflective of this belief in the prospectivity of this Project, the Company filed an application with the authorities in Castilla-La Mancha during the year for a 3-year extension of the current exploration licence over the Guarajaz tenement area. Variscan Mines’ local Spanish subsidiary, Variscan La Mancha, has already validly fulfilled the requirements for an extension to the exploration permit, the initial 3 year term of which expired during the year. From the expiry date to the official extension date, the title is valid. 12 VARISCAN MINES Annual Report 2022  Operational Review f Chile The Rosario Project is located approximately 120 kilometres by road east of the port city of Chanaral in the Atacama Region of northern Chile. Chile is a proven mining jurisdiction and is the largest producer of copper globally. The Rosario project lies about 20 kilometres north of the El Salvador mine (owned by Codelco). It is one of the country’s larger copper operations, within a region of dense mining activity (all scales) and a good copper endowment. The Rosario Project comprises three granted exploitation concessions, Rosario 6, Rosario 7 and Salvadora, one granted mineral exploration licence (Abandonara) and an exploration concession under application (Rosario 101). These concessions cover two outcropping copper trends (Zones A and B) over a combined strike length of approximately 6 kilometres. As a result of the impact of the continuing worldwide COVID-19 pandemic and due to our ongoing focus on our Spanish zinc projects, no significant activities were conducted on the Rosario Project during the year. f Australia Variscan’s Australian-based project was materially downsized in the preceding year. As at the end of the year it held: ▯ A 0.5% net profits royalty on production from a uranium mine on the Junction Dam tenement. ▯ Minority interests in a number of areas of eastern and central Australia. No specific activities were undertaken by Variscan in these areas during FY22 as the Company focussed on its Spanish zinc projects. f COVID-19 While disruptions caused by the ongoing global COVID-19 pandemic became less severe during the year, the Board, management and the entire Variscan team remain vigilant. Variscan continues to adopt a proactive and pragmatic approach and remains ready to fully comply with any shifts in regulations aimed at safeguarding the health of our staff and contractors as well as the local communities. We currently anticipate that all existing exploration programmes will be completed on schedule. VARISCAN MINES Annual Report 2022 13  Operational Review f Looking ahead Exploration activities across Variscan’s Spanish assets have continued at pace over the early part of the Company’s 2023 financial year. Figure 8. Diamond drillcore from NOVDD108 illustrating massive sphalerite in dolostone. Note: Hole depth shown from 5.40m to 16.90m, hole 108. 14 VARISCAN MINES Annual Report 2022  Operational Review In August 2022, Variscan announced another round of assay results from the now completed, highly successful Phase 2 underground drilling programme at the San Jose Mine (See ASX announcements dated 25 August 2022). These continued to expand and infill zones of high-grade zinc mineralisation in the La Caseta Trend within the Central Zone of the San Jose Mine. They additionally linked new richly mineralised intersections in between known areas of workings, indicating continuity within and beyond the La Caseta Trend. There was also an encouraging drill result from step-out testing of adjacent near-surface mines (El Eucaliptal). Figure 9. Cross-section of Stope 191 illustrating new drillhole NOVDD113 and the lower lens of the La Caseta Trend. VARISCAN MINES Annual Report 2022 15  Operational Review This announcement followed earlier positive news coming out of the Phase 2 underground drilling at San Jose Mine (See ASX announcements dated 7 July 2022). These continued to expand zones of high-grade zinc mineralization in the La Caseta and Los Caracoles trends within the Central Zone, extended the 168 Trend, now linking it up with the adjacent richly mineralized La Caseta and Los Caracoles trends and Identified new zones of mineralization in adjacent near-surface mines (Eloisa and El Eucaliptal) stepping out up to 600m from the San Jose Mine, increasing scale potential. Figure 10. Plan view of selected mineralised intersections from drilling in the La Caseta Trend, 168 Trend and the Los Caracoles Trend. 16 VARISCAN MINES Annual Report 2022  Operational Review f Our next steps Further drilling at the San Jose Mine is anticipated as we proceed with mineral resource definition and a Mine Re-Start Concept Study to identify the potential economics and work-streams to support a re-start of initial, small-scale mining at San Jose. Strong news flow is expected over the coming months as results from our drilling and field exploration over Buenahora is combined with drilling and studies on San Jose. Variscan’s immediate focus is progressing with the following activities; all of which are expected to be completed by the end of calendar year 2022: ▯ Returning assay results from the current Buenahora surface drilling campaign together with supplementary exploration results. ▯ Reporting results of underground drilling at the Pepita target within the Buenahora Exploration Licence. ▯ Publishing a focused JORC compliant Mineral Resource estimate for the San Jose Mine. ▯ Reporting a Mine Re-Start Concept Study for the San Jose Mine. ▯ Delivery of approvals to undertake further surface drilling in and around the San Jose Mine to test step-out targets. ▯ Phase 3 underground infill and resource definition drilling at the San Jose Mine. ▯ In support of the above activities, the delivery of associated environmental, social and governance (ESG) initiatives. Recent activities have included supporting the Novales Lemon Fiesta and employing local staff in geological and administrative roles. The giant steps we have made in our development journey over the year would not have been possible without the support of all our stakeholders. I would personally like to thank all our staff for their diligence throughout this period. Their efforts were an integral component of Variscan’s highly successful exploration and development programme over the past 12 months. Also, a big thank you to all shareholders for their ongoing support. And last but not least, I would like to acknowledge the ongoing support given to Variscan by the local communities where our projects are located. We look forward to providing you all with additional updates on our exploration activities as additional milestones in our development strategy are achieved. Stewart Dickson Managing Director & CEO The information in this document that relates to the Exploration Target, Exploration results and technical information about the Novales-Udias project is based on, and fairly represents information and supporting documentation reviewed by by Dr. Mike Mlynarczyk, Principal of the Redstone Exploration Services, a geological consultancy acting as an external consultant for Variscan Mines. Dr. Mlynarczyk is a Professional Geologist (PGeo) of the Institute of Geologists of Ireland, and European Geologist (EurGeol) of the European Federation of Geologists, as well as Fellow of the Society of Economic Geologists (SEG). With over 10 years of full-time exploration experience in MVT-style zinc-lead systems in several of the world’s leading MVT provinces, Dr. Mlynarczyk 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 December 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (‘JORC Code’). Dr. Mlynarczyk consents to the inclusion in the report of the matters based upon the information in the form and context in which it appears. VARISCAN MINES Annual Report 2022 17  Directors’ Report Directors’ Report 18 VARISCAN MINES Annual Report 2022  Directors’ Report f Directors The names and details of the Company’s directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Dr Foo Fatt Kah MB, BCh, BAO, MBA Non-Executive Chairman Michael Moore BEng (Hons), MAusIMM, MAICD Non-Executive Director Dr Foo was appointed a Director of the Company on 7 October Mike was appointed a Non-Executive Director on 4 August 2015. 2009. Dr Foo is the Managing Director and co-founder of Luminor Mike is a mining engineer from the Camborne School of Mines Capital, a private equity fund management company based in with over 20 years of operational and executive management Singapore. He has over 20 years’ experience in the investment experience across a diverse range of commodities in Australia, banking, fund management and advisory businesses spanning Indonesia, West Africa and Europe. Europe and Asia. He was previously Head of Asian Equities for SG Securities Asia (the Asian Investment Banking business for Societe Generale) covering 10 Asian countries. Since 2004 Dr Foo has been active as an investor, overseeing investments in Resources, Energy and Healthcare. Dr Foo is qualified in Medicine (MB, B Ch, BAO) and Business Administration (M.B.A.) from the Queen’s University, United Kingdom, with further continuing education qualifications from Insead on Economic Value Added (EVA) and International Project Management. He has experience with listed companies in Singapore, being previously Executive Director of CyberVillage Holdings Ltd and Lead Independent Director of PEC Ltd. During the past three years Foo Fatt Kah has not served as a director of any other ASX listed company. Stewart Dickson BA (Hons), MBA Managing Director Stewart was appointed a Director of the Company on 1 May 2017. Stewart is an experienced corporate financier with a decade of investment banking experience. Most recently, he was Managing Director and Head of Metals & Mining at Cantor Fitzgerald Europe, based in London. He had responsibility for client coverage of public and private mining companies across precious metals and base metals, bulks, fertilizers and specialty metals. He has a broad range of international financial advisory, equity capital markets and corporate broking transaction experience including initial public offerings, financings and M&A. Prior to investment banking, Mr Dickson served in the British Army as a commissioned officer and saw operational service overseas. Stewart is a graduate of University College London and holds an MBA from Henley Business School. He is currently serving as Managing Director for Golden State Mining Limited (ASX:GSM) and Chairman of First Development Resources Limited. Mike has previously held other senior and executive management roles with several companies, including Rock Australia Mining & Civil Pty Ltd, Carnegie Minerals PLC, and with ASX listed Montezuma Mining Company Ltd where he was the Chief Executive Officer until April 2015. In addition, he served for 3 years on the board of Cape Care, a not-for-profit aged care provider in Western Australia. Mike is a member of the Australian Institute of Company Directors and the Australian Institute of Mining and Metallurgy. During the past three years, with the exception of Golden State Mining Limited as noted above, Michael Moore has not served as a director of any other ASX listed companies. Nicholas Farr-Jones AM LLB Non-executive Director Nick was appointed a Non-Executive Director on 1 July 2021. Nick has over 25 years of experience in the global mining sector as a specialist in natural resources investment and corporate governance. Additionally, he is an experienced public company director. Nick qualified as a lawyer before pursuing a career in investment banking. Notably he was responsible for the metal derivative business of Societe Generale in Europe and Africa before leading its commodity finance business in Australia. He is currently a Director of Taurus Funds Management, headquartered in Sydney, which specialises in bespoke financing solutions for global mid- tier and junior mining companies. Nick also holds a number of charitable appointments and is a highly regarded speaker on He was appointed as a Non-Executive Director of Trans-Siberian leadership. He was awarded the Order of Australia in 1992 for Gold plc on 19 September 2017, a gold producer listed on the AIM services to rugby union, having captained the Australian rugby market of the London Stock Exchange. team to World Cup success in 1991. During the past three years Stewart Dickson has not served as a During the past three years Nicholas Farr-Jones has not served director of any other ASX listed company. as a director of any other ASX listed company. VARISCAN MINES Annual Report 2022 19  Directors’ Report f Directors (continued) Mark Pitts BBus, FCA, GAICD Company Secretary Mark was appointed Company Secretary of the Company on 2 March 2018. Mark is a Fellow of Chartered Accountants Australia and New Zealand and a graduate member of the Australian Institute of Company Directors. He has more than 30 years’ experience in statutory reporting and business administration. Mark has been directly involved with and consulted to a number of public companies holding senior financial management positions. He is a Director of the corporate advisory firm Endeavour Corporate providing company secretarial support, corporate and compliance advice to a number of ASX listed public companies. 20 VARISCAN MINES Annual Report 2022  Directors’ Report f Directors’ Interests As at the date of this report, the interests of the Directors in the shares, options and performance rights of Variscan Mines Limited were: Number of securities held directly and indirectly Director Dr Foo Fatt Kah Mr Stewart Dickson Mr Michael Moore Mr Nicholas Farr-Jones Ordinary shares 5,018,107 7,330,772 793,786 1,135,544 Options 3,000,000 5,000,000 3,000,000 750,000 Performance Rights - 2,500,000 - - f Principal activities The principal continuing activity of the Group is the exploration for economic metal and mineral deposits. f Results The net result of operations of the Group after applicable income tax was a loss of $827,051 (2021: $684,613). Included in this result is the amount for share-based payments for the year of $191,175 (2021: $183,246). f Dividends No dividends were paid or proposed during the year. f Review of operations Group Overview During the financial year, the Group’s operations have been focused on the exploration of its wholly owned Zinc projects in Spain. In addition, the Group is continuing to investigate its Rosario Copper project in Chile and holds a number of minor interests in Australian mineral tenements. Board & Management Changes During the year, there have been no changes to the Board of Directors, nor senior management. VARISCAN MINES Annual Report 2022 21  Directors’ Report Impact of COVID-19 Pandemic During the previous financial year, as a result of the improvement in conditions worldwide, the Group had resumed its exploration operations, while still maintaining appropriate health and safety measures to ensure the wellbeing of its staff, contractors, and suppliers. These measures have continued throughout the financial year ended 30 June 2022. f Significant changes in the state of affairs The Directors are not aware of any significant changes in the state of affairs of the Group occurring during the financial period, other than as disclosed in this report. f Significant events after the reporting date There were, at the date of this report, no matters or circumstances which have arisen since 30 June 2022 that have significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years. f Indemnification and insurance of directors and officers The Company has not, during or since the end of the financial period, in respect of any person who is or has been an officer of the Company or a related body corporate, indemnified or made any relevant agreement for indemnifying against a liability incurred as an officer, including costs and expenses in successfully defending legal proceedings. The Company maintains adequate Directors and Officers insurance coverage. f Insurance premiums During the financial period the Company has paid premiums to insure each of the directors and officers against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director or officer of the Company, other than conduct involving a wilful breach of duty in relation to the Company. The premiums paid are not disclosed as such disclosure is prohibited under the terms of the contract. 22 VARISCAN MINES Annual Report 2022  Directors’ Report f Likely developments and expected results As the Group’s mineral projects are at an early stage of exploration, it is not possible to postulate likely developments and any expected results. f Shares under option or issued on exercise of options Details of unissued shares or interests under option for Variscan Mines Limited as at the date of this report are: Exercise Price of Option Expiry Date of Options Class of Share received upon exercise Number of Shares under option $1.00 $0.055 $0.065 $0.080 $0.12 $0.095 $0.10 $0.11 20 November 2022 30 November 2023 30 November 2023 30 November 2023 30 September 2024 30 November 2023 30 November 2023 30 November 2023 ORD ORD ORD ORD ORD ORD ORD ORD 500,000 4,000,000 4,000,000 4,000,000 2,500,000 1,500,000 1,500,000 1,500,000 13,000,000 Details of performance rights issued to the Company’s managing director as at the date of this report are: Performance Condition Expiry Date of Rights Class of Share received upon vesting Number of Rights Continuous service until 30 November 2021 Continuous service until 30 November 2022 30 November 2023 30 November 2023 ORD ORD 1,250,000 1,250,000 2,500,000 The first tranche of the Managing Director performance rights, including the performance condition to remain in continuous service until 30 November 2021, have now vested and are exercisable at any point until the expiry date. The holders of these options and performance rights do not have the right, by virtue of the option or performance rights, to participate in any share issue of the Company or of any other body corporate or registered scheme. Refer to the Remuneration Report and Notes 11 & 12 to the financial statements for further details of the options and rights outstanding. VARISCAN MINES Annual Report 2022 23  Directors’ Report f Remuneration report (audited) This remuneration report for the year ended 30 June 2022 outlines the remuneration arrangements of the Group in accordance with the requirements of the Corporations Act 2001 (the Act) and its regulations. This information has been audited as required by section 308(3C) of the Act. The remuneration report details the remuneration arrangements for key management personnel (KMP) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company. f Details of key management personnel Details of KMP of the Group are set out below: Directors Dr Foo Fatt Kah Stewart Dickson Mike Moore Non-Executive Chairman Managing Director & CEO Non-Executive Director Nicholas Farr-Jones Non-Executive Director (appointed 1 July 2021) Dr Susan Vearncombe Non-Executive Director (appointed 21 August 2020, resigned 30 June 2021) Mark Pitts Company Secretary f Remuneration philosophy The objective of the Company’s remuneration framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of These criteria result in a framework which can be used to provide strategic objectives and the creation of value for shareholders. a mix of fixed and variable remuneration, and a blend of short- The Board believes that executive remuneration satisfies the and long-term incentives in line with the Company’s limited following key criteria: financial resources. ▯ Competitiveness and reasonableness; ▯ Acceptability to shareholders; ▯ Performance linkage/alignment of executive compensation; ▯ Transparency; and ▯ Capital management. Fees and payments to the Company’s Non-Executive Directors and Senior Executives reflect the demands which are made on, and the responsibilities of, the Directors and the senior management. Such fees and payments are reviewed annually by the Board. The Company’s Executive and Non-Executive Directors, Senior Executives and Officers are entitled to receive options under the Company’s Employee Share Option Plan (“ESOP”). 24 VARISCAN MINES Annual Report 2022  Directors’ Report f Non-Executive Directors remuneration arrangements Directors are entitled to remuneration out of the funds of the Company but the remuneration of the Non-Executive Directors (NED) may not exceed in any year the amount fixed by the Company in general meeting for that purpose. The aggregate remuneration of the NEDs has been fixed at a The Chairman’s fee is set at $50,000 p.a. and NED fees at $36,000 maximum of $250,000 per annum to be apportioned among the p.a. which are consistent with industry average fees. At present, NEDs in such a manner as the Board determines. Directors are no Committee fees are paid to Directors. also entitled to be paid reasonable travelling, accommodation and other expenses incurred in consequence of their attendance at Board meetings and otherwise in the execution of their duties as Directors. f Use of remuneration consultants No remuneration consultants were engaged during the years ended 30 June 2021 or 30 June 2022. f Performance on shareholder wealth In considering the Group’s performance and benefits for shareholder wealth, the Board have regarded the following indices in respect of the current and previous four financial years: Performance Condition 2021 2020 Loss per share (cents) (0.31) (0.32) 2019 (0.76) 2018 2017 (1.76) (19.40) Net loss ($) (827,051) (684,613) (1,125,142) (451,709) (6,997,545) Share Price at 30 June $0.025 $0.075 $0.016 $0.030 $0.060 Remuneration is most directly linked to performance of shareholder wealth through the use of share options and performance rights as noted on pages 12 and 13 below. f Service agreements Remuneration and other terms of engagement for key management personnel are formalised in contractor agreements. Details of these arrangements are set out below: Managing Director – Stewart Dickson: ▯ Contract term: No fixed term. Either party may terminate the letter of employment with six months’ notice. ▯ Remuneration: £132,500 p.a. plus VAT as applicable (2021: £132,500 p.a. plus VAT as applicable) as at 30 June 2022. ▯ Termination payments: Nil. VARISCAN MINES Annual Report 2022 25 e c n a m r o f r e P l a t o T e c n a m r o f r e P s n o i t p O n o i t a u n n a r e p u S i e c v r e s g n o L - t r o h s r e h t O g n i t l u s n o C s t n e m y a p d e s a b - e r a h S ) a ( - t s o P t n e m y o p m e l m r e t - g n o L s t fi e n e b m r e T t r o h S e v a e l s t fi e n e b m r e t s e e f Directors’ Report d e s a b $ - - - - - - - - $ 6 0 9 , 7 7 s t h g i r $ - $ 6 0 9 , 7 2 1 7 7 , 9 9 2 7 1 9 , 1 3 8 0 7 , 6 4 6 0 9 , 3 6 0 5 2 0 5 , - - 6 0 9 , 7 2 0 5 2 4 1 , 3 3 8 , 1 9 4 7 1 9 , 1 3 0 7 7 , 6 1 1 6 0 9 , 1 8 6 0 9 , 1 8 - - 6 0 9 , 7 2 6 0 9 , 7 2 9 3 7 , 3 7 5 7 1 9 , 1 3 6 7 6 4 4 1 , $ - - - - - - - - $ - - - - - - - - $ - - - - - - - - $ - & y r a a S l s e e f $ 0 0 0 0 5 , 6 4 1 , 1 2 2 - - - 0 0 0 , 6 3 0 0 0 , 6 3 s r o t c e r i D o o F K F n o s k c D S i e r o o M M s e n o J - r r a F N 6 4 1 , 1 2 2 0 0 0 2 2 1 , l a t o t - b u S - - 0 0 0 4 5 , 0 0 0 4 5 , P M K r e h t O l a t o t - b u S s t t i P M 6 4 1 , 1 2 2 0 0 0 6 7 1 , n o i t a r e n u m e R l a t o T . s n o i t i d n o c g n i t s e v r i e h t h t i w e c n a d r o c c a n i t s e v o t e u n i t n o c h c h w i , s r a e y s u o i v e r p g n i r u d d e u s s i s t h g i r d n a s n o i t p o f o n o i t r o p a s e d u c n l I ) a ( : e r a p u o r G e h t f o l e n n o s r e p t n e m e g a n a m y e k r e h t o d n a y n a p m o C e h t f o r o t c e r i d h c a e f o n o i t a r e n u m e r e h t f o t n e m e e r o a m h c a e f o t n u o m a d n a e r u t a n e h t f o s l i a t e D j l 2 2 0 2 e n u J 0 3 d e d n e r a e y e h t r o f n o i t a r e n u m e r P M K d n a s r o t c e r i D f 26 VARISCAN MINES Annual Report 2022 e c n a m r o f r e P l a t o T e c n a m r o f r e P s n o i t p O n o i t a u n n a r e p u S i e c v r e s g n o L - t r o h s r e h t O g n i t l u s n o C s t n e m y a p d e s a b - e r a h S ) a ( - t s o P t n e m y o p m e l m r e t - g n o L s t fi e n e b m r e T t r o h S e v a e l s t fi e n e b m r e t s e e f Directors’ Report d e s a b $ - - - - - - - - - $ 8 4 1 , 8 7 s t h g i r $ - $ 8 4 1 , 8 2 8 4 1 , 4 6 0 2 6 , 2 8 9 8 , 8 5 - - - 8 4 1 , 8 2 - 8 4 1 , 8 2 1 7 1 , 2 7 4 8 8 7 , 0 3 , 2 1 3 4 2 1 7 5 3 , 8 6 2 8 8 7 , 0 3 ) b ( 8 6 8 , 9 3 8 4 1 , 6 7 8 4 1 , 6 7 - - 8 4 1 , 8 2 8 4 1 , 8 2 , 9 1 3 8 4 5 8 8 7 , 0 3 0 6 4 2 5 1 , $ - - - - - - - - - $ - - - - - - - - - $ - - - - - - - - - $ - - - - & y r a a S l s e e f $ 0 0 0 0 5 , 0 0 0 , 6 3 0 2 6 , 2 1 0 7 , 7 9 1 - s r o t c e r i D o o F K F n o s k c D S i e r o o M M ) c ( e f y F S 1 0 7 , 7 9 1 0 7 3 9 1 1 , l a t o t - b u S - - 0 0 0 , 8 4 0 0 0 8 4 , P M K r e h t O l a t o t - b u S s t t i P M 1 0 7 , 7 9 1 0 7 3 , 7 6 1 n o i t a r e n u m e R l a t o T 0 5 7 , 0 3 ) d ( e b m o c n r a e V S : e r a p u o r G e h t f o l e n n o s r e p t n e m e g a n a m y e k r e h t o d n a y n a p m o C e h t f o r o t c e r i d h c a e f o n o i t a r e n u m e r e h t f o t n e m e e r o a m h c a e f o t n u o m a d n a e r u t a n e h t f o s l i a t e D j l 1 2 0 2 e n u J 0 3 d e d n e r a e y e h t r o f n o i t a r e n u m e r P M K d n a s r o t c e r i D f . 8 1 0 2 e n u J 0 3 d e d n e r a e y e h t g n i r u d d e u s s i s n o i t p o r o f r a e y l i a c n a n fi s i h t n i d e s i n g o c e r s e s n e p x e e h t s e d u c n l I ) b ( . r a e y e h t g n i r u d d e u s s i s t h g i r d n a s n o i t p o f o n o i t r o p d e t s e v e h t s t n e s e r p e R ) a ( . 1 2 0 2 e n u J 0 3 d e n g i s e r , 0 2 0 2 t s u g u A 1 2 d e t n o p p A i ) d ( . 0 2 0 2 t s u g u A 1 2 d e n g i s e R ) c ( VARISCAN MINES Annual Report 2022 27 2 2 0 2 e n u J 0 3 t a e c n a a B l r e h t o e g n a h c t e N s u n o b s a d e t n a r G e s i c r e x e n o d e u s s i s e r a h S l / 1 2 0 2 y u J 1 t a e c n a a B l Directors’ Report n o i t a n g i s e r n o p u / s n o i t p o f o i t n e m t n o p p a n o p u 7 0 1 , 8 1 0 , 5 2 7 7 , 0 3 3 , 7 6 8 7 , 3 9 7 4 4 5 , 5 3 1 , 1 - - 0 0 0 , 5 2 6 - 4 4 5 , 5 3 1 , 1 - - - - - - - - - - - 7 0 1 , 8 1 0 , 5 2 7 7 , 5 0 7 , 6 6 8 7 , 3 9 7 - - n o s k c D S i e r o o M M o o F K F s e n o J - r r a F N s t t i P M l e n n o s r e P t n e m e g a n a M y e K f o s n o i t c a s n a r t d n a s g n d o h n o i t p O f i l l e n n o s r e P t n e m e g a n a M y e K f o s n o i t c a s n a r t d n a s g n d o h e r a h S f i l 28 VARISCAN MINES Annual Report 2022 l t a e b a s i c r e x e d n a d e t s e V / 2 2 0 2 e n u J 0 3 t a e c n a a B l d e r i p x E / d e s p a L n o i t a r e n u m e r s a d e t n a r G l / 1 2 0 2 y u J 1 t a e c n a a B l 2 2 0 2 e n u J 0 3 n o i t a n g i s e r n o p u i t n e m t n o p p a n o p u , 0 0 0 0 5 2 2 , , 0 0 0 0 0 0 4 , 0 0 0 0 5 7 , , 0 0 0 0 5 2 2 , , 0 0 0 0 5 2 2 , , 0 0 0 0 0 0 , 3 , 0 0 0 0 0 0 , 5 , 0 0 0 0 0 0 , 3 0 0 0 0 5 7 , , 0 0 0 0 0 0 , 3 - ) , 0 0 0 0 0 5 ( - - - 0 0 0 0 5 7 , , 0 0 0 0 0 5 , 1 0 0 0 0 5 7 , 0 0 0 0 5 7 , 0 0 0 0 5 7 , , 0 0 0 0 5 2 2 , , 0 0 0 0 0 0 4 , , 0 0 0 0 5 2 2 , n o s k c D S i e r o o M M o o F K F - s e n o J - r r a F N , 0 0 0 0 5 2 2 , s t t i P M  Directors’ Report f Performance Rights holdings of Key Management Personnel During the previous financial year, 2,500,000 performance rights were issued in two equal tranches of 1,250,000 each to the Company’s CEO and Managing Director, Stewart Dickson, upon the following terms: ▯ Tranche 1: 1,250,000 performance rights vested upon completion of 12 months of continuous service (on 30 November 2021), and are exercisable into ordinary shares in the Company. These rights expire if unexercised on 30 November 2023. ▯ Tranche 2: 1,250,000 performance rights will vest upon completion of 24 months of continuous service (on 30 November 2022), and are exercisable into ordinary shares in the Company. These rights expire if unexercised on 30 November 2023. As the Tranche 1 performance rights have now vested, they are exercisable at the request of the holder at any point until their expiry. There have been no movements in performance rights held during the year. f Compensation options and performance rights granted during the year A total of 4,500,000 unquoted options were granted as compensation during the period to directors and key management personnel, the details of which are as follows: Options - Tranche 4 Options - Tranche 5 Options - Tranche 6 Number of securities granted 1,500,000 1,500,000 1,500,000 Grant date 25 Nov 2021 25 Nov 2021 25 Nov 2021 Vesting condition / date None None None Expiration date Exercise price 30 Nov 2023 30 Nov 2023 30 Nov 2023 $0.095 $0.10 $0.11 VARISCAN MINES Annual Report 2022 29  Directors’ Report The fair value of the options issued as compensation as set out above was determined by reference to the Black-Scholes option pricing model, the key inputs into which and resulting valuation are summarised as follows: Options - Tranche 4 Options - Tranche 5 Options - Tranche 6 Underlying security spot price on date of grant Exercise price Grant date Expiration date Total life (years) Expected volatility Risk-free rate Expected dividend yield Value per security Number of securities Portion vested at balance date Remaining life (years) $0.042 $0.095 25 Nov 2021 30 Nov 2023 2 125% 0.55% - $0.0196 1,500,000 100% 1.42 $0.042 $0.10 25 Nov 2021 30 Nov 2023 2 125% 0.55% - $0.0191 1,500,000 100% 1.42 Total value $29,400 $28,650 $0.042 $0.11 25 Nov 2021 30 Nov 2023 2 125% 0.55% - $0.0183 1,500,000 100% 1.42 $27,450 f Options and Rights granted during the previous year A total of 12,000,000 unquoted options and 2,500,000 performance rights were granted as compensation during the previous financial year to directors and key management personnel, the details of which are as follows: Options - Tranche 1 Options - Tranche 2 Options - Tranche 3 Performance Rights – Tranche 1 Performance Rights – Tranche 2 Number of securities granted 4,000,000 4,000,000 4,000,000 1,250,000 1,250,000 Grant date 9 Dec 2020 9 Dec 2020 9 Dec 2020 9 Dec 2020 9 Dec 2020 Vesting condition / date (a) (a) (a) 30 Nov 2021 30 Nov 2022 Expiration date Exercise price 30 Nov 23 30 Nov 23 30 Nov 23 30 Nov 23 30 Nov 23 $0.055 $0.065 $0.080 N/A N/A (a) 30 Each tranche of options vests in three equal amounts. The first third vested upon grant, the second after 12 months and the final third after 24 months. VARISCAN MINES Annual Report 2022  Directors’ Report The fair value of the options issued as compensation during the previous financial year as set out above was determined by reference to the Black- Scholes option pricing model, the key inputs into which and resulting valuation are summarised as follows: Options - Tranche 4 Options - Tranche 5 Options - Tranche 6 Underlying security spot price on date of grant Exercise price Grant date Expiration date Total life (years) Expected volatility Risk-free rate Expected dividend yield Value per security Number of securities Portion vested at 30 June 2021 Remaining life (years) Total value $0.028 $0.055 26 Nov 2020 30 Nov 2023 3.01 150% 0.20% - $0.0206 4,000,000 33% (a) 2.42 $82,400 $0.028 $0.065 26 Nov 2020 30 Nov 2023 3.01 150% 0.20% - $0.0200 4,000,000 33% (a) 2.42 $80,000 $0.028 $0.080 26 Nov 2020 30 Nov 2023 3.01 150% 0.20% - $0.0193 4,000,000 33% (a) 2.42 $77,200 (a) Represents the portion vested at 30 June 2021. As at 30 June 2022, a total of 67% have vested. The fair value of the performance rights issued as compensation during the prior year as set out above was determined by reference to the underlying share price on the date of grant, being $0.028 per security (totalling $70,000). There were no alterations to the terms and conditions of options granted as remuneration since their grant date. There were no forfeitures during the period. The Company has established an Employee Share Option Plan (“ESOP”) for the benefit of Directors, officers, senior executives, employees and consultants. No securities have been issued under the ESOP during the current year (2021: Nil). VARISCAN MINES Annual Report 2022 31  Directors’ Report f Options and Rights lapsed during the year Transactions with directors and key management personnel During the current year, amounts totalling $37,800 were paid to Endeavour Corporate Pty Ltd, a Company Associated with Mr Mark Pitts, for accounting and administration services (2021: $28,600). These amounts are separate from the fees paid to Mr Pitts through his role as Company Secretary and are not included in the Key Management Personnel remuneration table on page 9. Directors’ Benefits, Emoluments and Share Options During its annual budget review, the Board reviews the Directors’ Emoluments. Remuneration levels, including participation in the Company’s ESOP, are set to provide reasonable compensation in line with the Company’s limited financial resources. During the year no Director of the Company has received or become entitled to receive any additional benefits to their ordinary directors’ fees by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest. Due to the difficulty in the measurement of performance using quantitative indicators in the mineral exploration industry, there is no formal link between financial performance of the group and remuneration levels. There is no retirement scheme for Non-Executive Directors. End of Audited Remuneration report. 32 VARISCAN MINES Annual Report 2022  Directors’ Report f Meetings of directors The following table sets out the number of Directors’ meetings held during the financial year and the number of meetings attended by each Director for which they were entitled to attend. Due to the size and composition of the board, the roles of the Audit and Risk and Remuneration Committees are fulfilled by the board as a whole: Dr Foo Fatt Kah Mr Stewart Dickson Mr Michael Moore Mr Nicholas Farr-Jones Total Number of Meetings Held Non-audit services Number of Meetings Held whilst a director Number Attended 12 12 12 12 12 12 12 12 12 The Company’s auditor did not provide any non-audit services during the year ended 30 June 2022 (2021: Nil). Signed this 27th day of September 2022 in accordance with a resolution of the Directors. Stewart Dickson Managing Director & CEO VARISCAN MINES Annual Report 2022 33  Auditor’s Independence Declaration Auditor’s Independence Declaration AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the consolidated financial report of Variscan Mines Limited for the year ended 30 June 2022, I declare that to the best of my knowledge and belief, there have been no contraventions of: a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) any applicable code of professional conduct in relation to the audit. Perth, Western Australia 27 September 2022 N G Neill Partner Page | 16 34 VARISCAN MINES Annual Report 2022  Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Profit or Loss and Other Comprehensive Income f For the year ended 30 June 2022 Notes 3 Continuing operations Interest income Total income Compliance expenses Professional services expenses Finance expenses Directors expenses Travel and accommodation expenses Share based payments 12,13 Increase in fair value of financial assets Other expenses Total expenses Realised loss on foreign exchange Unrealised gain/(loss) on foreign exchange Total foreign exchange loss Loss before income tax expense Income tax expense Loss for the period Other comprehensive income, net of income tax Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations Other comprehensive income for the period, net of tax 4 Consolidated 2022 $ 578 578 (100,877) (206,576) (114) 2021 $ 6,106 6,106 (69,492) (142,065) (102) (232,573) (218,220) (10,821) (191,175) - (80,665) (822,801) (5,202) 374 (4,828) (827,051) - - (183,246) 77,771 (48,383) (583,737) (106,209) (773) (106,982) (684,613) - (827,051) (684,613) 78,338 78,338 1,390 1,390 Total comprehensive loss for the period (748,713) (683,223) Basic and diluted loss per share (cents per share) 14 (0.31) (0.32) The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes VARISCAN MINES Annual Report 2022 35  Consolidated Statement of Financial Position Consolidated Statement of Financial Position f As at 30 June 2022 Assets Current assets Cash and cash equivalents Trade and other receivables Total current assets Non-current assets Plant and equipment Deferred exploration and evaluation expenditure Other non-current assets Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Total current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity Consolidated Notes 2022 $ 2021 $ 6 7 8 9 10 11 13 1,945,935 258,707 4,436,385 50,908 2,204,642 4,487,293 67,351 31,564 6,710,006 4,755,448 62,757 6,840,114 9,044,756 229,348 5,016,360 9,503,653 281,065 281,065 281,065 232,424 232,424 232,424 8,763,691 9,271,229 34,018,303 33,968,303 722,487 472,974 (25,977,099) (25,170,048) 8,763,691 9,271,229 The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes 36 VARISCAN MINES Annual Report 2022  Consolidated Statement of Cash Flows Consolidated Statement of Cash Flows f For the year ended 30 June 2022 Cash flows from operating activities Payments to suppliers and employees Interest received Finance costs Consolidated Notes 2022 $ 2021 $ (638,995) (773,982) 578 (114) 6,106 (102) Net cash outflow from operating activities 20 (638,531) (767,978) Cash flows from investing activities Exploration and evaluation expenditure (1,804,964) (1,489,503) Sale of financial assets Payments for property, plant and equipment - (38,034) 475,971 (33,604) Net cash outflow from investing activities (1,842,998) (1,047,136) Cash flows from financing activities Proceeds from issue of shares Payments for share issue costs Net cash inflow from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of exchange rate fluctuations on cash held 50,000 (55,550) (5,550) (2,487,079) 4,436,385 (3,371) 4,250,000 (143,000) 4,107,000 2,291,886 2,146,123 (1,624) Cash and cash equivalents at the end of the year 6 1,945,935 4,436,385 The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes VARISCAN MINES Annual Report 2022 37  Consolidated Statement of Changes in Equity Consolidated Statement of Changes in Equity f For the year ended 30 June 2022 Issued capital Share-based payment reserve Consolidated Foreign currency translation reserve Accumulated losses Total 29,841,639 159,917 5,921 (24,485,435) 5,522,042 - - - - - - (684,613) (684,613) 1,390 - 5,921 1,390 1,390 (684,613) (683,223) 1 July 2020 Loss for the period Other comprehensive income, for the period, net of income tax Total comprehensive loss for the periodactivities Issue of share capital for cash 4,250,000 Issue of deferred share capital Issue of share capital in lieu of fees 160,000 64,568 - - - Share based payments - 183,246 Options issued as share issue costs (122,500) 122,500 (225,404) - - - - - - - - - - - - - 4,250,000 160,000 64,568 183,246 - (225,404) Share issue costs 30 June 2021 1 July 2021 Loss for the period Other comprehensive income, for the period, net of income tax Total comprehensive loss for the periodactivities Share based payments Lapse of options 30 June 2022 33,968,303 465,663 7,311 (25,170,048) 9,271,229 33,968,303 465,663 7,311 (25,170,048) 9,271,229 - - - - - - - - (827,051) (827,051) 78,338 - 1,390 78,338 (827,051) (748,713) - - - - - 50,000 191,175 20,000 - - - 191,175 (20,000) 34,018,303 636,838 85,649 (25,977,099) 8,763,691 Issue of share capital for cash 50,000 The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes 38 VARISCAN MINES Annual Report 2022  Notes to the Financial Statements Notes to the Financial Statements f 1. Corporate information The financial report of Variscan Mines Limited (Variscan or the Company) for the year ended 30 June 2022 was authorised for issue in accordance with a resolution of the Directors on 27 September 2022. Variscan is a for-profit entity for the purposes of preparing the financial statements. Variscan Mines Limited (the parent) is a company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange under ASX Code VAR. The consolidated financial statements comprise the financial statements of Variscan Mines Limited and its subsidiaries (the Group or Consolidated Entity). The nature of the operations and principal activities of the Group are described in the Directors’ Report. f 2. Summary of significant accounting policies Basis of preparation The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. It has been prepared on a historical cost basis except for investments in listed shares, which are measured at fair value. Statement of compliance The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (IASB). Accounting standards issued but not yet effective Australian Accounting Standards and interpretations that have been issued or amended but are not yet effective have been assessed has having no material impact on the Group’s financial statements and have not been adopted by the Group for the year ended 30 June 2022. Adoption of new and revised standards Standards and Interpretations applicable to 30 June 2022 In the year ended 30 June 2022, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Company and effective for the current reporting period beginning on or after 1 July 2021. As a result of this review, the Group has determined there is no material impact of the new and revised standards on the results for the financial year, and no changes required to Group Accounting Policies. Basis of consolidation The consolidated financial statements comprise the financial statements of Variscan Mines Limited (Variscan or the Company) and its subsidiaries as at 30 June each year. The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. At this date, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate. VARISCAN MINES Annual Report 2022 39  Notes to the Financial Statements f 2. Summary of significant accounting policies (Continued) Going Concern The financial report has been prepared on the going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. The Directors believe that the Group will have sufficient working capital to meet its minimum project development and administrative expenses in the next twelve months following the date of signing of the financial report. For the year ended 30 June 2022, the Group has incurred a loss before tax of $827,051 and net cash outflows from operating and investing activities of $2,481,529. As at 30 June 2022 the Group had $1,945,935 in cash and cash equivalents and net current assets of $1,923,577. Whilst not immediately required, the Group may need to raise additional funds to meet its planned and budgeted exploration expenditure as well as regular corporate overheads. The Group’s capacity to raise additional funds will be impacted by the success of the ongoing exploration activities and market conditions. Additional sources of funding available to the Group include a capital raising via preferential issues to existing shareholders or placements to new and existing investors. If necessary, the Group can delay exploration expenditure and the directors can also institute cost saving measures to further reduce corporate and administrative costs. However, should the above planned activities to raise or conserve capital not be successful, there exists a material uncertainty surrounding the Group’s ability to continue as a going concern and, therefore, realise its assets and dispose of its liabilities in the ordinary course of business and at the amounts stated in the financial report. Business combinations Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the sum of the acquisition-date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer, and the amount of any non- controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value of at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group’s operating or accounting policies and other pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured at fair value as at the acquisition date through profit or loss. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with AASB 139 either in profit or loss or in other comprehensive income. If the contingent consideration is classified as equity, it shall not be remeasured. Cash and cash equivalents Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and in hand and short-term deposits, with a maturity date not exceeding six months, readily convertible to a known amount of cash and subject to an insignificant risk of change in value. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts, if any. Exploration and evaluation Exploration and evaluation Exploration and evaluation expenditure incurred by or on behalf of the Group is accumulated separately for each area of interest. Such expenditure comprises net direct costs and an appropriate portion of related overhead expenditure, but does not include general overheads or administrative expenditure not having a specific connection with a particular area of interest. Exploration and evaluation costs in relation to separate areas of interest for which rights of tenure are current are brought to account in the year in which they are incurred and carried forward provided that: 40 VARISCAN MINES Annual Report 2022  Notes to the Financial Statements f 2. Summary of significant accounting policies (Continued) ▯ Such costs are expected to be recouped through successful development and exploitation of the area, or alternatively through its sale; and ▯ Exploration and/or evaluation activities in the area have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. Once a development decision has been taken, all past and future exploration and evaluation expenditure in respect of the area of interest is aggregated within costs of development. Exploration and evaluation – impairment The Group assesses at each reporting date whether there is an indication that an asset has been impaired and for exploration and evaluation costs whether the above carry forward criteria are met. Accumulated costs in respect of areas of interest are written off or a provision made in the profit or loss when the above criteria do not apply or when the Directors assess that the carrying value may exceed the recoverable amount. The costs of productive areas are amortised over the life of the area of interest to which such costs relate on the production output basis. Provisions are made where farm-in partners are sought and there is a possibility that carried-forward expenditures may have to be written off in the future if a farm-in partner is not found. In the event that farm-in agreements are reached or the Group undertakes further exploration in its own right on those properties, the provisions would be reviewed and if appropriate, written back. Investments and other financial assets Recognition and derecognition Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. Classification and initial measurement of financial assets Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable). For the purpose of subsequent measurement, financial assets, other than those designated and effective as hedging instruments, are classified into the following categories: ▯ amortised cost ▯ fair value through profit or loss (FVTPL) ▯ equity instruments at fair value through other comprehensive income (FVOCI) ▯ debt instruments at fair value through other comprehensive income (FVOCI). All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses. The classification is determined by both: ▯ the entity’s business model for managing the financial asset ▯ the contractual cash flow characteristics of the financial asset. All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses. Subsequent measurement of financial assets a) Financial assets at amortised cost Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL): ▯ they are held within a business model whose objective is to hold the financial assets to collect its contractual cash flows ▯ the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding. VARISCAN MINES Annual Report 2022 41  Notes to the Financial Statements f 2. Summary of significant accounting policies (Continued) After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments. b) Financial assets at fair value through profit or loss (FVTPL) Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at fair value through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply. The category, during the comparative financial period, contained an equity investment. The Group accounted for the investment at FVTPL and did not make the irrevocable election to account for the investment in unlisted and listed equity securities at fair value through other comprehensive income (FVOCI). The fair value was determined in line with the requirements of AASB 9, which does not allow for measurement at cost. Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists. c) Trade and other receivables The Group makes use of a simplified approach in accounting for trade and other receivables and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward- looking information to calculate the expected credit losses using a provision matrix. The Group assess impairment of trade receivables on a collective basis as they possess shared credit risk characteristics they have been grouped based on the days past due. d) Classification and measurement of financial liabilities The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments). All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income. Plant and equipment Plant and equipment assets are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset, namely motor vehicles and plant and equipment – depreciated over 2 to 5 years (2021: 2 to 5 years). Impairment The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the profit or loss in the period the item is derecognised. 42 VARISCAN MINES Annual Report 2022  Notes to the Financial Statements f 2. Summary of significant accounting policies (Continued) Leases Liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. Trade and other payables and provisions Trade payables and other payables are carried at amortised cost. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the profit or loss net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre- tax rate that reflects current market assessments of the time value of money and where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. Employee entitlements Wages, salaries, annual leave, and long service leave Liabilities for wages and salaries are recognised and are measured as an amount unpaid at the reporting date at current pay rates in respect of employee’s services up to that date. Superannuation The Group contributes to defined contribution superannuation funds for its employees. The cost of these contributions is expensed as incurred. A liability in respect of superannuation at the current superannuation guarantee rate has been accrued at the reporting date. Share-based payment transactions In addition to salaries, the Group provides benefits to certain employees (including Directors) of the Group in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (“equity-settled transactions”). There is currently an Employee Share Option Plan in place to provide these benefits. The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value of the options is determined by using the Black-Scholes or binomial option pricing model, or in the case of listed options, the listed option price at the date the options were issued. In valuing transactions settled by way of issue of options, no account is taken of any vesting limits or hurdles, or the fact that the options are not transferable. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the VARISCAN MINES Annual Report 2022 43  Notes to the Financial Statements f 2. Summary of significant accounting policies (Continued) vesting conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Group’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The profit or loss charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition. If the terms of an equity-settled award are modified, at a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. If an equity-settled award is cancelled, it is treated as if it had vested on the date of the cancellation, and any expense not yet recognised is recognised immediately. However, if a new award is substituted for the cancelled award and designated a replacement award on the date it is granted, the cancelled and the new award are treated as if there was a modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share except where such dilution would serve to reduce a loss per share. Revenue recognition Revenue is recognised to depict the transfer of promised goods or services to customers at an amount that reflects the consideration expected to be entitled in exchange for those goods or services. The following specific recognition criteria must also be met before revenue is recognised. Rendering of services Revenue from consulting services are recognised when provided. Interest Revenue is recognised as interest accrues using the effective interest method. Royalties Royalties are recognised in accordance with substance of the relevant agreement. Contract exploration Contract exploration revenue (consulting fees) earned from third parties is recognised when rights to receive the revenue are assured. Income tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences: Except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised: 44 VARISCAN MINES Annual Report 2022  Notes to the Financial Statements f 2. Summary of significant accounting policies (Continued) Except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Income taxes relating to items recognised directly in equity are recognised in equity and not in the profit or loss. Other taxes Revenues, expenses and assets are recognised net of the amount of GST except: Where the GST incurred on the purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financial activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. Currency Functional currency translation The functional and presentation currency for the parent company is Australian dollars ($). The functional currency of overseas subsidiaries is the local currency. Transactions and balances Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the translation. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation of Group Companies’ functional currency to presentation currency During the current period, the results of the Spanish subsidiaries were translated into Australian Dollars (presentation currency). Income and expenses for each profit or loss item were translated at the average exchange rate, unless this was not a reasonable approximation of the cumulative effects of the rates prevailing on the transaction dates, in which case income and expenses were translated at the dates of the transactions. Assets and liabilities were translated at exchange rates prevailing at reporting date. All resulting exchange differences were recognised in other comprehensive income, until the date of disposal of the net investment in the foreign operation, at which point the cumulative amount of the foreign currency translation reserve will be recognised in the net loss for the year. Impairment of assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless VARISCAN MINES Annual Report 2022 45  Notes to the Financial Statements f 2. Summary of significant accounting policies (Continued) the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash- generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. The increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Significant accounting judgements, estimates and assumptions The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are: Share-based payment transactions The Company measures the cost of equity-settled share-based payments at fair value at the grant date using the Black-Scholes formula taking into account the terms and conditions upon which the instruments were granted and estimates of volatility. Capitalisation and write-off of capitalised exploration costs The determination of when to capitalise and write-off exploration expenditure requires the exercise of judgement based on assessments of results, various assumptions, and other factors such as historical experience, current and expected economic conditions. Refer to Note 9 for further details. Earnings/Loss per share Basic earnings/loss per share is calculated as net profit/loss attributable to members of the Group, adjusted to exclude any costs of servicing equity divided by the weighted average number of ordinary shares. Diluted earnings/loss per share is calculated as net profit/loss attributable to members of the Group, adjusted for: ▯ Costs of servicing equity. ▯ The after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses. ▯ 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. Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Managing Director. 46 VARISCAN MINES Annual Report 2022  Notes to the Financial Statements f 3. Income Income Interest income Net cash outflow from operating activities f 4. Income tax Consolidated 2022 $ 578 578 2021 $ 6,106 6,106 Consolidated 2022 $ 2021 $ Prima facie income tax (credit) on operating (loss) at 30% (2020: 30%) (248,115) (205,384) Deferred tax assets not recognised Other Income tax expense Deferred tax assets have not been recognised in respected to the following items: Unrecognised deferred tax assets Accrued expenses and provisions Capital raising costs Income tax losses Unrecognised deferred tax liabilities Temporary timing differences related to: Exploration and evaluation expenditure Net deferred tax asset not recognised 57,240 190,875 - 39,104 78,669 - 205,384 - 18,917 111,321 4,674,851 4,844,802 4,792,624 4,975,040 (2,013,002) (1,426,634) 2,779,622 3,548,905 No provision for income tax is considered necessary in respect of the Company for the period ended 30 June 2022. No recognition has been given to any deferred income tax asset which may arise from available tax losses. The Company has estimated its losses at 30 June 2022 of $16,592,970 (2021: $16,149,341). No recognition has been given to any deferred income tax liabilities which may arise from the recognition of capitalised exploration and evaluation expenditures, as the Company has sufficient expected carried-forward tax losses to negate such a liability. A benefit of 30% (2021: 30%) of approximately $4,674,851 (2021: $4,844,802) associated with the tax losses carried forward will only be obtained if: ▯ The Company derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised; ▯ The Company continues to comply with the conditions for deductibility imposed by the law; and ▯ No changes in tax legislation adversely affect the Company in realising the benefit from the deductions for the losses. VARISCAN MINES Annual Report 2022 47  Notes to the Financial Statements f 4. Income tax (Continued) Tax consolidation Variscan Mines Limited and its 100% owned Australian subsidiaries formed a tax consolidated group with effect from 1 November 2007. Variscan Mines Limited is the head entity of the tax consolidated group. No amounts have been recognised in the financial statements in respect of this agreement on the basis that the possibility of default is remote. Franking credits Franking credits of $2,810,116 (2021: $2,810,116) are available for subsequent years. The above amounts represent the balance of the franking account as at the end of the reporting period, adjusted for: ▯ Franking credits that will arise from the payment of the amount of the provision for income tax, ▯ Franking debits that will arise from the payment of dividends recognised as a liability at the reporting date, and ▯ Franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date. The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of subsidiaries were paid as dividends. f 5. Auditors’ remuneration Amounts received or due and receivable by: HLB Mann Judd (WA) Partnership, for: Audit and review of the financial report of Variscan Mines Limited (a) (a) Includes accruals at balance date. f 6. Cash and cash equivalents Cash at bank and in hand Consolidated 2022 $ 30,780 30,780 2021 $ 29,283 29,283 Consolidated 2022 $ 1,945,935 1,945,935 2021 $ 4,436,385 4,436,385 Cash at bank earns interest at floating rates based on daily bank deposit rates. The carrying amount of cash and cash equivalents represents fair value. Short-term deposits are made for varying periods of between one day and six months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. 48 VARISCAN MINES Annual Report 2022  Notes to the Financial Statements f 7. Receivables Current Other Debtors GST/VAT receivable Prepayments Consolidated 2022 $ 3,300 235,601 19,806 258,707 2021 $ 3,300 29,239 18,369 50,908 Receivables are non-interest bearing and generally 30-day terms and trading terms are being followed by debtors and there are no overdue amounts. An allowance for expected credit losses is recognised when there is objective evidence that it is impaired. No allowance for expected credit losses is required. f 8. Plant & equipment Plant and equipment – at cost Accumulated depreciation Net book value Reconciliation of plant and equipment is as follows: Opening carrying value Additions Depreciation Consolidated 2022 $ 71,638 (4,287) 67,351 31,564 38,034 (2,247) 67,351 2021 $ 33,604 (2,040) 31,564 - 33,604 (2,040) 31,564 Depreciation expenses related to the plant and equipment utilised solely in the exploration and evaluation activities of the Group is capitalised to deferred exploration and evaluation expenditure. Refer Note 9. VARISCAN MINES Annual Report 2022 49  Notes to the Financial Statements f 9. Deferred exploration and evaluation expenditure Exploration and evaluation phase: Costs brought forward Costs incurred during the year Depreciation capitalised (refer Note 8) Expenditure written off during the year Consolidated 2022 $ 2021 $ 4,755,448 1,978,666 2,247 - 3,296,140 1,469,352 2,040 - Impact of foreign currency exchange differences (26,355) (12,084) Costs carried forward 6,710,006 4,755,448 Exploration expenditure costs carried forward are made up of: Novales/Udias Zinc Project - Spain Guajaraz Zinc Project – Spain Rosario Copper project - Chile Costs carried forward 5,934,870 3,997,971 696,410 78,726 678,751 78,726 6,710,006 4,755,448 The above amounts represent costs of areas of interest carried forward as an asset in accordance with the accounting policy set out in Note 2. The ultimate recoupment of deferred exploration and evaluation expenditure in respect of an area of interest carried forward is dependent upon the discovery of commercially viable reserves and the successful development and exploitation of the respective areas or alternatively sale of the underlying areas of interest for at least their carrying value. Amortisation, in respect of the relevant area of interest, is not charged until a mining operation has commenced. f 10. Current liabilities – payables Trade creditors (a) Accrued expenses Consolidated 2022 $ 154,569 126,496 281,065 2021 $ 169,369 63,055 232,424 (a) Trade creditors are non-interest bearing and are generally settled on 30-day terms. 50 VARISCAN MINES Annual Report 2022  Notes to the Financial Statements f 11. Contributed equity Share capital 266,732,024 (2021: 266,107,024) ordinary shares fully paid 35,816,600 35,766,600 Consolidated 2022 $ 2021 $ Share issue costs Movements in ordinary shares on issue At 1 July 2020 Shares issued for cash Shares issued in settlement of deferred share consideration Shares issued in lieu of directors fees Value of lapsed VAROA quoted options transferred At 30 June 2021 Shares issued for cash At 30 June 2022 Movements in quoted options on issue At 1 July 2020 Lapse of quoted options At 30 June 2021 No movements during the year At 30 June 2022 (1,798,297) (1,798,297) 34,018,303 33,968,303 Number Value $ 206,093,551 30,763,428 53,125,000 4,250,000 4,000,000 2,888,473 - 160,000 64,568 528,604 266,107,024 35,766,600 625,000 50,000 266,732,024 35,816,600 Number Value $ 29,669,247 528,604 (29,669,247) (528,604) - - - - - - On 31 May 2021, 29,669,247 quoted options lapsed unexercised. Upon their expiry, the value previously attributed to the Option Issue Consideration Reserve, forming part of gross Contributed Equity, was transferred to the value of Issued Share Capital. The Company has 19,500,000 unquoted options on issue at balance date. Refer Note 12 for details. VARISCAN MINES Annual Report 2022 51  Notes to the Financial Statements f 11. Contributed equity (continued) Terms and conditions of contributed equity Ordinary shares Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company. Options Options do not carry voting rights or rights to dividends until options are exercised. f 12. Share-based payments and unquoted options Option pricing model and terms of options The Company has 19,500,000 unquoted options currently on issue as a result of share-based payment arrangements. 4,500,000 options were issued during the current financial year as share-based payments to directors and other key management personnel (2021: 12,000,000 options issued to directors and other key management personnel). These share-based payments were valued by reference to the Black-Scholes option pricing model. Furthermore, as part of the share placement completed on 28 June 2021, the Company agreed to issue 2,500,000 unquoted options exercisable at 12 cents per share to the lead manager of the placement. These options, which have a 3-year expiry period, were issued during the current period. The following table lists the inputs into this model and the terms of options granted in the Company: Number of securities 1,500,000 1,500,000 1,500,000 2,500,000 Options - Tranche 4 Options - Tranche 5 Options - Tranche 6 Lead manager options Underlying security spot price on date of grant Exercise price Grant date Expiration date Total life (years) Expected volatility Risk-free rate Expected dividend yield Value per security Remaining life (years) $0.042 $0.095 $0.042 $0.10 $0.042 $0.11 $0.075 $0.12 25 Nov 2021 25 Nov 2021 25 Nov 2021 28 June 2021 (a) 30 Nov 2023 30 Nov 2023 30 Nov 2023 30 Sept 2024 2 125% 0.55% - $0.0196 1.42 2 125% 0.55% - $0.0191 1.42 2 125% 0.55% - $0.0183 1.42 3 125% 0.20% - $0.049 2.25 (a) These options were issued during the current financial year on 27 September 2021, a grant date of 28 June 2021 has been used as the date at which the Company incurred the obligation to issue these options. 52 VARISCAN MINES Annual Report 2022  Notes to the Financial Statements f 12. Share-based payments and unquoted options (continued) The following table lists the valuation model inputs for options granted during the previous year: Number of securities 4,000,000 4,000,000 4,000,000 Options - Tranche 1 to Key Management Personnel Options - Tranche 2 to Key Management Personnel Options - Tranche 3 to Key Management Personnel Underlying security spot price on date of grant Exercise price Grant date Expiration date Total life (years) Expected volatility Risk-free rate Expected dividend yield Value per security Vesting condition / date Portion vested at balance date Remaining life (years) $0.028 $0.055 $0.028 $0.065 $0.028 $0.080 26 Nov 2020 26 Nov 2020 26 Nov 2020 30 Nov 2023 30 Nov 2023 30 Nov 2023 3 150% 0.20% - 3 150% 0.20% - 3 150% 0.20% - $0.0206 $0.0200 $0.0193 (b) 67% 1.42 (b) 67% 1.42 (b) 67% 1.42 (b) Each tranche of options vests in three equal amounts. The first third vested upon grant, the second after 12 months and the final third after 24 months. Types of share-based payment plans Share-based payments An Employee Share Option Plan (ESOP) has been established where selected officers, employees and consultants of the Company can be issued with options over ordinary shares in Variscan Mines Limited. The options, issued for nil consideration, will be issued in accordance with a performance review by the Directors. The options cannot be transferred and will not be quoted on the ASX. Options expire if not exercised 90 days after a participant resigns from the Company. There have been no cancellations or modifications to any of the plans during 2022 and 2021. No securities have been issued under the ESOP during the financial year ended 30 June 2022 (2021: Nil). VARISCAN MINES Annual Report 2022 53  Notes to the Financial Statements f 12. Share-based payments and unquoted options (continued) Summary of movement of unquoted options on issue in the parent entity Movements in unquoted options on issue At 1 July 2020 Issue of options to Directors and Key Management Personnel Fair value of options to be issued to lead manager of placement Expense recognised for further vesting during the year At 30 June 2021 Issue of options to Directors and Key Management Personnel Issue of options to lead manager of placement, recognised during the previous financial year Lapse of options Expense recognised for further vesting during the year At 30 June 2022 The outstanding balance as at 30 June 2022 is represented by: Number 1,000,000 12,000,000 - - 13,000,000 4,500,000 2,500,000 (500,000) - 19,500,000 Value $ 159,917 150,121 122,500 2,338 434,876 85,500 - (20,000) 73,759 574,135 Exercise Price of Option Expiry Date of Options Class of Share received upon exercise Number of Shares under option $1.00 $0.055 $0.065 $0.080 $0.120 $0.095 $0.010 $0.011 20 November 2022 30 November 2023 30 November 2023 30 November 2023 30 September 2024 30 November 2023 30 November 2023 30 November 2023 ORD ORD ORD ORD ORD ORD ORD ORD 500,000 4,000,000 4,000,000 4,000,000 2,500,000 1,500,000 1,500,000 1,500,000 19,500,000 54 VARISCAN MINES Annual Report 2022  Notes to the Financial Statements f 12. Share-based payments and unquoted options (continued) Weighted Average disclosures for unquoted options granted by the parent entity Weighted average exercise price of options at 1 July Weighted average exercise price of options granted during period Weighted average exercise price of options expired during period Weighted average exercise price of options outstanding at 30 June Weighted average exercise price of options exercisable at 30 June Weighted average contractual life remaining 2022 $ 2021 $ $0.123 $0.108 $0.60 $0.106 $0.066 1.50 $0.80 $0.062 - $0.123 $0.213 2.30 Range of exercise price $0.055 - $1.00 $0.055 - $1.00 Performance rights issued as share-based payments During the previous financial year, the shareholders of the Company approved the issue of 2,500,000 performance rights to the Company’s Managing Director and CEO, Stewart Dickson. The fair value of these performance rights was determined by reference to the underlying share price on the date of grant, being $0.028 per security. Details of performance rights issued to the Company’s managing director during the year are: Performance Condition Expiry Date of Rights Fair value per security Number of Rights Continuous service until 30 November 2021 30 November 2023 Continuous service until 30 November 2022 30 November 2023 $0.028 $0.028 1,250,000 1,250,000 2,500,000 Summary of movement of performance rights on issue in the parent entity Movements in performance rights on issue At 1 July 2021 Further vesting expense recognised during the year At 30 June 2022 Number 2,500,000 - - Value $ 30,788 31,916 62,704 VARISCAN MINES Annual Report 2022 55  Notes to the Financial Statements f 13. Reserves Share-based compensation reserve Foreign currency translation reserve Share-based compensation reserve Balance at the beginning of financial year Share-based payments Lapse of options Balance at end of financial year Foreign currency translation reserve Balance at the beginning of financial year Effect of exchange rate fluctuation Balance at end of financial year Consolidated 2022 $ 636,838 85,649 722,487 465,663 191,175 (20,000) 636,838 7,311 78,338 85,649 2021 $ 465,663 7,311 472,974 159,917 305,746 - 465,663 5,921 1,390 7,311 (a) Share-based compensation reserve The share-based compensation reserve is used to recognise the fair value of unlisted options and performance rights issued but not exercised as described in Note 2 and referred to in Note 12. (b) Foreign currency translation reserve The foreign currency translation reserve recognised the net exchange differences on foreign operations. 56 VARISCAN MINES Annual Report 2022  Notes to the Financial Statements f 14. Earnings/(Loss) per share Earnings/(loss) used in calculating basic and diluted earnings/(loss) per share Consolidated 2022 $ 2021 $ (827,051) (684,613) Consolidated 2022 Number 2021 Number Weighted average number of ordinary shares outstanding during the year used in calculation of basic and diluted EPS 265,850,566 211,930,392 Basic and diluted earnings/(loss) per share (0.31) (0.32) All potential ordinary shares for the calculation of diluted loss per share are considered anti-dilutive. Consolidated 2022 Cents per share 2021 Cents per share f 15. Key management personnel Key management personnel (KMP) remuneration Compensation for key management personnel Short-term employee benefits Long-term employee benefits Post-employment benefits Share-based payments Total compensation Consolidated 2022 $ 2021 $ 397,146 365,071 - - 176,593 573,739 - - 183,248 548,319 VARISCAN MINES Annual Report 2022 57  Notes to the Financial Statements f 16. Related party disclosures Subsidiaries The consolidated financial statements include the financial statements of Variscan Mines Limited (the Parent Entity) and the following subsidiaries: Name Bluestone 23 Pty Ltd Variscan Mines Europe Limited Country of incorporation Australia UK Slipstream Resources Spain Pty Ltd Australia Slipstream Resources Spain 2 Pty Ltd Australia Variscan Mines Cantabria, SL Variscan Mines La Mancha, SL Spain Spain % Equity interest $ Investment 2022 2021 2022 2021 100 100 100 100 100 100 100 100 100 100 100 100 5,000 5,000 1 1 2,403,748 2,403,748 686,531 686,531 4,439 4,500 4,439 4,500 Transactions with key management personnel During the current year, amounts totalling $37,800 were paid to Endeavour Corporate Pty Ltd, a Company Associated with Mr Mark Pitts, for accounting and administration services (2021: $28,600). f 17. Farm-in / Farm-out arrangements The Company is a party to a number of exploration farm-in / farm-out agreements to explore for copper, gold, zinc, lead and uranium. Under the terms of the agreements the Company may be required to contribute towards the exploration and other costs if it wishes to maintain or increase its percentage holdings. These arrangements are not separate legal entities. There are contractual arrangements between the participants for sharing costs and future revenues in the event of exploration success. There are no assets and liabilities attributable to Variscan at reporting date resulting from these arrangements. Percentage equity interests in these arrangements at 30 June 2022 were as follows: Hillston – diluting to 16% Callabonna – diluting to 30% f 18. Segment information Consolidated 2022 % Interest 39.2% 49% 2021 % Interest 39.2% 49% AASB 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker in order to allocate resources to the segment and to assess its performance. The Group’s operating segments have been determined with reference to the monthly management accounts used by the Chief Operating Decision maker to make decisions regarding the Group’s operations and allocation of working capital. Due to the size and nature of the Group, the Managing Director has been determined as the Chief Operating Decision Maker. 58 VARISCAN MINES Annual Report 2022  Notes to the Financial Statements f 18. Segment information (Continued) Based on the quantitative thresholds included in AASB 8, there are currently two geographical segments, being Australia and Spain, which are considered for management purposes to form part of the single reportable segment of mineral exploration. Segment information The following tables present revenue and profit information and certain asset and liability information regarding geographical segments for the years ended 30 June 2022 and 2021. Australia Spain Total 2022 $ 2021 $ 2022 $ 2021 $ 2022 $ 2021 $ Segment income 578 6,106 Segment loss before income tax expense (827,051) (684,613) - - - - 578 6,106 (827,051) (684,613) Segment assets 5,680,162 7,838,622 3,364,594 1,665,031 9,044,756 9,503,653 Segment liabilities (226,122) (204,174) (54,943) (28,250) (281,065) (232,424) f 19. Commitments Exploration licence expenditure requirements In order to maintain the Group’s tenements in good standing with the various mines departments, the Group may be required to incur exploration expenditure under the terms of each licence. There are nil exploration licence commitments at year end (2021: nil) Milestone consideration – Spanish Zinc Project Acquisition In accordance with the acquisition of the Spanish Zinc Projects, the Company must issue additional shares upon the satisfaction of certain exploration milestones. These milestones are for the definition, in accordance with JORC 2012, of an Inferred Mineral Resource (or greater) of: ▯ Milestone 1: 4 million tonnes at 7% Zn ▯ Milestone 2: 8 million tonnes at 7% Zn Upon satisfaction of each of these milestones, the Company must issue 27,500,000 ordinary shares to the vendors of Slipstream Spain Pty Ltd and Slipstream Spain 2 Pty Ltd, and 2,426,471 shares to Hispanibal S.L. as the vendor of the “Hispanibal Option”, for a total of 59,852,941 Ordinary Shares if both milestones are met. As at the date of this report, the Directors are of the view that the work conducted on the projects to date is not of a sufficiently advanced stage to determine the probability of meeting these milestones and therefore no current obligation has been recorded in this interim financial report. VARISCAN MINES Annual Report 2022 59  Notes to the Financial Statements f 20. Statement of Cash Flows Reconciliation of net cash outflow from operating activities to operating loss after income tax Operating loss after income tax Share-based payment expense Fair value (increase) on financial assets Shares issued in lieu of fees Foreign exchange variances Change in assets and liabilities: (Increase)/decrease in receivables (Increase)/decrease in other assets (Decrease)/increase in trade and other creditors Consolidated 2022 $ 2021 $ (827,051) 191,175 - - 3,371 (27,309) - 21,283 (684,613) 183,246 (77,771) 64,568 3,014 (33,407) (137,781) (85,234) Net cash outflow from operating activities (638,531) (767,978) For the purpose of the Statement of Cash Flows, cash includes cash on hand, at bank, deposits and bank bills used as part of the cash management function. The Group does not have any unused credit facilities. The balance at 30 June comprised: Cash and cash equivalents Consolidated 2022 $ 2021 $ 1,945,935 1,945,935 4,436,385 4,436,385 f 21. Financial risk management objectives and policies The Company’s Board considers the Company’s overall risk management framework and policies, including quarterly review by the Board of the Company’s financial position and financial forecasts and maintaining adequate insurances. AASB 7 requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk. Capital management The Group considers its capital to comprise its ordinary share capital and its retained earnings, net of accumulated losses. In managing its capital, the Group’s primary objective as an explorer is to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment needs. The Group has no debt at the year-end hence has a nil gearing ratio. In making decisions to adjust its capital structure to achieve these aims, either through altering its new share issues, or consideration of debt, the Group considers not only its short-term position but also its long-term operational and strategic objectives. 60 VARISCAN MINES Annual Report 2022  Notes to the Financial Statements f 21. Financial risk management objectives and policies (Continued) Financial instrument risk exposure and management As is common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. These main risks, arising from the group’s financial instruments are interest rate risk, liquidity risk, share market risk and credit risk. This note describes the Group’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements. There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note. General objectives, policies and processes The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and has the responsibility for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group’s finance function. The Board receives quarterly reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. Further details regarding these policies are set out below: Liquidity risk Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected requirements for a period of at least 45 days. The Board receives cash flow projections on a monthly basis as well as information regarding cash balances. At balance date, these projections indicated that the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances. The expected settlement of the Group’s financial liabilities is as follows: Carrying amount Contracted cash flows < 6 months 6-12 months 1-2 years 2-5 years 30 June 2022 Trade and other payables 281,065 281,065 281,065 281,065 281,065 281,065 30 June 2021 Trade and other payables 232,424 232,424 232,424 232,424 232,424 232,424 - - - - - - - - - - - - VARISCAN MINES Annual Report 2022 61  Notes to the Financial Statements f 21. Financial risk management objectives and policies (Continued) Interest rate risk At reporting date, the Group is exposed to floating weighted average interest rates at 30 June 2022 for financial assets as follows: Weighted average rate of cash balances Cash balances All other financial assets and liabilities are non-interest bearing. The Group’s exposure to interest rate risk is set out in the following tables: Consolidated 2022 0.09% 2021 0.02% $1,945,935 $4,436,385 Consolidated Pre-tax Loss lower / (higher) 2022 $ 19,459 (19,459) 2021 $ 44,364 (44,364) Consolidated Equity lower / (higher) 2022 $ 19,459 (19,459) 2021 $ 44,364 (44,364) +1% (100 basis points) -1% (100 basis points) The above table reflects the impact on the Group’s loss before income tax and equity from a movement in interest rates of 1%, or 100 basis points, for the current and comparative financial periods. Share market risk The Company relies greatly on equity markets to raise capital for its exploration activities and is thus exposed to equity market volatility. When market conditions require, for prudent capital management, in consultation with its professional advisers the Group looks to alternative sources of funding, including the sale of assets and royalties. Credit risk Credit risk arises principally from the Group’s cash, cash equivalents, receivables and tenement security deposits. The Group’s exposure to credit risk arises from potential default of the counter party, with the maximum exposure equal to the carrying amount of these instruments. The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group’s policy to securitise its trade and other receivables. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. Foreign currency risk The Group is exposed to foreign currency risk on purchases that are denominated in a currency other than the Australian dollar. The Group does not enter into derivative financial instruments to hedge such transactions denominated in a foreign currency. The Group is primarily exposed to change in Euro/$ exchange rates for the year ended 30 June 2022, although this exposure and all other foreign currency exposure during the current financial year has been assessed as immaterial. Other receivables Other receivables comprise GST. Credit worthiness of debtors is undertaken when appropriate. 62 VARISCAN MINES Annual Report 2022  Notes to the Financial Statements f 21. Financial risk management objectives and policies (Continued) Equity price risk During the previous year, the Group disposed of its investments in equity interests in listed securities, and therefore, no equity price risk exposure exists at 30 June 2022 (2021: Nil exposure). Accounting policies Accounting policies in relation to financial assets and liabilities and share capital are contained in Note 2. Fair value of financial assets and liabilities The fair value of all monetary financial assets and financial liabilities of the Group approximate their carrying value. There are no off-balance sheet financial asset and liabilities at year-end. All financial assets and liabilities were denominated in Australian dollars during the years ended 30 June 2022 and 2021. Fair value risk The group uses three different methods in estimating the fair value of a financial investment. The methods comprise - ▯ Level 1 – the fair value is calculated using quoted prices in active markets; and ▯ Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) ▯ Level 3 – the fair value is estimated using inputs other than quoted prices. Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting date without any deduction for transaction costs. The fair value of derivatives that do not have an active market are based on valuation techniques. Level 2 derivatives include market observable inputs whilst level 3 derivatives do not include market observable inputs. Transfer between categories There were no transfers between levels during the year f 22. Parent entity information Information relating to the parent entity Variscan Mines Limited: Current assets Total assets Current liabilities Total liabilities Net Assets Issued capital Accumulated losses Reserves Total shareholders’ equity (Loss) of the parent entity Other comprehensive income Consolidated 2022 1,802,295 8,723,342 (226,121) (226,121) 8,497,221 2021 4,400,782 9,371,885 (204,176) (204,176) 9,167,709 34,018,303 33,968,303 (26,157,920) (25,266,257) 636,838 8,497,221 (891,663) - 465,663 9,167,709 (604,010) - Total comprehensive (loss) of the parent entity (891,663) (604,010) The accounting policies of the Parent Entity are consistent with those of the Group as disclosed in Note 2, except for Investments in Subsidiaries, which are accounted for at cost less accumulated impairment losses. VARISCAN MINES Annual Report 2022 63  Notes to the Financial Statements f 23. Events after the reporting date There were, at the date of this report, no matters or circumstances which have arisen since 30 June 2022 that have significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years. 64 VARISCAN MINES Annual Report 2022  Directors’ Declartion Directors’ Declaration 1. In the directors’ opinion: (a) the financial statements and notes set out on pages 17 to 45 are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (ii) giving a true and fair view of the group’s financial position as at 30 June 2022 and of its performance for the financial year ended on that date; and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. 3. The notes to the financial statements include a statement of compliance with International Financial Reporting Standards. The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer for the year ended 30 June 2022 required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the directors. Stewart Dickson Managing Director 27 September 2022 VARISCAN MINES Annual Report 2022 65  Independent Auditor’s Report Independent Auditor’s Report INDEPENDENT AUDITOR’S REPORT To the Members of Variscan Mines Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Variscan Mines Limited and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance for the year then ended; and (b) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material Uncertainty Related to Going Concern We draw attention to Note 2 in the financial report, which indicates that a material uncertainty exists that may cast significant doubt on the Entity’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matter described below to be the key audit matters to be communicated in our report. Page | 47 66 VARISCAN MINES Annual Report 2022  Independent Auditor’s Report Key Audit Matter How our audit addressed the key audit matter Exploration and evaluation assets Refer to note 9 In accordance with AASB 6 Exploration for and Evaluation of Mineral Resources, the Group capitalises all exploration and evaluation expenditure, including acquisition costs and subsequently applies the cost model after recognition. Our audit focused on the Group’s assessment of the carrying amount of the capitalised exploration and evaluation asset, as this is one of the most significant assets of the Group. We planned our work to address the audit risk that the capitalised expenditure may no longer meet the recognition criteria of the standard. In addition, we considered it necessary to assess whether facts and circumstances existed which suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. Our procedures included but were not limited to the following: • We obtained an understanding of the key processes associated with management’s review of the carrying values of each area of interest; • We considered management’s assessment of potential indicators of impairment; • We obtained evidence that the Group has current rights to tenure of its areas of interest; • We examined the exploration budget for the year ending 30 June 2022 and discussed with management the nature of planned ongoing activities; • We verified a sample of exploration expenditure capitalised; and • We examined the disclosures made in the financial report. Information Other than the Financial Report and Auditor’s Report Thereon The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2022, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Page | 48 VARISCAN MINES Annual Report 2022 67  Independent Auditor’s Report Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: − Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. − Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. − Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. − Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. − Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Page | 49 68 VARISCAN MINES Annual Report 2022  Independent Auditor’s Report Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included within the directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Variscan Mines Limited for the year ended 30 June 2022 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. HLB Mann Judd Chartered Accountants Perth, Western Australia 27 September 2022 N G Neill Partner Page | 50 VARISCAN MINES Annual Report 2022 69  ASX Additional Information Schedule of Tenements f Listing of tenements held as at 14 October 2022 Tenement SPAIN Cantabria Tenement No. Interest Joint Venture Details Buenahora Fraction 1 Buenahora Fraction 2 IP 16.662-01 IP 16.662-02 San José La Torra Tres Amigos Torpeza Andrea Andrea-demasía a Es Dudosa Cargadoiro Tres amigos-demasía a Flor del pueblo Torpeza-demasía a Torpeza-3ª demasía a Torpeza-2ª demasía a Flor del pueblo-demasía a Dudosa-demasía a Andrea-3ª demasía a Andrea-2ª demasía a Cargadoiro-demasía a Ampliación a Matilde Aumentada Campitos Campitos-demasía a Carmenchu Amelita Eloísa 70 VARISCAN MINES Annual Report 2022 EC 94 EC 512 EC 1565 EC 2557 EC5220 EC5374 EC8049 EC8165 EC11589 EC11594 EC12942 EC12952 EC13079 EC13080 EC13154 EC13170 EC13175 EC13176 EC13260 EC13641 EC14238 EC14554 EC14640 EC14945 EC14949 EC14947 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%  ASX Additional Information Tenement Tenement No. Interest Joint Venture Details Ampliación a Matilde-demasía a Cargadoiro 2 Amelita-demasía a Carmenchu-demasía a Eloísa-demasía a Carmenchu-2ª demasía a 6º Aumento a porvenir Ampliación a Matilde-demasía a Campitos-segunda demasía a Cargadoiro 2- demasía a Carmenchu-tercera demasía a 6º Aumento a porvenir-demasía a Torpeza-tercera demasía a Toledo Guajaraz Tenement CHILE – Note 1 Rosario 6 1-40 Rosario 7 1-60 Rosario 101 Salvadora Abandonara EC14948 EC14954 EC14979 EC14980 EC14981 EC14982 EC15672 EC13641-10 EC14554-20 EC14954-10 EC14980-30 EC15672-10 EC2557-30 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% IP 4.203 100% Tenement No. Interest Joint Venture Details 0310259624 0310259632 03102N2229 0310231355 0310248487 10.4% 10.4% 10.4% 10.4% 10.4% Tenement Tenement No. Interest Joint Venture Details NEW SOUTH WALES Willyama Hillston Native Dog Woodlawn South EL 8075 0% Note 2 EL 6363 39.2% EL 8236 ELs 7257 and 7469 0% 0% Perilya can earn 80%, Eaglehawk 9.8% Note 2 Royalty interest only VARISCAN MINES Annual Report 2022 71  ASX Additional Information Tenement Tenement No. Interest Joint Venture Details SOUTH AUSTRALIA Junction Dam Callabonna Tenement FRANCE – Note 4 St Pierre Beaulieu EL 5682 0% Marmota acquired 100% ownership. See Note 3 EL 5360 49% Red Metal 51%, can earn 70% Tenement No. Interest Joint Venture Details PER PER 100% 100% EL = Exploration Licence PER = Permis Exclusif de Recherche (France) IP EC = Investigation Permit (Spain) = Exploration Concession (Spain) Note 1: On 1 July 2019 the Company announced it had successfully renegotiated the terms of the existing Option Agreement to provide the Company with a participating interest of 10.4%. The Company can earn up to 90% of the project through payment of amounts totaling approximately US$2.25 milllion. Note 2: Under an agreement with Silver City Minerals Limited, Broken Hill Operations and Eaglehawk Geological Consulting Pty Ltd Variscan has converted its interest in parts of these tenements to a NSR (Net Smelter Return). Note 3: Marmota has earned 100% of the uranium rights only in EL 5682. Variscan has a 0.5% net profits royalty on production from a uranium mine. Note 4: The remaining exploration licences owned by Variscan Mines SAS (excluding the Couflens PER) have been conditionally acquired by a new wholly owned subsidiary, Variscan Mines Europe Limited. Pursuant to the approval for the Subsidiary Sale, the Ministry of Economy and Finance has imposed, without prior consultation, the compulsory relinquishment of the remaining licences. The Company has approved the relinquishment request and has yet to receive a response. The timetable for the completion of the relinquishment process is unknown. f Details of Joint Ventures Callabonna EL 5360, SA Variscan 49%. Red Metal has earned a 51% interest by spending $1 million and can earn a 70% interest by spending $3 million. Variscan then can contribute with 30% or reduce to a 15% interest, carried to completion of a BFS and repayable from Variscan’s share of net proceeds of mine production. Hillston EL 6363, NSW Variscan 39.2% and Eaglehawk 9.8%, Perilya 51%. Perilya can earn an 80% interest in this tenement by completing expenditure of $1.5 million. Variscan and Eaglehawk can then each participate with their respective interests of 16% and 4% or convert to a 10% and 2.5% free-carried interest to completion of a BFS. On completion of a BFS, Variscan and Eaglehawk can participate or convert their interests to a NSR royalty. Woodlawn South ELs 7257 and 7469, NSW Variscan holds an NSR royalty interest in both these tenements. Willyama and Native Dog, ELs 8075 and 8236 NSW Under various agreements with Silver City Minerals Limited, Variscan holds an NSR royalty interest in each of these tenements. 72 VARISCAN MINES Annual Report 2022  ASX Additional Information f Governance Framework The Board of Variscan Mines Limited (Variscan) has responsibility for corporate governance for the Company and its subsidiaries (the Group) and has implemented policies, procedures and systems of control with the intent of providing a strong framework and practical means for ensuring good governance outcomes which meet the expectations of all stakeholders. The Corporate Governance Statement, dated 30 June 2022 and approved by the Board on 19 October 2022, sets out corporate governance practices of the Group which, taken as a whole, represents the system of governance. The framework for corporate governance follows the 4rd Edition of the ASX Corporate Governance Council’s Principles and Guidelines. The Directors have implemented policies and practices which they believe will focus their attention and that of their Executives on accountability, risk management and ethical conduct. The Board will continue to review its policies to ensure they reflect any changes within the Group, or to accepted principles and good practice. Where the Board considers the Group is not of sufficient size or complexity to warrant adoption of all the recommendations set out in the ASX Corporate Governance Council’s published guidelines, these instances have been highlighted. This Corporate Governance Statement together with governance policies and committee charters is available on our website at https://www.variscan.com.au/index.php/corporate-information/corporate-governance. Shareholder Information f Shareholder Information as at 14 October 2022 Ordinary fully paid shares 266,732,024 fully paid ordinary shares on issue. Substantial shareholders CITICORP NOMINEES PTY LIMITED Shareholding 38,755,046 SLIPSTREAM RESOURCES INTERNATIONAL PTY LTD 35,625,000 DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT 16,968,750 As at 14 October 2022, there were 1,098 shareholders with less than a marketable parcel of $500. VARISCAN MINES Annual Report 2022 73  ASX Additional Information Top 20 shareholders of ordinary shares CITICORP NOMINEES PTY LIMITED Number % 38,755,046 14.530% SLIPSTREAM RESOURCES INTERNATIONAL PTY LTD 35,625,000 13.356% DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT 16,968,750 6.362% FELDI LIMITED HISPANIBAL SL LIGHTNING JACK PTY LTD BNP PARIBAS NOMS PTY LTD EFFECTIVE INVESTMENTS PTY LTD OPEKA DALE PTY LTD CCGF HOLDING PTY LIMITED DR FATT KAH FOO DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT KWAN CHEE SENG MR MICHAEL ANTHONY PARNELL BNP PARIBAS NOMINEES PTY LTD SPINERGY CAPITAL PTY LTD MERCER STREET GLOBAL OPPORTUNITY FUND LLC 7,330,772 2.748% 7,150,000 2.681% 7,080,000 2.654% 5,801,250 2.175% 5,000,000 1.875% 4,750,000 1.781% 3,607,125 1.352% 2,886,839 1.082% 2,800,000 1.050% 2,725,000 1.022% 2,550,981 0.956% 2,477,097 0.929% 2,300,000 0.862% 2,250,000 0.844% BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD 2,158,994 0.809% MR GEORGE EVAN LOUIZIDIS MR SIMON ANDREW TESTER Total Securities of Top 20 Holdings Total of Securities 2,000,000 0.750% 1,887,450 0.708% 156,104,304 58.525% 266,732,024 Range 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over Distribution of shareholders No of shareholders Ordinary shares % 740 184 74 323 245 1,566 153,739 467,728 588,404 13,248,118 252,274,035 266,732,024 0.06 0.18 0.22 4.97 94.58 100.00 74 VARISCAN MINES Annual Report 2022  ASX Additional Information Unquoted securities The Company has the following unquoted securities on issue: Description Number Number of holders Performance rights, fully vested on 30 November 2021, expiring 30 November 2023 1,250,000 Performance rights, vesting on 30 November 2022, expiring 30 November 2023 1,250,000 Unquoted options, exercisable at $1.00 on or before 20 November 2022 Unquoted options, exercisable at $0.095 on or before 30 November 2023 Unquoted options, exercisable at $0.10 on or before 30 November 2023 Unquoted options, exercisable at $0.11 on or before 30 November 2023 Unquoted options, exercisable at $0.055 on or before 30 November 2023 Unquoted options, exercisable at $0.065 on or before 30 November 2023 Unquoted options, exercisable at $0.08 on or before 30 November 2023 Unquoted options, exercisable at $0.12 on or before 30 September 2024 500,000 1,500,000 1,500,000 1,500,000 4,000,000 4,000,000 4,000,000 2,500,000 1 1 1 5 5 5 5 5 5 1 Voting rights There are no restrictions on voting rights for ordinary shares. On a show of hands every member present or by proxy shall have one vote and upon a poll each share shall have one vote. Where a member holds shares which are not fully paid, the number of votes to which that member is entitled on a poll in respect of those part paid shares shall be that fraction of one vote which the amount paid up bears to the total issued price thereof. Option holders have no voting rights until the options are exercised. There is no current on-market buy-back. VARISCAN MINES Annual Report 2022 75 www.variscan.com.au 

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