Volt Resources Annual Report 2020

Plain-text annual report

ANNUAL REPORT For the year ended 30 June 2020 VOLT RESOURCES LTD ANNUAL REPORT For the year ended 30 June 2020 Contents Corporate Directory Directors’ Report Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report Additional ASX Information 3 4 18 19 20 21 22 23 45 47 50 2 VOLT RESOURCES LTD ANNUAL REPORT For the year ended 30 June 2020 Corporate Directory Non-Executive Chairman Managing Director Non-Executive Director Directors Mr. Asimwe Kabunga Mr. Trevor Matthews Mr. Giacomo Fazio Company Secretary Ms Susan Hunter Registered Office Level 25 108 St Georges Terrace Perth WA 6000 Telephone: +61 8 9486 7788 Business Offices Level 25 108 St Georges Terrace Perth WA 6000 Volt Graphite Tanzania Plc C/- Level 1, Golden Heights Building, Wing B Plot No 1826/17 Chole Road Msasani Peninisula, Masaki PO Box 80003 Dar es Salaam, Tanzania Website and Email www.voltresources.com info@voltresources.com Share Registry Advanced Share Registry Services 110 Stirling Highway Nedlands WA 6009 Telephone: +61 8 9389 8033 Facsimile: +61 8 9262 3723 Auditors HLB Mann Judd (WA Partnership) Level 4 130 Stirling Street Perth WA 6000 Securities Exchange ASX:VRC 3 VOLT RESOURCES LTD DIRECTORS’ REPORT For the year ended 30 June 2020 Your Directors submit the financial report of Volt Resources Limited (the Company) and its Controlled Entities (Consolidated Entity) for the year ended 30 June 2020. DIRECTORS The names of Directors who held office during or since the end of the year: Asimwe Kabunga Stephen Hunt Giacomo Fazio Non-Executive Chairman Non-Executive Director (resigned 1 May 2020) Non-Executive Director (appointed 1 July 2019) Trevor Matthews Managing Director (appointed 1 May 2020) PRINCIPAL ACTIVITIES The principal activity of the Consolidated Entity during the financial year was graphite exploration and evaluation activities in Tanzania. RESULTS The loss after tax for the year ended 30 June 2020 was $3,134,096 (2019: $3,483,275). REVIEW OF OPERATIONS Overview Key operational highlights during the 2020 financial year included: Gold The June quarter saw activity in relation to Volt’s progression in establishing a new gold business whilst continuing with the development of its Bunyu Graphite Project in Tanzania. The creation of a new gold business provides Volt shareholders with the opportunity to participate in the potential value accretion from gold exploration and development activities at a time when gold prices are at historical record levels, particularly through leveraging the Company’s existing extensive networks in Africa. Gold Projects Guinea During May 2020 Volt entered into an agreement to acquire three highly prospective gold projects located in Guinea, Africa. The projects comprise six permits (“Permits”) with a total area of 388km2 in the prolific Siguiri Basin which forms part of the richly mineralised West African Birimian Gold Belt. The Company is to acquire all of the issued capital of Gold Republic Pty Ltd. Gold Republic is the legal and beneficial holder of all of the issued share capital in each of Norsk Gold Pte. Ltd, (a registered Singapore entity which in turn is the legal and beneficial holder of all of the issued share capital in Novo Mines Sarlu) and KB Gold Sarlu. Novo Mines and KB Gold hold 100% of the legal and beneficial interests in the Permits. Completion of the acquisition occurred subsequent to the year end following shareholder approval at a general meeting held on 20 July 2020. Guinea Projects and Permits Volt has six permits and has formed them into three projects – the Kouroussa Project, Mandiana Project and Konsolon Project. See Figure 2 below for the project and permit locations. 4 VOLT RESOURCES LTD DIRECTORS’ REPORT For the year ended 30 June 2020 The Kouroussa Project is formed by three permits, the Kouroussa, Kouroussa West and Fadougou permits. The Kouroussa and Kouroussa West permits border PDI’s Kaninko Project which was the subject of a recently announced discovery of high-grade gold mineralization. The Konsolon Project constitutes one large permit named Konsolon. The permit has a NW-SE trending soil geochemical anomaly identified by previous explorers. The Mandiana Project is formed by the Nzima and Monebo permits. The Nzima permit area surrounds the Nzima gold deposit which is operated by small scale miners. Figure 2. The Permits located in the Suguiri Basin which forms part of the richly mineralised West African Birimian Gold Belt. Konsolon Project Historical data compilation of the Konsolon Permit has identified multiple "gold in soil" anomalies between 1 to 2.5km in length. This project is located ~20km West from Nordgold's Lefa Gold Mine which has resources and reserves of over 6 million ounces. The company has undertaken additional review of the Konsolon legacy soil geochemistry. Multiple gold in soil anomalies were identified between 1.0km and 2.5km in length across this permit. Review of soil samples in this dataset has identified high grade gold including 20.25g/t, 12.87g/t, 5.12g/t, 4.97g/t and 3.21g/t. Volt plans to collect grab samples across prospective zones prior to undertaking an auger geochemistry program in Q4 2020 to refine drill targets. 5 VOLT RESOURCES LTD DIRECTORS’ REPORT For the year ended 30 June 2020 Kouroussa Project The desktop studies and initial site visits have identified the presence of Birimian greenstone sequences in all Kouroussa Project permits. The geology is similar to the nearby Kouroussa and Kiniero Gold Projects currently in development. In the Kouroussa area, significant artisanal workings have been mapped along a NE interpreted structural trend through the Kouroussa and Fadougou permits. Gold panning of material from one of the artisanal pits produced visible gold. This structural trend hosts the Predictive Discovery and Cassidy Gold Projects. Volt has extended its Kouroussa West permit area to the south, doubling its size. Active small scale gold mining has been identified 1.5km south of the permit area. Mandiana Project Volt's in-country geology team commenced field activities in its Monebo and Nzima permits. The Nzima permit is in close proximity to the Nzima large artisanal mining operation. Work completed includes: • • • Geological mapping of artisanal workings and collection of grab samples. Numerous active artisanal workings have been mapped across both permits. A total of 90 grab samples have been collected in Monebo (11 grab samples) and Nzima (79 grab samples) permits. The samples have been despatched to SGS Mali for analysis. Luiri Hill Gold Project - Zambia On 21 May 2020, the Company announced it had entered into an agreement to acquire an 85% interest in the Luiri Hill Gold Project (“Luiri Project”) located in south-central Zambia, 120km west-northwest of the Zambian capital of Lusaka. Shareholder approval for the issue of shares to acquire the Luiri Project was obtained at a general meeting held on 20 July 2020. The negotiations with the project vendors to finalise the Share Sale Deed and supplementary agreements have been extended and difficult to finalise. In addition, issues identified in the due diligence process in relation to the corporate entities holding the licences and other matters has raised concerns in relation to completing the acquisition. Graphite The Company remains focused on development of its wholly-owned Bunyu Graphite Project in Tanzania. The Bunyu Graphite Project is ideally located near to critical infrastructure with sealed roads running through the project area and ready access to the deep-water port of Mtwara 140km to the south east. Bunyu Stage 1 Note Issue Developments Volt’s 100% owned Tanzanian subsidiary Volt Graphite Tanzania Plc (“VGT”) is undertaking a private placement of Notes that will be listed on the Development and Enterprise Market (“DEM”) of the Stock Exchange of Mauritius (“SEM”). The Note offer is seeking to raise US$15,000,000 through the issue of Senior Notes – with a greenshoe option of up to US$15,000,000 – to raise up to US$30,000,000. In December, VGT’s application for the listing of Notes was approved by the Stock Exchange of Mauritius’ listing executive committee. The Company and its advisor, Alphier Capital (formerly Exotix Capital) along with local brokers, commenced investor meetings from 27 January 2020 as part of a roadshow to market the Notes to sophisticated investors. Due to the widespread impact of the COVID-19 pandemic on financial markets and the associated delays as institutions and investment groups changed their work arrangements leading to delays in conducting due diligence and the deferral of investment decisions, the Company provided potential investors with additional time to complete these processes. The Mauritian Note offer was extended to close on 30 June 2020 and prior to the year end was further extended to 30 September 2020. A number of alternative funding proposals were presented to the Company as result of the engagement with numerous investment groups as part of the Note offer marketing process with some of these currently being progressed in parallel with the Note Offer process. 6 VOLT RESOURCES LTD DIRECTORS’ REPORT For the year ended 30 June 2020 The purpose of progressing with the Mauritian Note offer and alternative funding proposals is to enable the Company to: (a) (b) commence the development of the Stage 1 Bunyu Graphite Project in Southern Tanzania including the construction of a 400,000tpa concentration plant and associated infrastructure; and fund the resettlement costs of people currently farming and/or living within the project development area. Bunyu Metallurgical Testwork During the March quarter the Company commenced the first stage of a testwork program on graphite ore from the Bunyu Graphite Project in Tanzania. The testwork program was undertaken by highly respected technical group, American Energy Technologies Co. (“AETC”) which is headquartered and operates research and laboratory facilities in Chicago, Illinois. In January 2020, Volt commissioned AETC to undertake a testwork program using a representative sample from drilling completed as part of the Stage 1 Feasibility Study at the Company’s Bunyu Graphite Project. A graphite product from the Bunyu ore sample was prepared and analysed for certain physical, chemical and processing properties to provide information for its suitability for several value-added graphite market applications including as anode feedstock for Li-ion battery cells. Below is a table with the Stage 1 product size distribution compared with the product distribution from the AETC graphite product from the testwork program. There is a substantial increase in the percentage of high priced +30# and +50# graphite flake with a consequent reduction mainly in the lower priced fine graphite flake. With further testwork and analysis, this could have major economic benefits for both the Stage 1 and Stage 2 Bunyu project. Size (µm) Size (#) % Distribution % Distribution Stage 1 FS AETC Testwork +500 +300 +180 +150 -150 +30 +50 +80 +100 -100 Total 1 11 27 15 46 100 7 32 25 8 28 100 If through further testwork the benefits in flake size distribution continue, the next step would be to consider the incorporation into the Stage 1 feasibility study and flowsheet design. The operating and capital cost changes to the current Stage 1 plant are expected to be minimal and more than offset by the substantial increase in sales revenue. Offtake Agreement Extended The binding sales agreement (“Agreement”) between VGT and Qingdao Tianshengda Graphite Co. Ltd. (“Tianshengda”) for 9,000 tonnes per annum of Bunyu Graphite Product over five years was executed on 1 August 2018. The Agreement is conditional upon VGT confirming that it has completed the construction and commissioning of the Stage 1 Project for mine development and upon completion of the processing plant for the treatment of sufficient ore from the Project within defined milestone dates. The milestone dates were due to expire in the March 2020 quarter. In December 2019 the Company and Tianshengda executed an amendment to the Agreement extending these milestone dates by a further 2 years. This is a strong show of support and confidence by Volt’s offtake partner, Tianshengda, and reflects not only the quality of Volt’s graphite products but the expected strong increase in 7 VOLT RESOURCES LTD DIRECTORS’ REPORT For the year ended 30 June 2020 flake graphite demand in coming years from Electric Vehicle and grid energy storage, flame retardant building materials and other new industrial applications. The Tianshengda Offtake Agreement is one of two binding offtake agreements entered into by VGT and there is a further offtake agreement in draft that is to be executed once development funding is obtained. The combined offtake quantities under the existing and planned offtake agreements has completed the sale of product forecast to be available from Stage 1 production. Community Relations Overview The Company’s 100% owned subsidiary VGT continued to strengthen relationships with local communities even though project development activities are deferred while development funding is being progressed. VGT maintained strong communication through update reports, Resettlement Working Group meetings and meetings with the district government, ward and village leaders. Furthermore, VGT continued to make local financial contributions as part of its social investment program which includes the continued payment of a monthly allowance to Nursery School teachers at Utimbula village and financial contributions for a new ward office and school classroom facilities. Corporate Overview In July 2019, the maturity date for the loan note facility with RiverFort Global Capital and Yorkville Advisors was extended by two months, from 14 July 2019 to 14 September 2019. Volt launched a Share Purchase Plan (“SPP”) in July 2019, which closed oversubscribed during August to raise a total of $1,299,000. In addition, a further $250,000 was raised via a top-up placement of new shares to sophisticated and professional investors at the same issue price as the SPP and $100,000 requiring shareholder approval at the 2019 AGM, taking the total amount raised to $1,649,000. On 23 August 2019 based on an issue price of $0.012 per share, 108,250,081 shares were issued under the Share Purchase Plan and a further 20,833,335 shares were issued in relation to the $250,000 top-up placement. Funds raised under the SPP and Placement were used to repay the outstanding loan notes due to Riverfort Global Capital and Yorkville Advisors, which was due on 14 September 2019, and for general working capital and corporate purposes. In the December 2019 quarter, the Company undertook a 1 for 12.9 non-renounceable Rights Issue (“Rights Issue”) of ordinary shares, which closed in December, raising $1,251,000 following the underwriting and placement of all shortfall shares. Funds raised from the Rights Issue were used to progress the DEM listed Note issue, discussions with other development funding sources and for general corporate and working capital. On 8 January, the Company announced that it received $638,055 from the issue of 63,805,449 shares following the underwriting and placement of the shortfall shares from the recently closed Rights Issue On 14 May 2020, the Company announced it had successfully raised $800,000 (before costs) to assist with funding the initial exploration programs on the Guinea gold project and to provide working capital for Volt’s Tanzanian graphite project and meet corporate costs. The capital raising was completed through the placement of 160,000,000 new fully paid ordinary shares at A$0.005 per share (Placement) plus 80,000,000 unlisted options with an exercise price of A$0.01 and a maturity date 24 months from the date of issue (with each investor to receive one option for every two shares subscribed for under the Placement). General Meetings The AGM was held on 20 November 2019 and all resolutions were passed. Board and Management Changes On 1 July 2019, the Company appointed Mr Giacomo (Jack) Fazio as Non-Executive Director, following the resignation of Mr Alwyn Vorster. 8 VOLT RESOURCES LTD DIRECTORS’ REPORT For the year ended 30 June 2020 On 30 April 2020, Mr Trevor Matthews resigned as CEO. On 1 May 2020, the Company appointed Mr Trevor Matthews as Managing Director, following the resignation of Mr Stephen Hunt. DIRECTOR AND COMPANY SECRETARY INFORMATION Mr Asimwe Kabunga | Non Executive Chairman From 4 August 2017, appointed 5 April 2017 Qualifications: Bachelor of Science Mathematics and Physics. Other current directorships of Listed Public Companies: Lindian Resources Limited (Chairman). Former directorships of Listed Public Companies in last three years: Strandline Resources Limited. Interests in Shares and Options over Shares in the Company: 342,350,874 fully paid ordinary shares. Mr Kabunga is a Tanzanian born Australian entrepreneur who has over 20 years technical and commercial experience in Tanzania, the United States and Australia. Mr Kabunga has extensive experience in the mining industry, logistics, land access, tenure negotiation and acquisition, as well as a developer of technology businesses. Mr Kabunga has been instrumental in establishing the Tanzania Community of Western Australia Inc, and served as its first President. Mr Kabunga was also a founding member of Rafiki Surgical Missions and Safina Foundation, both NGOs dedicated to helping children in Tanzania. Mr Trevor Matthews | Managing Director Appointed 1 May 2020 Qualifications: Bachelor of Commerce, Post Graduate Diploma in Applied Finance and Investment. Other current directorships of Listed Public Companies: nil. Former directorships of Listed Public Companies in last three years: nil. Interests in Shares and Options over Shares in the Company: 1,580,043 fully paid ordinary shares. Mr Matthews has an accounting and finance background with over 25 years experience in the resources industry including roles with North and WMC Resources in executive-level positions. More recently, his last two roles were as MD for MZI Resources (2012-16) and Murchison Metals (2005-11). During his career Mr Matthews has gained considerable experience managing a number of nascent resource projects through to production. Consequently, he has extensive executive management experience of feasibility studies, project planning/development, coordination and leveraging capital markets effectively to secure the appropriate mix of debt/equity funding, to successfully complete a mining project. Mr Giacomo (Jack) Fazio | Non-Executive Director Appointed 1 July 2019 Qualifications: Diploma in Geometry, Associate Diploma in Civil Engineering, Graduate Certificate in Project Management. Other current directorships of Listed Public Companies: Lindian Resources Limited (Non-Executive Director). Former directorships of Listed Public Companies in last three years: nil. Interests in Shares and Options over Shares in the Company: 915,892 fully paid ordinary shares. 9 VOLT RESOURCES LTD DIRECTORS’ REPORT For the year ended 30 June 2020 Mr Fazio is a highly experienced project, construction and contract/commercial management professional having held senior project management roles with Primero Group Limited, Laing O’Rourke and Forge Group Ltd. His experience ranges from feasibility studies through to engineering, procurement, construction, and commissioning of diverse mining resources, infrastructure, oil & gas and energy projects. Mr Stephen Hunt | Non-Executive Director Resigned 1 May 2020 Qualifications: Bachelor of Business (Maj. Marketing), AICD member. Other current directorships of Listed Public Companies: American Pacific Borate and Lithium Limited. Former directorships of Listed Public Companies in last three years: nil. Mr Hunt has more than 25 years of experience in the marketing of steel and mineral products worldwide. His career includes 15 years at BHP Billiton Ltd, where he spent 5 years in the London office marketing minerals to European and Middle Eastern customers. Stephen has built on his extensive network and developed his own minerals trading company, which has a strong Chinese focus. He brings along with him 15 years of cumulative board experience with ASX limited companies and was a founding director of Magnis Resources Limited. Ms Susan Hunter| Company Secretary Appointed 1 August 2017 Ms Hunter has over 25 years’ experience in the corporate finance industry and has extensive experience in Company Secretarial and Non-Executive Director roles on ASX, AIM and TSX listed companies. She is founder and Managing Director of consulting firm Hunter Corporate Pty Ltd, which specialises in the provision of corporate governance and company secretarial advice to ASX, AIM and TSX listed companies. She has previously held senior management roles at Ernst & Young, PricewaterhouseCoopers and Bankwest, both in Perth and Sydney. Ms Hunter holds a Bachelor of Commerce degree majoring in accounting and finance, is a Chartered Accountant, a Fellow of the Financial Services Institute of Australasia, a Fellow of the Institute of Chartered Secretaries and Administrators and a Graduate Member of the Australian Institute of Company Directors. MEETINGS OF DIRECTORS The following table sets out the number of meetings of the Company’s Directors (and committees of directors) held during the year ended 30 June 2020, and the number of meetings attended by each Director. Directors Mr. Asimwe Kabunga Mr. Trevor Matthews2 Mr. Giacomo Fazio3 Mr. Stephen Hunt1 Number of Meetings Eligible to Attend Number of Meetings Attended 6 1 6 5 6 1 6 5 Notes: 1. 2. S. Hunt resigned on 1 May 2020. T. Matthews was appointed as Managing Director on 1 May 2020. T. Matthews attended all Board meeting held during the year prior to his appointment as Managing Director in the capacity of CEO. 3. G. Fazio was appointed on 30 June 2019. 10 VOLT RESOURCES LTD DIRECTORS’ REPORT For the year ended 30 June 2020 SHARE OPTIONS At the date of this report the following options have been granted over unissued capital. Grant Date Details Expiry Date Exercise Price Balance 30 June 2020 25 Jun 2019 Unlisted options 23 Dec 2020 15 May 2020 Unlisted options 15 May 2022 $0.04 $0.01 25,536,000 80,000,000 105,536,000 PERFORMANCE RIGHTS During the 2020 financial year no performance rights have been issued and 10,000,000 performance rights have been cancelled or lapsed. A balance of 10,000,000 performance rights remain outstanding at balance date and at the date of this report. REMUNERATION REPORT The “Remuneration Report” which forms part of the Director’s Report, outlines the remuneration arrangements in place for the Key Management Personnel of Volt Resources Limited for the year ended 30 June 2020 and is included from page 13. EVENTS SUBSEQUENT TO REPORTING DATE No matters or circumstances have arisen since the end of the year which will significantly affect, or may No matters or circumstances have arisen since the end of the year which will significantly affect, or may significantly affect, the state of affairs or operations of the Consolidated Entity in future financial periods other than the following: On 20 July 2020, the Company held a General Meeting of shareholders, the following resolutions voted on and passed. • • • • Ratification of the prior issue of 160,000,000 shares and 80,000,000 options issued on 15 May 2020. Approval for the issue of 121,718,576 shares to Kabunga Holdings Pty Ltd. Approval for the issue of $3.75million in shares to the vendors on the Luiri Project. Approval for the issue of 10,000,000 Performance Rights to Mr Hashimu Millanga. On 28 July 2020, the Company announced the completion of the acquisition of the Guinea Gold Project via the acquisition of all of the issued shares in Gold Republic Pty Ltd (“Gold Republic”). Gold Republic holds the permits for three gold projects (Mandiana, Konsolon and Kouroussa) located in Guinea, Africa. The projects comprise six permits located in the prolific Suiguri Basin with a total area of 388km2. LIKELY DEVELOPMENTS The Consolidated Entity intends to continue its exploration activities on its existing tenements, assess the viability of existing tenements and to acquire further suitable tenements for exploration and/or development as opportunities arise. The Consolidated Entity is progressing options, including the Senior Note Offer to be listed on issue on the Mauritian DEM, to raise development funding, initially for the Stage 1 Bunyu Graphite Project to allow directors to make a Final Investment Decision (FID) based on the Stage 1 Feasibility Study completed in July 2018. Subsequent to development funding and resulting positive FID for Stage 1, the Company would then be in a position to commence resettlement of affected landowners, upgrade of access roads and water supply, preparation of the plant site and commencement of construction works. 11 VOLT RESOURCES LTD DIRECTORS’ REPORT For the year ended 30 June 2020 ENVIRONMENTAL REGULATION The Consolidated Entity has a policy of exceeding or at least complying with its environmental obligations. During the financial year, the Consolidated Entity did not materially breach any particular or significant regulation in respect to environmental management in any of the jurisdictions in which it operates. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There have been no significant changes in the state of affairs of the group to the date of this report. DIVIDENDS No dividends have been declared, provided for or paid in respect of the financial year ended 30 June 2020 (2019: nil). INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company has agreed to indemnify all the Directors and Officers of the Company for any liabilities to another person (other than the Company or related body corporate) that may arise from their position as Directors or Officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. During the financial year the Company paid a premium in respect of a contract insuring the Directors and Officers of the Company and its controlled entities against any liability incurred in the course of their duties to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. PROCEEDINGS ON BEHALF OF COMPANY No person has applied for leave of court to bring proceedings on behalf of the Consolidated Entity or intervene in any proceeding to which the Consolidated Entity is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Consolidated Entity was not a party to any such proceedings during the year. CORPORATE GOVERNANCE A copy of Volt’s 2020 Corporate Governance Statement, which provides detailed information about governance, and a copy of Volt’s Appendix 4G which sets out the Company’s compliance with the recommendations in the fourth edition of the ASX Corporate Governance Council’s Principles and Recommendations is available on the corporate governance section of the Company’s website at https://voltresources.com/. NON-AUDIT SERVICES No fees for non-audit services were paid or payable to the external auditor of the Parent Entity during the year ended 30 June 2020 (2019: nil). AUDITOR’S INDEPENDENCE DECLARATION The auditor’s independence declaration for the year ended 30 June 2020, which forms a part of the directors’ report has been received and is included within this annual report at page 18. 12 VOLT RESOURCES LTD DIRECTORS’ REPORT For the year ended 30 June 2020 REMUNERATION REPORT (Audited) This remuneration report outlines the key management personnel remuneration arrangements of the Consolidated Entity in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report, key management personnel (KMP) of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Consolidated Entity, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes the specified executives. For the purposes of this report, the term 'executive' encompasses the chief executive, senior executives and secretaries of the Parent and the Consolidated Entity. Remuneration Committee The Company is not of a sufficient size to justify the establishment of a remuneration committee and so the Board of Directors of the Company fulfils this obligation and is responsible for determining and reviewing remuneration arrangements for the directors and executives. The Board of Directors assesses the appropriateness of the nature and amount of remuneration of executives on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality, high performing director and executive team. Remuneration Philosophy The performance of the Company depends upon the quality of its directors and executives. To prosper, the Company must attract, motivate and retain highly skilled directors and executives. To this end, the charter adopted by the remuneration committee aims to align rewards with achievement of strategic objectives. The remuneration framework applied provides for a mixture of fixed and variable pay and a blend of short and long term incentives as appropriate. Remuneration Structure In accordance with best practice corporate governance, the structure of non-executive director and executive remuneration is separate and distinct. Non-Executive Directors The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at General Meeting and was capped at $360,000 in November 2018. The Company’s policy is to remunerate non-executive directors at market rates (for comparable companies) for time, commitment and responsibilities. Fees for non-executive directors are not linked to the performance of the Company, however to align directors’ interests with shareholders’ interests, directors are encouraged to hold shares in the Company, and subject to approval by shareholders, are permitted to participate in the Employee Share Option Plan. Retirement Benefits and Allowances No retirement benefits or allowances are paid or payable to directors of the Company (other than statutory or mandatory superannuation contributions, where applicable). Performance on shareholder wealth In considering the Group’s performance and benefits for shareholder wealth, the Board have regarded the following indices in respect of the current and previous four financial years: EPS loss (cents) Net profit / loss ($’000) Exploration expenditure ($’000) Share price ($) and Evaluation 2020 (0.20) (3,134) 355 0.024 2019 (0.24) (3,483) 603 0.020 2018 (0.27) (3,079) 4,863 0.021 2017 (0.32) (3,102) 6,167 0.029 2016 (0.57) (3,807) 3,114 0.105 13 VOLT RESOURCES LTD DIRECTORS’ REPORT For the year ended 30 June 2020 Executives Base Pay Executives are offered a competitive level of base pay which comprises the fixed (unrisked) component of their pay and rewards. Base pay for senior executives is reviewed annually to ensure market competitiveness. There are no guaranteed base pay increases included in any senior executives’ contracts. Short Term Incentives Payment of short-term incentives is dependent on the achievement of key performance milestones as determined by the Board of Directors. No bonuses have been paid or are payable in respect of the year to 30 June 2020. There have been no forfeitures of bonuses by key management personnel during the current or prior periods and no cash bonuses remained unvested at year-end. Long Term Incentives - Share-Based Compensation Both performance rights and share options have been issued to Directors and executives as part of their remuneration. Share-based compensation instruments are not issued based on performance criteria, however, they are issued with vesting conditions and exercise prices set specifically to increase goal congruence between Directors, executives and shareholders. Performance rights and options granted carry no dividend or voting rights. The Company currently has no policy in place to limit an individual’s risk exposure in relation to the issue of company securities as remuneration. Service Agreements In late November 2016, the Company entered into an agreement with Mr Trevor Matthews, in his capacity as Chief-Executive Officer commencing 1 January 2017 with a base package inclusive of statutory superannuation and before incentives of $300,000 per annum, plus a company provided car parking bay at its corporate office or payment in lieu. Under an established Performance Rights Plan approved by shareholders, Mr Matthews was issued 35,000,000 Performance Rights during the prior year in the following tranches subject to vesting conditions: • • • Tranche A – 15,000,000 Performance Rights vest on the Company raising a minimum of US$30 million for the development of the Bunyu Stage 1 Project by 31 March 2019. Tranche B – 10,000,000 Performance Rights vest on the receipt of first sales revenue from product produced from the Binyu Stage 1 Project evidenced by the receipt of cash proceeds in a Volt Group Company’s bank account by 30 June 2020. Tranche C – 10,000,000 Performance Rights vest on the achieving a 20 business day VWAP equal to or exceeding 15 cents per share for the Company within 3 years of grant date. The condition for Tranche A was not achieved by 31 March 2019 resulting in the 15,000,000 performance rights lapsing, the condition for Tranche B was not achieved by 30 June 2020 resulting in 10,000,000 performance rights lapsing. On 1 May 2020, Mr Trevor Matthews resigned his position as CEO and was appointed Managing Director. As Managing Director, Mr Matthews will receive a monthly retainer of $3,000 with additional hours charged at a consulting rate of $200 per hour. Mr Matthews has a one-month notice period by either party without cause and Immediate termination by the company with cause. Performance rights are to be agreed by the Volt Board and approved by shareholders. Use of Remuneration Consultants The Board is satisfied that the recommendations of remuneration consultants (if utilised) were made free from undue influence from any member of Key Management Personnel. No remuneration consultants were utilised during the 2020 financial year. 14 VOLT RESOURCES LTD DIRECTORS’ REPORT For the year ended 30 June 2020 Remuneration of Directors and Key Management Personnel 2020 Short term Performance rights Post employment Directors Asimwe Kabunga Giacomo Fazio1 Trevor Matthews3 Stephen Hunt2 KMP Trevor Matthews3 Mark Hoffmann4 Base salary & annual leave Director fees $ $ - - - - - 321,655 148,485 470,140 470,140 123,559 47,800 6,000 43,800 221,159 - - - 221,159 Consulting fees $ Share based payments $ Super- annuation $ Performance related % Total $ 28,000 - 62,000 - 90,000 - - - 90,000 - - - - - - - - - - (72,449) - (72,449) (72,449) 25,000 11,749 36,749 36,749 151,559 47,800 68,000 43,800 311,159 274,206 160,234 434,440 745,599 - - - - (26.4) (16.7) (9.7) Giacomo Fazio was appointed 1 July 2019. Stephen Hunt resigned 1 May 2020. Trevor Matthews resigned as Chief Executive Officer and was appointed Managing Director 1 May 2020. 1. 2. 3. 4. Mark Hoffmann was made redundant 5 February 2020. 2019 Directors Asimwe Kabunga Stephen Hunt Alwyn Vorster2 Matthew Bull1 KMP Trevor Matthews Mark Hoffmann Short term Leave and other entitlements $ Cash salary and fees $ 133,071 52,560 52,560 1,000 239,191 270,000 209,331 479,331 718,522 - - - - - 2,923 953 3,876 3,876 Performance rights Post employment Consulting fees $ Share based payments $ Super- annuation $ Performance related % Total $ - - - - - - - - - - - - 591,582 591,582 591,582 - - - 95 95 30,000 19,886 49,886 49,981 133,071 52,560 52,560 1,095 239,286 894,505 230,170 1,124,675 1,363,961 - - - - - 66.1 - 52.6 43.4 1. Matthew Bull resigned 9 July 2018. 2. Alwyn Vorster resigned 30 June 2019. 15 VOLT RESOURCES LTD DIRECTORS’ REPORT For the year ended 30 June 2020 Share Based Compensation Options There were no options granted, exercised or lapsed during the financial year, in relation to key management personnel’s remuneration. Performance Rights The conditions for Tranche B were not achieved resulting in 10,000,000 performance rights lapsing. The fair value of the performance rights granted is estimated as at the date of grant using the black scholes model (except Tranche C) and trinomial option model (Tranche C) taking into account the following inputs: Black Scholes Option Model Tranche B Performance Rights expiring 30-Jun-2020 n/a 80% 2.025% 1.69 years nil $0.021 $0.021 Trinomial Option Model Tranche C3 Performance Rights expiring 22- Oct-2021 $0.15 70% 2.09% 3 years nil $0.021 $0.004 Details Share price barrier Expected volatility Risk free interest rate Expected life Exercise price Grant date share price Fair value per right Shares Exercise of Options / Conversion of Perf. Rights Net Other Change* Balance at End of Year Issued as Remuneration Balance at Beginning of Year 160,142,017 - 125,935 12,687,026 300,000 173,254,978 Key Management Personnel 2020 Asimwe Kabunga Giacomo Fazio Trevor Matthews Stephen Hunt2 Mark Hoffmann3 Total 2019 Asimwe Kabunga Stephen Hunt Matthew Bull Alwyn Vorster1 Trevor Matthews Mark Hoffmann Total 1. 2. 3. Mark Hoffmann was made redundant 5 February 2020. 160,142,017 12,687,026 4,088,885 6,229,437 72,920 300,000 183,520,285 Alwyn Vorster resigned 30 June 2019. Stephen Hunt resigned 1 May 2020. - - - - - - - - - - - - - - - - - - - - - - - - - - 60,490,281 915,892 1,454,108 (12,687,026) (300,000) 49,873,255 - - (4,088,885) (6,229,437) 53,015 - (10,265,307) 220,632,298 915,892 1,580,043 - - 223,128,233 160,142,017 12,687,026 - - 125,935 300,000 173,254,978 16 VOLT RESOURCES LTD DIRECTORS’ REPORT For the year ended 30 June 2020 Performance rights Key Management Personnel 2020 Balance at Beginning of Year Granted as Remuneration Vested and converted into ordinary shares Lapsed as hurdle not achieved / cancelled Balance at End of Year - - - - - - - - 20,000,000 - - 20,000,000 Asimwe Kabunga Giacomo Fazio Trevor Matthews Stephen Hunt2 Mark Hoffmann3 Total 2019 Asimwe Kabunga Stephen Hunt Matthew Bull Alwyn Vorster1 Trevor Matthews Mark Hoffmann Total 1. 2. 3. Mark Hoffmann was made redundant 5 February 2020. - 2,500,000 - 2,000,000 15,000,000 - 19,500,000 Alwyn Vorster resigned 30 June 2019. Stephen Hunt resigned 1 May 2020. - - - - 35,000,000 - - - - - - - - - - - - - - - - - (10,000,000) - - (10,000,000) - (2,500,000) - (2,000,000) (30,000,000) - (34,500,000) - - 10,000,000 - - 10,000,000 - - - - 20,000,000 - 20,000,000 No employee share option were granted as remuneration during the 2020 and 2019 financial years. Performance rights have been the preferred method of remuneration in recent years. Other Transactions with Key Management Personnel of the Consolidated Entity Entities associated with Mr Stephen Hunt and Mr Asimwe Kabunga both provided unsecured short-term loans of $50,000 each. The loans have a 10% interest rate per annum payable at maturity and a maturity date of 15 July 2019 or earlier at the Company’s discretion. These loans were repaid in full on 1 July 2019. On 14 November 2019 Mr Asimwe Kabunga and Mr Trevor Matthews both provided unsecured short-term loans of $50,000. The loans have a 10% interest rate per annum payable at maturity and an initial maturity date of 31 December 2019 or earlier at the Company’s discretion. The loan from Mr Kabunga was repaid on 9 January 2020 by issue of shares at $0.01. On 8 April 2020, a further $20,000 was lent by Mr Trevor Matthews, the balance of $73,595 including capitalised interest remains unpaid at 30 June 2020. During the 2020 financial year, there were no other transactions with Key Management Personnel. Signed in accordance with a resolution of directors. End of Remuneration Report Asimwe Kabunga Non-Executive Chairman 30 September 2020 17 AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the consolidated financial report of Volt Resources Limited for the year ended 30 June 2020, 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 30 September 2020 B G McVeigh Partner 18 VOLT RESOURCES LTD FINANCIAL STATEMENTS For the year ended 30 June 2020 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2020 2 2 3 Revenue Interest income Other income Expenses Corporate compliance fees Corporate management costs Foreign exchange gain (loss) Marketing and investor relations costs Occupancy expenses Share based payments Finance costs Other expenses Loss before income tax Income tax (expense)/benefit Loss after income tax 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 loss for the year, net of income tax Total comprehensive loss for the year Loss attributable to: Owners of Volt Resources Limited Non-controlling interests Total comprehensive loss attributable to: Owners of Volt Resources Limited Non-controlling interests 2020 $ 580 41,685 (401,755) (1,524,291) 290 (205,945) (46,364) 72,449 (765,662) (350,582) (3,179,595) 45,499 (3,134,096) 2019 $ 4,071 - (534,882) (1,840,920) 38,222 (202,064) (156,427) (591,582) (233,280) (607,586) (4,124,448) 641,173 (3,483,275) 1,161,504 (61,075) 1,161,504 (1,972,592) (61,075) (3,544,350) (3,139,173) 5,077 (3,134,096) (3,493,873) 10,598 (3,483,275) (1,973,390) 798 (1,972,592) (3,554,948) 10,598 (3,544,350) Loss per share attributable to owners of Volt Resources Limited Basic and diluted loss per share (cents per share) 4 (0.19) (0.24) The accompanying notes form part of these financial statements. 19 VOLT RESOURCES LTD FINANCIAL STATEMENTS For the year ended 30 June 2020 Consolidated Statement of Financial Position As at 30 June 2020 Current Assets Cash and cash equivalents Trade and other receivables Prepayments Total current assets Non-current Assets Trade and other receivables Other financial assets Property, plant and equipment Deferred exploration and evaluation expenditure Total non-current assets Total assets Current Liabilities Trade and other payables Provisions Borrowings Total current liabilities Non-current Liabilities Borrowings Total non-current liabilities Total liabilities Net assets Equity Share capital Reserves Accumulated losses Parent entity interest Non-controlling interests Total equity Note 5 6 8 9 10 12 12 13 14 2020 $ 264,449 129,281 39,465 433,195 - - 40,846 23,959,210 24,000,056 24,433,251 679,635 - 1,543,299 2,222,934 - - 2,222,934 22,210,317 2019 $ 1,171,421 41,748 40,413 1,253,582 3,900 30,000 45,676 22,394,753 22,474,329 23,727,911 347,354 62,260 1,523,709 1,933,323 1,004,648 1,004,648 2,937,971 20,789,940 67,880,852 1,113,436 (46,574,311) 22,419,977 (209,660) 22,210,317 64,415,434 20,102 (43,435,138) 21,000,398 (210,458) 20,789,940 The accompanying notes form part of these financial statements. 20 VOLT RESOURCES LTD FINANCIAL STATEMENTS For the year ended 30 June 2020 Consolidated Statement of Changes in Equity For the year ended 30 June 2020 Share capital $ Reserves $ Accumulated losses $ Parent entity interest $ Non-controlling interests $ At 1 July 2018 Loss for the year Other comprehensive loss Total comprehensive loss Transactions with owners in their capacity as owners Shares issued Cost of share issue Equity exercised/expired Share based payments At 30 June 2019 At 1 July 2019 Loss for the year Other comprehensive loss Total comprehensive loss Transactions with owners in their capacity as owners Shares issued Cost of share issue Share based payments At 30 June 2020 63,973,234 - - - 434,747 7,453 - - 64,415,434 64,415,434 - - - 3,699,963 (234,545) - 67,880,852 The accompanying notes form part of these financial statements. 163,204 - (61,075) (61,075) - - (673,609) 591,582 20,102 20,102 - 1,165,783 1,165,783 - - (72,449) 1,113,436 (40,614,874) (3,554,948) 61,075 (3,493,873) - - 673,609 - (43,435,138) (43,435,138) (3,139,173) - (3,139,173) - - - (46,574,311) 23,521,564 (3,554,948) - (3,554,948) 434,747 7,453 - 591,582 21,000,398 21,000,398 (3,139,173) 1,165,783 (1,973,390) 3,699,063 (234,545) (72,449) 22,419,977 (221,056) 10,598 - 10,598 - - - - (210,458) (210,458) 5077 (4,279) 798 - - - (209,660) Total equity $ 23,300,508 (3,544,350) - (3,544,350) 434,747 7,453 - 591,582 20,789,940 20,789,940 (3,134,096) 1,161,504 (1,972,592) 3,699,963 (234,545) (72,449) 22,210,317 21 VOLT RESOURCES LTD FINANCIAL STATEMENTS For the year ended 30 June 2020 Consolidated Statement of Cash Flows For the year ended 30 June 2020 Cashflows from Operating Activities Government incentive received Research and development tax credit received Payments to suppliers and employees Interest received Finance costs Net cash used in operating activities Cashflows from Investing Activities Payments for exploration expenditure Proceeds from disposal of plant and equipment Refund of rental bond Net cash (used in) / from investing activities Cashflows from Financing Activities Proceeds from issue of shares Proceeds from borrowings Repayment of borrowings Payments of share issue costs Costs of loan financing Net cash from financing activities Net decrease in cash held Cash and cash equivalents at beginning of period Cash and cash equivalents as at year end 2020 $ 2019 $ 33,348 - (2,252,585) 580 (120,514) (2,339,171) (355,195) - - (355,195) 3,380,155 132,208 (1,526,424) (198,545) - 1,787,394 (906,972) 1,171,421 264,449 - 641,173 (3,831,464) 5,320 (19,210) (3,204,181) - 609 59,088 59,697 429,825 2,435,218 (491,625) 39,812 (289,602) 2,123,628 (1,020,856) 2,192,277 1,171,421 5 5 The accompanying notes form part of these financial statements. 22 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 Notes to the Consolidated Financial Statements Statement of significant accounting policies Basis of preparation 1. (a) These financial statements are general purpose financial statements, which have been prepared in accordance with the requirements of the Corporations Act 2001, Accounting Standards and Interpretations and comply with other requirements of the law. The accounting policies detailed below have been consistently applied to all of the years presented unless otherwise stated. The financial statements are for the Consolidated Entity consisting of Volt Resources Limited and its subsidiaries. The financial statements have also been prepared on a historical cost basis. Cost is based on the fair values of the consideration given in exchange for assets. The Company is a listed public company, incorporated in Australia. The entity’s principal activities are graphite exploration activities in Tanzania. Going Concern (b) The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. At 30 June 2020 the Consolidated Entity had cash of $264,449 and net assets of $22,210,317 primarily represented by deferred exploration expenditure of $23,959,210 on its Graphite prospecting tenements in Tanzania. During the year, net cash outflows from operating activities totalled $2,339,171 primarily in relation to corporate compliance, management, marketing and investor relations costs of the listed parent entity. The Directors are of the opinion that the Consolidated Entity is a going concern due to the following factors: (i) The Consolidated Entity is progressing a Senior Note Offer and listing on the Stock Exchange of Mauritius and other funding options. Assuming a successful Note issue and the sourcing of supplementary funding, all expenditures relating to the Bunyu Graphite project and Tanzanian activities will be met out of these funds in Tanzania. The corporate costs to be incurred in Australia are expected to approximate A$2.5 million per annum; (ii) The Company has the ability to raise additional working capital in the shorter term from: a. a capital raising; b. issue of convertible securities; and (iii) The Company has the ability to sell assets, or an interest in assets. Whilst the Directors are confident that the above initiatives will generate sufficient funds to enable the Consolidated Entity to continue as a going concern for at least the period of 12 months from the date of signing this financial report, should these initiatives be unsuccessful, there exists a material uncertainty that may cast significant doubt on the ability of the Consolidated Entity to- continue as a going concern and, therefore, whether it will be able to realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. Adoption of new and revised standards (c) In the year ended 30 June 2020, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Consolidated Entity and effective for the current annual reporting periods beginning on or after 1 July 2019. As a result of this review, the Directors have determined that there is no material impact of the new and revised Standards and Interpretations on the Consolidated Entity and therefore no material change is necessary to the Consolidated Entity’s accounting policies. 23 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 The new Standards effective and adopted are documented below: AASB 16 Leases If a lessee has significant operating leases outstanding at the date of initial application, right-of-use assets will be recognised for the amount of the unamortised portion of the useful life, and lease liabilities will be recognised at the present value of the outstanding lease payments. This will increase EBITDA as operating leases that were previously expensed will be amortised as a right-of-use asset, and an interest expense on the lease liability. However, there will be an overall reduction in net profit before tax in the early years of a lease because the amortisation and interest charges will exceed the current straight-line expense incurred under the existing standard. This trend will reverse in the later years. There will be no change to the accounting treatment for short-term leases less than 12 months and leases of low value items, which will continue to be expensed on a straight-line basis. The Consolidated Entity has considered this standard and identified there has been no impact on the financial statements as the Consolidated Entity does not have any lease contracts in place. Standards and Interpretations in issue not yet adopted The Directors have also reviewed all of the new and revised Standards and Interpretations in issue not yet adopted that are relevant to the Consolidated Entity and effective for the half-year reporting periods beginning on or after 1 January 2019. As a result of this review, the Directors have determined that there is no material impact of the new and revised Standards and Interpretations in issue not yet adopted on the Consolidated Entity and therefore no material change is necessary to the Consolidated Entity’s accounting policies. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Statement of compliance (d) The financial report was authorised for issue on 30 September 2020. The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS). Basis of consolidation (e) The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries. Control is achieved when the Company: • • • has power over the investee; is exposed, or has rights, to variable returns from its involvement in with the investee; and has the ability within its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements listed above. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss from the date the Company gains control until the date when the Company ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the controlling interest having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Consolidated Entity’s accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members are eliminated in full on consolidation. 24 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 Critical accounting judgements and key sources of estimation uncertainty (f) The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Share-based payment transactions: The Consolidated Entity measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using either the Black and Scholes or Trinomial Options formula taking into account the terms and conditions upon which the instruments were granted. Exploration and evaluation expenditure: The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgment in determining whether it is likely that future economic benefits are likely either from future exploitation or sale or where activities have not reached a stage which permits a reasonable assessment of the existence of reserves. The determination of a Joint Ore Reserves Committee (JORC) resource is itself an estimation process that requires varying degrees of uncertainty depending on sub-classification and these estimates directly impact the point of deferral of exploration and evaluation expenditure. The deferral policy requires management to make certain estimates and assumptions about future events or circumstances, in particular whether an economically viable extraction operation can be established. Estimates and assumptions made may change if new information becomes available. 2. Revenue and expenses Other income Cashflow boost 2020 $ 41,685 41,685 2019 $ - - Expenses include: Share based payments - Performance rights (72,449) 591,582 Other expenses Corporate advisors and brokers, including business development Depreciation Travel and accommodation Other Total other expenses 1,667 9,029 29,785 310,101 350,582 113,939 50,729 118,470 324,448 607,586 Accounting policy: revenue recognition Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the 25 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. Interest income Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset. 3. Income tax A reconciliation between tax expense and the product of accounting loss before income tax multiplied by the Group’s applicable tax rate is as follows: Total loss before income tax expense 2020 $ 2019 $ (3,179,595) (4,124,448) Tax at the group rate of 30% (2019: 30%) Share based payments Non-deductible expenses Non-assessable income Capital raising costs deductible Income tax losses not brought to account Profit and loss proportion of research and development tax credit Income tax benefit 953,879 21,735 (635,584) 12,506 29,196 (381,732) 45,499 45,499 1,237,334 (177,475) (795,288) - 34,376 (298,947) 641,173 641,173 The tax rates used in the above reconciliation are the corporate tax rates of Australia 30% and Tanzania 30% (2019: Australia 30%, Tanzania 30%). The 27.5% tax rate on taxable profits for small businesses does not apply to Australian corporate entities under Australian tax law if greater than 80% passive income is expected. The Consolidated Entity has tax losses arising in Australia of $20,339,592 (2019: $19,251,419) that are available indefinitely for offset against future taxable profits of the companies in which the losses arose. The availability of these losses is subject to the satisfaction of either the same business or continuity of ownership tests. Tax on losses arising in Tanzania to 30 June 2019 totalled A$1.649 million equivalent. The Tanzania tax losses for the year ended 30 June 2020 are yet to be determined. Deferred tax assets have not been recognised in respect of these items because it is not sufficiently probable that future taxable profit will be available against which the Consolidated Entity can utilise the benefits thereof. Accounting policy: 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: • when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference 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 26 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: • when 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; or • when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference 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. Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. 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 profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. Tax consolidation legislation Volt Resources Limited and its 100% owned Australian resident subsidiary have implemented the tax consolidation legislation. Current and deferred tax amounts are accounted for in each individual entity as if each entity continued to act as a taxpayer on its own. Volt Resources Limited recognises both its own current and deferred tax amounts and those current tax liabilities, current tax assets and deferred tax assets arising from unused tax credits and unused tax losses which it has assumed from its controlled entities within the tax consolidated group. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts payable or receivable from or payable to other entities in the Consolidated Entity. Any difference between the amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) controlled entities in the tax consolidated group. Accounting policy: other taxes Revenues, expenses and assets are recognised net of the amount of GST except: • when the GST incurred on a 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; and receivables and payables, which 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 financing 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. 4. Loss per share 2020 $ 2019 $ Loss attributable to owners of Volt Resources Limited used in calculating basic and dilutive EPS (3,139,173) (3,483,275) 27 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 Weighted average number of ordinary shares used in calculating basic and diluted earnings / (loss) per share (*): Basic / diluted loss per share 2020 Number 2019 number 1,677,153,454 1,455,635,268 Cents per share Cents per share (0.19) (0.24) *As the Consolidated Entity is loss making in both 2020 and 2019, no potential ordinary shares are considered to be dilutive as they would act to decrease the loss per share. The options on issue (Note 13) represent potential ordinary shares but are not dilutive and accordingly have been excluded from the weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted loss per share. Accounting policy: earnings/loss per share Basic earnings/loss per share is calculated as net profit or loss attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share is calculated as net profit or loss attributable to members of the parent, adjusted for: • • • costs of servicing equity (other than dividends) and preference share dividends; the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. 5. Cash and cash equivalents Reconciliation of operating loss after tax to the net cash flows from operations: Loss after tax Non-cash items Depreciation and impairment charges Foreign currency (gain)/loss Share based payments Capitalised interest Debt establishment fees Change in assets and liabilities Trade and other receivables Prepayments Trade and other payables Provisions Net cash outflow from operating activities Reconciliation of cash: Cash at bank and on hand 2020 $ 2019 $ (3,134,096) (3,483,275) 9,029 (3,910) (72,449) 454,926 189,994 (53,633) 948 332,280 (62,260) (2,339,171) 50,728 (38,222) 591,582 - - 112,485 6,917 (447,789) 3,393 (3,204,181) 264,449 264,449 1,171,421 1,171,421 28 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 Accounting policy: cash and cash equivalents Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash at bank earns interest at floating rates based on daily bank deposit rates. 6. Trade and other receivables Current GST receivable Cashflow boost receivable Other receivable Non-current Rental bond 2020 $ 23,426 16,674 89,181 129,281 - - 2019 $ 15,562 - 26,186 41,748 3,900 3,900 Accounting policy: trade and other receivables Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within periods ranging from 15 days to 30 days. The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. 7. Other financial asset Term deposit 2020 $ - - 2019 $ 30,000 30,000 Accounting policy: financial assets Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, its carrying value is written off. Financial assets at fair value through profit or loss Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making 29 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss. Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income include equity investments which the consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition. Impairment of financial assets The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss. 8. Plant and equipment Plant and equipment – at cost Accumulated depreciation Net book amount Balance at the beginning of the year Acquisitions Depreciation expense Disposal Foreign currency translation Balance at the end of the year 2020 $ 158,378 (117,532) 40,846 45,676 - (9,029) - 4,199 40,846 2019 $ 148,617 (102,941) 45,676 100,480 - (50,729) (4,075) - 45,676 Accounting policy: property, plant and equipment Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows: • Plant and equipment – over 3 years The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. Impairment The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. The recoverable amount of plant and equipment is the higher of fair value less costs to sell 30 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating unit to which the asset belongs, unless the asset's value in use can be estimated to be close to its fair value. An impairment exists when the carrying value of an asset or cash- generating units exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in profit or loss for the year as a separate line item. Derecognition and disposal An item of property, 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 asset) is included in profit or loss in the year the asset is derecognised. 9. Deferred exploration and evaluation expenditure Exploration and evaluation phase – at cost At beginning of the year Exploration expenditure during the year Foreign currency translation Total exploration and evaluation 2020 $ 2019 $ 22,394,753 355,195 1,209,262 23,959,210 21,786,559 602,879 5,315 22,394,753 Accounting policy: exploration and evaluation Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied: a) b) the rights to tenure of the area of interest are current; and at least one of the following conditions is also met: (i) the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or (ii) exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years. Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development. Capitalised exploration and evaluation expenditure represents the accumulated cost of acquisition and subsequent cost of exploration and evaluation of the properties. 31 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 Ultimate recoupment of these costs is dependent on the successful development and commercial exploitation, or alternatively, sale, of the respective areas of interest. Accounting policy: impairment of assets The Consolidated Entity 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 Consolidated Entity 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 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. That 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. 10. Trade and other payables Trade payables and accruals 2020 $ 679,635 679,635 2019 $ 347,354 347,354 Accounting policy: trade and other payables Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial year that are unpaid and arise when the Consolidated Entity becomes obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months. Trade payables are non-interest bearing and are normally settled on 30-day terms. 11. Provisions Employee entitlements 2020 $ - - 2019 $ 62,260 62,260 32 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 12. Borrowings Current Directors’ loansa),d) Short-term loanb) Insurance premium funding Non-current 18 month US$ loanc) Total borrowings Movement in borrowings: 2020 Opening balance Proceeds from borrowings Repayment of borrowings Non-cash repayments Interest paid Interest and borrowing costs expensed Forex movement on USD loans 2019 Opening balance Proceeds from borrowings Repayment of borrowings Interest paid Capitalised interest Interest and borrowing costs expensed Forex movement on USD loans 2020 $ 2019 $ 73,595 1,461,159 8,545 1,543,299 - - 1,543,299 100,948 1,422,761 - 1,523,709 1,004,648 1,004,648 2,528,357 Other loans $ Lars bader loan $ Working capital $ Insurance premium funding $ Total $ 1,422,761 1,004,648 - (1,422,761) - - - - (13,236) (102,186) 13,236 540,902 17,795 - - 100,948 120,000 (100,000) (50,329) (948) 3,924 - - 2,528,357 12,208 132,208 (3,663) (1,526,424) - (50,329) (201) 201 - (116,571) 558,263 17,795 1,461,159 73,595 8,545 1,543,299 Other loans $ Lars bader loan $ Working capital $ Convertible loan $ Total $ - - - 399,844 399,844 1,339,286 995,932 100,000 - 2,435,218 (91,781) (10,329) - 160,714 24,871 - - 3,274 5,442 - - - 948 - - 1,422,761 1,004,648 100,948 (399,844) (491,625) - - - - - (10,329) 4,222 166,156 24,871 2,528,357 a) On the 27 May 2019 Volt Director’s Mr Hunt and Mr Kabunga provided unsecured loans of $50,000 each on commercial terms or better at 10.0% per annum repayable by 15 July 2019 or earlier at the Company’s election. These were repaid in full on 1 July 2019. b) The Company entered into a secured funding agreement on 14 January 2019 to provide a short-term loan for six months with a face value equivalent to A$1.5 million (US$1.0 million) and principal repayments totalling approximately A$0.1 million during the April to June 2019 quarter, the loan is 33 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 denominated in US$ and the proceeds totalled the equivalent of A$1,339,286. Subsequent to year’s end the loan maturity was extended from 14 July 2019 to 14 September 2019. This loan was paid during the year. c) On the 24 June 2019 as part of US$1.0 million in funding from a European based high net worth investor, Volt received US$700,000 in unsecured loan funds with the full amount due at maturity in 18-months. The total amount payable at maturity includes a deferred establishment fee of US$350,000. On 26 June 2020, interest payable of US$70,000 was capitalised to the loan balance bringing to total loan to US$770,000. The interest rate applicable for the remainder of the loan term increased to 30% per annum. d) On 14 November 2019 Mr Asimwe Kabunga and Mr Trevor Matthews both provided unsecured short- term loans of $50,000. The loans have a 10% interest rate per annum payable at maturity and an initial maturity date of 31 December 2019 or earlier at the Company’s discretion. The loan from Mr Kabunga was repaid on 9 January 2020 by issue of shares at $0.01. On 8 April 2020, a further $20,000 was lent by Mr Trevor Matthews, the balance of $73,595 including capitalised interest remains unpaid at 30 June 2020. 13. Issued capital a) Share capital Ordinary shares fully paid 2020 $ 2019 $ 67,880,852 67,880,852 64,415,434 64,415,434 b) Movement in shares on issue 2020 number 2020 $ 2019 number 2019 $ Balance at the beginning of the year Share placements Shares issued in lieu of interest Share purchase plan Rights issue Share issue costs Balance at the end of the year 1,476,323,875 168,333,334 - 129,083,416 125,096,172 1,898,836,797 64,415,434 1,455,379,711 20,845,714 98,450 - - - 67,880,852 1,476,323,875 900,000 - 1,549,000 1,250,963 (234,545) 63,973,234 429,824 4,923 - - 7,453 64,415,434 c) Share options Grant Date Details Expiry Date Exercise Price Balance 30 June 2019 Movement during the year Balance 30 June 2020 25 Jun 2019 Unlisted options 23 Dec 2020 15 May 2020 Unlisted options 15 May 2022 $0.04 $0.01 25,536,000 - - 80,000,000 25,536,000 80,000,000 25,536,000 80,000,000 105,536,000 The options granted during the 2020 financial year were free attaching to the May 2020 placement. The options granted during the 2019 financial year were free attaching to the June 2019 placement 34 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 d) Performance rights Milestone Expiry Date Tranche Receipt of the first sales revenue from product produced from the Bunyu Stage 1 project Achieving a VRC 20-day VWAP of 15 cents per share 30 Jun 2020 Within 3 yrs of grant B C Balance 30 June 2019 Expired during the year Balance 30 June 2020 10,000,000 (10,000,000) - 10,000,000 - 10,000,000 20,000,000 (10,000,000) 10,000,000 The vesting conditions for the Trance B performance rights were not met prior to the expiry date. Tranche C rights contain market based vesting conditions and have been valued using an up and in single barrier share option pricing model with a Parisian barrier adjustment. The model takes into consideration that the Tranche C Rights will vest at any time during the performance period, given that the VWAP exceeds the determined barrier over the specified number of days. The model incorporates a trinomial option pricing model. Accounting policy: issued capital 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. 14. Reserves Share based payments reserve Foreign currency translation reserve Movement in reserves; Share based payments reserve Balance at the beginning of the year Share based payment Transfer to accumulated losses on expiry of options and lapse of performance rights Balance at the end of the year Foreign currency translation reserve Balance at the beginning of the year Currency translation differences Balance at the end of the year Total reserves 2020 $ 22,393 1,091,043 1,113,436 2020 $ 94,842 (72,449) - 22,393 (74,740) 1,165,783 1,091,043 1,113,436 2019 $ 94,842 (74,740) 20,102 2019 $ 176,869 591,582 (673,609) 94,842 (13,665) (61,075) (74,740) 20,102 35 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 Accounting policy: foreign currency translation Both the functional and presentation currency of Volt Resources Limited and its Australian subsidiaries is Australian dollars. Each entity in the Consolidated Entity determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. All exchange differences in the consolidated financial report are taken to profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. The functional currency of foreign operations through Dugal Resources Lda and Xiluva Mozambi Lda, is Mozambique New Metical (MZN) The functional currency of foreign operations through Volt Graphite Tanzania Limited is Tanzanian Shillings (TZS) and US Dollars (USD). As at the reporting date the assets and liabilities of these subsidiaries are translated into the presentation currency of Volt Resources Limited at the rate of exchange ruling at the reporting date and their statements of comprehensive income are translated at the weighted average exchange rate for the year. The exchange differences arising on the translation are taken directly to a separate component of equity, being recognised in the foreign currency translation reserve. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in profit or loss. Share based payments 15. Vesting expense of $137,551 was recognised during the year in relation to the Tranche B and C performance rights on issue to Trevor Matthews. A $210,000 reversal of amounts previously expensed has also been recognised as a result of the vesting conditions attached to the Tranche B rights not being met upon their expiry. The fair value of the equity settled performance rights granted is estimated as at the date of grant using the Trinomial Option model (Tranche C Performance Rights) taking into account the terms and conditions upon which the options were granted: Details Tranche Expiry Share price barrier Expected volatility Risk free interest rate Expected life Exercise price Grant date share price Fair value per right/option Performance Rights C 22 Oct 2021 $0.15 70% 2.09% 3 years nil $0.021 $0.004 Accounting policy: share-based payment transactions Equity settled transactions: The Consolidated Entity provides benefits to employees (including senior executives) of the Consolidated Entity in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an external valuer using a Black-Scholes model. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Volt Resources Limited (market conditions) if applicable. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are 36 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 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 a) b) the extent to which the vesting period has expired; and the Consolidated Entity’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 consolidated statement of profit or loss and other comprehensive income 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, as 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 cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were 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/loss per share (see Note 4). 16. Financial instruments a) Capital risk management The Consolidated Entity manages its capital to ensure that entities in the Consolidated Entity will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Consolidated Entity’s overall strategy remains unchanged from 2018. The capital structure of the Consolidated Entity consists of debt, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings. None of the entities are subject to externally imposed capital requirements. Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax, and general administrative outgoings. Gearing levels are reviewed by the Board on a regular basis in line with its target gearing ratio, the cost of capital and the risks associated with each class of capital. Financial assets Cash and cash equivalents Trade and other receivables Other financial assets Financial liabilities Trade and other payables Borrowings 2020 $ 264,449 129,281 - 393,730 679,635 1,543,299 2,222,934 2019 $ 1,171,421 45,648 30,000 1,247,069 347,354 2,528,357 2,875,711 b) Financial risk management objectives The Consolidated Entity is exposed to market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Consolidated Entity seeks to minimise the 37 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 effect of these risks, by using derivative financial instruments to hedge these risk exposures where appropriate. The use of financial derivatives is governed by the Consolidated Entity’s policies approved by the board of directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by management on a continuous basis. The Consolidated Entity does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. c) Market risk The Consolidated Entity’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates, commodity prices and exchange rates. There has been no change to the Consolidated Entity’s exposure to market risks or the manner in which it manages and measures the risk from the previous period. d) Foreign currency risk management The Consolidated Entity undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters. No forward contracts or other hedging instruments have been used during the current or prior year as the Consolidated Entity’s foreign exchange exposure is not considered to be sufficiently material to justify such activities. The carrying amounts of the Consolidated Entity’s foreign currency denominated monetary assets and monetary liabilities at the balance date expressed in Australian dollars are as follows: Assets Liabilities 2020 2019 2020 2019 US dollars Tanzanian shillings 7,574 1,024 1,012,701 691 1,461,159 - 2,348,088 - Foreign currency sensitivity analysis The Consolidated Entity is exposed to US Dollar (USD) and Tanzanian shillings (TZS) currency fluctuations. The following table details the Consolidated Entity’s sensitivity to a 10% increase and decrease in the Australian dollar against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number indicates a weakening against the respective currency. For a strengthening of the Australian Dollar against the respective currency there would be an equal and opposite impact on the result and other equity and the balances below would be negative. USD impact Result for the year TZS impact Result for the year e) Interest rate risk 2020 $ 2019 $ (145,359) (133,539) 102 69 As at and during the year ended on reporting date the Consolidated Entity had no significant interest-bearing assets or liabilities, other than liquid funds on deposit and various loans. As such, the Consolidated Entity’s income and operating cash flows (other than interest income from funds on deposit and interest expense on the loans) are substantially independent of changes in market interest rates. 38 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 The Consolidated Entity’s exposure to interest rate risk for each class of financial assets and liabilities is set out below: Financial assets Cash and cash equivalents Financial liabilities Borrowings 2020 $ 2019 $ Floating 264,449 1,171,421 Fixed 1,543,299 2,528,357 Consolidated Entity and Parent Company sensitivity The sensitivity analyses below have been determined based on the exposure to interest rates at the balance date and the stipulated change taking place at the beginning of the financial year and held constant through the reporting period. At balance date, if interest rates had been 80 basis points higher or lower and all other variables were held constant, the Consolidated Entity’s net result would increase or decrease by $2,116 (2019: $9,371). This is mainly attributable to the Consolidated Entity’s exposure to interest rates on its variable rate cash holdings. f) Credit risk The Consolidated Entity seeks to trade only with recognised, trustworthy third parties and it is the Group’s policy to perform credit verification procedures in relation to any customers wishing to trade on credit terms with the Consolidated Entity. The Consolidated Entity has no significant concentrations of credit risk. g) Liquidity risk Prudent liquidity management involves the maintenance of sufficient cash, marketable securities, committed credit facilities and access to capital markets. It is the policy of the Board to ensure that the Consolidated Entity is able to meet its financial obligations and maintain the flexibility to pursue attractive investment opportunities through keeping committed credit lines available where possible, ensuring the Consolidated Entity has sufficient working capital and preserving the 15% share issue limit available to the Company under the ASX Listing Rules. h) Net fair value The carrying amount of financial assets and liabilities recorded in the financial statements approximate their fair value as at 30 June 2020. Accounting policy: investments and other financial assets Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off. Financial assets at fair value through profit or loss Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss. 39 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income include equity investments which the consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition. Impairment of financial assets The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss. 17. Commitments and contingencies Within one year - exploration Within one year – office lease One to five years - exploration 2020 $ 49,888 - - 49,888 2019 $ 148,027 1,950 349,157 499,134 There are no contingent liabilities as at the date of this report, other than for the Resettlement Action Plan totalling US$3.5 million where commencement of resettlements and any commitments are contingent on the consolidated entity making a Financial Investment Decision (FID) to develop the Bunyu Graphite project which is contingent on an appropriate level of development funding being sourced. On production and sale of graphite products from the Bunyu Graphite project, the previous owners are entitled to a 3% net smelter royalty on the sale of dried concentrate. At the Company’s election, at any stage in the future the Company may pay US$2.0 million to reduce the royalty rate to 1.5%. Changes to the legal framework governing the natural resources sector in Tanzania were passed by the Tanzanian Parliament in early July 2017 and the Company advised the ASX of the impact of the new legislation on 7 July 2017. One impact was the Tanzanian Government would have a 16% non-dilutable free carried interest in Volt’s Tanzanian subsidiary which increases from a current interest of nil. The 16% interest is to apply to mining operations under a mining licence or a special mining licence. The Company is not aware of any further guidance or application of this change to date. The Consolidated entity currently retains a 100% interest in Volt’s Tanzanian subsidiary which holds the Bunyu Graphite Project. 40 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 Financial reporting by segments 18. AASB 8 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 function of the chief operating decision maker is performed by the Board collectively. Information reported to the Board for the purposes of resource allocation and assessment of performance is focused broadly on the Group’s diversified activities across different sectors. The Group’s reportable segments under AASB 8 are Corporate and Graphite. 2020 Revenue Interest received Total segment revenue Expenditure Corporate compliance fees Corporate management costs Foreign exchange gain (loss) Marketing and investor relations costs Occupancy expenses Share based payments Finance costs Other expenses Total segment expenditure Loss before income tax SEGMENT ASSETS Segment operating assets Total segment assets SEGMENT LIABILITIES Segment operating liabilities Total segment liabilities 2019 Revenue Interest received Total segment revenue Corporate $ Graphite $ 41,685 580 42,265 (321,000) (1,186,612) (40,721) (204,818) (45,362) 72,449 (756,889) (327,046) (2,809,999) (2,767,734) - - - (80,755) (337,679) 41,011 (1,127) (1,002) - (8,773) (23,536) (411,861) (411,861) Total $ 41,685 580 42,265 (401,755) (1,524,291) 290 (205,945) (46,364) 72,449 (765,662) (350,582) (3,221,860) (3,179,595) 400,382 400,382 24,032,869 24,032,869 24,433,251 24,433,251 2,222,934 2,222,934 - - 2,222,934 2,222,934 Corporate $ Graphite $ 4,071 4,071 - - Total $ 4,071 4,071 41 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 Expenditure Corporate compliance fees Corporate management costs Foreign exchange gain (loss) Marketing and investor relations costs Occupancy expenses Share based payments Finance costs Other expenses Total segment expenditure Loss before income tax SEGMENT ASSETS Segment operating assets Total segment assets SEGMENT LIABILITIES Segment operating liabilities Total segment liabilities Corporate $ Graphite $ Total $ (528,472) (1,380,719) 33,793 (201,730) (111,243) (591,582) (233,280) (346,588) (3,359,821) (3,355,750) (6,410) (460,201) 4,429 (334) (45,184) - - (260,998) (768,698) (768,698) (534,882) (1,840,920) 38,222 (202,064) (156,427) (591,582) (233,280) (607,586) (4,128,519) (4,124,448) 2,038,498 2,038,498 22,394,753 22,394,753 24,433,251 24,433,251 2,937,971 2,937,971 - - 2,937,971 2,937,971 Accounting policy: 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 Board of Directors of Volt Resources Limited. Subsidiaries 19. The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries: Volt Graphite Tanzania Plc Mozambi Graphite Pty Ltd Mozambi Resource Investments Pty Ltd Dugal Pty Ltd Dugal Resources Lda Mozambi Ventures Lda Xiluva Mozambi Lda Country of Incorporation Tanzania Australia Australia Australia Mozambique Mozambique Mozambique 2020 % 100 100 100 100 70 80 80 2019 % 100 100 100 100 70 80 80 The Company’s intention is to wind up or liquidate the three Mozambique subsidiaries and Dugal Pty Ltd. 42 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 20. Auditors remuneration Amounts received or due and receivable by the auditor for: Amounts received or due and receivable by HLB Mann Judd for an audit or review of the financial report 33,900 39,927 2020 $ 2019 $ Amounts received or due and receivable by other auditors: Amounts received or due and receivable by Innovex in Tanzania for the audit of Volt Graphite Tanzania Ltd 21. Key management personnel remuneration Short term employee benefits Share based payments Post-employment benefits (superannuation) Total remuneration 11,950 45,850 2020 $ 781,299 (72,449) 36,749 745,599 6,410 46,337 2019 $ 722,398 591,582 49,981 1,363,961 Parent entity information 22. The following details information related to the parent entity, Volt Resources Limited, as at 30 June 2020. The information presented here has been prepared using consistent accounting policies as presented in Note 1. Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets/(liabilities) Issued capital Reserves Accumulated losses Total equity Loss for the year Other comprehensive income for the year Total comprehensive loss for the year 2020 $ 2019 $ 398,954 23,659,953 24,058,907 2,228,505 - 2,228,505 21,830,402 67,880,852 22,033 (46,072,483) 21,830,402 (2,743,631) - (2,743,631) 1,219,906 22,880,951 24,100,857 391,436 2,528,357 2,919,793 21,181,064 64,415,434 94,482 (43,328,852) 21,181,064 (2,775,654) - (2,775,654) 43 VOLT RESOURCES LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2020 Commitments Within one year One to five years 2020 $ - - - 2019 $ 1,950 - 1,950 Accounting policy: parent entity financial information The financial information for the parent entity, Volt Resources Limited, disclosed in this note has been prepared on the same basis as the consolidated financial statements, except as set out below. Investments in subsidiaries, associates and joint venture entities Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial statements of Volt Resources Limited. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments. Share-based payments The Consolidated Entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a Black- Scholes model. Events subsequent to year end 23. No matters or circumstances have arisen since the end of the year which will significantly affect, or may significantly affect, the state of affairs or operations of the Consolidated Entity in future financial periods other than the following: On 20 July 2020, the Company held a General Meeting of shareholders, the following resolutions voted on and passed. • Ratification of the prior issue of 160,000,000 shares and 80,000,000 options issued on 15 May 2020. • Approval for the issue of 121,718,576 shares to Kabunga Holdings Pty Ltd. • Approval for the issue of $3.75million in shares to the vendors on the Luiri Project. • Approval for the issue of 10,000,000 Performance Rights to Mr Hashimu Millanga. On 28 July 2020, the Company announced the completion of the acquisition of the Guinea Gold Project via the acquisition of all of the issued shares in Gold Republic Pty Ltd (“Gold Republic”). Gold Republic holds the permits for three gold projects (Mandiana, Konsolon and Kouroussa) located in Guinea, Africa. The projects comprise six permits located in the prolific Suiguri Basin with a total area of 388km2. 44 VOLT RESOURCES LTD DIRECTORS’ DECLARATION For the year ended 30 June 2020 1) In the opinion of the directors of Volt Resources Limited (the ‘Company’): a. the accompanying financial statements and notes and the additional disclosures are in accordance with the Corporations Act 2001 including: i. giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2020 and of its performance for the year then ended; and ii. complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations regulations 2001; 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 financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. This declaration has been made after receiving the declarations required to be made to the directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2020. This declaration is signed in accordance with a resolution of the Board of Directors. Asimwe Kabunga Non-Executive Chairman 30 September 2020 45 INDEPENDENT AUDITOR’S REPORT To the members of Volt Resources Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Volt Resources Limited (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2020, 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 2020 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 1(b) in the financial report, which indicates that a material uncertainty exists that may cast significant doubt on the Group’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 above, we have determined the matters described below to be the key audit matters to be communicated in our report. 46 Key Audit Matter How our audit addressed the key audit matter Exploration and evaluation asset Refer to Note 9 In accordance with AASB 6 Exploration for and Evaluation of Mineral Resources, the Group has capitalised the acquisition costs and all exploration and evaluation expenditure for its graphite project in Tanzania. The Group has applied the cost model after recognition. Our audit focused on the Group’s impairment assessment of the carrying amount of the capitalised exploration and evaluation asset, as this is the most significant asset 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 to suggest that the carrying amount of the 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 the Directors’ assessment of potential indicators of impairment; • We obtained evidence that the Group has current rights to tenure of its areas of interest; • We examined the exploration budget for the year ending 30 June 2021 and discussed with management the nature of planned ongoing activities; • We enquired with management, reviewed ASX announcements and reviewed minutes of Directors’ meetings to ensure that the Group had not resolved to discontinue exploration and evaluation at any of its areas of interest; 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 consolidated annual report for the year ended 30 June 2020, 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. 47 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. 48 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 2020. In our opinion, the Remuneration Report of Volt Resources Limited for the year ended 30 June 2020 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 30 September 2020 B G McVeigh Partner 49 VOLT RESOURCES LTD ADDITIONAL ASX INFORMATION For the year ended 30 June 2020 Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information is current at 22 September 2020. Number of Shareholders and Option Holders Shares As at 22 September 2020, there were 3,750 shareholders holding a total of 20,020,555,373 fully paid ordinary shares. Options As at 22 September 2020, there were 25,536,000 un-quoted Options exercisable at $0.04 on or before 31 December 2020 and 80,000,000 un-quoted Options exercisable at $0.01 on or before 15 May 2022. Distribution of Equity Securities Ordinary Shares Unlisted Options 1 - 1000 1001 - 5000 5001 - 10,000 10,001 - 100,000 100,001 and above Total There were 1,279 holders totalling 16,497,163 ordinary shares holding less than a marketable parcel. Number of Shares Number of Holders - - - - 8 8 Number of Holders 255 194 149 1,595 1,557 3,750 83,457 535,832 1,193,688 74,581,887 1,944,160,509 2,020,555,373 Number of Shares - - - - 105,536,000 105,536,000 Top Twenty Share Holders Shareholder name KABUNGA HOLDINGS PTY LTD VEN CAPITAL PTY LTD MR PETER RAYMOND NOTMAN + MR ELAINE NOTMAN BOSSWHAT PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED CITICORP NOMINEES PTY LIMITED LITTLEJOHN EMBREY ENGINEERING PTY LTD CHATA HOLDINGS PTY LTD BNP PARIBAS NOMS PTY LTD GROUP ROPA INVESTMENTS (GIBRALTAR) LIMITED 1 2 3 4 5 6 7 8 9 10 11 MR LESLIE THOMAS KING + MRS HEATHER KING HAJ CORPORATE & FINANCIAL SERVICES PTY LTD 12 13 MR SCOTT WILLIAMS 14 MR ROHAN PATNAIK 15 MR RICHARD HIM SIM VOM 16 MR KEVIN BRADY 17 18 19 MR STEPHEN MARK YOUNG + MRS LILIBETH VILLAMIN YOUNG ENDJUA PTY LTD J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 20 MR PAUL JOHN ANSTEE + MR RODNEY MICHAEL SMITH Ordinary shares held number 342,350,874 75,085,000 57,680,802 35,000,000 33,808,575 30,592,493 29,362,556 27,464,286 21,201,624 21,000,000 20,000,000 19,780,000 18,810,470 16,250,000 12,258,657 12,165,724 11,023,427 10,937,947 10,157,272 10,130,000 % 16.94 3.72 2.85 1.73 1.67 1.51 1.45 1.36 1.05 1.04 0.99 0.98 0.93 0.8 0.61 0.6 0.55 0.54 0.5 0.5 815,059,707 40.34 50 VOLT RESOURCES LTD ADDITIONAL ASX INFORMATION For the year ended 30 June 2020 Substantial Share Holders The names of substantial shareholders pursuant to the Company’s share register are as follows: Shareholder name 1 KABUNGA HOLDINGS PTY LTD Ordinary shares held number 342,350,874 342,350,874 % 16.94 16.94 Voting Rights All ordinary shares carry one vote per share without restriction. Tenement Listing Project Country Region Tanzania Tanzania Tanzania Tanzania Tanzania Tanzania Tanzania Tanzania Tanzania Tanzania Masasi District Masasi District Nachingwea, Ruangwa & Masasi Districts Ruangwa & Masasi Districts Newala & Masasi Districts Newala, Ruangwa & Masasi Districts Ruangwa & Lindi Districts Masasi District Masasi District Masasi District e t i h p a r G a n a z n a T i Licence Number Status ML 591/2018 ML 592/2018 Live Live PL 10643/2015 Renewal PL 10644/2015 PL 10667/2015 Renewal Renewal PL 10668/2015 Renewal PL 10717/2015 PL 10788/2016 PL 13207/2018 PL 13208/2018 Renewal Renewal Application Application Beneficial Interest 100% 100% 100% 100% 100% 100% 100% 100% # # # Prospecting Licence Applications PL 13207/2018 and PL 13208/2018 are for 100% of the remaining area covered by PL 10718/2015 which ceased on the granting of the two Mining Licenses over a portion of the previously held prospecting license tenement area. Summary of results of the entity’s annual review of its Mineral Resources and Ore Reserves. The Company carries out an annual review of its Mineral Resources and Ore Reserves as required by the ASX Listing Rules. The review was carried out as at 30 June 2020. The estimates for Ore Reserves and Mineral Resources were prepared and disclosed under the JORC Code 2012. As of the 30 June 2020, the Company reviewed the Mineral Resource and Ore Reserve inventories and found: • • • All Mineral Resource and Ore Reserve statements follow JORC 2012 guidelines. Opportunities for the Company to convert lower classified Mineral Resources into higher classification, and Opportunities to convert appropriate Mineral Resources into Ore Reserves, with follow up exploratory work including but not limited to infill drilling and further metallurgical test work. The Company is not aware of any new information or data that materially affects the information included in the Annual Statement about Mineral Resources or Ore Reserves and confirms that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed as of 30 June 2020. Mineral Resource and Ore Reserve Statements All Mineral Resources and Ore Reserves announced by Volt Resources Ltd are within the Republic of Tanzania. Volt Resources the consolidated entity, is targeting Graphite mineralisation within the Republic of Tanzania. 51 VOLT RESOURCES LTD ADDITIONAL ASX INFORMATION For the year ended 30 June 2020 As of the 30 June 2020, the Graphite Mineral Resources for Volt Resources were: Bunyu Project Mt TGC (%) Measured Namangale North (now Bunyu 1) Total Measured Indicated Namangale North (now Bunyu 1) Namangale South (now Bunyu 2 & 3) Total Indicated Inferred Namangale North (now Bunyu 1) Namangale South (now Bunyu 2 & 3) Total Inferred Total Resource 20 20 122 33 155 264 23 286 461 5.3 5.3 5.2 4.3 5.0 5.0 3.6 4.9 4.9 Note: The Mineral Resource is inclusive of the Ore Reserves. Inconsistencies in totals are due to rounding. Refer to announcement “Pre-Feasibility Study Completed” dated 15 December 2016. This Mineral Resource statement has been compiled in accordance with the guidelines of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code – 2012 Edition). Mineral Resources were based on cut-off grades of 2.5% TGC for Namangale North and 4% TGC for Namangale South. As per clause 49 of the JORC 2012 Code, to detail the specifications of the minerals reported above: Size µm Label 500 Super Jumbo Jumbo 300 180 Large 150 Medium 75 Small Fine -75 Namangale 1 (now Bunyu 1) % 1 13 29 12 27 18 Namangale 2 (now Bunyu 2) % 9 29 29 8 16 9 Namangale 3 (now Bunyu 3) % 5 26 30 10 19 11 Note: Inconsistencies in totals are due to rounding. Refer to announcement “Pre-Feasibility Study Completed” dated 15 December 2016. As of the 30 June 2020, the Graphite Ore Reserves for Volt Resources were: Ore Reserve Classification Ore (Mt) TGC (%) Contained Graphite (Mt) Namangale 1 North (now Bunyu 1) Namangale 2 South (now Bunyu 2) Namangale 3 South (now Bunyu 3) Subtotal - Proved Namangale 1 North (now Bunyu 1) Namangale 2 South (now Bunyu 2) Namangale 3 South (now Bunyu 3) Subtotal - Probable Total Ore Reserve Proved Probable 19.3 - - 19.3 95.8 6.4 5.8 108.1 127.4 4.32 - - 4.32 4.4 5.11 3.05 4.37 4.36 0.8 - - 0.8 4.2 0.3 0.2 4.7 5.6 52 VOLT RESOURCES LTD ADDITIONAL ASX INFORMATION For the year ended 30 June 2020 Note: Inconsistencies in totals are due to rounding. Refer to announcement “Pre-Feasibility Study Completed” dated 15 December 2016. This Ore Reserve statement has been compiled in accordance with the guidelines of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code – 2012 Edition). Ore Reserves are based on the following processing cut-off that varied between deposits: 1.29% TGC for Namangale 1, 1.52% for Namangale 2, and 1.76% for Namangale 3. Material changes in Mineral Resources and Ore Reserve Holdings from the previous financial year The material changes in the Graphite Mineral Resources from the 2019 financial year to the 2020 financial year: There were no material changes to Mineral Resources or Ore Reserves during the year ended 30 June 2020. An updated subset of the Mineral Resources and Ore Reserves relating to the Stage 1 higher grade portion of the Bunyu 1 deposit was announced on 31 July 2018 and is further detailed below. Governance Arrangements and Internal Controls with respect to Mineral Resource and Ore Reserve Estimates The Company ensures that all Mineral Resource and Ore Reserve calculations are subject to appropriate levels of governance and internal controls. Exploration Results are collected and managed by competent qualified geologists and metallurgists. All data collection activities are conducted to industry standards based on a framework of quality assurance and quality control protocols covering all aspects of sample collection, topographical and geophysical surveys, drilling, sample preparation, physical and chemical analysis and data and sample management. Mineral Resource and Ore Reserve estimates are prepared by qualified independent Competent Persons. If there is a material change in the estimate of a Mineral Resource, the modifying factors for the preparation of Ore Reserves, or reporting an inaugural Mineral Resource or Ore Reserve, the estimate and supporting documentation in question are reviewed by a suitably qualified independent Competent Person. The Company reports its Mineral Resources and Ore Reserves on an annual basis in accordance with the JORC Code 2012 Edition. The Ore Reserves and Mineral Resources Statement is based on and fairly represents information and supporting documentation prepared by competent and qualified independent external professionals. The Mineral Resources Statement has been approved by a Competent Person, Mr Mark Biggs of ROM Resources Ltd, a member of the Australasian Institute. The Ore Reserves Statement has been approved by Mr Andrew Law of Optiro Pty Ltd, a Competent Person who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Law, Mr Biggs and Mr Bull have consented to the inclusion of the Statement in the form and context in which it appears in this Annual Statement or Report. Competent Person’s Statements The information above is extracted from the announcement dated 15 December 2016. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and, in the case of estimates of Mineral Resources and Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to apply and have not materially changed. On 31 July 2018, the Company announced an updated subset of the Mineral Resources and Ore Reserves relating to the Stage 1 higher grade portion of the Bunyu 1 deposit. The subset is further detailed in a separate section with separate competent person statements below. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement. Nevertheless, for ease of access, please see the relevant Competent Person’s statements below: 53 VOLT RESOURCES LTD ADDITIONAL ASX INFORMATION For the year ended 30 June 2020 The information in this report that relates to Mineral Resources is based on information compiled by Mr Mark Biggs, a Competent Person who is a member of the Australasian Institute of Mining and Metallurgy. Mr Biggs is a Director of ROM Resources Pty Ltd. Mr Biggs has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Biggs consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report that relates to Ore Reserves is based on information compiled Mr Andrew Law, a Competent Person who is a Fellow and Chartered Professional of the Australasian Institute of Mining and Metallurgy. Mr Law was previously a Director of Optiro. Mr Law has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Law consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. In accord with the Stage 1 Feasibility Study for the Bunyu Graphite Project Tanzania dated 30 July 2018 – The Bunyu 1 (Stage 1): Mineral Resources & Ore Reserves tables below, relate to the Stage 1 higher grade portion of the Bunyu 1 deposit, not the entire Bunyu 1 deposit as detailed above. The July 2018 resource model was developed for investigation of the Stage 1 pit designs. The global Mineral Resource for Bunyu 1 reported with the 2016 Pre-feasibility Study results, on 15 December 2016 has not been re-estimated. The July 2018 model is restricted to above 240 mRL and includes only the top two layers of mineralisation within the southern area and the top four layers of mineralisation within the northern area. Geological interpretation has identified additional mineralised layers that are not included in the July 2018 resource model: seven within the northern area, eight within the south area and two within the eastern area. The Mineral Resources have been reported for the July 2018 model at a 2.93% TGC cut-off grade and are included in the Table below. This cut-off grade was determined from technical and economic assessment of the mineralisation within the Stage 1 Feasibility Study (FS) pits by Orelogy. This resource tabulation is not a resource statement for the entire Bunyu 1 project and is presented for validation of the July 2018 resource model which has been used as the basis of the July 2018 Stage 1 FS pit designs. Bunyu 1 (Stage 1): Mineral Resources (restricted above the base of model surface and above 240 mRL) reported above a cut-off grade of 2.93% TGC Classification Measured Indicated Inferred Total Mt 8.0 31.9 36.9 76.8 TGC (%) 5.8 5.6 5.1 5.4 Note: this update does not cover the global Mineral Resources at Bunyu 1 The July 2018 mineral resource model was used to determine the Bunyu 1 Stage 1 FS Ore Reserve and associated mine production schedule. The selected mining scenario, based on the outcomes of an open pit optimisation, was for three pits to be developed over 7 years with a total of 2.8Mt of mill feed being mined. The scope of the Stage 1 FS was to develop a project plan for a relatively small component of the Bunyu 1 deposit. The Bunyu Stage 1 FS Ore Reserve is considered a subset of the 2016 Namangale 1 Ore Reserve released by Volt 54 VOLT RESOURCES LTD ADDITIONAL ASX INFORMATION For the year ended 30 June 2020 Resources 15 December 2016 as part of the 2016 Namangale Pre-Feasibility Study. It therefore does not replace or update this reserve and is for the purposes of underpinning the Stage 1 FS. The overall Ore Reserve for Bunyu (previously Namangale) will be updated as part of the Bunyu Stage 2 DFS which will be based on the whole of the Bunyu 1 deposit. The specifications of the minerals reported above: Size µm Label 500 Super Jumbo Jumbo 300 Large 180 150 Medium -150 Small to Fine Bunyu 1 (Stage 1) % 1 11 27 15 46 Note: Inconsistencies in totals are due to rounding. Refer to announcement “Positive Stage 1 Feasibility Study Bunyu Graphite Project, Tanzania” dated 30 July 2018. The Bunyu 1 (Stage 1): Ore Reserves (not the entire Bunyu 1 deposit) Material Ore Location North Central South Starter South Main TOTAL Classification Proved Probable Subtotal Proved Probable Subtotal Proved Probable Subtotal Proved Probable Subtotal Proved Probable Total kt 833 60 892 472 343 815 399 399 709 709 1,305 1,511 2,815 TGC % 6.1% 5.1% 6.0% 6.2% 5.6% 5.9% 0.0% 6.8% 6.8% 0.0% 6.6% 6.6% 6.1% 6.4% 6.3% Waste kt Total kt Strip Ratio 109 1,001 0.12 593 1,408 0.73 916 1,315 2.30 649 1,358 0.91 2,267 5,082 0.81 The Bunyu Stage 1 FS Ore Reserve comprises 46% Proved and 54% Probable Ore Reserves. Both the Stage 1 Ore Reserve and Mineral Resource underpinning it have been prepared by competent persons in accordance with JORC requirements. The Bunyu Stage 1 FS mining schedule was designed to generate a minimum 400,000tpa of plant feed annually, for seven years, resulting in an average feed grade of 6.26% TGC. Competent Person’s Statements The information in the Stage 1 Feasibility Study for the Bunyu Graphite Project Tanzania dated 30 July 2018 that relates to Mineral Resources is based upon information compiled by Mrs Christine Standing who is a Member of the Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Mrs Standing is an employee of Optiro Pty Ltd and has sufficient experience relevant to the style of mineralisation, the type of deposit under consideration and to the activity undertaken to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, 55 VOLT RESOURCES LTD ADDITIONAL ASX INFORMATION For the year ended 30 June 2020 Mineral Resources and Ore Reserves. Mrs Standing consents to the inclusion in this annual statement of a summary based upon her information in the form and context in which it appears. The information in the Stage 1 Feasibility Study for the Bunyu Graphite Project Tanzania dated 30 July 2018 that relates to Ore Reserves was compiled by Mr Ross Cheyne who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Cheyne is a Director of Orelogy Consulting Pty Ltd and has sufficient experience relevant to the style of mineralisation, the type of deposit under consideration and to the activity undertaken to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Cheyne consents to the inclusion in this annual statement of a summary based upon his information in the form and context in which it appears. 56

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