West Wits Mining Annual Report 2020

Plain-text annual report

West Wits Mining Limited ABN 89 124 894 060 Annual report For the year ended 30 June 2020 West Wits Mining Limited ABN 89 124 894 060 Annual report - 30 June 2020 Contents Corporate Directory ........................................................................................................................................................ 3 Chairman's letter ............................................................................................................................................................ 4 Review of operations and activities ................................................................................................................................ 6 Directors' report ............................................................................................................................................................ 18 Auditor's Independence Declaration ............................................................................................................................ 35 Consolidated statement of profit or loss and other comprehensive income ................................................................. 36 Consolidated statement of financial position ................................................................................................................ 37 Consolidated statement of changes in equity ............................................................................................................... 38 Consolidated statement of cash flows .......................................................................................................................... 39 Notes to financial statements ..................................................................................................................................... 40 Directors' declaration ................................................................................................................................................... 74 Independent auditor's report to the members ............................................................................................................... 75 Shareholder information ............................................................................................................................................... 80 Page 2 of 81 Corporate Directory Directors Mr Michael Quinert Executive Chairman Mr Jac van Heerden (appointed on 16 April 2020) Managing Director Mr Hulme Scholes Non-Executive Director Dr Andrew Tunks Non-Executive Director Mr Peter O’Malley (appointed on 16 April 2020) Non-Executive Director Mr Daniel Pretorius (resigned on 16 April 2020) Non-Executive Director Joint Company Secretaries Mr Simon Whyte Mr Phillip Hains (resigned on 16 April 2020) Principal registered office in Australia Level 3, 62 Lygon Street Carlton VIC 3053 Australia Share and debenture register Automic Pty Ltd Level 5 126 Phillip Street Sydney NSW 2000 +61 2 9698 5414 Auditor William Buck Level 20, 181 William Street Melbourne VIC 3000 Solicitors Quinert Rodda & Associates Suite 1, Level 6, 50 Queen Street Melbourne VIC 3000 Bankers National Australia Bank Level 2, 330 Collins Street Melbourne VIC 3000 Website http://www.westwitsmining.com/ Page 3 of 81 Chairman's letter Dear Fellow Shareholders, On behalf of the Board of Directors, I am pleased to present the 2020 Annual Report for West Wits Mining Limited (ASX: WWI). The Company’s primary focus during the 2020 financial period was the progression of the mining right application at the Witwatersrand Basin Project (“WBP”) which hosts a 3.65M oz Au JORC Resource. A critical milestone was reached in June 2020 with the Department of Mineral Resources (“DMR”) approving the Company’s Environmental Authorisation after extensive engagement and an exhaustive review period. The DMR requested the Company’s proof of funds for rehabilitation in 1Q 2020, a key final step in the DMR’s review process which provided a strong signal of the Government’s support for the project and that the application process is nearing conclusion. The Company’s provision of the Rehab Guarantee to the DMR gave the Board impetus to re- commission WBP’s independent scoping study and geological work on West Wits exploration target. Both activities are pivotal to achieving West Wits’ goal of becoming a junior gold producer targeting >60,000oz Au per annum over a 15- year plus mine life. The independent scoping study was completed shortly after the reporting period and confirmed the Company’s view that WBP offers multiple areas for mining, identifying five distinct areas which enables staged development. Importantly, this provides optionality to the Board in managing the CAPEX profile which is expected to be low due to the existing historical infrastructure and planned toll treatment. Part of the initial mining area at Kimberly East includes an exploration target for the K9A reef in that zone. The geology team has been working hard to convert that exploration target into a JORC compliant Mineral Resource with results expected imminently. This is expected to augment and underpin further the already sizeable 3.65Moz JORC Resource. Furthermore, the ore bodies are still open in multiple directions with additional reef packages of the prolific Witwatersrand Basin system yet to be explored by West Wits in the project area. The Board restructure completed in April 2020 executes part of the Company’s strategic plan to move towards a more operational focused footing as the WBP gears towards the development of the underground mine, introducing skillsets to improve the Board’s capability to drive activity. The restructure was highlighted by the appointment of experienced mining executive, Jac van Heerden, to Managing Director. The Company also made key appointments with the hiring of a Geology & Exploration Manager and Social & Labour Manager, both roles critical to the success of the Company’s strategic transformation. The Board followed closely the developments in the Paterson Province after Rio Tinto and Greatland Gold’s exceptional exploration results at WINU and Havieron respectfully. These results have fired escalating interest in the area surrounding West Wits’ Mt Cecelia project in the Paterson Province, Western Australia. The Company signed an access agreement with RIO during the year, enabling RIO to build tracks to access their tenements which virtually surround West Wits 100% owned project. A specialist desktop study was completed in April 2020, identifying an orogenic gold target, which is being followed up with a SkyTEM helicopter-borne aeromagnetic survey in September 2020 over the entire tenement area. This method is an exploration technique which has been fundamental to the success of peer companies in the region and the Board is looking forward to seeing the results as we take our next steps in this exciting region. Page 4 of 81 Chairman's letter (continued) As we move forward towards the grant of the mining right for WBP the gold price has strengthened and with it our prospects of providing meaningful returns on your investment. Thank you for your ongoing interest and support of West Wits. For and on behalf of the Board Michael Quinert Executive Chairman West Wits Mining Ltd 30 September 2020 Page 5 of 81 Review of operations and activities HIGHLIGHTS  Environmental Authorisation (EA) approval from the Department of Mineral Resources (DMR) on the Witwatersrand Basin Project (WBP) marking a significant milestone  Independent Scoping Study by Bara Consulting on gold mining at the WBP was substantially progressed during the period and completed in July 2020, identifies five distinct targets for staged development  Scoping Study assumptions are in sufficient detail to move directly into a Bankable Feasibility Study on the Qala Shallows area which was commissioned in September 2020  An exploration desktop study of existing historical mining data is being utilised to evaluate the K9A reef with an aim to bring this reef into the WBP’s 3.65Moz Au Global JORC Resource1  Regional exploration activity continues to accelerate near Mt Cecelia in the Paterson Province, the Company signed an access deed with Rio Tinto Limited’s (“RIO”) during the period to enable RIO to access their neighbouring tenements through Mt Cecelia  A Lithostructural Desktop Study of Mt Cecelia provided a new geological interpretation, identifying three distinct targets: banded-iron formations (“BIF”) hosted Gold, Polymetallic VMS & Manganese  Strategic Board restructure included the appointment of South African based Managing Director, Jac van Heerden, to drive development of WBP towards production OVERVIEW West Wits Mining (ASX: WWI) (the Company or West Wits) primary focus during the financial year was progressing the mining right application at the Company’s marquee Witwatersrand Basin Project in South Africa and advancing WBP’s independent scoping study which was completed shortly after reporting date. Both events significantly de-risk WBP as the Company accelerates feasibility studies to target maiden underground production in 2021. The DMR’s EA approval represents a significant milestone in the application process as it demonstrates the South African Government’s support for the project after an exhaustive review period. The DMR’s EA approval was then subject to SA’s appeal procedure, three appeals were received during the review period which was extended a further 30-days due to COVID-19 allowances. Appeals are a normal part of South Africa’s mining right application process; the Company remains assured in the soundness of its EA process and is confident of a successful outcome. West Wits recommissioned the independent scoping study on WBP in April 2020 with mining specialists, Bara Consulting, updating the study’s 2019 key input assumptions which included the base gold price increasing from USD 1,200/oz to USD 1,500/oz, reflecting the prevailing market conditions which continue to strengthen. The Independent Scoping Study by Bara is underpinned by the WBP’s 3.65Moz Au JORC Resource1 (Table 1) which covers the entire Project footprint and the K9A exploration target (Table 2) which forms part of the Kimberley East Underground target area. A key objective of the Independent Scoping Study was to provide an assessment of the mining potential over the whole Project area. The Independent Scoping Study confirmed the Project’s distinct positive investment parameters which de-risks the Project and enables the Company to progress to the next stage of feasibility on the Qala Shallows as well as the supporting exploration activity which is deemed a high priority. 1 The original report was “2019 Annual Report to Shareholders” which was issued with consent of competent persons Dr Andrew J. Tunks, it was released to the ASX on 27th September 2019 and can be found on the Company’s website (https://westwitsmining.com/). The Company is not aware of any new information or data that materially effects the information included in the relevant market announcement. The form & context in which the Competent Persons’ findings are presented have not been materially modified. Page 6 of 81 Review of operations and activities (continued) WWI’s exploration activity ramped up in March 2020 and focused on converting the K9A Exploration Target (Table 2) into a JORC compliant resource. WWI’s in-country geological consultant, Shango Solutions (Shango), is utilising historical survey and assay information, capturing data in a 3D environment to compile a 3D(Digital Terrain Model) and 3D Block Model of the Kimberley Reef package which is utilised in the resource generation and feasibility studies. It is anticipated the exploration work will convert the exploration target into a JORC compliant resource with results expected soon. West Wits 100% owned Mt Cecelia project lies in the Paterson Province which continues to see significant regional exploration activity which is being led by RIO Tinto’s WINU project, approximately 70km’s east. Rio also hold the rights to the majority of Mt Cecelia’s neighboring tenements. A third-party specialists desktop study was completed in April 2020 and resulted in a new interpretation of the Mt Cecelia’s geological structures, identifying the potential of a new orogenic gold play, determination of VMS prospective host units and Manganese potential which provides significant upside exploration opportunity to the region. West Wits followed up the study with the first field trip in July 2020 and subsequent SkyTEM helicopter-borne aeromagnetic survey with results expected in 4Q 2020. WITWATERSRAND BASIN PROJECT, SOUTH AFRICA EXPLORATION The project’s global MRE sits at 3.65Moz (33.9M tonnes at 3.4g/t) with 2.4Moz (21.1M tonnes at 3.55g/t) in the Measured and Indicated categories at a 2.0g/t cut-off grade1. TABLE 1: GLOBAL MRE FOR THE WITWATERSRAND BASIN PROJECT AT 2.0G/T CUT-OFF1 Category Measured Indicated Measured & Indicated Inferred Total Tonnes (millions) Grade (g/t Au) Ounces Au 12.0 9.1 21.1 12.8 33.9 3.65 3.37 3.55 3.0 3.4 1,420,000 988,000 2,408,000 1,240,000 3,648,000 Notes: The Global MRE set at a 2.0 g/t Au cut-off. Reported in accordance with the JORC Code of 2012. Number differences may occur due to rounding errors. Table 1 shows the Global JORC Resource as announced on 16th July 20181 and also takes into account depletion resulting from tonnes removed in the Kimberley Central Open Pit operations. The original report for the table above was “2019 Annual Report to Shareholders” released to the ASX on 27/09/2019. WWI’s current desk top study and exploration program is designed to advance the Company’s 650,000oz to 1,000,000oz Au Exploration Target on the K9A reef (Table 2) into a JORC compliant resource. Exploration Target for K9A Reef -Kimberley East Project Range Tonnes (M) Au (g/t) Low High 6.5 8.0 3.0 4.0 Au (Oz) 650,000 1,000,000 Table 2: The consolidated Exploration Target is stated above as ranges of potential tonnes and grades. Number differences may occur due to rounding errors. The original report was “Witwatersrand Basin Project’s Kimberley Reef East Upside Potential”, released to the ASX on 31/08/2018. The previously stated Exploration Target was proposed for the K9A reef which is situated approximately 10m stratigraphically above the K9B Reef. The potential quantity and grade of the Exploration Target is conceptual in nature, there has been insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration will result in the estimation of a Mineral Resource. Shango’s resource work is utilising historical survey and assay information, capturing data in a 3D environment to compile a 3D digital terrain model (Image 1) and 3D geological model which is scheduled for completion soon. Page 7 of 81 Review of operations and activities (continued) Image 1: Shango’s preliminary 3D Digital Terrain model WWI’s development plan aims to convert greater than 75% of the initial 10-year mining footprint of the Qala Shallows into measured and indicated resource categories to underpin the Bankable Feasibility Study (“BFS”) on the Qala Shallows which was commissioned in September 2020. The exploration work on the K9A target conversion project carried out during the period will identify areas for infill drilling to improve the resource confidence level. Improving the size of the indicated and measured resource categories will then allow Bara Consulting to assess a greater resource for conversion to a reserve following the completion of the BFS. The information in this report relates to Mineral Resources is based on information compiled by Dr. Andrew Tunks. Dr. Tunks (Member Australian Institute Geoscientists) is a Director of the Company and 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, Minerals Resources and Ore Reserves’. Dr Tunks consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.’ DEVELOPMENT Bara’s Independent Scoping Study utilised a base gold price assumption of USD 1,500 and ZAR/USD exchange rate of ZAR16.5. Sensitivity analysis of gold price in the study indicates the potential for significant upside when compared to the prevailing gold price at the time of reporting. The Independent Scoping Study identifies five distinct reef packages to develop mining operations (Image 2). The combination of these five mining operations was in the previous phase of the mine’s life some 20 years ago producing around 80koz-100koz Au per annum. However, due to expected constraints in re-opening old shafts the Independent Scoping Study has concluded that the refurbished operations will achieve something moderately less than past production rate. Page 8 of 81 Review of operations and activities (continued) Bird Reef Central Qala Shallow (<500m) Main Reef and MRL Bird Reef East Qala Deeps (500m – 1500m) Not to scale Image 2: Schematic of WBP Scoping Study conceptual mine layout shows the connection between the Qala Shallow to both the Bird Reef East package and Qala Deeps. The Qala Shallows and Qala Deeps areas still have extensive life left and will form the backbone of the Project. The other areas of operation will supplement additional tonnes through the Qala operations mine life (Image 3). The Qala Shallows was operational when the historical mine closed in the early 2000’s. The scoping study proposes development via the refurbishment of the existing adit which is anticipated to include trackless haulage and would require significantly lower CAPEX compared to reconstructing the incline shaft with winder. A key factor in the Independent Scoping Study’s prioritisation of the Qala Shallows for initial development is the Kimberley Reef’s ore profile which modelling shows is best suited to provide the steadiest state of production over WBP’s mine life. In turn, production from Qala Shallows would support the development of other distinct target areas during development phases. In addition, mine design undertaken as part of the Independent Scoping Study shows that the Qala Adit provides a feasible access point for early mining development and future mechanised mining operations, as well as access to the Qala Deep and Bird Reef East ore bodies (Image 2). Page 9 of 81 Review of operations and activities (continued) Image 3: 3D Schematic of Scoping Study conceptual mine layout The scoping study’s production target is based on a combination of measured resource, indicated resource, inferred resource and exploration target. Due to the inclusion of the inferred resource and exploration target areas in early stage mining , the Company has decided to defer the decision to release the Scoping Study’s production target or financial modelling until the currently underway exploration projects have been completed. Mining Method & Processing The scoping study utilises a narrow reef breast-mining method in the upper sections of the conceptual mine plan which was the same mining method being used when the historical mine ceased in the early 2000’s and is still being used extensively in South African gold mining today. Therefore, the scoping study is based on a tried and tested mining method in the Witwatersrand Basin with a readily available, highly skilled workforce and supply network. The BFS will also investigate additional mechanised mining techniques which are expected to provide significant efficiency improvements where the reef dip is greater than 50o. There is sufficient capacity and quality of processing in the region to enter a toll treating arrangement with one of the local process plant operators as opposed to allocating CAPEX for the construction and operation of a process facility. The Independent Scoping Study did not foresee any issues with processing of the ore as it has been successfully processed during the mine’s historical operation and the neighbouring mines are currently mining the same reef packages which achieve metallurgical recoveries greater than 90%. MINING RIGHT APPLICATION Final documents of the Mining Right application were provided to the DMR in July 2019 which triggered the department’s final 107-day review period. The Company actively engaged the DMR, having numerous meetings at the DMR offices and holding a site tour of the mining right application area to demonstrate the plans for underground mine development via the refurbishment of existing infrastructure. The DMR requested the removal of two proposed open-pit areas from the Mine Works Program, “Roodepoort Main Pit” and “Rugby Club Main Reef Pit” due to the proximity of communities and housing developments to these two proposed open-pits. WWI reviewed the DMR’s request and assessed the impact to not be material to the overall resource and project with the project’s value predominately based on the underground mine targets, removing them from the application. Page 10 of 81 Review of operations and activities (continued) The DMR requested a financial guarantee for the rehabilitation of the area under the mining right application on the 24th March 2020, 2-days prior to the COVID-19 lockdown. As a result of COVID restrictions, the EA Approval was delayed approximately 9-weeks due to lockdown requirements which closed the DMR’s regional office and prevented department officials from formally receipting the original copy of WWI’s rehabilitation guarantee per regulatory requirements. The EA was approved by the DMR on 24th June 2020 and represents a significant milestone towards mine development and production at the WBP. Following granting, the EA approval was subjected to public review for 20 calendar days whereby interested and affected parties (IAP’s) can lodge an appeal against the EA decision. Once an appeal is lodged with the Department of Environmental Affairs (“DEA”), the EA will not be further acted on until the appeal has been ruled on. A directive issued by the Minister for Environment on 5th June provided for an additional 30-day period for appeals to be submitted due to the impacts of COVID. Three parties submitted appeals in the extended period which were expected and had been foreshadowed. West Wits’ legal counsel submitted the Company’s response to the DEA in August. The Company remains confident in the soundness of its EA process and is confident of a successful outcome which is expected by early November 2020. COMMUNITY West Wits stakeholder engagement process is continuing with interested and affected parties, community institutions, provincial and national government offices actively engaged to ensure progressive mutually beneficial outcomes of the Company operating in the region. The appointment of a full-time Social & Labour Manager during the year was a critical step and will play a key role in the WBP’s development, driving West Wits’ sustainable community development projects and harnessing locally sourced skills and resources. The Company continued its proactive engagement with nearby communities by providing support to a local not-for- profit organisation, Hlokomelo Community Organisation, which assists primary caregivers, youth-headed homes, orphaned and vulnerable children and families that are impacted by the HIV and AIDS with food parcels in Sol Plaatjie and Matholesville. West Wits support enabled the not-for-profit organisation to purchase nutritional food parcels for those beneficiaries that were unable to receive food parcels from government during the COVID 19 lockdown. The program reached Orphaned and Vulnerable Children (OVC’s) who were depending on school nutrition programmes to eat and youth- headed household in Durban Deep, Skoonplass and Matholesville. West Wits assistance also targeted the School Governing Bodies (SGB) teachers who lost income as schools were closed during the lockdown, senior citizens living with more than one grandchild and youth headed households. Image 4: (Left) Food Parcels provided during the COVID 19 lockdown at Sol Plaatje and Matholesville and (Right) WWI’s Social & Labour Manager, Tozama, and members of the Hlokomelo Community Organisation (NGO) with the motorbike donated by West Wits Mining. Page 11 of 81 Review of operations and activities (continued) As part of its’ sustainable community development initiatives, West Wits funded the Hlokomelo Community Organisation’s purchase of a motorbike for an income generation project. Hlokomelo motorbike delivery service has been established to provide low-cost outsourcing delivery services to communities. It aims to assist community members at large, including the aged and sickly, where members will no longer queue for medications, grants and groceries. The motorbike will be used to deliver medication and groceries to the community of Sol Plaatjie, Matholesville and Rooderpoort. This project is geared towards bringing a stable income to the organisation rather than solely relying on donations and sponsorships. KIMBERLEY CENTRAL OPEN-PIT PROJECT: PRODUCTION & REHABILITATION Kimberley Central Open Pit’s main contractors were decommissioned at the end of June 2019 with final ore processed in July 2019. Ore mined during the period was approximately 5,280t which was supplemented by a further 1,400t on stockpile at the end of June. Head grade was 2.0g/t for the quarter and plant recovery of 97.5% resulted in a recovered grade of 1.94g/t Au, approx. 8% above plan. The average delivered grade over the project life was 2.13g/t Au and plant recovery of 88.2% resulted in an average recovered grade of 1.89g/t Au. The Group final reconciliation for the toll treating arrangement which resulted in a further allocation of 8.6kg for historical gold accounting discrepancies and for gold-in-plant (“GIP”). The additional allocation increased gold sales for the financial year to 21.62kg. At the end of the reporting period Pit 3 was the only remaining pit being backfilled to close out the rehabilitation project which is nearing completion. All historical mine shafts have been plugged by concrete at depth and lie under cover, preventing illegal miner access and enabling urban development. MT CECELIA – EAST PILBARA, AUSTRALIA WWI’s Mt Cecelia project is located approximately 150km ENE of Marble Bar, 150km NW of Telfer Mine, and 120km NNW of Nifty mine (aerial distance). The region is considered one of the country’s most prominent addresses for mineral exploration with several joint venture agreements being reached since RIO’s WINU discovery, approximately 70km E of Mt Cecelia, and AIM Listed Greatland Gold’s Haverion project E of Telfer (Image 5). Agreement was reached in June 2020 with the FNA proponent to access the 11% overlapping area of the exploration area in the northern portion of the exploration license per the Department of Mines, Industry Regulation and Safety’s license conditions. RIO’s extensive 2018 pegging campaign included EL’s covering over 60% of Mt Cecelia’s border with its local interest increased through the $6m farm-in & joint venture agreement with Carawine Resources (ASX:CWX) to explore CWX’s Baton project2 which sits on Mt Cecelia’s SE boundary. The Company signed an access deed with RIO Tinto Limited (“RIO”) in October 2019 and RIO submitted a Program of Works in January 2020 to build tracks on the Mt Cecelia tenement area to access their surrounding EL’s. RIO’s activity is an indication of the prospectivity of West Wits Mt Cecelia project and improves the Group’s tenement access with the construction of tracks. Page 12 of 81 Review of operations and activities (continued) Image 5: Mt Cecelia’s adjoins Carawine’s Baton project to the south east which was included in RIO’s farm-in agreement and also encompasses the Vines Fault. RIO EL applications on tenements adjacent to Mt Cecelia to the north and east were granted in October 2019. Mid-tier miner, IGO Limited (ASX:IGO), has also demonstrated strong interest in the region having completed a $15m earn-in agreement with Encounter Resources (ASX:ENR) at ENR’s Yeneena project3. IGO’s interest extends via the execution of a $32m Joint Venture term sheet in June 2020 with Metals X (ASX:MTX) at MTX’s Paterson Exploration Project (PEP) but excludes the historically significant Nifty mine4. Both Yeneena, PEP and Nifty are located to the south of WWI’s Mt Cecelia project along the Vines Fault which was a focus of the PGN desktop review and the upcoming field work (Image 5). Desktop Study Review PGN Geoscience were engaged by the Company to perform a detailed Lithostructural desktop study to assist in developing new exploration models for target generation at WWI’s Mt Cecelia project and to provide a context to existing/known mineralisation occurrences. The study generated an improved geological map and the revised understanding which has significant implications for future exploration programs, primarily from the identification of a folded and faulted, banded-ironstone, felsic intrusive complex that is highly prospective for orogenic gold. The new geological interpretation and resultant map introduces a considerably more complex geology than the currently available public geological map and includes a new interpretation for the Vines Fault a major structural element in the Paterson. (Image 6) Page 13 of 81 Review of operations and activities (continued) Image 6: Newly compiled map for West Wits Mining compared to (inset) currently available map. BIF–Hosted Orogenic Gold Target The initial interpretation suggests that a folded banded-iron sequence is juxtaposed by a series of steep structures. The publicly available airborne magnetics further suggests a series of demagnetised zones internal to the BIF. The hypothesis is that these are prospective for orogenic gold mineralising systems. The resultant new geological interpretation has resolved a new architecture and consequently new litho-structural framework for the Mt Cecelia project area within E45/5045, the central west area location is highly prospective for orogenic BIF hosted gold. Polymetalic VMS & Manganese Targets The study found, the Kylena Formation and Jeerinah Formation are prospective for VMS deposits. Both of which occur in significant volumes within the tenement area. These formations represent classic bimodal volcanic sequences and as such, present a significant opportunity and considerable spatial extent for exploration within the WWI tenure. Through the extrapolation and resultant understanding from developing a district-scale exploration litho-structural map, Manganese deposits such as those locally related to the Baramine series of deposits ~8km to the south-west are hosted within a form-surface related to the synformally folded sequence of Pinjian Chert Breccia units. Future Exploration Program for EL 45/5045 WWI engaged a Pilbara based contractor to perform an initial reconnaissance trip in July (post-reporting period) with the key objective to determine access to the project and PGN’s target areas, supply stations for future exploration and provide observation geological outcropping and other features. The fieldtrip observed sand dune cover, commonly associated with the Paterson Province, resulted in a large portion of the geological structures identified in PGN’s report to not outcrop at surface. Similar to other explorers in the region, West Wits has opted to commission a SkyTEM helicopter-borne aeromagnetic survey over the entire tenement area with activities commencing from September 2020. Survey results are expected to be available in 4Q 2020 which are expected to include recommendations for drilling targets for the 2021 field season. Page 14 of 81 Review of operations and activities (continued) TAMBINA PROJECT – PILBARA, AUSTRALIA First Au (ASX: FAU) continued to manage exploration at the Tambina Project, located approximately 100km West of Marble Bar, as part of the 2019 Farm-In Agreement. No significant developments were reporting during the financial year. DEREWO PROJECT, INDONESIA West Wits continued to work with local partners on securing clean & clear status on IUP’s whilst also seeking new parties take the project forward for the potential disposal of part of WWI’s interest. The Company is seeking further information from PTMQ on the status of the other IUP’s. As reported in the 31 December 2019 Half Year accounts, WWI reports the Indonesian subsidiary group as a discontinued operation with the investment written down to zero. CORPORATE West Wits’ Board promoted West Wits MLI CEO, Jac van Heerden, to the Board as Managing Director of WWI in April 2020. Mr van Heerden, a senior mining executive with over two decades experience in the mining sector, has overseen project & mine development across southern Africa and more recently presided over a large-scale copper / cobalt operation in the Democratic Republic of Congo prior to joining West Wits in January 2019. The Company also appointment experienced US based investment finance executive, Mr Peter O’Malley, as Non- Executive Director to the WWI Board at the same time. Mr O’Malley worked at Credit Suisse for 13 years and later, while based in Hong Kong, managed Deutsche Bank’s Natural Resources investment banking practice in Asia-Pacific for many years. Importantly, the appointments introduce senior mine engineering and investment finance experience to the Board mix which was viewed as strategically essential as the Company enters the development phase. Niel Pretorius (Non-Executive Director) and Phillip Hains (Joint Company Secretary) elected to resign as part of the changes. The Company hired South African based and highly experienced geologist, Martin Bevenlander, as Geology and Exploration Manager to oversee and drive the exploration programs at both WBP and Mt Cecelia with activity ramping up at both projects in the subsequent period. COVID-19 Update The Company continues to monitor restrictions associated with the COVID-19 outbreak in both South Africa and Australia. The main impact from COVID-19 to date is on the timing of the mining right application with an approximate 3-month delay from South Africa’s COVID lockdown and the Western Australian Government’s border restrictions which impedes interstate personnel accessing the Mt Cecelia project. There has been minimal impact on WWI’s management team and key contractors who have been able to work remotely and progress key exploration, feasibility and licensing activities during lockdown periods. WWI’s executive team continues to assess capital markets to ensure the Company has avenues to finance the execution of its strategic development plan. The uncertainty surrounding the COVID-19 pandemic contributed to the Board’s decision to take a prudent approach to raise funds in 2020 which sees the Company well capitalised at the time of reporting. Page 15 of 81 Review of operations and activities (continued) Issue of Securities The Company issued securities (detailed below) which further align the interests of employees, consultants and directors with those of shareholders: • • • • 2,500,000 unlisted options to Dr Andrew Tunks and 2,500,000 unlisted options to Mr Hulme Scholes (or their nominees), who are both Directors of the Group. The unlisted options have an exercise price of $0.012 (1.2 cents), expire 4 years from the issue date and, upon exercise, entitle the holder to a fully paid ordinary share in the Group. The options are subject to periodic vesting over a period of 18 months. 5,000,000 unlisted options to Alces Capital Partners (or its nominee), a third-party consultancy who is not a related party of the Group, in lieu of cash for investor relations services provided to the Group. The unlisted options have an exercise price of $0.012 (1.2 cents), vest immediately, expire 4 years from the issue date and, upon exercise, entitle the holder to a fully paid ordinary share in the Group. 5,500,000 unlisted options in recognition of the assistance and support provided by Mr Peter O’Malley of Kenosis Capital LLC (“Kenosis”) in connection with recent strategic planning and development in the lead up to the issue of the convertible notes. The options have an exercise price of $0.015 (1.5 cents) and expire two years after issue. Total of 24,500,000 performance rights to Michael Quinert, Jac van Heerden and Simon Whyte (or their nominees). West Wits raised additional capital during the period to support ongoing activities via the issue of securities detailed below: • Placement raised $735,000 through the issue of 122,500,000 fully paid ordinary shares at $0.006 (0.6 cents) per share as announced to the ASX on 20th August 2019 • • • 1,000,000 convertible notes in the Company (Notes) at an issue price of USD$1 per Note for an aggregate USD$1,000,000 capital raising pursuant to a subscription agreement as announced to ASX on 20 December 2019 $800,000 through the issue of 80,000,000 fully paid ordinary shares at $0.01 (1 cent) per share via a Placement ($650,000) and SPP ($150,000) with the SPP oversubscribed by 177% which resulted in a scale- back as announced to ASX on 23rd June 2020 The Company issued 5,595,278 fully paid ordinary shares at the same deemed price of $0.01 (1 cent) per share in-lieu of cash for payment of accrued interest of $55,953 on the Convertible Notes Shortly after the reporting period, the Company raised a further $3,407,750 via the issue of 161,940,477 fully paid ordinary shares at $0.021 (2.1 cents) per share in a Placement to new and existing unrelated sophisticated and professional investors, as announced to the ASX on 14th August 2020. Carawine Resources ASX Release: “$6 Million Paterson Farm In With Rio Tinto” on 28/10/2019 ENR ASX Release: “Paterson Province Exploration Commences Under IGO Earn-In” on 08/05/2020 2. 3. 4. MTX ASX Release: “$32M Paterson Province Exploration JV with IGO Limited” on 11/06/2020 Page 16 of 81 Review of operations and activities (continued) Interests in Mining Tenements Tenements Location Held at end of period 66.6%* 80%* Underground rights – Witwatersrand Basin, West Rand, South Africa Pilbara region, Western Australia Pilbara region, Western Australia 80%* Pilbara region, Western Australia 80%* GP183PR Mining Lease – M45/988 Mining Lease – M45/990 Mining Lease – M45/991 Exploration License – EL 45/5045 Pilbara region, Western Australia 100% Production IUP – Paniai Regency, Indonesia NO. 47/2010 ^ Exploration IUP – NO. 76/2010 ^ Exploration IUP – NO.31/2010 ^ Exploration IUP – Paniai, Indonesia Intan Jaya, Indonesia Nabire, Indonesia 29%* 64%* 64%* 64%* Acquired during the period - Disposed during the period - - - - - - - - - - - - - - - NO. 543/142/SET * Minority positions are held by local parties in compliance with local legislation in relation to foreign ownership and mineral and production rights. ^ Exploration IUP’s may no longer be within the compliance period and could be subject to cancellation Page 17 of 81 Directors' report Your Directors present their report on the consolidated entity consisting of West Wits Mining Limited and the entities it controlled at the end of, or during, the year ended 30 June 2020. Throughout the report, the consolidated entity is referred to as the group. Directors and company secretaries The following persons held office as Directors of West Wits Mining Limited during the financial year or unless otherwise stated: Mr Michael Quinert, Executive Chairman Mr Jac van Heerden, Managing Director (appointed on 16 April 2020) Mr Hulme Scholes, Non-Executive Director Dr Andrew Tunks, Non-Executive Director Mr Peter O’Malley, Non-Executive Director (appointed on 16 April 2020) Mr Daniel Pretorius, Non-Executive Director (resigned on 16 April 2020) The following persons held office as joint company secretary of West Wits Mining Limited during the financial year: Mr Simon Whyte, Joint Company Secretary Mr Phillip Hains, Joint Company Secretary (resigned on 16 April 2020) Information on directors & company secretaries Mr Michael Quinert Executive Chairman Experience and expertise Other current directorships Former directorships in last 3 years Special responsibilities Interests in shares, options and performance rights Mr Quinert graduated with degrees in economics and law from Monash University and has over 30 years experience as a commercial lawyer, and over 20 years as a partner in a Melbourne law firm. He has extensive experience in assisting and advising public companies on capital raising and market compliance issues. First Au Ltd (ASX: FAU) Manalto Limited (ASX: MTL) Covata Limited (ASX: CVT) None Interest in shares Interest in options Interest in performance rights 33,320,234 12,000,000 10,500,000 Mr Jac van Heerden Managing Director (appointed on 16 April 2020) Experience and expertise Other current directorships Former directorships in last 3 years Special responsibilities Interests in shares and performance rights Mr van Heerden is a Mining Engineer (MBA) with over 20 years of operations and project experience in South Africa, DRC and Zimbabwe. His experience has been gained on both underground and open pit mines with a focus in gold, platinum and base metals. Jac was President of ERG Africa’s copper/cobalt mine overseeing 3,800 personnel prior to joining WWI. None None None Interest in shares Interest in performance rights Page 18 of 81 5,714,285 7,000,000 Information on directors & company secretaries (continued) West Wits Mining Limited Directors' report 30 June 2020 (continued) Mr Daniel (Niel) Pretorius Independent Non-Executive Director (resigned 16 April 2020) Experience and expertise Other current directorships Former directorships in last 3 years Special responsibilities Interests in shares and options Mr Pretorius was appointed Group Legal Council for DRDGold Limited (DRDGold) in 2003 and Chief Executive Officer of DRDGold Ltd in January 2009. He has over 20 years’ experience in the mining industry. Mr Pretorius was present through the re-focus of DRDGOLD's strategy to exit deep level underground mining, and focus on surface reclamation through the expansion of their Crown Gold Recoveries footprint, the acquisition and recommissioning of Ergo, and more recently the acquisition of the surface gold portfolio of Sibanye Stilwater. Executive Director of DRD Gold Limited (JSE:DRD). None None Interest in shares Interest in options - - Mr Peter O’Malley Independent Non-Executive Director (appointed on 16 April 2020) Experience and expertise Mr O’Malley is US based investment finance executive, Mr O’Malley’s experience includes 13 years at Credit Suisse and later managing Deutsche Bank’s HK Natural Resources investment banking practice in Asia-Pacific. Peter has extensive experience advising on M&A, debt/equity transactions, and capital optimisation strategies in multiple jurisdictions. Other current directorships Bonterra Resources (TSX-V: BTR) Barnwell Industries (NYSE: BRN) Former directorships in last 3 years Special responsibilities None None Interests in shares and options Interest in shares Interest in options 300,000 5,500,000 Page 19 of 81 West Wits Mining Limited Directors' report 30 June 2020 (continued) Information on directors & company secretaries (continued) Mr Hulme Scholes Non-Executive Director Experience and expertise Other current directorships Former directorships in last 3 years Special responsibilities Interests in shares and options Mr Scholes graduated with a BA Law and LLB degree from the University of the Witwatersrand and is an admitted attorney of the High Court of South Africa. Mr Scholes specialises in mining and mineral law, has practised exclusively in the field for 20 years and is regarded as one of South Africa's experts within mining law. He was a partner of Werksman Attorneys based in Johannesburg from 1999 to 2008 and is currently a senior partner at Malan Scholes Attorneys. He started his professional career as a learner official for Harmony Gold Mining Co. Limited in the 1980's which provides him with a unique blend of experience. Mr Scholes is currently a Non-Executive Director of Randgold and Exploration Company Limited (JSE Listing) (JSE: RNG). None None Interest in shares Interest in options 1,136,364 2,500,000 Dr Andrew Tunks Non-Executive Director Experience and expertise Other current directorships Former directorships in last 3 years Special responsibilities Interests in shares and options Dr Tunks is a highly credentialed geologist with 30 years of local and international experience, particularly in the gold sector. He has spent many years exploring and overseeing projectsin developing countries throughout Africa and South America. Global experience means Dr Tunks can provide expertise in navigating diverse regulatory systems. Having begun his career with Western Mining Corporation (WA) Dr Tunks progressed to senior positions with leading gold producers including the role of Chief Geologist at both IAMGOLD Corporation and Ranger Minerals (West Africa). Since then, Dr Tunks has held several executive roles with ASX-listed groups including CEO of Auroch Minerals, General Manager - Operations at Orinoco Gold (Brazil) and CEO of A-Cap Resources (Botswana). More recently, he was appointed MD of Meteoric Resources. Dr Tunks has lectured on economic and structural geology at University of Tasmania, published articles in peer-reviewed journals and presented at numerous conferences. He is a member of the Australian Institute of Geoscientists, holds a Bachelor of Science (Hons) from Monash and a PhD in geology from the University of Tasmania. Meteoric Resources NL (ASX: MEI) MSM Corporation International Limited (ASX: MSM) Auroch Minerals Limited (ASX: AOU) None Interest in shares Interest in options 2,644,026 14,500,000 Page 20 of 81 West Wits Mining Limited Directors' report 30 June 2020 (continued) Information on directors & company secretaries (continued) Mr Simon Whyte Joint Company Secretary Experience and expertise Other current directorships Former directorships in last 3 years Special responsibilities Interests in shares, options and performance rights Mr. Whyte is a Chartered Accountant and has over 12 years’ experience accounting and operational management, including Ernst & Young and BP Australia Pty Ltd None None None Interest in shares Interest in options Interest in performance rights 7,460,020 3,000,000 7,000,000 Mr Phillip Hains Joint Company Secretary (resigned 16 April 2020) Experience and expertise Other current directorships Former directorships in last 3 years Special responsibilities Interests in shares and options Mr. Hains is a Chartered Accountant and holds a master of business administration from RMIT University. Mr Hains has over 20 years’ experience in providing businesses with accounting, administration, compliance and general management services. None None None Interest in shares Interest in options - - Page 21 of 81 Meetings of directors The numbers of meetings of the group's board of Directors and of each board committee held during the year ended 30 June 2020, and the numbers of meetings attended by each Director were: West Wits Mining Limited Directors' report 30 June 2020 (continued) Mr Michael Quinert Dr Andrew Tunks Mr Peter O’Malley Mr Daniel Pretorius Mr Hulme Scholes Mr Jac van Heerden Full meetings of directors B A 5 5 5 4 1 1 4 3 5 3 1 1 A = Number of meetings attended B = Number of meetings held during the time the Director held office or was a member of the committee during the year * Due to the size of the Company the full Board assumes the role of the Audit & Remuneration committees Principal activities The Group's principal continued activities in the course of the financial year were to explore for gold at the mining tenements situated in Western Australia and South Africa. During the financial year 2020, the Group has discontinued its operations in Indonesia. There have been no other significant changes in the nature of those principal activities during the financial year. Dividends The Directors did not pay or declare any dividends during the financial year (2019: Nil). The Directors do not recommend the payment of a dividend in respect of the 2020 financial year. Page 22 of 81 West Wits Mining Limited Directors' report 30 June 2020 (continued) Event since the end of the financial year On 14 August 2020, the Group completed a share placement to raise $3.4 million (before costs) via the issue of 131.7 million new fully paid ordinary shares at $0.021 (2.1 cents) per share to existing and new sophisticated and professional investors. No other matters or circumstances have occurred subsequent to period end that has significantly affected, or may significantly affect, the operations of the group, the results of those operations or the state of affairs of the Group in subsequent financial years. Likely developments and expected results of operations The likely developments in the Group’s operations, to the extent that such matters can be commented upon, are covered in the Review of Operations in this annual report and above. In the opinion of the Directors, disclosure of detailed information regarding the expected results of those operations in financial years after the current financial year is not predictable at this stage, or may prejudice the interests of the Group; accordingly this information has not been included in this report. Significant changes in the state of affairs During the year, the Group successfully raised capital by approximately $1.5 million net of transaction costs and resulted in 223.1 million new fully paid ordinary shares being issued. The funds received from capital raise are for the purpose of working capital, to accelerate activities for the completion of the mining right application in South Africa, the development of WBP and exploration of the Mt Cecelia Project. PTMQ has been classified as a discontinued operation in the current financial year due to the lack of progress in securing the Clean & Clear status of the IUP’s. The Group entered in a subscription agreement with a US based investment group, Wingfield Capital Partners LLC, to raise USD 1 million through the issuance of 1 million convertible notes with a conversion price of USD 0.007 (US Cents per share), and minimum term of 3 years with an interest of 12% per annum accruing annually in arrears. The convertible notes were issued in two tranches. In the opinion of the Directors, there were no other significant changes in the state of affairs of the Group during the financial year under review not otherwise disclosed in this annual report. Page 23 of 81 West Wits Mining Limited Directors' report 30 June 2020 (continued) Remuneration report (audited) The Directors present the West Wits Mining Limited 2020 remuneration report, outlining key aspects of our remuneration policy and framework, and remuneration awarded this year. (A) Remuneration Policy Remuneration of all Executive and Non-Executive Directors, and Officers of the Group is determined by the remuneration and nomination committee. The Group is committed to remunerating Senior Executives and Executive Directors in a manner that is consistent with "best practice" (including the interests of shareholders) and market-competitive by ensuring fees are appropriate and in line with the market. Remuneration packages are based on fixed component, determined by the Executives' position, experience and performance, and may be satisfied via cash or equity. Non-Executive Directors are remunerated out of the aggregate amount approved by shareholders and at a level that is consistent with industry standards. Non-Executive Directors do not receive performance based bonuses and prior shareholder approval is required to participate in any issue of equity. No retirement benefits are payable other than statutory superannuation, if applicable. Remuneration policy versus company financial performance Since the Company was incorporated, it has listed on the Australian Securities Exchange and acquired mining tenements in Western Australia, South Africa and in Papua Province, Indonesia. Exploration activities commenced in January 2008 within the South African tenements. The nature of the Group's mining activities is highly speculative and can provide high returns if successful. The speculative nature of these activities and recent global economic trends, have been factors which have affected the Group's share price performance and shareholder wealth over the period. The Group's remuneration policy is based on industry practice rather than the Group's performance and takes into account the risk and liabilities assumed by the Directors and Executives as a result of their involvement in the speculative activities undertaken by the Group. Directors and Executives are fairly compensated for the extensive work they undertake. Other than the remuneration of one non-director key management personnel, Chairman and Managing Director, who are entitled to remuneration linked to performance, no other Directors’ remuneration were linked to performance during the financial year. The Group continued to recognise the share-based payment expense from equity issued in prior period and in current year of $235,924 (2019: $204,608). The bonus expense recognised during the year related to service condition of each recipient. The Non-Executive Directors remuneration pool is $300,000, last approved by shareholders in 2007. Use of remuneration consultants Due to the size and nature of the organisation, the Company has not engaged remuneration consultants to review and measure its policy and strategy. The board reviews remuneration strategy periodically and may engage remuneration consultants in the future to assist with this process. Page 24 of 81 West Wits Mining Limited Directors' report 30 June 2020 (continued) Remuneration report (audited) (continued) (A) Remuneration Policy (continued) Additional remuneration approved by shareholders during the year The list of remuneration related resolutions proposed for the Directors and other Key Management Personnel approved at the AGM held on 29 November 2019 are as below:- • • • • • • Issuance of 10,500,000 performance rights to Mr Michael Quinert Issuance of 7,000,000 performance rights to Mr Jac van Heerden Issuance of 7,000,000 performance rights to Mr Simon Whyte Issuance of 2,500,000 options to Dr Andrew Tunks with each option has an exercise price of $0.012 and expiry date of 4 years from date of issuance Issuance of 2,500,000 options to Mr Hulme Scholes with each option has an exercise price of $0.012 and expiry date of 4 years from date of issuance Issuance of 5,428,571 ordinary shares at a deemed issue price of $0.007 per share to Mr Michael Quinert Voting and comments made at the Company’s 2019 Annual General Meeting (“AGM”) At the 2019 AGM, 87% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2019. The Company did not receive any specific feedback at the AGM regarding its remuneration practices. (B) Remuneration report (a) Details of remuneration The following person was considered other KMP of West Wits Mining Limited during the financial year: Mr Michael Quinert, Executive Chairman Mr Daniel Pretorius, Non-Executive Director Mr Hulme Scholes, Non-Executive Director Dr Andrew Tunks, Non-Executive Director Mr Jac van Heerden, Managing Director (previously Chief Executive Officer of West Wits SA (Pty) Ltd) Mr Peter O’Malley, Non-Executive Director Mr Simon Whyte, Chief Financial Officer and Joint Company Secretary 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 group, directly or indirectly, including any Director (whether executive or otherwise) of the group receiving the highest remuneration. Details of the remuneration of the KMP of the group are set out in the following tables. Page 25 of 81 West Wits Mining Limited Directors' report 30 June 2020 (continued) Remuneration report (audited) (continued) (B) Remuneration report (continued) (a) Details of remuneration (continued) Amounts of remuneration The following table shows details of remuneration expenses recognised for the Group's KMP for the year ended 30 June 2020. 2020 Short-term benefits Cash salary and fees $ Cash bonus $ Non- monetary benefits(5) $ Post- employment benefits Share-based payments Super- annuation $ Equity- settled $ Options $ Performance Rights $ Directors Mr Michael Quinert Mr Daniel Pretorius (3) Mr Hulme Scholes Dr Andrew Tunks(4) Mr Peter O’Malley (2) Mr Jac van Heerden (1) Other KMP Mr Simon Whyte Total KMP compensation 127,500 - 24,853 31,000 8,333 211,483 136,986 540,155 - - - - - - - - - - - - - 12,353 - - - - - - 34,833 - - - - 70,113 23,277 - 6,696 6,696 28,930 - 12,969 - - - - 8,666 6,639 13,014 35,000 - 8,744 18,992 13,014 139,946 65,599 30,379 808,085 Total $ 198,579 - 31,549 37,696 37,263 302,615 - 200,383 Notes (1) Mr Jac van Heerden’s remuneration for the period from 1 July 2019 to 15 April 2020 was covered under the capacity as the CEO of the South African subsidiaries, which is part of other KMP. He was subsequently appointed on 16 April 2020 as the Managing Director of the Group. (2) Mr Peter O’Malley was appointed on 16 April 2020. (3) Mr Daniel Pretorius resigned on 16 April 2020. (4) Mr Andrew Tunks’s cash salary and fees includes $1,000 for consulting fees paid to Tunks GeoConsulting, a Company related to Mr Andrew Tunks. (5) Comprises of annual leave component. Page 26 of 81 West Wits Mining Limited Directors' report 30 June 2020 (continued) Remuneration report (audited) (continued) (B) Remuneration report (continued) (a) Details of remuneration (continued) The following table shows details of remuneration expenses recognised for the group's KMP for the year ended 30 June 2019. 2019 Short-term benefits Post-employment benefits Share-based payments Cash salary and fees $ 129,333 50,000 - 25,000 97,500 100,000 82,192 484,025 Cash bonus $ Non- monetary benefits(4) $ Super- annuation $ - - - - - - - - - - - - - - 8,430 8,430 - - - - - - 7,808 7,808 Equity- settled $ 38,000 - - - - Options $ 52,043 19,516 - - 62,064 Total $ 219,376 69,516 - 25,000 159,564 25,000 30,000 - 15,985 125,000 144,415 93,000 149,608 742,871 Directors Mr Michael Quinert(5) Mr Vincent Savage (3) Mr Daniel Pretorius Mr Hulme Scholes Dr Andrew Tunks Other KMP Mr Jac van Heerden (1) Mr Simon Whyte (2) Total KMP compensation Notes (1) Mr Jac van Heerden’s remuneration covers the period from his appointment as the CEO of the South African subsidiaries from 1 January 2019 to 30 June 2019. (2) On 1 October 2018, Mr Simon Whyte became a full-time employee of the Group and on 16 March 2019, he was appointed as the Group’s Chief Financial Officer and Joint Company Secretary. For the period from 1 October 2018 until 15 March 2019, Mr Simon Whyte was considered as a key management personnel based on his involvement in the decision-making process and executive duties. His remuneration for 2019, therefore covered the period from 1 October 2018 to 30 June 2019. Prior to becoming a KMP, Mr Simon Whyte was engaged as a consultant to the Group. (3) Mr Vincent Savage resigned on 21 June 2019 (4) Comprises of annual leave component. (5) Bonus payment through equity settlement for Mr Michael Quinert was approved after the financial report was lodged. The bonus amount has since been included in the remuneration table subsequently given it related to that year. Page 27 of 81 West Wits Mining Limited Directors' report 30 June 2020 (continued) Remuneration report (audited) (continued) (B) Remuneration report (continued) (b) Equity issued as part of remuneration for the year ended 30 June 2020 Issue of shares The number of shares in the Company held during the financial year by each Director and other Key Management Personnel of the Company, including their personally related parties, are set out below. Share holdings 2020 Directors Mr Michael Quinert Mr Jac van Heerden Dr Andrew Tunks Mr Peter O’Malley Mr Daniel Pretorius Mr Hulme Scholes Other Key Management Personnel Mr Simon Whyte Balance at the start of the period(1) Granted as remuneration Received on exercise of options Other changes(2) Balance at the end of the period(3) 23,140,391 - 2,283,449 300,000 - 1,136,364 5,428,571 5,714,285 - - - - 2,562,013 29,422,217 3,857,142 14,999,998 - - - - - - - - 4,751,272 - 360,577 - - - 33,320,234 5,714,285 2,644,026 300,000 - 1,136,364 1,040,865 7,460,020 6,152,714 50,574,929 (1) Balance may include shares held prior to individuals becoming Director/KMP. For individuals who became Director/KMP during the period, the balance is as at the date they became Director/KMP. (2) Other changes include on-market purchases and participation in share purchase plan. (3) For former KMP, the balance is as at the date they cease being KMP. Page 28 of 81 West Wits Mining Limited Directors' report 30 June 2020 (continued) Remuneration report (audited) (continued) (B) Remuneration report (continued) (b) Equity issued as part of remuneration for the year ended 30 June 2020 (continued) Issue of options The number of options over ordinary shares in the Company held during the financial year by each Director and other Key Management Personnel of the Company, including their personally related parties, are set out below. Option holdings 2020 Directors Mr Michael Quinert Dr Andrew Tunks Mr Jac van Heerden Mr Daniel Pretorius Mr Peter O’Malley Mr Hulme Scholes Other Key Management Personnel Mr Simon Whyte Balance at start of the period(1) Granted as remuneration Options Expired Other changes(2) Balance at end of the period(3) Vested and exercisable 12,000,000 12,000,000 - - 5,500,000 - - 2,500,000 - - - 2,500,000 3,000,000 32,500,000 - 5,000,000 - - - - - - - - - 12,000,000 12,000,000 - 14,500,000 13,250,000 - - - - - - 5,500,000 5,500,000 - 1,250,000 2,500,000 - 3,000,000 - 3,000,000 - 37,500,000 35,000,000 (1) Balance may include options held prior to individuals becoming Director/KMP. For individuals who became Director/KMP during the period, the balance is as at the date they became Director/KMP. (2) Other changes incorporates changes resulting from the expiration/forfeiture of options. (3) For former KMP, the balance is as at the date they cease being KMP. Page 29 of 81 West Wits Mining Limited Directors' report 30 June 2020 (continued) Remuneration report (audited) (continued) (B) Remuneration report (continued) (b) Equity issued as part of remuneration for the year ended 30 June 2020 (continued) Issue of options (continued) The terms and conditions of each grant of options over ordinary shares affecting remuneration of Directors and other Key Management Personnel in future reporting years are as follows: Grant date 21/11/2017 21/11/2017 21/11/2017 21/11/2017 21/11/2017 21/11/2017 04/12/2017 04/12/2017 04/12/2017 29/11/2019 29/11/2019 15/01/2020 15/01/2020 Exercise price $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.012 $0.012 $0.015 $0.015 Granted no. 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 1,000,000 1,000,000 1,000,000 2,500,000 2,500,000 2,200,000 3,300,000 37,500,000 Expiry date 03/12/2022 03/12/2022 03/12/2022 29/01/2023 29/01/2023 29/01/2023 03/12/2022 03/12/2022 03/12/2022 18/12/2023 18/12/2023 02/02/2022 01/03/2022 Total vested Vested % Exercised - - - - - - - - - - - - - 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 1,000,000 1,000,000 1,000,000 1,250,000 1,250,000 2,200,000 3,300,000 35,000,000 100% 100% 100% 100% 100% 100% 100% 100% 100% 50% 50% 100% 100% Option holders do not have any rights to participate in any issues of shares or other interests in the Company or any other entity. Option holders hold no voting rights. On exercise, each option is convertible into one ordinary share. Issue of performance rights The 24,500,000 equity settled options were issued to Management as per the ASX announcement on 18 December 2019 and related shareholder approval obtained at the AGM on 29 November 2019. Page 30 of 81 West Wits Mining Limited Directors' report 30 June 2020 (continued) Remuneration report (audited) (continued) (B) Remuneration report (continued) (b) Equity issued as part of remuneration for the year ended 30 June 2020 (continued) Issue of performance rights (continued) The performance hurdles, relevant dates and conditions of the rights are detailed below: Number issued Issue date Expiry date Exercise price Market/Non- market performance condition Probability of non- market performance condition occurring Fair value for each performance rights ($) 4,700,000 18/12/2020 31/12/2020 0.0150 Market 3,800,000 18/12/2020 31/12/2021 0.0280 Market 3,100,000 18/12/2020 31/12/2022 0.0420 Market N/A N/A N/A 0.0009 0.0012 0.0016 Total fair value recorded ($) 4,183 4,560 4,836 1,750,000 18/12/2020 30/06/2021 N/A Non-market 60% 0.0050 3,150 1,750,000 18/12/2020 31/12/2021 N/A Non-market 10% 0.0050 875 2,300,000 18/12/2020 30/06/2021 N/A Non-market 10% 0.0050 1,150 3,200,000 18/12/2020 30/06/2022 N/A Non-market 30% 0.0050 4,800 3,900,000 24,500,000 18/12/2020 30/06/2023 N/A Non-market 35% 0.0050 6,825 30,379 Performance Hurdle 30-day VWAP of $0.015 at 31/12/2020 30-day VWAP of $0.028 at 31/12/2021 30-day VWAP of $0.042 at 31/12/2022 Expanding the JORC Resource by 600,000oz at a grade of at least 3g/t by 30/06/2021 Delineating a total of 650,000 ounces of gold reserves (in accordance with JORC 20121) at a grade of at least 3g/t Au by 31/12/2021 Achieving annualised production of 5,500oz of gold per annum over a consecutive period of 3- months in the 12- months to 30/06/2021 Achieving annualised production of 25,000oz of gold per annum over a consecutive period of 3-months in 2022 calendar year Achieving annualised production of 45,000oz of gold per annum over a consecutive period of 3-months in 2023 calendar year TOTAL Page 31 of 81 West Wits Mining Limited Directors' report 30 June 2020 (continued) Remuneration report (audited) (continued) (B) Remuneration report (continued) The number of performance rights held during the financial year by each Director and other Key Management Personnel of the Company, including their personally related parties, are set out below. Performance rights holdings 2020 Directors Mr Michael Quinert Dr Andrew Tunks Mr Jac van Heerden Mr Daniel Pretorius Mr Peter O’Malley Mr Hulme Scholes Other Key Management Personnel Mr Simon Whyte Balance at start of the period Granted as remuneration Performance rights exercised Other changes Balance at end of the period - - - - - - 10,500,000 - 7,000,000 - - - - - 7,000,000 24,500,000 - - - - - - - - - 10,500,000 - - 7,000,000 - - - - - - - - 7,000,000 - 24,500,000 Page 32 of 81 West Wits Mining Limited Directors' report 30 June 2020 (continued) Remuneration report (audited) (continued) (B) Remuneration report (continued) (c) Employment contracts of executives Name: Position: Contract duration: Notice period: Fixed remuneration: Mr Jac van Heerden Managing Director Unspecified 4 weeks by either party $280,000 per annum, including superannuation $70,000 annual bonus related to service condition Name: Position: Contract duration: Notice period: Fixed remuneration: Mr Simon Whyte Chief Financial Officer and Company Secretary Unspecified 4 weeks by either party $180,000 per annum, including superannuation $40,000 annual bonus related to service condition (d) Related party transactions Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. Transactions with related parties are as follows: Legal fees that were paid to Quinert Rodda & Associates, a Director related entity to Mr Michael Quinert Rental expense paid to Brickwick Pty Ltd, a Director related entity to Mr Michael Quinert Legal fees that were paid to Malan Scholes Attorneys, a Director related entity to Mr Hulme Scholes Consultancy fees that were paid to MERA Advisers, a Director related entity to Mr Hulme Scholes Consultancy fees paid to Kenosis Capital LLC, a related entity to Mr Peter O’Malley [End of remuneration report] 2020 $ 78,778 8,100 74,666 60,022 104,243 2019 $ 27,857 - 111,187 128,291 - Page 33 of 81 West Wits Mining Limited Directors' report 30 June 2020 (continued) Shares under option At the date of this report, the unissued ordinary shares of West Wits Mining Limited under option are as follows: Quantity 10,000,000 10,000,000 12,000,000 3,000,000 17,000,000 10,000,000 2,200,000 3,300,000 67,500,000 Grant Date 15/11/2017 21/11/2017 21/11/2017 04/12/2017 21/11/2017 29/11/2019 15/01/2020 15/01/2020 Exercise Price $0.050 $0.050 $0.050 $0.050 $0.050 $0.012 $0.015 $0.015 Expiry Date 14/11/2020 30/11/2020 03/12/2022 03/12/2022 29/01/2023 18/12/2023 02/02/2022 01/03/2022 Shares issued as a result of the exercise of options No options were exercised during the year ended 30 June 2020 (2019: Nil). Insurance of officers and indemnities During the financial year the Company entered into an insurance policy to indemnify Directors and Officers against certain liabilities incurred as a Director or Officer, including costs and expenses associated in successfully defending legal proceedings. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an Officer or Auditor of the Company or of any related body corporate against a liability incurred as such as Officer or Auditor. Proceedings on behalf of the company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. Rounding of amounts The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ reports) Instrument 2016/191, issued by the Australian Securities and Investments commission, relating to ‘rounding-off’ of amounts in the Directors’ report. Amounts in the Directors’ report have been rounded off in accordance with that instrument to the nearest thousand dollars, or in certain cases, the nearest dollar. Auditor's independence declaration The lead auditor’s independence declaration as required under section 307C of the Corporations Act 2001 for the year ended 30 June 2020 has been received and is set out on the following page. This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the directors Mr Michael Quinert Executive Chairman 30 September 2020 Melbourne Page 34 of 81 AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF WEST WITS MINING LIMITED I declare that, to the best of my knowledge and belief during the year ended 30 June 2020 there have been: — no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and — no contraventions of any applicable code of professional conduct in relation to the audit. William Buck Audit (Vic) Pty Ltd ABN 59 116 151 136 A. A. Finnis Director Melbourne, 30 September 2020 Consolidated statement of profit or loss and other comprehensive income For the year ended 30 June 2020 Continuing Operations Revenue Cost of sales of goods Gross profit/(loss) Other income Corporate & administration expenses Director and employee expenses Exploration expenses Loss before income tax Income tax expense Loss for the year from continuing operations Discontinued operations Loss after tax for the year from discontinued operations Loss for the year Other comprehensive income Item that may be reclassified to profit or loss in subsequent year Exchange differences on translation of foreign operations Other comprehensive income/(loss) for the year, net of tax Total comprehensive loss for the period Loss is attributable to: Owners of West Wits Mining Limited Non-controlling interests Total comprehensive income/(loss) for the period is attributable to: Continuing operations Discontinued operations Non-controlling interests Continuing operations Discontinued operations Owners of West Wits Mining Limited Notes Consolidated entity 30 June 2020 $'000 30 June 2019 $'000 (Restated) 3 4 19 142 (25) 117 171 (1,138) (905) (2) (1,757) - (1,757) (156) (1,913) (1,195) (1,195) (3,108) (1,668) (245) (1,913) (500) (56) (556) (2,452) (100) (2,552) 4,825 (5,079) (254) - (884) (598) (224) (1,960) - (1,960) (9,801) (11,761) 301 301 (11,460) (7,962) (3,799) (11,761) (368) (3,528) (3,896) (1,291) (6,273) (7,564) Loss per share for continuing operations attributable to the ordinary equity holders of the Group: Basic earnings per share Diluted earnings per share Loss per share for discontinued operations attributable to the ordinary equity holders of the Group: Basic earnings per share Diluted earnings per share Loss per share for loss attributable to the ordinary equity holders of the Group: Basic earnings per share Diluted earnings per share 7(a) 7(a) 7(a) 7(a) (3,108) (11,460) (0.19) (0.19) (0.02) (0.02) (0.21) (0.21) (0.26) (0.26) (1.30) (1.30) (1.56) (1.56) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. Page 36 of 81 Consolidated statement of financial position As at 30 June 2020 ASSETS Current assets Cash and cash equivalents Trade and other receivables Prepayments Total current assets Non-current assets Plant and equipment Exploration and evaluation, development and mine properties Goodwill Other non-current assets Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Borrowings Provisions Liabilities held-for-sale Total current liabilities Non-current liabilities Other financial liabilities Total non-current liabilities Total liabilities Net assets EQUITY Share capital Reserves Accumulated losses Equity attributable to owners of West Wits Mining Limited Non-controlling interests Total equity Consolidated entity 30 June 2020 $'000 30 June 2019 $'000 Notes 8(a) 9 8(b) 8(c) 19 8(d) 10(a) 10(b) 1,202 32 2 1,236 5 10,847 - - 10,852 12,088 1,017 111 154 1,923 3,205 1,740 1,740 4,945 7,143 175 1,740 - 1,915 19 11,744 115 13 11,891 13,806 4,458 101 495 - 5,054 65 65 5,119 8,687 38,406 (1,207) (24,115) 13,084 (5,941) 7,143 36,963 (444) (22,447) 14,072 (5,385) 8,687 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. Page 37 of 81 Consolidated statement of changes in equity For the year ended 30 June 2020 Attributable to owners of West Wits Mining Limited Notes Share capital $'000 36,089 - Other reserves $'000 (992) - Accumulated losses $'000 (14,485) (7,962) Non- controlling interests $'000 (1,489) (3,799) Total $'000 20,612 (7,962) Total equity $'000 19,123 (11,761) - 398 (97) 301 (7,962) (7,564) (3,896) (11,460) Consolidated entity Balance at 1 July 2018 Loss for the year Other comprehensive income/(loss) Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Options issued 10(a) 10(b)(i) - - 874 - 874 398 398 - 150 150 - - - 874 150 1,024 - - - 874 150 1,024 8,687 Balance at 30 June 2019 36,963 (444) (22,447) 14,072 (5,385) Loss for the year from continuing operations Loss for the year from discontinued operations Other comprehensive income/(loss) Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Vesting of share-based payments for options issued Vesting of share-based payments for performance rights issued 10(a) 10(b)(i) 10(b)(ii) - - - - 1,443 - - - - (884) (884) - 90 31 1,443 121 (1,568) (1,568) (189) (1,757) (100) (100) (56) (156) - (884) (311) (1,195) (1,668) (2,552) (556) (3,108) - - - - 1,443 90 31 1,564 - - - - 1,443 90 31 1,564 Balance at 30 June 2020 38,406 (1,207) (24,115) 13,084 (5,941) 7,143 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. Page 38 of 81 Consolidated statement of cash flows For the year ended 30 June 2020 Cash flows from operating activities Receipts from customers Payments to suppliers and employees Net cash outflow from operating activities Cash flows from investing activities Cash received from farm-out arrangement Payments for exploration Net cash outflow from investing activities Cash flows from financing activities Proceeds from issues of shares Capital raising costs Proceeds from issue of convertible notes Proceeds from borrowings Net cash inflow from financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of period Notes Consolidated entity 30 June 2020 $'000 30 June 2019 $'000 14(a) 10(a) 10(a) 2,006 (3,432) (1,426) 3,434 (4,294) (860) - (300) (300) 1,535 (253) 1,441 - 2,723 997 175 30 1,202 60 (751) (691) 845 (26) - 101 920 (631) 1,068 (262) 175 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. Page 39 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 1 Summary of significant accounting policies This note provides a list of the significant accounting policies adopted in the preparation of these consolidated financial statements to the extent they have not already been disclosed in the other notes above. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the group consisting of West Wits Mining Limited and its subsidiaries. (a) Basis of preparation The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The financial statements of the Group comply with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The financial statements cover the Group of West Wits Mining Limited and controlled entities (the “Group” or “group”). West Wits Mining Limited is a listed for profit public company, incorporated and domiciled in Australia. (i) Reporting basis and conventions The financial statements have been prepared on an accruals basis and are based on historical costs. The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial statements. The accounting policies have been consistently applied, unless otherwise stated. (b) Going concern For the year ended 30 June 2020, the Group has reported a net loss after income tax and before eliminating non- controlling interests of $1.91 million (2019: $11.76 million) and net operating cash outflows of $1.43 million (2019: $0.86 million). As of 30 June 2020, the Group had $1.20 million cash at bank (2019: $0.18 million), and net current liabilities of $1.97 million (2019: $3.14 million). As announced to the ASX on 14 August 2020, the Group completed a share placement to raise $3.4 million (before costs) via the issue of 131.7 million new fully paid ordinary shares at $0.021 (2.1 cents) per share to existing and new sophisticated and professional investors. On this basis, the Board has assessed the going concern basis is appropriate. Page 40 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 1 Summary of significant accounting policies (continued) (c) New accounting standards and interpretations (i) New and amended standards adopted by the group • AASB 16 Leases AASB 16 Leases became effective on 1 January 2019. Accordingly, this standard applies for the first time in this financial report. AASB 16 ‘Leases’ replaces AASB 117 ‘Leases’ along with three Interpretations (AASB Interpretation 4 ‘Determining whether an Arrangement contains a Lease’, UIG 115 ‘Operating Leases-Incentives’ and UIG 127 ‘Evaluating the Substance of Transactions Involving the Legal Form of a Lease’). The new Standard has been applied using the modified retrospective approach, with the cumulative effect of adopting AASB 16 being recognised in equity as an adjustment to the opening balance of retained earnings for the current period. Prior periods have not been restated. The Group has adopted AASB 16 from 1 July 2019. Except for short-term leases and leases of low-value assets, right- of-use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). Impact of adoption During the reporting period, the Group only has operating leases with lease term less than 12 months. Therefore, the Group has applied the optional exemption to not recognise right-of-use assets and corresponding lease liabilities but to account for the lease expense on a straight-line basis over the remaining lease term. (ii) New standards and interpretations not yet mandatory or adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2020. The Group’s assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out below. The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January 2020 and early adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards. Where the Group has relied on the existing framework in determining its accounting policies for transactions, events or conditions that are not otherwise dealt with under the Australian Accounting Standards, the Group may need to review such policies under the revised framework. At this time, the application of the Conceptual Framework is not expected to have a material impact on the Group’s financial statements. Page 41 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 1 Summary of significant accounting policies (continued) (d) Accounting policies (i) Principles of consolidation A controlled entity is any entity West Wits Mining Limited has the power to control the financial and operating policies of, so as to obtain benefits from its activities. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. Controlled entities are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases. A list of controlled entities is contained in Note 12 to the financial statements. All inter-company balances and transactions between entities in the Group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the Company. Where controlled entities have entered or left the Group during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased. Non-controlling interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial statements. (ii) Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (iii) Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Page 42 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 1 Summary of significant accounting policies (continued) (d) Accounting policies (continued) (iii) Provisions (continued) Critical estimates and assumptions: In calculating the provision of rehabilitation and restoration in relation to the mining production activities in South Africa, a degree of estimation and judgement was applied to quantify the amount of potential costs required at the end of the project life. (iv) Employee benefits Provision is made for the Group's liability for employee benefits arising from services rendered by employees up to the end of the reporting period. Short-term and Long-term employee benefits: A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably. Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Liabilities recognised in respect of long term employee benefits are measured as the present value of the estimated future cash outflows to be made by the Company in respect of services provided by employees up to reporting date. (v) Interest income Interest income is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Other income is recognised when it is received or when the right to receive payment is established. All income is stated net of the amount of goods and services tax (GST) or value added tax (VAT). (vi) Income tax Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. The charge for current income tax expense is based on the profit adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the end of the reporting period. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Page 43 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 1 Summary of significant accounting policies (continued) (d) Accounting policies (continued) (vii) Goods and Services Tax (GST)/ Value Added Tax (VAT) Income, expenses and assets are recognised net of the amount of GST/VAT, except where the amount of GST/VAT incurred is not recoverable from the Taxation Authority. In these circumstances the GST/VAT is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST/VAT. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST/VAT component of investing and financing activities, which are disclosed as operating cash flows. (viii) Impairment of Non-Financial Assets At the end of each reporting period, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the statement of profit or loss and other comprehensive income. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. (ix) Leases Since AASB 16 has come to effect, any new contracts entered into on or after 1 July 2019, the group considers whether a contract is, or contains a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’. To apply this definition the group assesses whether the contract meets three key evaluations which are whether: • • • the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Company, the Company has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract, the Company has the right to direct the use of the identified asset throughout the period of use. The Company assess whether it has the right to direct ‘how and for what purpose’ the asset is used throughout the period of use. Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: • • • • fixed payments (including in-substance fixed payments), less any lease incentives receivable, amounts expected to be payable by the lessee under residual value guarantees, the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. Page 44 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 1 Summary of significant accounting policies (continued) (d) Accounting policies (continued) (ix) Leases (continued) The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the group’s incremental borrowing rate. Right-of-use assets are measured at cost comprising the following: • • • • the amount of the initial measurement of lease liability, any lease payments made at or before the commencement date, less any lease incentives received, any initial direct costs, and restoration costs. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. (x) Trade and other payables Liabilities for trade creditors and other amounts are initially recognised at the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group. They are subsequently measured at amortised cost. Payables to related parties are measured at fair value initially then subsequently measured at amortised cost using effective interest method. Interest, when charged by the lender is recognised as an expense on an accruals basis. (xi) Foreign currency transactions and balances Functional and presentation currency The functional currency of each entity is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity's functional and presentation currency. Transaction and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity; otherwise the exchange difference is recognised in the statement of profit or loss and other comprehensive income. Group companies The financial results and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows: • assets and liabilities are translated at year-end exchange rates prevailing at the end of the reporting period; • income and expenses are translated at average exchange rates, which approximate the rate at the date of the transaction, for the period; and retained earnings are translated at the exchange rates prevailing at the date of the transaction. • Exchange differences arising on translation of foreign operations are transferred directly to the Group’s foreign currency translation reserve in the statement of financial position. These differences are recognised in the statement of profit or loss and other comprehensive income in the period in which the operation is disposed. Page 45 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 1 Summary of significant accounting policies (continued) (d) Accounting policies (continued) (xii) Exploration and development expenditure Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis. Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is an uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Critical estimates and assumptions: Exploration and evaluation costs have been capitalised on the basis that the consolidated entity will commence commercial production in the future, from which time the costs will be amortised in proportion to the depletion of the mineral resources. Key judgements are applied in considering costs to be capitalised which includes determining expenditures directly related to these activities and allocating overheads between those that are expensed and capitalised. In addition, costs are only capitalised that are expected to be recovered either through successful development or sale of the relevant mining interest. Factors that could impact the future commercial production at the mine include the level of reserves and resources, future technology changes, which could impact the cost of mining, future legal changes and changes in commodity prices. To the extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the period in which this determination is made. The Directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information and that capitalised exploration costs are expected to be recovered either through successful development or sale of the relevant mining interest. Page 46 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 1 Summary of significant accounting policies (continued) (d) Accounting policies (continued) (xiii) Contributed equity Ordinary shares and unissued share options are classified as issued capital. Ordinary issued capital is recognised at the fair value of the consideration received by the Company. Any transaction costs directly attributable to the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. (xiv) Share-based payments Equity settled share-based payments are measured at fair value at the date of grant. Fair value for shares and listed options is measured using market value. Fair value for unlisted options is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted, based on management's best estimate for the effects of non- transferability or exercise restrictions. The Black-Scholes option pricing model also takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-market vesting conditions. Critical estimates and assumptions: The value attributed to share options issued is an estimate calculated using an appropriate mathematical formula based on an option pricing model. The choice of models and the resultant option value require assumptions to be made in relation to the likelihood and timing of the conversion of the options to shares and the value of volatility of the price of the underlying shares. (xv) Earnings per share Basic earnings/(losses) per share is determined by dividing the result from ordinary activities after related income tax expense by the weighted average number of ordinary shares outstanding during the financial year. Diluted earnings/(losses) per share are equivalent to basic earnings/(losses) per share as the potentially dilutive securities are excluded from the computation of diluted earnings/(losses) per share because the effect is anti-dilutive. (xvi) Revenue from mining production Revenue from mining production is recognised at a point in time when control over the gold ores is passed to the customer. The performance obligation is satisfied when the quantity of gold ores produced is verified and certified by both the customer and the company. A trade receivable is recognised at the date of sale and payment is made by the customer within no more than 30 days from the sale date. Page 47 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 1 Summary of significant accounting policies (continued) (d) Accounting policies (continued) (xvi) Revenue from mining production (continued) The contract is entered into and the transaction price is determined based on the quantity of ores produced at a pre- determined unit price and there are no further adjustments to this price. There are no other performance obligations (unsatisfied or partially unsatisfied), other than already disclosed requiring disclosure. (xvii) Investments in associates and joint arrangements Associates are those entities over which the Group is able to exert significant influence but which are not subsidiaries. A joint venture is an arrangement that the Group controls jointly with one or more other investors, and over which the Group has rights to a share of the arrangement’s net assets rather than direct rights to underlying assets and obligations for underlying liabilities. A joint arrangement in which the Group has direct rights to underlying assets and obligations for underlying liabilities is classified as a joint operation. Investments in associates and joint ventures are accounted for using the equity method. Interests in joint operations are accounted for by recognising the Group’s assets (including its share of any assets held jointly), its liabilities (including its share of any liabilities incurred jointly), its revenue from the sale of its share of the output arising from the joint operation, its share of the revenue from the sale of the output by the joint operation and its expenses (including its share of any expenses incurred jointly). Any goodwill or fair value adjustment attributable to the Group’s share in the associate or joint venture is not recognised separately and is included in the amount recognised as investment. The carrying amount of the investment in associates and joint ventures is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate and joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group. Unrealised gains and losses on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment. Critical estimates and assumptions: The arrangement in relation to the Kimberley Central Open Pit tenement requires the directors to exercise a degree of judgement to conclude that the two partners have direct rights to the assets of the partnership and are jointly and severally liable for the liabilities incurred by the partnership. This arrangement is therefore classified as a joint operation and the Group recognises its direct right to the jointly held assets, liabilities, revenues and expenses. Page 48 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 1 Summary of significant accounting policies (continued) (e) Liabilities held for sale and discontinued operations For the year ended 30 June 2020, the Group classifies liabilities of disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. liabilities of disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense. The criteria for held for sale classification is regarded as met only when the sale is highly probable and the liabilities or disposal group is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset/liabilities and the sale expected to be completed within one year from the date of the classification. Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale. Assets and liabilities classified as held for sale are presented separately as current items in the statement of financial position. A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and: • Represents a separate major line of business or geographical area of operations • Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, or • Is a subsidiary acquired exclusively with a view to resale Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the statement of profit or loss. Additional disclosures are provided in Note 19. All other notes to the financial statements include amounts for continuing operations, unless indicated otherwise. Page 49 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 1 Summary of significant accounting policies (continued) (e) Liabilities held for sale and discontinued operations (continued) As a result of the classification of liabilities held for sale of the disposal groups and discontinued operations, the Group has restated the comparatives for the consolidated statement of profit or loss and other comprehensive income for the financial year ended 30 June 2019, as shown below Consolidated statement of profit or loss and other comprehensive income Original Discontinued operations Revised Revenue Cost of sales of goods Gross Profit Corporate & administration expenses Director and employee expenses Exploration expenses Depreciation and amortisation expense Impairment of exploration assets Loss before income tax for the year from continuing operations Income tax expense Loss after tax for the year from discontinued operations Loss for the year Item that may be reclassified to profit or loss in subsequent year Exchange differences on translation of foreign operations Other comprehensive income (loss) for the year, net of tax Total comprehensive loss for the year Loss is attributable to: Owners of West Wits Mining Limited Non-controlling interests Total comprehensive loss for the year is attributable to: Owners of West Wits Mining Limited Non-controlling interests 4,825 (5,079) (254) (944) (598) (224) - (9,741) (11,761) - - (11,761) 301 301 (11,460) (7,962) (3,799) (11,761) (7,564) (3,896) (11,460) - - - 4,825 (5,079) (254) 60 - - - 9,741 9,801 - (9,801) (884) (598) (224) - - (1,960) - (9,801) - (11,761) - - - - - - - - - 301 301 (11,460) (7,962) (3,799) (11,761) (7,564) (3,896) (11,460) Page 50 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 2 Operating segments (a) Segment results The Group operates in one operating segment being mining and exploration. During the year ended 30 June 2020, the Group announced an update on Derewo River Gold Project wherein a binding Heads of Agreement with TME Group Pte Ltd has been signed and was established that West Wits International would dilute its equity interests in PT Madinah Quarataa’n (“PTMQ”), the Project Company, from the current 64% to 10%. The dilution was to come into effect upon implementation of the HOA. As of the date of report, the agreement has not been finalised. PTMQ has been classified as discontinued operations, the Indonesian segment is no longer presented within the segment note. As a result, the Group’s activities can be divided into two reportable segments based on reports received and reviewed by the Board. The two reportable segments are based on two distinct geographical locations, South Africa and Australia. Mining and exploration activities are carried out only on the South African segments; whereas the Australian segment reflects only the administrative arm of the business that supports the mining and exploration activities in the other geographical location. Consolidated entity 2020 External sales Other income Total Segment Result South Africa Australia $'000 $'000 Total $'000 142 139 281 (448) - 32 32 (1,309) 142 171 313 (1,757) The segment information provided to the Board for the reportable segments for the year ended 30 June 2019 is as follows: Consolidated entity 2019 (Restated) External sales Other income Total Segment Result South Africa Australia $'000 $'000 Total $'000 4,825 - 4,825 (902) - - - (1,058) 4,825 - 4,825 (1,960) (b) Segment assets Segment assets are measured in the same way as in the financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset. South Africa Australia Total segment assets Page 51 of 81 Consolidated entity 30 June 2020 $'000 30 June 2019 $'000 8,077 4,011 12,088 10,573 3,090 13,663 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 2 Operating segments (continued) (c) Segment liabilities Segment liabilities are measured in the same way as in the financial statements. These liabilities are allocated based on the operations of the segment and the physical location of the asset. South Africa Australia Total segment liabilities Consolidated entity 30 June 2020 $'000 30 June 2019 $'000 818 2,204 3,022 2,848 333 3,181 (d) Other segment information During the year ended 30 June 2020, there was one major customer who contributed to 100% of the group's revenue (2019: 100%) from our mining production activities in South Africa. 3 Revenue from contract with customers (a) Disaggregation of revenue from contracts with customers The group only derives revenue from the transfer of goods at a point in time (i.e sale of gold bearing ore) and revenue from contracts with customers is only generated from the South Africa segment, as disclosed in note 2(a): Timing of revenue recognition • At a point in time • Over time Consolidated entity 30 June 2020 $'000 30 June 2019 $'000 142 - 142 4,825 - 4,825 Page 52 of 81 4 Income tax expense (a) Numerical reconciliation of income tax expense to prima facie tax payable West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) Loss from continuing operations before income tax expense Tax at the Australian tax rate of 27.5% (2019 - 27.5%) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Impairment expense Subtotal Current year tax benefit not recognised Income tax expense 5 Key management personnel disclosures Consolidated entity 30 June 2020 $'000 30 June 2019 $'000 (Restated) (1,757) 483 (1,960) 539 - 483 (483) - 14,980 - 539 (539) - 1,390 The aggregate compensation made to Directors and other members of key management personnel of the group is set out below: Short-term employee benefits Post-employment benefits Share-based payments (a) Transactions with other related parties Consolidated entity 30 June 2020 $000 30 June 2019 $000 559 13 236 808 492 8 243 743 The following transactions occurred with related parties: Consolidated entity Sales and purchases of goods and services Legal fees that were paid to Quinert Rodda & Associates, a Director related entity to Mr Michael Quinert Rental expense paid to Brickwick Pty Ltd, a Director related entity to Mr Michael Quinert Legal fees that were paid to Malan Scholes Attorneys, a Director related entity to Mr Hulme Scholes Consultancy fees that were paid to MERA Advisers, a Director related entity to Mr Hulme Scholes Consultancy fees paid to Kenosis Capital LLC, a related entity to Mr Peter O’Malley 30 June 2020 $000 30 June 2019 $000 79 8 75 60 104 28 - 111 128 - Page 53 of 81 6 Remuneration of auditors During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms: West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) Remuneration of the auditor of the parent entity for: Audit services and review of financial statements Remuneration of other auditors of subsidiaries for: Audit services and review of financial statements Total remuneration for audit and other assurance services 7 Loss per share (a) Basic & diluted loss per share Loss per share for loss attributable to the ordinary equity holders of the Group: Basic earnings per share Diluted earnings per share Attributable to the ordinary equity holders of the Group From continuing operations From discontinued operations (b) Reconciliation of loss used in calculating earnings per share Loss attributable to the ordinary equity holders of the Group used in calculating basic & diluted earnings per share: From continuing operations From discontinued operations Page 54 of 81 Consolidated entity 2020 $’000 2019 $’000 42 17 59 41 18 59 Consolidated entity 30 June 2020 Cents 30 June 2019 Cents (0.21) (1.56) (0.19) (0.02) (0.26) (1.30) Consolidated entity 30 June 2020 $'000 30 June 2019 $'000 (1,757) (156) (1,913) (1,960) (9,801) (11,761) West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 7 Loss per share (continued) (c) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic loss per share Consolidated entity 2020 Number 2019 Number 919,064,924 753,490,824 The outstanding share options as at 30 June 2020 are considered to be anti-dilutive and therefore were excluded from the diluted weighted average number of ordinary shares calculation. 8 Financial assets and financial liabilities (a) Trade and other receivables Consolidated entity Current assets Trade receivables (i) Other receivables (i) Aging analysis 30 June 2020 $'000 17 15 32 Balance as at 30 June 2020 ($’000) % 30 June 2019 ($’000) % Less than 30 days 30 - 90 days Greater than 90 days 17 100% 871 94% - - - - - 0% 54 6% 30 June 2019 $'000 925 815 1,740 Total 17 100% 925 100% Page 55 of 81 8 Financial assets and financial liabilities (continued) (b) Trade and other payables Current liabilities Payables to creditors and employees Accrued expenses Trade payables are unsecured and are usually paid within 30 days of recognition. (c) Provisions Provisions Provision for rehabilitation and restoration in relation to the mining production in South Africa Others West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) Consolidated entity 30 June 2020 $'000 691 326 1,017 30 June 2019 $'000 3,305 1,153 4,458 Consolidated entity 30 June 2020 $'000 30 June 2019 $'000 147 7 154 477 18 495 (d) Other financial liabilities Non-current liabilities Convertible notes Other financial liability Consolidated entity 30 June 2020 $'000 1,740 - 1,740 30 June 2019 $'000 - 65 65 Other financial liabilities mainly relates to convertible notes issued to Wingfield Capital Partners LLC. During the year ended 30 June 2020, the Group entered in a subscription agreement with a US based investment group, Wingfield Capital Partners LLC, to raise USD 1 million through the issuance of 1 million convertible notes with a conversion price of USD 0.007 (US Cents per share), and minimum term of 3 years with an interest of 12% per annum accruing annually in arrears. The convertible notes were issued in two tranches with details below:- • First tranche issued on 3 February 2020 for 400,000 convertible notes at USD1.00 each, expiring three years from date of issue of second tranche, with an option to be extended twice for one year. • Second tranche issued on 2 March 2020 for 600,000 convertible notes at USD1.00 each, expiring three years from date of issue, with an option to be extended twice for one year. Page 56 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 8 Financial assets and financial liabilities (continued) (d) Other financial liabilities (continued) The convertible notes represent a written option to exchange for the Group’s equity instruments that are denominated in a foreign currency (USD) and a portion of its conversion feature is dependent on the movement in the gold price. Therefore, this has been assessed to be a variable conversion price as there is a conversion formula based on the gold price in foreign currency which will vary the number of shares to be issued. The convertible notes have two embedded derivatives features apart from the principal amount of the convertible notes (host contract). As a result, the Group has recognised host contract amount and the derivative financial liabilities in accordance with AASB 9. The convertible notes are initially recorded at fair value at issue date and subsequently measured at fair value through profit or loss at each reporting date. Since the convertible notes have an initial term of 3 years, they have been classified under non- current liabilities. Tranche 1 – 400,000 convertible notes Convertible notes Gold price option (derivative liability) Foreign currency (derivative liability) Interest accrued in arrears Tranche 2 – 600,000 convertible notes Convertible notes Gold price option (derivative liability) Foreign currency (derivative liability) Interest accrued in arrears Initial recognition $'000 506 71 18 - 595 Revaluation as at 30 June 2020 $'000 583 82 24 7 696 Initial recognition $'000 784 107 27 - 918 Revaluation as at 30 June 2020 $'000 874 123 37 10 1,044 As a result of the revaluation as of 30 June 2020, $0.2 million has been recognised in profit or loss. Fair value hierarchy Since the convertible notes are not traded in an active market and fall under the level 2 of the fair value hierarchy. The fair value has been estimated by using the formula stated in the signed convertible note subscription agreement based on observable market conditions that existed at the issue date and at 30 June 2020. Page 57 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 9 Exploration and evaluation, development and mine properties Consolidated entity At 1 July 2018 Cost or fair value Year ended 30 June 2019 Opening net book amount Additions Cash received under a farm-in arrangement Exchange differences Acquisition of subsidiary Closing net book amount at 30 June 2019 Consolidated entity At 1 July 2019 Cost or fair value Year ended 30 June 2020 Opening net book amount Additions Performance rights capitalised Exchange differences Closing net book amount at 30 June 2020 Derewo River Gold Project $'000 Rand & DRD Leases $'000 Tambina Gold Project $'000 Mt Cecelia Project $'000 9,397 9,397 - 344 (9,741) 7,838 7,838 715 - 213 - - 8,766 1,847 1,847 - (60) 2 - 1,789 1,099 1,099 90 - - - 1,189 Derewo River Gold Project $'000 Rand & DRD Leases $'000 Tambina Gold Project $'000 Mt Cecelia Project $'000 Total $'000 20,181 20,181 805 (60) 559 (9,741) 11,744 Total $'000 - - - - - 8,766 1,789 1,189 11,744 8,766 290 17 (1,214) 7,859 1,789 1 - - 1,790 1,189 9 - - 11,744 300 17 (1,214) 1,198 10,847 During the year ended 30 June 2019, the Group conducted a reassessment on the expected recoverability of the Derewo River Gold Project (the "Project") on successful development and commercial exploitation in conjunction with recent developments in working with local experts and consultants in evaluating different avenues to materialise the return of investment. Even though the Group has not changed its view on the fundamental value of the Project, management has made a decision to fully provide for the carrying value of the Project due to the uncertainty in materialising the return. Page 58 of 81 10 Equity (a) Share capital Ordinary shares Fully paid Total share capital (i) Movements in ordinary shares: Details Balance at 1 July 2018 Shares issued during the year Less: Transaction costs arising on share issues Balance at 30 June 2019 Shares issued during the year Less: Transaction costs arising on share issues West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 30 June 2020 Shares 30 June 2019 Shares 1,023,126,278 800,031,002 1,023,126,278 800,031,002 30 June 2020 $'000 38,406 38,406 30 June 2019 $'000 36,963 36,963 Number of shares (in thousands) 717,848 82,183 - 800,031 223,095 - $'000 36,089 899 (25) 36,963 1,696 (253) Balance at 30 June 2020 1,023,126 38,406 Page 59 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 10 Equity (continued) (a) Share capital (continued) Details of shares issued Date 20/08/2019 18/12/2019 04/06/2020 05/06/2020 23/06/2020 Details Issue of ordinary shares to provide working capital to support the Company’s activities pending the anticipated grant of the Company’s mining right for its Witwatersrand Gold Project Issue of ordinary shares in lieu of cash in connection with services provided to the Company Issue of ordinary shares Issue of ordinary shares in lieu of cash for interest accrued on the Convertible Notes Issue of ordinary shares under Share Purchase Plan No. of shares Unit price ($) $'000 122,500,000 14,999,998 65,000,000 5,595,278 15,000,000 223,095,276 0.006 0.007 0.010 0.010 0.010 735 105 650 56 150 1,696 (ii) Ordinary shares Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital. (b) Reserves Foreign currency translation reserve Shared-based payment reserve – options (i) Shared-based payment reserve – performance rights (ii) (i) Options Opening balance Options issued Options expired Amortisation of share-based payments for options issued in prior periods Closing balance Consolidated entity 30 June 2020 $'000 (3,483) 2,245 31 (1,207) 30 June 2019 $'000 (2,599) 2,155 - (444) 30 June 2020 Number of Options 52,000,000 15,500,000 - 30 June 2019 Number of Options 54,000,000 - (2,000,000) - 67,500,000 - 52,000,000 30 June 2020 30 June 2019 $'000 2,155 58 - 32 2,245 $'000 2,005 - - 150 2,155 Page 60 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 10 Equity (continued) (b) Reserves (continued) (i) Options (continued) During the financial year 2020, the following unlisted options were issued (2019: nil):- Grant date Details 29/11/2019 15/01/2020 Issued options to directors and consultant Issued options to consultant No. of shares 10,000,000 5,500,000 15,500,000 Share-based payment expense $'000 29 29 58 Share-based payment expense of $32,006 recognised during the current financial year related to options used in prior year. As at 30 June 2020, the following unlisted options are in existence: Series Issued 15/11/2017 04/12/2017 04/12/2017 04/12/2017 30/01/2018 18/12/2019 15/01/2020 15/01/2020 Quantity 10,000,000 10,000,000 12,000,000 3,000,000 17,000,000 10,000,000 2,200,000 3,300,000 67,500,000 Grant date 15/11/2017 21/11/2017 21/11/2017 04/12/2017 21/11/2017 29/11/2019 15/01/2020 15/01/2020 Expiry date 14/11/2020 30/11/2020 03/12/2022 03/12/2022 29/01/2023 18/12/2023 02/02/2022 01/03/2022 Exercise price ($) 0.050 0.050 0.050 0.050 0.050 0.012 0.015 0.015 Fair value at grant date per option ($) 0.0170 0.0170 0.0190 0.0190 0.0170 0.0031 0.0052 0.0053 No options were exercised during the year (2019: nil) (ii) Performance Rights Opening balance Performance rights issued and expensed Performance rights issued and capitalised Closing balance 30 June 2020 Performance Rights - 11,600,000 12,900,000 24,500,000 30 June 2019 Performance Rights - - - - 30 June 2020 $'000 - 14 17 31 30 June 2019 $'000 - - - - Page 61 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 10 Equity (continued) (b) Reserves (continued) (ii) Performance Rights During the financial year 2020, the following performance rights were issued (2019: nil):- Grant date Details 29/11/2019 Issued performance rights to directors No. of shares 11,600,000 11,600,000 Share-based payment expense $'000 14 14 Performance rights amounted to $16,800 were capitalised as part of exploration assets during the current financial year. 11 Share-based payments (a) Options issued during the period The value attributed to share options and remuneration shares issued is an estimate calculated using an appropriate option-pricing model. The choice of models and the resultant option value require assumptions to be made in relation to the volatility of the price of the underlying shares. The 10,000,000 equity settled options were issued to Directors as per the ASX announcement on 18 December 2019 and related shareholder approval obtained at the AGM on 29 November 2019. The exercise price for the 10 million options is at $1.2 cents per option. 7.5 million options fully vested on the 18 December 2019, with the remaining 2.5 million options vesting 9 months after the issue date. The assessed fair value of options at grant date was determined using the Black-Scholes option valuation model that takes into account the exercise price, term of the option (48 months), security price at grant date and expected price volatility of the underlying security (112%), the expected dividend yield (0.00%), and the risk-free interest rate (0.65%) for the term of the security. The volatility was based on analysing the Group's historical trading data for the last 24 months up to and including the valuation date. The 5,500,000 equity settled options were issued to Directors as per the ASX announcement on 15 January 2020. The exercise price for the 5.5 million options is at $1.5 cents per option. 2.2 million options fully vested on 3 February 2020, with the remaining 3.3 million options vested on 2 March 2020. The assessed fair value of options at grant date was determined using the Black-Scholes option valuation model that takes into account the exercise price, term of the option (24 months), security price at grant date and expected price volatility of the underlying security (118%), the expected dividend yield (0.00%), and the risk-free interest rate (0.81%) for the term of the security. The volatility was based on analysing the Group's historical trading data for the last 24 months up to and including the valuation date. The Group recognised the $57,821 of share-based payment expense in the statement of profit of loss due to immediate vesting. The Option-value model inputs during the year 30 June 2020 included: Grant date Expiry date Exercise price ($) No. of options Expected volatility Dividend yield Share price at grant date ($) Risk- free interes t rate 29/11/2019 15/01/2020 15/01/2020 18/12/2023 02/02/2022 02/03/2022 0.012 10,000,000 0.015 2,200,000 0.015 3,300,000 0.005 0.010 0.010 112% 118% 118% 0.00% 0.00% 0.00% 0.65% 0.81% 0.81% Fair value at grant date per option ($) 0.0031 0.0052 0.0053 Page 62 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 11 Share-based payment (continued) (b) Performance rights issued during the period The 24,500,000 equity settled options were issued to Management as per the ASX announcement on 18 December 2019 and related shareholder approval obtained at the AGM on 29 November 2019. The Group recognised $13,579 of share-based payment expense in the statement of profit or loss and capitalised $16,800 of performance rights in the statement of financial position. The performance hurdles, relevant dates and conditions of the rights are detailed below: Number issued Issue date Expiry date Exercise price Market/Non- market performance condition Probability of non- market performance condition occurring Fair value for each performance rights ($) 4,700,000 18/12/2020 31/12/2020 0.0150 Market 3,800,000 18/12/2020 31/12/2021 0.0280 Market 3,100,000 18/12/2020 31/12/2022 0.0420 Market N/A N/A N/A 0.0009 0.0012 0.0016 Total fair value recorded ($) 4,183 4,560 4,836 1,750,000 18/12/2020 30/06/2021 N/A Non-market 60% 0.0050 3,150 1,750,000 18/12/2020 31/12/2021 N/A Non-market 10% 0.0050 875 2,300,000 18/12/2020 30/06/2021 N/A Non-market 10% 0.0050 1,150 3,200,000 18/12/2020 30/06/2022 N/A Non-market 30% 0.0050 4,800 3,900,000 24,500,000 18/12/2020 30/06/2023 N/A Non-market 35% 0.0050 6,825 30,379 Performance Hurdle 30-day VWAP of $0.015 at 31/12/2020 30-day VWAP of $0.028 at 31/12/2021 30-day VWAP of $0.042 at 31/12/2022 Expanding the JORC Resource by 600,000oz at a grade of at least 3g/t by 30/06/2021 Delineating a total of 650,000 ounces of gold reserves (in accordance with JORC 20121) at a grade of at least 3g/t Au by 31/12/2021 Achieving annualised production of 5,500oz of gold per annum over a consecutive period of 3- months in the 12-months to 30/06/2021 Achieving annualised production of 25,000oz of gold per annum over a consecutive period of 3- months in 2022 calendar year Achieving annualised production of 45,000oz of gold per annum over a consecutive period of 3- months in 2023 calendar year TOTAL The management has assessed the probability of the non-market conditions being satisfied. The performance rights with non-market conditions have been capitalised in exploration and evaluation assets as per the Group exploration plan. Page 63 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 12 Interests in other entities (a) Material subsidiaries The group’s principal subsidiaries at 30 June 2020 are set out below. Unless otherwise stated, they have share capital consisting solely of ordinary shares that are held directly by the group, and the proportion of ownership interests held equals the voting rights held by the group. The country of incorporation or registration is also their principal place of business. Name of entity Place of business/ country of incorporation West Wits Mining SA (Pty) Ltd West Wits MLI (Pty) Ltd Mining & Mineral Reclamation Services (Pty) Ltd West Wits Monarch (Pty) Ltd NuGold Company Ltd (Hong Kong) PT. NuGold Indonesia PT. Madinah Qurrata'ain South Africa South Africa South Africa South Africa Hong Kong Indonesia Indonesia Ownership interest held by the group 2020 % 90 74 2019 % 90 74 74 100 100 100 64 74 100 100 100 64 Ownership interest held by non-controlling interests 2020 % 10 26 26 - - - 36 2019 % 10 26 26 - - - 36 All subsidiaries listed above operated in the mining and exploration industry. (i) Significant restrictions Cash held by all South Africa subsidiaries is subject to exchange control regulations governed by the South African Reserve Bank (SARB). Ongoing approval by SARB is crucial to the transfer of cash funds into and out of South Africa. Page 64 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 12 Interests in other entities (continued) (b) Non-controlling interests (NCI) Set out below is summarised financial information for each subsidiary that has non-controlling interests that are material to the group. The amounts disclosed for each subsidiary are before inter-Company eliminations. South Africa 30 June 2020 $'000 30 June 2019 $'000 233 818 (585) 7,844 - 7,844 7,259 1,998 1,804 2,848 (1,044) 8,769 - 8,769 7,725 1,454 South Africa 30 June 2020 $'000 30 June 2019 $'000 (448) 822 374 (614) (902) 12 (890) (329) South Africa 30 June 2020 $'000 30 June 2019 $'000 (846) (377) 1,362 139 263 (715) 354 (98) Summarised balance sheet Current assets Current liabilities Current net liabilities Non-current assets Non-current liabilities Non-current net assets Net assets Accumulated NCI Summarised statement of comprehensive income Loss for the period Other comprehensive income Total comprehensive income Loss allocated to NCI < blank header row > Summarised cash flows Cash flows (used in)/from operating activities Cash flows used in investing activities Cash flows from financing activities Net increases/(decrease) in cash and cash equivalents (c) Transactions with non-controlling interests There have been no transactions with non-controlling interests during the year 2020 (2019: nil). Page 65 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 12 Interests in other entities (continued) (d) Joint operations West Wits MLI (Pty) Ltd, a subsidiary of the Group has a 50% interest in a joint arrangement called the Kimberley Central Open Pit which was set up as a partnership together with Elandiwave Pty Ltd (“Elandiwave”), a South Africa based company for mining production activities. The joint venture operation ceased production at the beginning of the reporting period with operations winding down during the period. Minor backfilling operations of the remaining open-pit are expected to be completed in the current reporting period which will also end the joint arrangement. The principal place of business of the joint operation is in South Africa. 13 Contingent liabilities and contingent assets (a) Contingent liabilities The group had no contingent liabilities at 30 June 2020 (2019: nil). (b) Contingent assets The group had no contingent assets at 30 June 2020 (2019: nil). 14 Cash flow information (a) Reconciliation of loss after income tax to net cash inflow from operating activities Consolidated entity 30 June 2020 $'000 30 June 2019 $'000 (1,913) (11,761) 156 104 166 6 42 74 1,708 (2) (1,426) (341) (1,426) 9,741 150 - - - - (1,391) 49 1,812 540 (860) Loss for the year Adjustments for:- Impairment of assets Share-based payments Unrealised foreign exchange on convertible note Other unrealised foreign exchange Fair value movements of convertible note derivatives Interest expense on convertible notes Change in operating assets and liabilities: Decrease/(Increase) in accounts receivable (Increase)/Decrease in other current assets (Decrease)/Increase in accounts payable (Decrease)/Increase in provision Net cash outflow from operating activities Page 66 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 15 Parent entity financial information (a) Summary financial information The individual financial statements for the parent entity show the following aggregate amounts: Balance sheet Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets Shareholders' equity Issued capital Share-based payments reserve Accumulated losses Profit or loss for the year Total comprehensive income 30 June 2020 $'000 1,005 24,898 25,903 464 1,740 2,204 23,699 (21,978) 38,406 2,276 (16,983) 23,699 (653) (653) 30 June 2019 $'000 96 21,816 21,912 181 - 181 21,731 (21,764) 36,963 2,155 (17,387) 21,731 (1,058) (1,058) (b) Guarantees entered into by the parent entity West Wits Mining Ltd has not entered into any guarantees, in the current or previous financial year, in relation to the debts of its subsidiaries (2019: Nil). (c) Contingent liabilities of the parent entity The parent entity did not have any contingent liabilities as at 30 June 2020 or 30 June 2019. For information about guarantees given by the parent entity, please see above. (d) Contractual commitments for the acquisition of property, plant or equipment At 30 June 2020, West Wits Mining Ltd had not entered into any contractual commitments for the acquisition of property, plant and equipment (2019: nil). 16 Events occurring after the reporting period On 14 August 2020, the Group completed a share placement to raise $3.4 million (before costs) via the issue of 131.7 million new fully paid ordinary shares at $0.021 (2.1 cents) per share to existing and new sophisticated and professional investors. No other matters or circumstances have occurred subsequent to period end that has significantly affected, or may significantly affect, the operations of the group, the results of those operations or the state of affairs of the group or Group in subsequent financial years. 17 Capital management The Group's policy is to maintain a strong and flexible capital base to maintain investor, creditor and market confidence and to sustain future development of the business. The board monitors the return on capital, which the Group defines as total shareholders’ equity attributable to members of West Wits Mining Limited divided by the quantity of shares on issue. The Group is not subject to externally imposed capital requirements. Page 67 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 18 Financial risk management The Group's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. Management have established risk management policies to identify and analyse the risks faced by the company and the group, to set appropriate risk limits and controls, and to monitor risk and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. (a) Market risk (i) Foreign exchange risk The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than the respective functional currency of each company within the group. The Group also has exposure to foreign exchange risk in the currency cash reserves it holds to meet subsidiary loan requirements. This is kept to an acceptable level by buying foreign currency at spot rates only to fund short term cash requirements. The Group's exposure to foreign exchange risk has not changed from the previous year. The Group does not make use of derivative financial instruments to hedge foreign exchange risk. Assets Liabilities Total exposure 30 June 2020 ZAR $'000 95,813 (9,703) 86,110 The following significant exchange rates applied during the year: Currency . ZAR Average Rate 2019 2020 30 June spot rate 2019 2020 10.5244 10.1065 11.8624 9.8938 Sensitivity The Group is exposed to the South African Rand (ZAR) and Indonesian Rupiah (IDR). The average annual movement in the AUD/ZAR and AUD/IDR exchange rate over the last 5 years was 6.6% for ZAR and 5.6% for IDR (2019: 6.6% for ZAR and 5.6% for IDR) based on the year-end spot rates. A fluctuation of 6.6% for ZAR and 5.6% for IDR against the AUD at 30 June would have changed the equity and loss by the amounts show below. This analysis assumes that all other variables, in particular interest rates, remain consistent. The analysis is performed on the same basis for 2019. Consolidated entity Sensitivity result Impact on post-tax profit Impact on other components of equity 2020 $'000 39 2019 $'000 607 2020 $'000 638 2019 $'000 407 The effect on equity is to the Foreign Currency Translation Reserve and Accumulated Losses. Page 68 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 18 Financial risk management (continued) (a) Market risk (continued) (ii) Price risk Exposure The Group is exposed to the risk of fluctuations in prevailing market commodity prices on gold. The Group’s has not established a formal policy to manage this risk. Management maintain a tight control over the production costs and work closely with its key contractors to ensure that any fluctuation in the gold price is reflected in the production costs. (b) Credit risk (i) Risk management Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Group. Surplus cash is invested with financial institutions of appropriate credit worthiness and the amount of credit exposure to any one counter party is limited. The Group only has one customer for its mining production activity and thus management works closely with this major customer to minimise any credit risk. The Group's maximum exposure to credit risk at the end of the reporting period is set out in the table below. The carrying amount of the financial assets represents the maximum credit risk exposure. Cash and cash equivalents Trade and other receivables Consolidated entity 30 June 2020 $'000 30 June 2019 $'000 1,202 32 1,234 175 1,740 1,915 (ii) Impairment of financial assets The group has one type of financial assets subject to the expected credit loss model: • trade receivables for mining production activities While cash and cash equivalents are also subject to the impairment requirements of AASB 9, the identified impairment loss was immaterial. The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on the payment profiles of sales over a period since the commencement of its mining production until 30 June 2020 and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. On that basis, the loss allowance as at 30 June 2020 from the ECL method was concluded as immaterial as the group had not written off any receivables. Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the group, and a failure to make contractual payments Page 69 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 18 Financial risk management (continued) (b) Credit risk (continued) Impairment losses on trade receivables are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item. (c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient assets to meet liabilities as they fall due. The Group is exposed to liquidity risk via the quantity and type of financial assets and liabilities it holds. The board ensures that the Group can meet its financial obligations as they fall due by maintaining sufficient reserves of cash, continuously monitoring forecast and actual cash flows, matching the maturity profiles of financial assets and liabilities, and identifying when they need to raise additional funding from the equity markets. The Group’s exposure to liquidity risk has remained unchanged from the previous year. (i) Maturities of financial instruments Contractual maturities of financial liabilities At 30 June 2020 Financial assets - cash flows realisable Cash and cash equivalents Trade and other receivables Financial liabilities due to payment Trade and other payables Borrowings Other financial liabilities Net inflow/(outflow) on financial instruments Due within 1 year $'000 Due within 1 to 5 years $'000 Total contractual cash flows $'000 Carrying amount (assets)/ liabilities $'000 Over 5 years $'000 1,202 32 1,234 - - - (1,017) (111) - (1,128) - - (1,740) (1,740) 106 (1,740) - - - - - - - - 1,202 32 1,234 1,202 32 1,234 (1,017) (111) (1,740) (2,868) (1,017) (111) (1,740) (2,868) (1,634) (1,634) Page 70 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 18 Financial risk management (continued) (c) Liquidity risk (continued) Contractual maturities of financial liabilities At 30 June 2019 Financial assets - cash flows realisable Cash and cash equivalents Trade and other receivables Financial liabilities due to payment Trade and other payables Borrowings and other financial liabilities Net inflow/(outflow) on financial instruments Due within 1 year Due within 1 to 5 years Over 5 years Total contractual cash flows $'000 $'000 $'000 $'000 Carrying amount (assets)/ liabilities $'000 175 1,740 1,915 (4,458) (101) (4,559) (2,644) - - - - (65) (65) (65) - - - - - - - 175 1,740 1,915 175 1,740 1,915 (4,458) (166) (4,624) (4,458) (166) (4,624) (2,709) (2,709) Fair value The fair value of financial assets and liabilities equals to the carrying amounts shown in the statement of financial position due to the short-term nature of those financial assets and liabilities. Page 71 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 19 Discontinued operations On 16 August 2019, the Group announced an update on Derewo River Gold Project wherein a binding Heads of Agreement with TME Group Pte Ltd has been signed and was established that West Wits International would dilute its equity interests in PT Madinah Quarataa’n (“PTMQ”), the Project Company, from the current 64% to 10%. The dilution was to come into effect upon implementation of the HOA. As of the date of report, the agreement has not been finalised. PTMQ has been classified as discontinued operations and the Indonesian segment is no longer presented within the segment note. The below table presents the financial performance information of the discontinued operations. Revenue from operations Cost of sales of goods Corporate administration Impairment of exploration assets Impairment of trade and other receivables Impairment of plant and equipment Impairment of goodwill Impairment of other non-current assets Loss before tax from discontinued operations Income tax expense Loss for the year from discontinued operations 30 June 30 June 2020 $’000 - - - - (15) (13) (115) (13) (156) - (156) 2019 $’000 - - (60) (9,741) - - - - (9,801) - (9,801) Page 72 of 81 West Wits Mining Limited Notes to the financial statements 30 June 2020 (continued) 19 Discontinued operations (continued) During the year ended 30 June 2020, PT Madinah Quarataa’n has written off all its assets amount to $156,000 and hence the remaining classes of liabilities of PT Madinah Quarataa’n classified as held for sale as at 30 June 2020 are as follows: Liabilities Trade and other payables Other financial liabilities Total liabilities held-for-sale Net liabilities directly associated with disposal group 30 June 2020 $’000 1,858 65 1,923 1,923 As of 30 June 2020 and 30 June 2019, PT Madinah Quarataa’n does not has any cash and cash equivalents and hence no cash flows are presented. 30 June 30 June 2020 cents 2019 cents Loss per share Basic loss per share for the period from discontinued operations Diluted loss per share for the period from discontinued operations (0.02) (0.02) (1.30) (1.30) Page 73 of 81 Directors' declaration In the Directors' opinion: (a) the financial statements and notes set out are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and (ii) (iii) give a true and fair view of the financial position as at 30 June 2020 and of the performance for the year ended on that date of the company and the Group; and comply with International Financial Reporting Standards as disclosed in Note 1 (b) (c) the Chairman and Chief Finance Officer have each declared that: (i) the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; the financial statements and notes for the financial year comply with the Accounting Standards; and the financial statements and notes for the financial year give a true and fair view. (ii) (iii) in the Directors' opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Board of Directors. Mr Michael Quinert Director Melbourne 30 September 2020 Page 74 of 81 West Wits Mining Limited Independent auditor’s report to members Report on the Audit of the Financial Report Opinion We have audited the financial report of West Wits Mining 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 other explanatory information, and the directors’ declaration. In our opinion, the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) 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 (ii) 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 (including Independence Standards) (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. 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. CARRYING VALUE OF EXPLORATION AND EVAUATION ASSETS Area of focus (Refer to notes 1 and 9) How our audit addressed it The Group has continued to incur exploration costs for their gold mining projects in Australia and South Africa. As these costs have been incurred over a number of years, there is a risk that the capitalisation of exploration and evaluation expenditure may no longer be appropriate. An impairment review is only required if an impairment trigger is identified. Due to the nature of the gold industry, indicators of impairment could include: — Changes to exploration plans; — Loss of rights to tenements; — Changes to reserve estimates; — Costs of extraction and production; or — Exchange rate factors. Based on management’s assessment the exploration areas in Australia and South Africa continue to meet the requirements for capitalisation at 30 June 2020. DISCONTINUED OPERATIONS Area of focus (Refer to notes 1 and 19) During the year, the Group decided to divest its Indonesian operations through a proposed sale to a third party. This proposed divestment of the Indonesian operations meets the definition of a discontinued operation under AASB 5 Non- Current Assets Held for Sale and Discontinued Operations. During the year ended 30 June 2020 the Group incurred a loss after tax from the Indonesian operations of $0.2 million (30 June 2019: $9.8 million). The accounting for this matter is complex and as such we have determined it a Key Audit Matter. Our audit procedures included: — A review of the directors’ assessment of the criteria for the capitalisation of exploration expenditure and evaluation of whether an impairment charge is required; — Understanding and vouching the underlying contractual entitlement to explore and evaluate each area of interest, including an evaluation of the requirement to renew that tenement at its expiry; — Examining project spend per each area of interest and comparing this spend to the minimum expenditure requirements set out in the underlying tenement expenditure plan; and — Examining project spend to each area of interest to ensure that it is directly attributable to that area of interest. We also assessed the adequacy of the Group’s disclosures in respect of exploration costs in the financial report. How our audit addressed it Our audit procedures included; — Assessing that the accounting treatment has been applied by the Group is in accordance with AASB 5 Non-Current Assets held for sales and Discontinued Operations; — Performed audit procedures over the residual balances held within the trial balances of the Indonesian entities as at 30 June 2020; and Assessed the disclosure is the financial statements is appropriate including the restatement of the of the statement of profit or loss and other comprehensive income for the prior year. CONVERTIBLE NOTE Area of focus (Refer to notes 1 and 8d) The Group issued convertible notes to a single investor during the current financial year. Accounting for these transactions is complex, as the Group’s accounting policy requires the separation at initial recognition, where material, of an embedded derivative, representing the option to convert the note to a variable number of shares, from the underlying host (principal) contract. Both the embedded derivative and host contract are reflected in the value of the convertible note in the financial statements. The accurate recording of the transactions associated with the convertible notes is dependent on the following: — The share price as at the date of the issue of the convertible notes; — Inputs associated with the features of the notes (interest rate, maturity, security); and — Movement is in foreign exchange and the market price of gold to determine the value of the embedded derivative. The accounting for this matter is complex and as such we have determined it a Key Audit Matter. GOING CONCERN Area of focus (Refer to note 1) The financial statements have been prepared on a going concern basis. Historically, the Group, in accordance with its business plans, has incurred exploration costs for their gold mining projects which has resulted in significant accumulated losses. Accumulated losses reported in the Consolidated Statement of Financial Position were stated at $24.1 million, as at 30 June 2020. As announced to the ASX on 14 August 2020, the Group completed a share placement to raise $3.4million (before costs). The going concern basis assumption is a Key Audit Matter as the Group will rely on a consistent equity raising strategy to progress the objectives of the business plans of the Group. How our audit addressed it Our audit procedures included: — Understanding the terms of the convertible note agreement, including an assessment of classification between current and non- current for the underlying host contract and a determination that the conversion formula met the definition of an embedded derivative and hence a financial liability; — Verifying the voracity of pricing applied to the value of the embedded derivative and the accrual of amortised interest applicable to the host contract; — Performed a cross check against our own findings and fair value with the independent valuation commissioned by management; and — Verifying that the values attributed to the transactions were in line with the terms of the convertible note agreements. We also assessed the adequacy of the Group’s disclosures in the financial report. How our audit addressed it Our audit procedures included: — Assessed the cash flow requirements of the Company over 15 months from 30 June 2020 based on budgets and forecasts; — Understanding what forecast expenditure is committed and what could be considered discretionary; — Considering the liquidity of existing assets on the balance sheet; — Vouched the share placement cash received to bank statements subsequent to year end; — Examined capital raising alternatives available to the Group to enable the business plans of the Group to be fully executed in the short to medium term; and — Considered potential downside scenarios and the resultant impact on available funds. We also assessed the adequacy of the Group’s financial statement disclosures. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2020 but does not include the financial report and the 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 has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are 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 these financial statements. A further description of our responsibilities for the audit of these financial statements is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf This description forms part of our independent auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2020. In our opinion, the Remuneration Report of West Wits Mining 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. William Buck Audit (Vic) Pty Ltd ABN 59 116 151 136 A. A. Finnis Director Melbourne, 30 September 2020 Shareholder information The shareholder information set out below was applicable as at 25 September 2020. A. Distribution of ordinary fully paid shares All ordinary shares carry one vote per share. Holding 1 - 1000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over Ordinary shares No. of holders 43 36 113 645 844 1,681 Total units 4,078 134,600 1,081,580 33,399,748 1,150,446,749 1,185,066,755 There were 219 holders of less than a marketable parcel of ordinary shares. B. Ordinary fully paid shareholders Top Twenty Ordinary fully paid shareholders The names of the twenty largest holders of quoted equity securities are listed below: Holding Ordinary shares DRD GOLD LIMITED CITICORP NOMINEES PTY LIMITED M&M INVESTMENT PTE LTD KASTIN PTY LTD TWYNAM INVESTMENTS PTY LTD REALSTAR FINANCE PTY LTD DEBT MANAGEMENT ASIA CORPORATION MR LUM CHIN WENG BNP PARIBAS NOMINEES PTY LTD GERARD C TOSCAN MANAGEMENT PTY LIMITED DRYCA PTY LTD RINGWOOD MANAGEMENT PTY LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED MRS DIANNE BAILEY JOHN WARDMAN & ASSOCIATES PTY LTD MRS ANNA VORONTSOVA MR CHRISTOPHER NORMAN SLEIGH BNP PARIBAS NOMS PTY LTD LGH NOMINEES PTY LTD GREGORACH PTY LTD Number held 47,812,500 44,936,620 33,333,334 30,772,614 28,984,104 24,698,294 23,093,417 21,666,666 21,020,074 19,000,000 17,500,000 16,575,000 14,772,343 12,081,731 12,000,000 10,321,459 10,000,000 9,592,648 9,000,000 8,284,132 415,444,936 % 4.03% 3.79% 2.81% 2.60% 2.45% 2.08% 1.95% 1.83% 1.77% 1.60% 1.48% 1.40% 1.25% 1.02% 1.01% 0.87% 0.84% 0.81% 0.76% 0.70% 35.06% Page 80 of 81 Unquoted Equity Securities Unlisted options Class Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Other unquoted equity securities Convertible notes Performance rights C. Substantial holders Quantity 10,000,000 10,000,000 15,000,000 17,000,000 10,000,000 5,500,000 Exercise price $0.050 $0.050 $0.050 $0.050 $0.012 $0.015 Expiry Date 14-Nov-20 30-Nov-20 30-Nov-22 29-Jan-23 18-Dec-23 3-Feb-22 Number of Holders 8 1 2 2 3 1 Number on Issue Number of Holders 1 3 1,000,000 24,500,000 There are no substantial holders in the Company at 25 September 2020. D. Shareholder enquiries Shareholders with enquiries about their shareholdings should contact the share registry: Automic Pty Ltd Level 5 126 Phillip Street Sydney NSW 2000 +61 2 9698 5414 www.automicgroup.com.au E. Change of address, change of name, consolidation of shareholdings Shareholders should contact the Share Registry to obtain details of the procedure required for any of these changes. F. Annual report Shareholders do not automatically receive a hard copy of the Company’s Annual Report unless they notify the Share Registry in writing. An electronic copy of the Annual Report can be viewed on the company’s website www.westwitsmining.com. G. Tax file numbers It is important that Australian resident Shareholders, including children, have their tax file number or exemption details noted by the Share Registry. H. CHESS (Clearing House Electronic Subregister System) Shareholders wishing to move to uncertified holdings under the Australian Securities Exchange CHESS system should contact their stockbroker. I. Uncertified share register Shareholding statements are issued at the end of each month that there is a transaction that alters the balance of an individual/company’s holding. J. Listing rule 4.10.19 disclosure The Company has used the cash and assets in a form readily convertible to cash that it had at the time of admission in a way consistent with its business objectives. Page 81 of 81

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