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2023 Report2023 ANNUAL REPORT SIGNIFICANT STAKES IN A SELECT RANGE OF KEY COMMODITY COMPANIES Zeta Resources Limited is a resource-focused investment holding company whose aim is to maximise total returns for shareholders by identifying and investing in resource assets and companies where the underlying value is not reflected in the market price. NATURE OF THE COMPANY Zeta Resources Limited (“Zeta”, “Zeta Resources”, or the “Company”) is a closed-end investment company, whose ordinary shares are listed on the Australian Securities Exchange (“ASX”). The business of Zeta consists of investing the pooled funds of its shareholders in accordance with its investment objective and policy, with the aim of generating a return for shareholders with an acceptable level of risk. The Company has contracted with an external investment manager, ICM Limited (the “Investment Manager” or “ICM”), to manage its investments and undertake the company secretarial function. WHY ZETA RESOURCES LIMITED? Zeta is a patient, long term investor, seeking and finding compelling value in the resources sector. Panoramic Resources Limited Zeta’s investment aim is to maximise total returns for shareholders by identifying and investing in resource assets and companies in diverse commodity sectors where the underlying value is not reflected in the market price. Zeta has a select range of concentrated investments, where the Company has a meaningful influence on its investment. Rather than take a passive approach, Zeta is an active manager of its investments, working alongside investee management teams to ensure rational decision making, particularly in respect of capital allocation. In addition, Zeta often participates at a corporate governance level, and assists investee companies with its network of contacts and experience. Zeta utilises ICM as its Investment Manager. ICM has a global network of offices, including a specialist team devoted to research and analysis of resource companies. 1 Annual Report for the year to 30 June 2023 CONTENTS 1 Why Zeta Resources Limited? PERFORMANCE 3 4 5 6 Chairman’s Statement Group Performance Summary Current Year Performance Geographical Investment Exposure INVESTMENTS 7 Investment Manager’s Report 16 Macro Trends Affecting Resources 17 Sector Summaries 21 ESG Spotlight 22 Our Investment Approach 24 Largest Holdings Overview 25 Five Largest Holdings Review 27 Investment Manager and Team GOVERNANCE 29 Directors 30 Report of the Directors 34 Corporate Governance Statement FINANCIAL STATEMENTS 36 Independent Auditor’s Report 40 Auditor’s Independence Declaration 41 Financial Statements 45 Notes to the Financial Statements 65 SHAREHOLDER INFORMATION 67 COMPANY INFORMATION FINANCIAL CALENDAR Year End 30 June Annual General Meeting 28 November 2023 Half Year 31 December Image above – Hudbay Minerals - Copper Mountain Front cover image – Panoramic Resources Limited FORWARD–LOOKING STATEMENTS This annual report may contain “forward-looking statements” with respect to the financial condition, results of operations and business of the Company. Such statements involve risk and uncertainty because they relate to future events and circumstances that could cause actual results to differ materially from those expressed or implied by forward-looking statements. The forward-looking statements are based on the directors’ current view and on information known to them at the date of this report. Nothing in this publication should be construed as a profit forecast. Potential investors are reminded that the value of investments and the income from them may go down as well as up and investors may not receive back the full amount invested. 2 Zeta Resources Limited CHAIRMAN’S STATEMENT Zeta’s deleveraging has positioned the company to consider new opportunities for investment, to support existing investee companies and to step up activity in its on-market buyback program. The past year was one of transitions, in several ways. The global community completed its transition out of the acute phase of the covid-19 pandemic and, following a sustained period of ultra low and even negative interest rates, entered into a world of inflation, significantly higher interest rates, and consequent facing up to recessionary concerns. PETER SULLIVAN Chairman The resource sector was heavily impacted by these developments. While the return to international travel and normalised migration relieved some employment pressure points, the rapid increase in economic demand against a backdrop of limited supply and challenging logistics led to cost inflation that hampered profits of existing resource operators and negatively impacted the economics of new developments. In addition to rising costs, increased difficulty in sourcing materials, contracting employees and generating timely assay results became significant hurdles to both development and the expansion of resource projects. Likewise, the substantial rise in interest rates added to debt servicing costs and made financing for developers more difficult to secure. Meanwhile, recessionary fears and lower than expected economic activity out of China, the largest user of resource material, dampened commodity price expectations, with most commodities either trading down over the course of the year or at best prices holding relatively flat. Similarly, it was a year of transitions for Zeta. Zeta’s top two holdings at the start of the financial year were subject to successful transactions during the period. In exchange for its 37% interest in Alliance Mining Commodities Ltd (“AMC”), Zeta received a 39% interest in Koumbia Bauxite Investments Ltd (“KBI”). KBI is party to a commercialisation deed which contemplates future fees based on the grade and the prevailing aluminium price at the time, on the first 180,000,000 dry tonnes of bauxite ore shipped from the Koumbia bauxite project. This restructure transaction has paved the way for AMC to develop this project and release value to KBI without further capital contribution. AMC has begun construction efforts and expects to reach commercial production as early as 2024. Prior to the end of the financial year, Copper Mountain Mining Corporation, which was Zeta’s second largest investment at the beginning of the year, was purchased in an all-share transaction by fellow Canadian Hudbay Minerals Inc. (“Hudbay”), a larger, more diversified copper-gold producer. Zeta publicly supported the transaction and became a Hudbay shareholder. Post year end the Hudbay holding has been sold down, giving a significant liquidity boost to Zeta. There was also positive activity amongst Zeta’s other Top 5 investments. GME Resources Limited, adopted a new name, Alliance Nickel Limited, and made exciting progress at its Ni-West battery-grade nickel project in Western Australia, including securing an offtake agreement and significant investment at an 80% premium to the then current share price by Stellantis, which owns 14 automotive brands and two mobility brands, being one of the world’s largest automakers. Advanced gold explorer Horizon Gold Limited added significantly to its overall gold resources following its second major drill program since Zeta acquired control and now has a total resource base of over two million ounces at its Gum Creek gold project. Liquidity from the sale of Hudbay shares has enabled Zeta itself to further transition with increased flexibility in its capital allocation decisions. This has led to it deleveraging significantly with its debt balance reduced to less than $3 million as at 30 June 2023. It has also positioned the company to consider new opportunities for investment, to support existing investee companies and given Zeta continues to trade at a significant discount to its net tangible asset backing, to step up activity in its on-market buyback program. Thank you for your ongoing support. We look forward to continuing our mission to find and realise value in the resource sector, with a focus on long-term value creation. Peter Sullivan Chairman 18 September 2023 3 Annual Report for the year to 30 June 2023 GROUP PERFORMANCE SUMMARY Total return(1) (annual) (%) Net tangible asset per ordinary share(2) (Australian cents) Ordinary share price (Australian cents) Discount (%) Profit/(loss) per ordinary share (US dollars) Dividends per ordinary share Equity holders' funds (US$m) Gross assets(3) (US$m) Cash (US$m) Other debt (US$m) Net debt (US$m) Net debt to equity (%) 30 June 2023 30 June 2022 % change 2023/22 1.0 39.1 30.5 (22.0) (0.01) Nil 146.8 149.6 1.8 (2.9) (1.1) 0.8 (25.3) (104.0) 38.7 33.0 (14.8) (0.12) Nil 151.5 178.9 0.1 (27.5) (27.4) 18.1 1.0 (7.6) 48.2 (93.6) n/a (3.1) (16.4) n/a (89.5) (95.9) (95.8) (1) Total return is calculated based on NTA per share return plus dividends reinvested from the payment date. (2) The NTA is calculated based on 563,524,256 shares on issue as at 30 June 2023, and 565,512,224 shares on issue as at 30 June 2022. (3) Gross assets less liabilities excluding loans. n/a = not applicable Alliance Nickel Limited 4 Zeta Resources Limited CURRENT YEAR PERFORMANCE NAV TOTAL RETURN PER ORDINARY SHARE SHARE PRICE RETURN PER SHARE NAV DISCOUNT AS AT 30 JUNE 2023 GEARING 1.0% 7.6% 22.0% 0.8% EARNINGS PER SHARE ORDINARY SHARES BOUGHT BACK AVERAGE PRICE OF ORDINARY SHARE BOUGHT BACK ONGOING CHARGES (EXCLUDING PERFORMANCE FEE) (US$0.01) 1,832,756 A$0.28 1.4% NTA PER SHARE VERSUS SHARE PRICE from 30 June 2022 to 30 June 2023 s r a l l o D n a i l a r t s u A 0.500 0.400 0.300 0.200 Jun 22 Aug 22 Oct 22 NTA Dec 22 Feb 23 Apr 23 Jun 23 Closing Share Price Source: ICM 5 Annual Report for the year to 30 June 2023 GEOGRAPHICAL INVESTMENT EXPOSURE AS AT 30 JUNE 2023 Canada 9.5% (23.8%) USA 3.3% Peru 7.8% Figures relate to percentage of total investments Figures in brackets as at 30 June 2022 Guinea 29.7% (29.8%) Other 2.8% (3.9%) Singapore 5.3% Australia 41.6% (42.5%) Source: ICM Zeta’s top two holdings at the start of the financial year (Alliance Mining & Copper Mountain) were subject to successful transactions during the period. 6 Zeta Resources Limited INVESTMENT MANAGER’S REPORT Horizon Gold Limited The 12 months under review were a challenging period for most of the commodities that Zeta invests in, with all but one key commodity either holding flat or declining during the period. The exception was gold which experienced a modest price gain, despite a rising interest rate environment, amidst global inflation and recessionary fears. TRISTAN KINGCOTT, CFA Investment Manager Nickel staged a brief recovery prior to the turn of the calendar year but has since drifted back down, while aluminium continued its decline that began in the prior fiscal year, in part driven by a slowdown in Chinese economic activity. The copper price fared somewhat better, managing to stay nearly flat year- over-year. Finally, following two consecutive years of tremendous price gains, oil and gas prices contracted considerably as supply deficits tightened and US LNG supply compensated for the squeeze on Russian gas imports into the European market. Zeta’s portfolio saw significant swings in two of its largest investments, as the share price in Panoramic Resources Limited (“Panoramic”) fell considerably and the share price in Copper Mountain Mining Corporation (“Copper Mountain”) realised a large gain, culminating in the purchase of the company by Hudbay in June. Zeta’s net assets per share ended the year essentially where it started, at A$0.39, as gains in its copper and gold investments were largely offset by losses in certain nickel and aluminium investments. For comparison, the S&P/ASX 200 Energy index rose 8% over the same period, and the S&P/ASX 300 Metals & Mining index, which includes gold mining stocks, rose 16%. Zeta’s share price fell 8% from A$0.330 to A$0.305. At the start of the period the share price was at a 15% discount to net assets; at the end of the period the share price was at a 22% discount to net assets. At the beginning of the year, Zeta had 29.8% of its gross assets in bauxite, 24.3% copper, 21.3% nickel, and 12.2% gold. By the end of the year, the top commodity exposures were 29.7% bauxite, 19.7% gold, 17.9% nickel, and 17.2% copper. The reduction in Zeta’s copper exposure came as a result of realising profits from the Copper Mountain/Hudbay transaction, the funds of which were primarily used to complete Zeta’s debt reduction efforts that started in the prior year. Zeta’s debt has essentially been eliminated, falling from US$52.8 million in June 2021 to US$39.2 million in June 2022 and finally to US$2.9m as at 30 June 2023, and post year end the company is now in a net cash position. 7 Annual Report for the year to 30 June 2023 INVESTMENT MANAGER’S REPORT (continued) IN THE YEAR TO 30 JUNE 2023 AUSTRALIA IS ZETA’S LARGEST COUNTRY EXPOSURE AT 41.6% GUINEA IS ZETA’S SECOND LARGEST COUNTRY EXPOSURE AT 29.7% CANADA IS ZETA’S THIRD LARGEST COUNTRY EXPOSURE AT 9.5% 0.8% 0.1% 14.3% Note: decreases/increases refer to the movement in the portfolio percentage of the relevant country SECTOR SPLIT OF INVESTMENTS 13 AI 29 Cu Bauxite Gold Nickel 29.7% (29.8%) 79 Au 19.7% (12.2%) 28 Ni 17.9% (21.3%) Copper Graphite Cobalt 17.2% (24.3%) Oil & Gas 0.1% (0.2%) 6 C 2.5% (3.7%) 27 Co 2.0% (4.1%) Other Cash 2.9% (3.2%) 7.9% (1.2%) Figures in brackets as at 30 June 2022 8 Zeta Resources Limited COMMODITY MARKETS As mentioned earlier, the price of most commodities fell during the year under review, including nickel, aluminium, oil, and natural gas. Copper was down slightly as well and gold was the lone bright spot, up 5.2% year-over-year in US dollar terms. Zeta’s largest geographical exposure is to Australia, with 41.6% of the portfolio invested at year end. Guinea is second, with just under 30% of the portfolio; and Canada third, with 8.5% of the portfolio. Aluminium Aluminium entered the year under review with downward momentum, having peaked at US$1.81 per pound in March 2022 before steadily falling due to softening demand and sliding coal prices (easing supply concerns in China where coal-fired power is a key component in the metal’s production process), to a low of US$0.94 per pound on 28 September 2022. Prices rebounded somewhat in December 2022 but hovered around US$1.05 per pound for the bulk of the next several months, before sinking back down to US$0.95 per pound at 30 June 2023, a 12.5% reduction year-over-year. Two primary factors influencing the pessimistic near-term outlook for aluminium are weak global demand, including in China, and supply increases in China (the world’s largest aluminium producer). Nonetheless, the aluminium market remains in deficit, and longer-term forecasts beyond 2025 are more bullish as aluminium demand will be supported by the green energy transition. This timeline aligns well with the expected ramp up of the Koumbia bauxite project, detailed below. During the year, Zeta exchanged its 37% interest in AMC for cash and a 39% interest in KBI, an unlisted investment company based in Bermuda. KBI has the right to a future revenue stream from AMC’s Koumbia bauxite project in the north-west of the Republic of Guinea, on the first 180 million dry tonnes of bauxite ore produced. The AMC-KBI transaction allowed for an existing Guinea-based shareholder in AMC to take direct ownership of the company and expedite development, with initial production now expected as early as 2024. ALUMINIUM PRICE from June 2021 to June 2023 2.60 2.30 2.00 1.70 1.40 1.10 0.80 0.50 Jun 21 Dec 21 Jun 22 Dec 22 Jun 23 US$/lb A$/lb Source: LME The aluminium market remains in deficit, and longer-term forecasts beyond 2025 are more bullish as aluminium demand will be supported by the green energy transition. 9 Annual Report for the year to 30 June 2023 INVESTMENT MANAGER’S REPORT (continued) Alliance Nickel Limited Copper Following a soft start to the year, the copper price trended in an upward direction from late July 2022, peaking for the year under review in January 2023. As central banks continued to tackle stubborn inflation with increasingly aggressive quantitative tightening, concern over the economic impact of higher interest rates and risk of a global recession heightened. This, combined with increasing concern over an economic slowdown in China, impacted by prolonged covid-19 restrictions and supply chain near-shoring in the western hemisphere, has led to a decline in the near-term demand for copper, causing a slight drop in prices through the last several months of the Zeta financial year. The downward trend continued through July and into August. At the end of June 2023, the copper price was US$3.72 per pound, 0.4% below the price at 30 June 2022 and 12% below the recent peak reached in January 2023. Over the medium term, demand growth for copper continues to be underpinned by increasing production of electric vehicles, its associated infrastructure, and further investments in new renewable energy capacity, all of which require the use of additional copper. Zeta’s largest investment in the copper sector at year end was Canadian firm Hudbay Minerals Inc., which produces copper in Peru and Canada, and has a development project in Arizona, USA. On 21 June 2023, Hudbay completed the acquisition of Copper Mountain, exchanging each Copper Mountain share for 0.381 Hudbay shares and creating the third largest copper producer in Canada. Zeta was the largest shareholder in Copper Mountain and publicly supported the transaction. Copper Mountain’s share price through 21 June, followed by Hudbay’s share price for the last 9 days of the month, performed well, up 43.8% for the year under review. COPPER PRICE from June 2021 to June 2023 7.00 6.00 5.00 4.00 3.00 2.00 Jun 21 Dec 21 Jun 22 Dec 22 Jun 23 US$/lb A$/lb Source: LME 10 Zeta Resources Limited Gold Nickel Gold outperformed most other commodities over Zeta’s financial year, amidst global inflation, monetary policy tightening and challenges in the financial sector in the first half of 2023. At the end of June 2022, the price of gold was US$1,817 per ounce; at the end of June 2023 the gold price was US$1,912 per ounce, an increase of 5.2%. In Australian dollars, the rise was more pronounced, from A$2,642 per ounce to A$2,873, an increase of 8.7%. The gold price response to the rapid increase in interest rates and continued strengthening of the US dollar would generally be bearish; however, competing drivers such as geopolitical tension, a 40-year high in inflation, recessionary concerns, and a short-lived falter in the US banking sector have created a relatively strong gold market over the last 12 months. Zeta’s largest investment in the gold sector is in Western Australian gold exploration company Horizon Gold. During the year, Zeta added to its Horizon Gold holdings, purchasing from the market. Horizon Gold continues to work through an extensive drilling campaign across multiple prospects, its third campaign in three years. The company recently issued a revised mineral resource estimate following results of its second drilling campaign, with mineral resources up 19% on the previous estimate. GOLD PRICE from June 2021 to June 2023 The nickel price started the year under review by continuing its slide downwards that began in April 2022, briefly falling below US$9.00 per pound in mid-July. The price then began to trend upward in October, in part on account of China easing its restrictive covid-19 policies. However, after peaking in January 2023 the price has since returned to a downward trend as concerns over a slower-than-expected Chinese economy, and overall uncertainty in the global economic outlook, heighten. The nickel price was US$9.13 per pound on 30 June 2023, down 12.9% compared to the same time last year. Nonetheless, the nickel price remains elevated relative to its long-term average, in part due to forecasts of increased demand for lithium-ion batteries and electric vehicles. Nickel is Zeta’s third largest commodity exposure, with Alliance Nickel Limited (“Alliance Nickel”) and Panoramic both significant holdings in Zeta’s portfolio. Alliance Nickel, which re-branded from GME Resources earlier in the year, continues to advance its NiWest nickel-cobalt project in Western Australia. The company signed an offtake and investment agreement with Stellantis NV in May 2023 and is on track to release an updated prefeasibility study before the end of the calendar year. Alliance Nickel performed well during the year under review, up 6.8% despite the softening of the nickel market. In contrast, Panoramic’s share price fell 54.0% during the year, as the impact of the weaker nickel price was compounded by a period of low-grade ore and a mechanical failure that temporarily halted production, causing a liquidity squeeze at the end of the financial year. Panoramic has since resolved its liquidity constraint with a fully underwritten placement, which was led by a significant commitment from Zeta. NICKEL PRICE from June 2021 to June 2023 3,100 2,800 2,500 2,200 1,900 1,600 1,300 Jun 21 Dec 21 Jun 22 Dec 22 Jun 23 Spot Price US$ Spot Price A$ Source: Kitco - London PM Fix 24 20 16 12 8 4 Jun 21 Dec 21 Jun 22 Dec 22 Jun 23 US$/lb A$/lb Source: LME 11 Annual Report for the year to 30 June 2023 INVESTMENT MANAGER’S REPORT (continued) Oil & Gas Following the dramatic price increases realised in the two years prior, both oil and natural gas prices faced steep declines during the year under review, ending at or below where they started two years ago. Brent Crude Oil was US$74.51 per barrel at the end of June 2023, down 37.8% vs the start of the year, while Henry Hub Natural Gas was down 62.1% to US$2.48 per MMBtu. Demand for oil continues to grow, albeit at a slower pace, with the post-covid rebound having largely run its course; however, oil pricing appears to be taking its cue from bearish macroeconomic indicators influenced by unprecedented monetary policy tightening, and recessionary concerns which have curtailed future demand expectations. The collapse in natural gas prices are in part a result of lower consumption in China and stabilisation in European markets following the 2022 supply shock caused by Russia’s invasion of Ukraine. Zeta does not currently have any significant investments in the oil and gas sector. BRENT CRUDE OIL PRICE from June 2021 to June 2023 190 160 130 100 70 40 Jun 21 Dec 21 Jun 22 Dec 22 Jun 23 US$/bbl A$/bbl Source: US Energy Information Administration Panoramic Resources Limited 12 Zeta Resources Limited CAPITAL STRUCTURE Zeta is a closed-end investment company, listed on the ASX, and incorporated in Bermuda. During the year, the loan from Somers Limited, a related party entity, was assigned to UIL Limited and repaid in full. As at 30 June 2023, Zeta had total assets of US$151.2 million (2022: US$182.2 million). Of this figure, US$44.9 million (2022: US$54.3 million) was invested in the bauxite sector; US$29.8 million (2022: US$23.9 million) was invested in the gold sector; US$27.1 million (2022: US$38.9 million) was invested in the nickel sector; and US$26.0 million (2022: US$44.3 million) was invested in the copper sector. TOTAL RETURN COMPARATIVE PERFORMANCE* since inception on 12 June 2013 to 30 June 2023 240.0 220.0 200.0 180.0 160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 Jun 13 Jun 15 Jun 17 Jun 19 Jun 21 Jun 23 Zeta Share Price S&P/ASX 200 Energy S&P/ASX 300 Metals & Mining *AUD, rebased to 100 as at 12 June 2013. Zeta share price adjusted for February 2014 entitlement issue and diluted for the September 2020 bonus option issue Source: ICM and S&P Dow Jones Indices FINANCIAL RESULTS The net loss after tax for the year was US$4,344,791 against a loss of US$68,542,960 in the year ended June 2022. The net loss was comprised largely of unrealised losses from investments. 13 Annual Report for the year to 30 June 2023 INVESTMENT MANAGER’S REPORT (continued) LOOK-THROUGH RESERVES & RESOURCES Zeta’s investment portfolio includes exposure to the following commodities, weighted by the percentage ownership of investee declared Reserves and Resources as follows as at the end of June 2023: RESERVES Proved & Probable RESOURCES Measured & Indicated 5.8 m t 63.5 m t 0.39 m t 0.32 m t 0.23 m t 0.11 m t 1.19 m oz 1.05 m oz 0.02 m t 0.01 m t — 0.14 m t Alumina Copper Nickel Gold Cobalt Graphite 13 AI 29 Cu 28 Ni 79 Au 27 Co 6 C 14 Zeta Resources Limited ASSOCIATES As at 30 June 2023, the following three entities were determined to be associates of Zeta: Koumbia Bauxite Investments Limited Unlisted company with the right to a future revenue stream from Alliance Mining Commodities Limited, operators of the Koumbia bauxite project in Guinea, West Africa % owned 38.5 Alliance Nickel Limited ASX-listed junior nickel and gold explorer with substantial nickel resources 36.4 in Western Australia Margosa Graphite Limited Unlisted graphite explorer focused on high-grade vein graphite in Sri Lanka 31.9 SIGNIFICANT INVESTMENTS Kumarina The five largest investments held by Zeta are considered in greater detail in their own section later in this annual report. The remaining significant investments are as follows. Margosa Graphite Margosa Graphite Limited (“Margosa”) is an unlisted Australian company targeting development of a JORC compliant high grade crystalline vein graphite deposit in Sri Lanka. Sri Lanka has a long history of graphite production since the mid-1800s and is home to some of the purest grade graphite in the world. Sri Lankan high quality graphite has varied applications, including in anodes for lithium-ion batteries used in electric vehicles. In the year under review Margosa submitted its application for a mining license to the Sri Lankan government and has demonstrated significant progress towards securing the license. Star Royalties Star Royalties Ltd. is a Canadian company focused on investing in royalties and streams in carbon credits and precious metals. In addition to its precious metal streaming agreements, the company pioneered the first forest carbon credit royalty in Canada and in 2022 formed Green Star Royalties, a Joint Venture with Agnico Eagle Mines, to accelerate its ability to pursue and fund larger carbon negative opportunities. Green Star is pursuing a pipeline of carbon negative projects, which would generate carbon offset credits in both the voluntary and compliance markets. Kumarina Resources Pty Limited (“Kumarina”) is a 100%-owned subsidiary of Zeta. The company is focused on the Murrin Murrin copper-gold project in Western Australia. The Murrin Murrin project has a gold resource (JORC 2012) of 52,100 ounces and is prospective for base metals in the form VMS style copper zinc mineralisation. Tenement ID Ownership M39/0371 M39/0372 M39/0397 M39/0398 M39/0399 M39/0400 M39/1068 0%* 0%* 100% 100% 100% 100% 100% *Gold and Base Metal Rights Tristan Kingcott, CFA ICM Limited Investment Manager 18 September 2023 15 Annual Report for the year to 30 June 2023 MACRO TRENDS AFFECTING RESOURCES GLOBAL DEBT, INFLATION AND RECESSION RISK • Record high government debt, quantitative tightening across many jurisdictions, and ongoing supply chain issues continue to impact the economy, adding to uncertainty • Continued quantitative tightening in response to persistent inflationary pressure • Weak consumer confidence and prolonged yield curve inversion shows signs of increased recession, or stagflation, risk • Risk to global economy, and thus demand for industrial commodities • Market volatility due to recessionary concerns GLOBAL TRADE • Covid-19 and recent geopolitical pressures, have increased focus on diversifying supply chains, nearshoring, and priortising trade with allies • Global trade growth has modestly slowed down, primarily driven by a pullback from China and India, however, remains at an all-time high • Public attitude toward global trade may influence long-term trade relations RUSSIA - UKRAINE CONFLICT • Russia–Ukraine conflict impacting global markets and the supply of several commodities • Food security concerns in many developing countries likely to persist from supply disruption of grain, wheat, corn, and fertiliser products • Sanctions placed on Russia and uncertainty regarding exports causing energy security concerns, initially as it relates to natural gas in much of Europe, with potential for further sanctions to impact critical minerals such as nickel ELECTRIC VEHICLES • Nearing tipping point where all factors for growth are in place • Electric vehicles use more commodities such as nickel and copper than traditional combustion-engine vehicles • Potential spike in demand for several metals, including lithium, cobalt, and manganese • Increased demand for flake and vein graphite • New battery technologies may limit demand for certain battery commodities CLIMATE CHANGE AND DECARBONISATION • Heightened consumer pull and government push to reduce carbon emissions across every sector of the economy globally • Use of renewables, including solar, wind, and biofuels increasing quickly but still a relatively small component of total energy mix • Likely to be a drag on long-term demand for certain commodities such as thermal coal and oil and a tailwind for several others, including nickel, copper, lithium, graphite, and potentially uranium • Growing focus on ESG reporting and fulsome accounting of carbon footprint required for many businesses; potential for producers’ carbon intensity to impact demand and pricing for their products – benefitting lower carbon intensive producers 16 Zeta Resources Limited SECTOR SUMMARIES BAUXITE 13 AIAluminium NICKEL 28 NiNickel Overview • Aluminium is the most widely used metal after iron; its primary usage is in alloys where its light weight is preferred • Bauxite is the primary ore from which aluminium is extracted; the ore must first be chemically processed to produce alumina (aluminium oxide); alumina is then smelted using an electrolysis process to produce pure aluminium metal • Diversified sources of production, albeit less than other commodities invested in by Zeta • Largest bauxite producer Australia, followed by China, with Guinea third • Largest bauxite reserves are in Australia and Guinea; Vietnam is a distant third Macro trends • Alumina production has been in increasing trend since early 1980s • Australia a big producer of bauxite and alumina, but relatively little smelting is conducted there • Aluminium prices are down greater than 12% since June 2022, however, remain slightly elevated versus the previous ten years • Aluminium being used by some manufacturers to replace steel in car frames to compensate for the additional weight of lithium-ion batteries vs internal combustion engines Exposure • 39% of Koumbia Bauxite Investments (unlisted) – investment company with the right to a revenue stream on a world-class bauxite resource in Guinea Overview • Industrial metal used primarily in stainless steel • Other uses include electroplating, alloy steel, and in cathodes for electric batteries • Diversified sources of production • Largest producers Indonesia, Philippines, Russia, New Caledonia, Australia, Canada Macro trends • Demand for nickel for lithium-ion batteries increasing quickly, but still relatively small component of global nickel demand • Nickel is currently trading relatively high compared to the previous 10 years amidst strong demand forecasts related to electric vehicle sales, however has cooled somewhat over the past two quarters • Industrial demand still heavily influenced by the Chinese economy Exposure • 36% of Alliance Nickel (ASX:AXN) – owns development project in Western Australia • 12% of Panoramic Resources (ASX:PAN) – nickel producer in Western Australia 17 Annual Report for the year to 30 June 2023 SECTOR SUMMARIES (continued) Overview • Industrial metal used primarily in electrical wiring • Other uses include roofing and plumbing, industrial machinery, and in alloys • Occurs naturally in a form that requires relatively little refining • Diversified production, but Chile by far the largest producer with Peru and China distant second and third Macro trends • Annual production has been increasing for over fifty years, but with a sharp uptick in late 1990s • Increasing demand for wiring for electric vehicles, but price still generally tied to the global economy and industrial demand • Copper price cooled slightly in the March quarter of 2023 amidst concerns of weaker Chinese copper demand, following three quarters of steady gains • Longer-term outlook on copper price remains positive with the anticipated ramp up of electric vehicle sales over the next decade • Fluctuating demand from China and risk of supply disruptions in South America also influence prices, particularly in the short term Exposure • 2% of Hudbay Minerals (TSX: HBM) – a copper and gold mining company with producing mines in Canada and Peru, and significant development opportunities in Canada, Peru, and the United States • 100% of Kumarina (unlisted) – junior copper-gold exploration firm in Western Australia Overview • Precious metal, prized for its rarity and relative lack of chemical reactivity • Gold occurs naturally in only a single isotope • Historic demand has been 50% jewellery, 35% investment, 15% industrial • Diversified sources of production • Largest producers China, Australia, Russia, Canada, United States Macro trends • Hedge to US dollar which has declined long term against gold • Price of gold has been volatile and peaking above $2,050 per oz in May 2023, and remains near 10-year highs, as monetary tightening and persistent inflation compete • Demand for jewellery dominated by China and India; US a distant third Exposure • 72% of Horizon Gold (ASX:HRN) – exploration and development in Western Australia • 100% of Kumarina (unlisted) – junior copper-gold exploration firm in Western Australia COPPER 29 CuCopper GOLD 79 AuGold 18 Zeta Resources Limited COBALT 27 CoCobalt Overview • Industrial metal used primarily in rechargeable batteries such as lithium-ion • Other uses include superalloys, integrated circuits and other industrial processes • Vast majority is produced as a by-product of copper or nickel mining • Roughly 60% of cobalt ore is produced in the Democratic Republic of the Congo, and more than 60% of smelting capacity is in China Macro trends • Demand has climbed alongside increased adoption of electric vehicles and other electronics • Some manufacturers, including Tesla, have developed cobalt-free lithium-ion batteries and many others have developed batteries that require relatively less cobalt, but industry consensus is that the metal will continue to be required in future electric vehicle batteries over the next 10 years, albeit likely at lower volumes per unit • After two years of strong pricing, on the back of increased demand for batteries and other industrial processes, cobalt prices have weakened amidst lower long-term demand expectations and recessionary concerns Exposure • 36% of Alliance Nickel (ASX: AXN) – Australian nickel developer with cobalt resources of 55,400 tonnes • 12% of Panoramic Resources (ASX:PAN) – Australian nickel producer with cobalt reserves of 7,000 tonnes GRAPHITE 6 CCarbon Overview • Found in three natural forms: amorphous; flake (or crystalline); and vein (or lump) • Flake and vein graphite have application in anodes in lithium-ion batteries • Graphite can be produced synthetically, although current production methods yield a purer graphite from natural ores • With modern chemical purification processes and thermal treatment, natural graphite achieves a purity of 99.9 percent compared to 99.0 percent for the synthetic equivalent • Largest producer of graphite is China; biggest graphite reserves are in Turkey Macro trends • Main uses of graphite are brake linings, foundry operations, lubricants, refractory applications, and steelmaking • Growth of production of lithium-ion batteries and electrical motors are driving a rapid increase in demand for graphite Exposure • 32% of Margosa Graphite (unlisted) – Sri Lankan brownfield explorer of vein graphite, the purest naturally occurring graphite 19 Annual Report for the year to 30 June 2023 SECTOR SUMMARIES (continued) OIL & GAS Overview • Oil is a fossil petroleum liquid whose primary use is fuel; around 80% of oil is refined into gasoline, diesel, and jet fuel, with the remaining 20% supplying various products including lubricants, asphalt, and petrochemicals • Natural gas is a petroleum gas whose primary uses are heating, electricity generation, and feedstock for petrochemicals • Globally diverse sources of production and demand • Largest producers of oil are US, Saudi Arabia, and Russia; largest producers of gas are the US and Russia, with Iran a distant third Macro trends • Annual growth in oil demand has generally followed a linear trend in line with world population growth • Oil prices have been volatile, peaking in mid-2022 having recovered to prices not seen since 2014 in response to the supply concerns caused by the Russian invasion of Ukraine and muted post pandemic supply recovery, however, have now cooled to near 10-year average • The global market remains in deficit as depressed pricing between 2014 and 2021 led to reduced global expenditures on oil & gas exploration, but technological improvements led to increased supply (prior to covid-19), especially in the US • After a 4% drop in 2020, global natural gas and LNG demand recovered in 2021 and is expected to continue increasing over the next 10-15 years, or longer, however prices have returned to near 2020 level Exposure • No significant investments in this sector 20 Zeta Resources Limited ESG SPOTLIGHT The Board believes that it is in the shareholders’ interests to consider ESG factors when selecting and retaining investments and has asked the Investment Manager to take these into account when investing. Where companies in the portfolio are assessed as having a relatively low ESG score ICM’s approach is to engage with the companies directly with the objective of seeing improvements over time. The below spotlights a recent initative undertaken by one of Zeta’s investments. Green Star partners with First Nations, Indigenous communities, and North American farmers on bespoke and mutually beneficial carbon reduction projects that share returns with stakeholder communities. ESG ANALYSIS: Star Royalties pioneered the world’s first carbon credit royalty (to the best of its knowledge) in 2020 and formed Green Star Royalties (“Green Star”) in October 2021 as a vehicle for funding projects focused on global decarbonization efforts. In March 2022, Star Royalties, Agnico Eagle Mines (a Canadian gold mining company, recognised globally for its leading ESG practices), and Star Royalties management formed a joint venture (61.9%, 35%, & 3.1%, respectively) to accelerate its ability to pursue larger carbon offset opportunities. Green Star prioritises North American investments into nature-based carbon offset projects (regenerative agriculture & improved forest management), renewable energies (solar & wind), and other green technologies. Green Star’s portfolio is expected to begin generating carbon offset credits in 2024, ramping up to over 570,000 carbon offset credits per annum by 2025. Green Star’s strategy provides both its shareholders and stakeholders exposure to projects expected to generate high-quality carbon credits, through the origination of carbon credit royalties and streams. From a project-level perspective, Green Star partners with First Nations, Indigenous communities, and North American farmers on bespoke and mutually beneficial carbon reduction projects that share returns with stakeholder communities. Green Star joined the International Emissions Trading Association in February 2023 and in April, Green Star’s Chief Commercial Officer, Rina Cerrato, was appointed Co-Chair of the International Emissions Trading Association working group on Voluntary Carbon Markets. The company is actively growing its involvement as a stakeholder in developing and participating in high-quality, transparent, and resilient carbon offset markets. ICM ESG CONCLUSION: Star Royalties’ Green Star JV not only demonstrates a commitment to funding carbon reduction initiatives but has been structured to advance social stewardship. Green Star’s unique portfolio of royalties enable counterparties such as the Lac Seul First Nation, Elizabeth Metis Settlement, and farmers across North America to participate in the economic upside of the projects that Green Star helps finance. This upside participation creates aligned, mutually beneficial partnerships that incentivise all stakeholders. Further, Star Royalties is dedicated to ensuring excellent governance and its board is majority independent of management and highlights diversity. As at July 2023, green investments account for approximately 70% of Star Royalties’ net asset value, and management remains committed to supporting further ESG-aligned investments that generate attractive returns to shareholders and stakeholders alike. 21 Annual Report for the year to 30 June 2023 OUR INVESTMENT APPROACH ICM is a long-term investor and typically operates focused portfolios with narrow investment remits. ICM has several dedicated research teams who have deep knowledge and understanding in their specific sectors, which improves the ability to source and make compelling investments. ICM has approximately USD 1.8bn of assets directly under management and is responsible indirectly for a further USD 22.9bn of assets in subsidiary investments. Zeta seeks to leverage ICM’s investment abilities in order to maximise total returns for shareholders by identifying and investing in resource assets and companies where the underlying value is not reflected in the market price. The Company invests in a range of resources entities, including those focused on bauxite, nickel, gold, copper, cobalt, graphite, oil & gas and base metals exploration and production. ICM looks to exploit market and pricing opportunities and concentrates on absolute performance. The investments are not market index driven and the investment portfolio comprises a series of bottom-up decisions. ICM typically does not participate in either an IPO or an auction unless there is compelling value. When reviewing investment opportunities, as part of the investment process ICM will look to understand the material ESG factors. ICM incorporates ESG factors into the investment process in three key ways: 01 02 UNDERSTANDING INTEGRATION In-depth analysis of the key issues that face potential and current holdings, as well as a deep understanding of the industry in which they operate. Incorporate the output of the ‘Understanding’ component into the full company analysis to ensure a clear and complete picture of the investment opportunity is obtained. 03 ENGAGEMENT Engage with investee companies on the key issues on a regular basis, both virtually and on location, where possible, to discuss and identify any gaps in their ESG policy to further develop and improve their ESG disclosure and implementation. We seek out and make compelling investments SUPERIOR, CONSISTENT PERFORMANCE Long Term Deep Value Operational Cash Generative Bottom Up Approach ACTIVE INVESTORS Investee Relationships Detailed Company Knowledge Extensive Industry Experience Resources Sector Focused DEEP SECTOR KNOWLEDGE I N D E P E N D E N C E & I N T E G R I T Y K R O W E M A R F E V I T R O P P U S & E L B A T S 22 Zeta Resources Limited VALUES ICM’s origins date back to 1988 and our organisation has evolved with offices now spanning the globe. We are focused on our values of: • Independence and Integrity • Creativity and Innovation • Excellence • Accountability TEAM We are proud of our diverse and inclusive environment for our teams to work in, which reflects the diversity of our communities. ICM works to create value by harnessing our experience and expertise to generate and grow strong relationships with our stakeholders We are focused on creating sustainable long-term value for our shareholders, team and the broader community through our: INVESTMENT PRACTICES Our deep and extensive research and understanding of the companies, sectors and markets we invest in moderates our risk and creates value for our investors. Our status as a signatory of the United Nations-supported Principles of Responsible Investment emphasises our commitment to integrating ESG factors into our investment decision making process. FINANCIAL Strong balance sheet and disciplined capital allocation to drive sustainable growth and shareholder value. PLATFORMS Technology, and digital and analytics enable our investment platforms to deliver growth for our shareholders. COMMUNITIES ICM supports the ICM Foundation, which has identified sustainable, effective and focused education where the biggest impact can be made on individuals and in communities. Over the past decade ICM and its stakeholders have contributed over USD 16.5m to not-for-profit and community organisations. 23 Annual Report for the year to 30 June 2023 LARGEST HOLDINGS OVERVIEW Hudbay Minerals – Manitoba operation THE VALUE OF THE FIVE LARGEST HOLDINGS REPRESENTS THE VALUE OF THE TEN LARGEST HOLDINGS REPRESENTS AUSTRALIA IS ZETA’S LARGEST COUNTRY EXPOSURE AT THE TOTAL NUMBER OF COMPANIES INCLUDED IN THE PORTFOLIO IS 89.8% (2022: 92.8%) OF TOTAL INVESTMENTS 94.2% (2022: 99.5%) OF TOTAL INVESTMENTS 41.6% (2022: 42.4%) OF TOTAL INVESTMENTS 30 (2022: 30) 24 Zeta Resources Limited FIVE LARGEST HOLDINGS REVIEW 1 2 3 KOUMBIA BAUXITE INVESTMENTS LIMITED owns the right to a future revenue stream from Alliance Mining Commodities Limited, the operators of the Koumbia Bauxite Project in the north-west of the Republic of Guinea. The Government of Guinea holds a 10% free-carried interest in AMC’s Guinea subsidiary which holds the mining concession. The Koumbia Bauxite Project is a world class bauxite development, with a JORC 2012-compliant mineral resource in excess of 1.5 billion tonnes. The Koumbia ore, high in alumina and low in reactive silica and boehmite, makes it particularly attractive for use in a low temperature, low cost, refining process. HUDBAY MINERALS INC is a Canadian copper-focused mining company headquartered in Toronto, Canada. Hudbay’s operating portfolio includes the Constancia mine in Cusco (Peru), the Snow Lake operations in Manitoba (Canada) and the Copper Mountain mine in British Columbia (Canada). Copper is the primary metal produced by the company. However, it has meaningful gold production, forecasting production of more than 150 thousand tonnes of copper and 300 thousand ounces of gold in 2023. Hudbay’s growth pipeline includes the Copper World project in Arizona, the Mason project in Nevada (United States), the Llaguen project in La Libertad (Peru) and several expansion and exploration opportunities near its existing operations. Country Bermuda Sector Bauxite Fair Value US$000 % of total investments % owned 44,900 29.7% 38.5% Countries Peru, Canada, and the United States of America Sector Copper and gold Fair Value US$000 % of total investments % owned 26,355 17.5% 2.1% HORIZON GOLD LIMITED is focused on exploration and development activities at its 100%-owned Gum Creek Project in Western Australia. Gum Creek covers approximately 660 square kilometres and has historically produced over one million ounces of gold. Gum Creek hosts JORC 2012 Resources of 44.5 million tonnes averaging 1.5g/t gold for 2.14 million ounces of gold. The company was spun off from nickel company Panoramic Resources in 2016 and Zeta participated in the IPO. In 2020 Zeta acquired Panoramic’s majority holding in Horizon Gold and has subsequently supported the company through providing working capital and participating in entitlement issues to raise new equity. Horizon Gold has been working through an extensive drilling campaign across multiple prospects with positive results. Country Australia Sector Gold Fair Value US$000 21,627 % of total investments 14.3% % owned 72.0% 25 Annual Report for the year to 30 June 2023 Country Australia Sector Nickel and cobalt Fair Value US$000 16,781 % of total investments 11.1% % owned 36.4% ALLIANCE NICKEL LIMITED is a Western Australian exploration and development company whose principal asset is its 100%-owned NiWest nickel-cobalt project situated adjacent to Glencore’s Murrin Murrin mining operation. The NiWest project is regarded as one of the largest and highest quality undeveloped nickel/cobalt resources in Australia. In July 2021, the company completed an updated Pre-Feasibility Study into the technical and economic viability of a heap leach and direct solvent extraction operation, which incorporated higher nickel and cobalt prices and cost escalation impacts since the original study was published in mid-2018. The updated study delivered a substantial increase to the projected economic returns and the company is now working on a Definitive Feasibility Study for the NiWest project. In May 2023, the company signed a binding offtake agreement with Stellantis NV for approximately 40% of future annual production over an initial term of 5 years. NiWest has a mineral resource estimate of 85.2 million tonnes at 1.03% nickel and 0.065% cobalt for 878,000 tonnes contained nickel and 55,400 tonnes contained cobalt. PANORAMIC RESOURCES LIMITED is a Western Australian based mining company that owns 100% of the Savannah underground nickel sulphide mine, located in the East Kimberley in Western Australia. Following a period of the mine being on care & maintenance, Panoramic restarted underground development, and ore production at Savannah in July 2021. Panoramic continues to accelerate mining operations at Savannah and expects to ramp up to full nameplate capacity in FY 2024. The company released a life of mine update in March 2023, which extended the mine life to FY 2035, supported by an updated mineral resource estimate with ore reserves of 8.5 million tonnes at 1.21% nickel, 0.58% copper, and 0.09% cobalt for 101,800 tonnes nickel, 48,500 tonnes copper, and 7,000 tonnes cobalt contained metal. Country Australia Sector Nickel, copper and cobalt Fair Value US$000 % of total investments % owned 15,568 10.3% 12.4% 4 5 26 Zeta Resources Limited INVESTMENT MANAGER AND TEAM The directors are responsible for Zeta’s investment policy and have overall responsibility for the Company’s day-to-day activities. Zeta has, however, entered into an Investment Management Agreement with ICM Limited under which ICM provides investment management services to Zeta, including investment analysis, portfolio monitoring, research and corporate finance. ICM is an international Fund Manager and Corporate Finance Adviser headquartered in Bermuda, with 10 offices globally. ICM has expertise in listed equity, private equity, and fixed income bonds, and specialises in the following investment sectors: utility & infrastructure, financial services, mining and resources, technology, and fixed income. ICM focuses on identifying investments at valuations that do not reflect their true long-term value and then assisting management to add value where appropriate. Their investment approach is to have a deep understanding of the business fundamentals of each investment and its environment versus its intrinsic value. ICM are long term investors and see markets as a place to exchange assets. ICM MANAGES OVER USD$1.8 billion IN FUNDS DIRECTLY AND IS RESPONSIBLE INDIRECTLY FOR A FURTHER USD 22.9BN OF ASSETS IN SUBSIDIARY INVESTMENTS. ICM HAS OVER 80 STAFF BASED IN OFFICES IN BERMUDA, CAPE TOWN, DUBLIN, LONDON, SEOUL, SINGAPORE, SYDNEY, VANCOUVER AND WELLINGTON. DUNCAN SAVILLE Duncan Saville is a director and chairman of ICM Limited who founded the ICM Group and its predecessor companies and has been employed by the Group since 1988. Duncan is a chartered accountant with experience in corporate finance and asset management. He is an experienced non-executive director having previously been a director in multiple companies in the utility, investment, mining and technology sectors. He is currently a non-executive director of Resimac Group Limited (ASX:RMC). His Fellowships include the Institute of Chartered Accountants Australia and New Zealand, the Australian Institute of Company Directors, the Financial Services Institute of Australasia, and he is a Member of the Singapore Institute of Directors. ALASDAIR YOUNIE Alasdair Younie joined the ICM Group in 2010, is a director of ICM Limited and is based in Bermuda. Mr Younie has extensive experience in financial markets and corporate finance, and he is responsible for the day-to-day running of the Somers Limited. He qualified as a chartered accountant with PricewaterhouseCoopers and subsequently worked for six years in the corporate finance division of Arbuthnot Securities Limited in London. Alasdair is a director of Somers Limited, Carebook Technologies Inc and West Hamilton Holdings Limited. Alasdair graduated from Bristol University with a BSc in Economics and Economic History in 1998 and is a Member of the Institute of Chartered Accountants in England and Wales. 27 Annual Report for the year to 30 June 2023 INVESTMENT MANAGER AND TEAM (continued) TRISTAN KINGCOTT Tristan Kingcott joined ICM in 2018 and is based in Vancouver, Canada. He is the portfolio manager for Zeta Resources Limited and responsible for ICM’s Canadian office. He is focused on the resources sector worldwide, and on the technology and financial services sectors in North America. Prior to joining ICM, Tristan performed various roles in the energy and finance sectors in Canada and New Zealand. He is currently a non-executive director of Terra Firma Capital Corp, and several unlisted companies. Tristan holds a Bachelor of Commerce degree in Finance from the University of Alberta, Canada, is a CFA Charterholder and a Member of the CFA Society in Vancouver. FRASER DANIELS Fraser Daniels joined ICM as an analyst in 2021 and is based in Vancouver, Canada. He is focused primarily on the commodities and resources sector worldwide. He has over seven years’ experience in financial and commercial analysis, and prior to joining ICM he performed in various roles, including business and corporate development roles at Kinder Morgan and BluEarth renewables, and most recently as National Account Manager at Canadian Pacific Rail. Fraser holds a Bachelor of Arts degree in Economics from Queen’s University at Kingston, Canada. EDUARDO GRECA Eduardo Greca joined ICM London in 2010 as the Latam Investment Strategist before moving to Brazil in 2012 where he is now based. He has over thirteen years of investment research experience, and prior to joining ICM he worked for the commodities risk management team at Kraft Foods. Eduardo covers the Latin American equity and fixed income investments and is responsible for the Stock Exchange sector worldwide with an emphasis on Emerging Markets. Eduardo obtained a Bachelor’s degree in Economics at the Federal University of Parana (UFPR) in 2009, is a CFA Charterholder, and a Member of the CFA Society in Brazil. DUGALD MORRISON Dugald Morrison has been involved with ICM and its predecessor companies since 1994 and is based in Wellington, New Zealand. He is an experienced investment analyst, having worked in stockbroking, investment banking and investment management firms in New Zealand, the United Kingdom, and the United States since 1987. Dugald is responsible for both the Australian and New Zealand ICM offices, and he leads the team responsible for the ICM Mobility Group. Dugald is a director of a number of companies, including Snapper Services Limited and Horizon Gold Limited (ASX:HRN). Dugald graduated from Victoria University of Wellington in 1991 with BCA (Hons) and is a Member of the New Zealand Institute of Directors. 28 Zeta Resources Limited DIRECTORS PETER SULLIVAN Mr Sullivan is an engineer and has been involved in the management and strategic development of resource companies and projects for more than 25 years, including experience in project engineering, corporate finance, investment banking, corporate and operational management, and public company directorships. He specialised in providing strategic corporate, financial and investment advice to companies principally in the resource sector. He has served as a director for numerous listed and unlisted companies and been closely involved with their development. Mr Sullivan holds a Bachelor of Engineering and a Master of Business Administration. Directorships of other listed companies in the last 3 years Mr Sullivan is chairman of Alliance Nickel Limited (ASX:AXN) and Horizon Gold Limited (ASX:HRN); and non-executive director of Panoramic Resources Limited (ASX:PAN) Mr Sullivan retired as a director of Resolute Mining Limited (ASX:RSG) effective 27 May 2021 after over 20 years’ involvement with the company. He was a non-executive director of Copper Mountain Mining Corporation (TSX:CMMC) until 20 June 2023 when the company was acquired by Hudbay Minerals Inc. MARTHINUS (MARTIN) BOTHA Mr Botha has over 30 years’ experience in banking, with the last 27 years spent in leadership roles building Standard Bank Group’s international operations. Mr Botha’s primary responsibilities at Standard Bank Plc included establishing and leading the development of the core global natural resources trading and financing franchises, as well as various geographic strategies. He is currently a member of the investment advisory board for the Sustainable Resources strategy of ARCH Emerging Markets Partners. Mr Botha holds a Bachelor of Engineering degree in Survey. Directorships of other listed companies in the last 3 years Mr Botha is non-executive chairman of Resolute Mining Limited (ASX:RSG). ANDRÉ LIEBENBERG Mr Liebenberg is an experienced mining industry professional and has extensive investor marketing, finance, business development and leadership experience. He was appointed CEO and Executive Director of Yellow Cake plc on 1 June 2018, just prior to the company’s IPO on the AIM market of the London Stock Exchange. Mr Liebenberg has over 25 years’ experience in the resources industry across private equity, investment banking, senior roles within BHP, and prior to joining Yellow Cake he was Chief Financial Officer at QKR Corporation. Mr Liebenberg holds a Bachelor of Science in Electrical Engineering from the University of Cape Town and a Master of Business Administration from the University of Cape Town. Directorships of other listed companies in the last 3 years Mr Liebenberg is an executive director of Yellow Cake plc (LSE:YCA) and was a non- executive director of Danakali Limited (ASX:DNK) until 3 August 2020. XI XI Xi Xi is a financial analyst with more than 20 years’ experience in the mining, energy and natural resource industry, ranging from managing companies focused on international exploration and development of mining projects to restructuring and overseeing a portfolio of private and public companies. She holds dual Bachelor of Science degrees in Chemical Engineering and Economics from the Colorado School of Mines and a Master of Arts in International Relations and China Studies from Johns Hopkins School of Advanced International Studies. Directorships of other listed companies in the last 3 years Xi Xi is currently non-executive director of Mineral Resources Limited (ASX:MIN). All Directors are Non-Executive Directors and were appointed to the board of the Company on 7 June 2013, other than Mr Liebenberg, who was appointed on 30 December 2019. 29 Annual Report for the year to 30 June 2023 REPORT OF THE DIRECTORS Panoramic Resources Limited Directors present their report for Zeta Resources Limited, including its subsidiaries Kumarina Resources Pty Limited, Zeta Energy Pte. Ltd, Zeta Investments Limited, Zeta Minerals Ltd and Horizon Gold Limited, for the year ended 30 June 2023. OPERATING AND FINANCIAL REVIEW Operating results The net loss attributable to the Company for the year to 30 June 2023 amounted to US$4,344,791. DIRECTORS Zeta Resources Limited has a Board of four non- executive, independent Directors. The names of directors in office at any time during or since the end of the year are: Peter Ross Sullivan Marthinus (Martin) Botha André Liebenberg Xi Xi PRINCIPAL ACTIVITIES The principal activities of the Company are investing in listed and unlisted resource focused investments. No significant change in the nature of these activities occurred during the year. Overview of operating activity The company listed on the ASX on 12 June 2013. During the year the Company has continued to build its portfolio of resource investments by investing a further US$6,157,691. Sales during the year resulted in a realised gain of US$30,272,053. A decrease in the fair value of the portfolio resulted in an unrealised loss recognised in profit or loss at year end of US$32,981,019. During the year the Company exchanged its interest in Alliance Mining Commodities Limited for an interest in Koumbia Bauxite Investment Limited. In exchange for its interest in AMC, KBI entered into a commercialisation deed where KBI will receive future payments based on the first 180,000,000 dry tonnes of bauxite shipped from the Koumbia project. 30 Zeta Resources Limited Financial position LIKELY DEVELOPMENTS At the end of the year, the Company had US$1,759,952 in cash and cash equivalents. Investments at fair value totalled US$111,381,126, loans to subsidiaries of US$10,224,103 and the investment in subsidiaries was valued at US$27,857,738. As at the year end, the Company had a US$2.5 million loan facility with Bermuda Commercial Bank expiring on 30 September 2024. GOING CONCERN The financial statements have been prepared on a going concern basis. The majority of the Company’s assets consist of equity shares in listed companies which in most circumstances are realisable within a short timescale. The directors believe the Company will be able to cover the commitments arising in the period 12 months from the date of approval of these financial statements. The use of the going concern basis of accounting is appropriate because there are no material uncertainties related to events or conditions that may cast significant doubt about the ability of the Company to continue as a going concern. After making enquiries, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis in preparing the accounts. DIVIDENDS No dividends have been paid or declared since the start of the year. No recommendation is made as to dividends. AFTER BALANCE SHEET DATE EVENTS The Company intends to continue to seek to maximise total returns for shareholders by identifying and investing in assets and companies where the underlying value is not reflected in the market price. REMUNERATION REPORT The remuneration report is set out in the following manner: • Policies used to determine the nature and amount of remuneration • Details of remuneration • Share based compensation • Directors’ interests Remuneration policy The board of directors is responsible for remuneration policies and the packages applicable to the directors of the Company. The board remuneration policy is to ensure that packages offered properly reflect a person’s duties and responsibilities and that remuneration is competitive and attracts, retains, and motivates people of the highest quality. The directors are remunerated for the services they render to the Company and such services are carried out under normal commercial terms and conditions. Engagement and payment for such services are approved by the other directors who have no interest in the engagement of services. At the date of this report the Company had not entered into any packages with directors which include performance-based components. Hudbay Minerals Inc. Details of remuneration for directors Since 30 June 2023, the Company has sold its holding in Hudbay Minerals Inc. for a total consideration of C$41.7 million. The Company paid a total of $200,000 to directors for the year ended 30 June 2023. The Company had no employees as at 30 June 2023. Panoramic Resources Limited rights issue In September 2023, the Company took up 200,000,000 rights in Panoramic Resources Limited’s tranche 2 institutional placement, for a total consideration of A$10 million. 31 Annual Report for the year to 30 June 2023 REPORT OF THE DIRECTORS (continued) Share based compensation There is currently no provision in the policies of the Company for the provision of share-based compensation to directors. The interest of directors in shares and options is set out elsewhere in this report. includes addressing succession issues and ensuring the board has the appropriate balance of skills, experience, independence, and knowledge of the entity to enable it to discharge its duties and responsibilities effectively. Directors’ interests The relevant interests of directors either directly or through entities controlled by the directors in the share capital of the Company and related body corporates as at the date of this report are: Ordinary shares opening balance Net change Director Peter R Sullivan 11,506,264 Martin Botha 775,000 André Liebenberg Xi Xi – – MEETINGS OF DIRECTORS – – – – Ordinary shares closing balance 11,506,264 775,000 – – There were five Board, and two Audit & Risk Committee meetings held during the year ended 30 June 2023. The attendance by the directors was as follows: Board Audit & Risk Committee Number of meetings held during the year Peter Sullivan Martin Botha André Liebenberg Xi Xi 5 5 5 5 4 2 1 2 2 2 LOANS TO DIRECTORS There were no loans entered into with directors during the year under review. AUDIT & RISK COMMITTEE The Company has established a separately chaired Audit & Risk Committee. The Audit & Risk Committee (“committee”) comprises all the independent directors of the Company and is chaired by André Liebenberg. Its duties include considering and recommending to the board for approval the contents of the half yearly and annual financial statements. The committee also provides an opinion as to whether the annual report and accounts, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company’s performance, business model and strategy. The committee also reviews the external auditors’ report on the annual financial statements and is responsible for reviewing and forming an opinion on the effectiveness of the external audit process and audit quality. Other duties include reviewing the appropriateness of the Company’s accounting policies and ensuring the adequacy of the internal control systems and standards. The committee meets at least twice a year. The planned meetings are held prior to the board meetings to approve the half yearly and annual results. Representatives of the Investment Managers attend all meetings. Board of Directors and Audit & Risk Committee meetings require that any two directors or members be present to form a quorum. During the year ended 30 June 2023, the committee consisted of all the independent directors of the Company. Due to the size of the board and the nature of the Company’s operations, it does not have a separate Remuneration Committee or a Nomination Committee. Matters normally considered by these committees are addressed by the full board. This INDEMNIFYING OFFICERS OR AUDITORS The Company has not, during or since the year ended, in respect of any person who is or has been an officer or the auditor of the Company or of a related 32 Zeta Resources Limited body corporate indemnified or made any relative agreement for indemnifying against a liability incurred as an officer or auditor, including costs and expenses in defending legal proceedings. ENVIRONMENTAL REGULATION Both Horizon Gold Limited and Kumarina Resources Pty Limited’s operations are subject to the Western Australian Mining Act 1978 and the Environmental Protection Act 1986 and the Environmental Protection Amendment Act 2020 (WA). The directors are not aware of any significant breaches and no actions were initiated for breaches under the Environmental Protection Act and the Western Australian Mining Act during the year covered by this report. APPLICATION OF CHAPTERS 6, 6A, 6B AND 6C OF THE CORPORATIONS ACT 2001 The Company is not subject to Chapters 6, 6A, 6B and 6C of the Corporations Act dealing with the acquisition of its shares. In addition, neither the Bermuda Companies Act nor the company’s Bye Laws prescribe a regime for the conduct of takeovers or contain a general prohibition on acquisitions of interests in Bermuda companies beyond a certain threshold in the same way as the Australian Corporations Act 2001. NON-AUDIT SERVICES No non-audit services were performed by the auditors of the Company during the year. ON-MARKET BUY-BACK SCHEME As part of its ongoing capital management strategy, Zeta implemented an on-market buy-back programme for up to 10 million ordinary shares. On 8 September 2022 the Company announced that the buy-back programme was to be extended from 15 September 2022 to 14 September 2023. The buy- back will only be effective should the share price of the company be at a discount to NTA exceeding 10%. The timing and quantity of purchases will depend on current market conditions and other future events. Pursuant to section 257B(4) of the Corporations Act 2001 (Cth), the share buy-back does not require shareholder approval as it falls under the 10/12 limit. Since the commencement of the on-market buy- back scheme on 15 September 2018, Zeta Resources has repurchased and cancelled 3,766,868 fully paid ordinary shares. On 28 August 2023 the Company announced a new on-market buy back for up to 54,400,000 shares, being the remaining allowable shares under the 10/12 limit. The buy-back commenced on 6 September 2023. INVESTMENT MANAGEMENT AGREEMENT The Company entered into an Investment Management Agreement with ICM Limited on 3 June 2018. Management fees are payable at a rate of 0.125% of funds managed on the calculation date, payable quarterly in arrears and pro-rated for any period less than three months. Performance fees are payable annually at year end on the difference between adjusted equity funds (adjusted for any dividends paid or accrued) on calculation date less adjusted base equity funds (highwater mark) previously used in the performance fee calculation multiplied by 15%. Either party may terminate the agreement with six months’ notice. The Company paid US$764,812 in management fees during the reporting year. AUDITOR’S INDEPENDENCE DECLARATION A copy of the auditor’s independence declaration is included in the Independent Auditor’s Report. This report is signed in accordance with a resolution of directors. André Liebenberg Director and Chair of the Audit & Risk Committee 18 September 2023 33 Annual Report for the year to 30 June 2023 CORPORATE GOVERNANCE STATEMENT THE COMPANY‘S CORPORATE GOVERNANCE FRAMEWORK Corporate Governance is the process by which the board of directors of a company protects shareholders’ interests and by which it seeks to enhance shareholder value. Shareholders hold the directors responsible for the stewardship of a company’s affairs, delegating authority and responsibility to the directors to manage the company on their behalf and holding them accountable for its performance. Responsibility for good governance lies with the board. The board considers the practice of good governance to be an integral part of the way it manages the Company and is committed to maintaining high standards of financial reporting, transparency and business integrity. The governance framework of the Company reflects the fact that, as an investment company, it has no full-time employees and outsources its activities to third party service providers. THE BOARD Four non-executive directors KEY OBJECTIVES: • to provide leadership within a framework of prudent and effective controls which enable risk to be assessed and managed; and • to constructively challenge and scrutinise performance of all outsourced activities. • to set strategy, values and standards; AUDIT & RISK COMMITTEE MANAGEMENT OVERSIGHT NOMINATION COMMITTEE REMUNERATION COMMITTEE All independent NEDs The board as a whole performs this function The board as a whole performs this function The board as a whole performs this function KEY OBJECTIVE: KEY OBJECTIVE: KEY OBJECTIVES: KEY OBJECTIVE: • to oversee the • to review the • to regularly review • to set the financial reporting and control environment. performance of the Investment Manager; and the board’s structure and composition; and remuneration policy for the directors of the Company. • to review the • to consider any new performance of other service providers. appointments. 34 Zeta Resources Limited As an ASX-listed company, the board’s principal governance reporting objective is in relation to the ASX Corporate Governance Principles and Recommendations (“Recommendations”) developed by the ASX Corporate Governance Council. In accordance with ASX Listing Rules 4.10.3 and 4.7.4, the Corporate Governance Statement, and accompanying Appendix 4G, will be available for review on the Company’s website and will be lodged with ASX concurrently with the Annual Report. The Appendix 4G details each Recommendation that needs to be reported against by the Company and will provide shareholders with information as to where relevant governance disclosures can be found. The Company’s corporate governance policies and charters are all available on the Company’s website. The Company’s directors and management are committed to conducting the group’s business in an ethical manner and in accordance with the highest standards of corporate governance. The Company has adopted and substantially complies with the Recommendations to the extent appropriate to the size and nature of the group’s operations. The Company has prepared a Corporate Governance Statement based on the fourth Edition of the Recommendations. It sets out the corporate governance practices that were in operation throughout the financial year for the Company, identifies any Recommendations that have not been followed, and provides reasons for not following such Recommendations. Details about the Company’s corporate governance policies and charges are available in the corporate governance section of our website at: https://www.zetaresources.limited/investor-relations/corporate-governance/ 35 Annual Report for the year to 30 June 2023 INDEPENDENT AUDITOR’S REPORT Independent Auditor’s Report Independent Auditor’s Report 30 June 2023 Independent Auditor’s Report Independent Auditor’s Report 30 June 2023 To the Shareholders of Zeta Resources Limited 30 June 2023 30 June 2023 To the Shareholders of Zeta Resources Limited Report on the Audit of the Financial Statements To the Shareholders of Zeta Resources Limited To the Shareholders of Zeta Resources Limited Report on the Audit of the Financial Statements Opinion Report on the Audit of the Financial Statements Report on the Audit of the Financial Statements Opinion We have audited the separate financial statements of Zeta Resources Limited set out on pages 41 to Opinion 64, which comprise the separate statement of financial position as at 30 June 2023, and the separate Opinion We have audited the separate financial statements of Zeta Resources Limited set out on pages 41 to statement of profit or loss and other comprehensive income, the separate statement of changes in 64, which comprise the separate statement of financial position as at 30 June 2023, and the separate We have audited the separate financial statements of Zeta Resources Limited set out on pages 41 to equity and the separate statement of cash flows for the year then ended, and notes to the separate We have audited the separate financial statements of Zeta Resources Limited set out on pages 41 to statement of profit or loss and other comprehensive income, the separate statement of changes in 64, which comprise the separate statement of financial position as at 30 June 2023, and the separate financial statements, including a summary of significant accounting policies. 64, which comprise the separate statement of financial position as at 30 June 2023, and the separate equity and the separate statement of cash flows for the year then ended, and notes to the separate statement of profit or loss and other comprehensive income, the separate statement of changes in statement of profit or loss and other comprehensive income, the separate statement of changes in financial statements, including a summary of significant accounting policies. equity and the separate statement of cash flows for the year then ended, and notes to the separate In our opinion, the separate financial statements present fairly, in all material respects, the separate equity and the separate statement of cash flows for the year then ended, and notes to the separate financial statements, including a summary of significant accounting policies. financial position of Zeta Resources Limited as at 30 June 2023, and its separate financial performance financial statements, including a summary of significant accounting policies. In our opinion, the separate financial statements present fairly, in all material respects, the separate and separate cash flows for the year then ended in accordance with International Financial Reporting financial position of Zeta Resources Limited as at 30 June 2023, and its separate financial performance In our opinion, the separate financial statements present fairly, in all material respects, the separate Standards. In our opinion, the separate financial statements present fairly, in all material respects, the separate and separate cash flows for the year then ended in accordance with International Financial Reporting financial position of Zeta Resources Limited as at 30 June 2023, and its separate financial performance financial position of Zeta Resources Limited as at 30 June 2023, and its separate financial performance Standards. and separate cash flows for the year then ended in accordance with International Financial Reporting and separate cash flows for the year then ended in accordance with International Financial Reporting Basis for Opinion Standards. Standards. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our Basis for Opinion Basis for Opinion responsibilities under those standards are further described in the Auditor’s Responsibilities for the We conducted our audit in accordance with International Standards on Auditing (ISAs). Our Audit of the Financial Statements section of our report. We are independent of the company in responsibilities under those standards are further described in the Auditor’s Responsibilities for the We conducted our audit in accordance with International Standards on Auditing (ISAs). Our accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for We conducted our audit in accordance with International Standards on Auditing (ISAs). Our Audit of the Financial Statements section of our report. We are independent of the company in responsibilities under those standards are further described in the Auditor’s Responsibilities for the Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits responsibilities under those standards are further described in the Auditor’s Responsibilities for the accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for Audit of the Financial Statements section of our report. We are independent of the company in of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance Audit of the Financial Statements section of our report. We are independent of the company in Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for with the IRBA Code and in accordance with other ethical requirements applicable to performing audits accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits with the IRBA Code and in accordance with other ethical requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics with the IRBA Code and in accordance with other ethical requirements applicable to performing audits International Independence Standards). We believe that the audit evidence we have obtained is with the IRBA Code and in accordance with other ethical requirements applicable to performing audits Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics sufficient and appropriate to provide a basis for our opinion. in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics International Independence Standards). We believe that the audit evidence we have obtained is Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including sufficient and appropriate to provide a basis for our opinion. International Independence Standards). We believe that the audit evidence we have obtained is International Independence Standards). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. sufficient and appropriate to provide a basis for our opinion. 36 Zeta Resources Limited Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the separate financial statements of the current period. These matters were addressed in the context of our audit of the separate financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Matter Audit response Valuation of Unlisted investments (notes 5 and 20.4 ) Our approach to address the valuation assertion for unlisted investment involved a substantive approach. Our key audit procedures included: The company’s accounting policy in note 3.6 of the Annual Financial Statements states that investments are the transaction cost and subsequently measured at fair value with any change in the fair value recognised in profit or loss. initially measured at The lack of readily available objective evidence such as quoted prices, increases the degree of estimation used in determining the fair value of unlisted investments. The valuation methods are subject to a high degree of judgement and are complex, especially for investments where there are limited to no equity transactions during the year. Areas of judgement include estimating the expected future income from operations that are still in the exploration phase and other external risk factors. Various valuation methods are used determining the fair value of the investments. in A relatively small percentage change in the in valuations aggregate, could result in a significant impact to the financial statements. investments, individual of • agreeing the valuation of the unlisted investments to the valuation reports prepared by managements expert to determine the valuation of the unlisted investments; • assessing the competence, capabilities and objectivity of the appointed experts; • evaluating key assumptions used in the valuation and valuation method and inputs used to ensure the valuations are reasonable; • assessing and validating the inputs used • • • in the valuations; recalculating key valuation workings; reviewing that the valuation techniques used are appropriate for the accounting standards and industry; comparing the assumptions used in the to company’s previous periods for consistency and to consider management bias; and valuation methods • evaluating whether the disclosures in the notes are appropriate and meet the requirements of IFRS 7 and IFRS 13. Based on the above the valuation of unlisted investments has been identified as a Key audit matter. 37 Annual Report for the year to 30 June 2023 INDEPENDENT AUDITOR’S REPORT (continued) Other Information The directors are responsible for the other information. The other information comprises the information included in the document titled Zeta Resources Limited for the year ended 30 June 2023, which includes the Directors’ Report, the Corporate Governance Statement and the Integrated Annual Report, which we obtained prior to the date of this report. The other information does not include the annual financial statements and our auditor’s reports thereon. Our opinion on the financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the separate financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the separate financial statements 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 statements The directors are responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for such internal control as the directors determine is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud or error. In preparing the separate financial statements, the directors are responsible for assessing the company’s ability 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 company or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial statements Our objectives are to obtain reasonable assurance about whether the separate 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 ISAs 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 separate financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 38 Zeta Resources Limited • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements In terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015, we report that Mazars has been the auditor of Zeta Resources Limited for 4 years. Mazars Partner: Nico Jansen Registered Auditor Date: 19 September 2023 Cape Town 39 Annual Report for the year to 30 June 2023 AUDITOR’S INDEPENDENCE DECLARATION Auditor’s Independence Declaration In relation to our audit of the financial statements of Zeta Resources Limited for the year ended 30 June 2023, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the international standards on auditing (ISA) or any other applicable code of professional conduct. Auditor’s Independence Declaration Auditor’s Independence Declaration Mazars Partner: Nico Jansen In relation to our audit of the financial statements of Zeta Resources Limited for the year ended Registered Auditor 30 June 2023, to the best of my knowledge and belief, there have been no contraventions of 19 September 2023 the auditor independence requirements of the international standards on auditing (ISA) or any Cape Town other applicable code of professional conduct. In relation to our audit of the financial statements of Zeta Resources Limited for the year ended 30 June 2023, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the international standards on auditing (ISA) or any other applicable code of professional conduct. Mazars Mazars Partner: Nico Jansen Partner: Nico Jansen Registered Auditor Registered Auditor 19 September 2023 19 September 2023 Cape Town Cape Town 40 Zeta Resources Limited STATEMENT OF FINANCIAL POSITION Notes at 30 June 2023 Non-current assets 4 Investment in subsidiaries 5 Investments 6 Loans to subsidiaries Current assets 7 Cash and cash equivalents Other receivable Total assets Non-current liabilities 9 Other loans Current liabilities 8 Loan from subsidiary 10 Trade and other payables 16 Tax payable Total liabilities Net assets Equity 11 Share capital 11 Share premium Treasury shares Accumulated losses Total equity June 2023 US$ June 2022 US$ 27,857,738 111,381,126 10,224,103 16,003,881 164,135,993 1,957,423 1,759,952 21,321 106,963 – 151,244,240 182,204,260 (2,877,903) (23,742,404) – (637,862) (963,266) (4,479,031) 146,765,209 (3,743,623) (414,610) (2,840,186) (30,740,823) 151,463,437 5,535 5,555 176,234,914 176,624,753 – (29,475,240) 146,765,209 (36,422) (25,130,449) 151,463,437 41 Annual Report for the year to 30 June 2023 STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME Notes for the year ended 30 June 2023 Income and investment returns 12 Revenue 12 Investment losses 13 Other income Expenses Directors fees Interest expense 14 Management and consulting fees 15 Operating and administration expenses Loss before tax 16 Taxation expense reversal Loss for the year Total comprehensive loss for the year Loss per share 17 Basic and diluted loss per share June 2023 US$ 21,490 (2,708,966) 592,740 (200,000) (864,198) (805,364) (725,958) June 2022 US$ 35,557 (66,373,764) 2,501,304 (200,000) (2,589,664) (1,344,513) (571,880) (4,690,256) (68,542,960) 345,465 (4,344,791) (4,344,791) – (68,542,960) (68,542,960) (0.01) (0.12) 42 Zeta Resources Limited STATEMENT OF CHANGES IN EQUITY Notes for the year ended 30 June 2023 Share capital US$ Share premium US$ Treasury Shares US$ Accumulated income/(losses) US$ Total US$ Balance at 1 July 2021 5,560 176,763,050 – 43,412,511 220,181,121 Purchase of treasury shares 11 Cancellation of treasury shares Total comprehensive income for the year – (5) – – (174,724) (138,297) 138,302 – – (174,724) – – – (68,542,960) (68,542,960) Balance at 30 June 2022 5,555 176,624,753 (36,422) (25,130,449) 151,463,437 Purchase of treasury shares 11 Cancellation of treasury shares Total comprehensive loss for the year – (20) – – – (353,437) (389,839) 389,859 – – (353,437) – Balance at 30 June 2023 5,535 176,234,914 – – (4,344,791) (4,344,791) (29,475,240) 146,765,209 43 Annual Report for the year to 30 June 2023 STATEMENT OF CASH FLOWS Notes for the year ended 30 June 2023 Cash flows from operating activities 18.1 Cash utilised by operations 12 Interest received Interest paid Taxation paid 12 Dividends received Net cash flows from operating activities Cash flows from investing activities Investments purchased Investments sold Increase in loan to subsidiaries from additional funding Decrease in loan to subsidiaries from repayments June 2023 US$ June 2022 US$ (1,635,216) (7,089,982) 17,666 (510,007) (1,425,630) 3,824 (3,549,363) (6,157,691) 44,496,392 (8,877,593) 543,326 16,493 (404,167) – 19,064 (7,458,592) (7,587,419) 26,655,955 (894,224) – Net cash flows from investing activities 30,004,434 18,174,312 Cash flows from financing activities 11 Purchase of treasury shares 18.2 Increase in loan from parent from additional funding (353,437) 242,583 (174,724) 5,570,571 18.2 Decrease in loan from parent from repayments (14,540,761) (23,343,020) 18.2 Increase in loan from subsidiary from additional funding 18.2 Decrease in loan from subsidiary from repayments 18.2 Increase in other loans from additional funding 18.2 Decrease in other loans from repayments Net cash flows from financing activities Net movement in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of exchange rate fluctuations on cash held 7 Cash and cash equivalents at end of the year – (3,695,143) 13,473,982 (19,998,110) (24,870,886) 1,584,185 106,963 68,804 1,759,952 8,401,474 (7,877,976) 14,572,100 (9,249,796) (12,101,371) (1,385,651) 1,378,703 113,911 106,963 44 Zeta Resources Limited NOTES TO THE FINANCIAL STATEMENTS 1. BASIS OF PREPARATION 1.1 Corporate information Zeta Resources Limited (“Zeta Resources” or “the Company”) is an investment company incorporated on 13 August 2012, listed on the Australian Securities Exchange and domiciled in Bermuda. The financial statements of the Company as at and for the year ended 30 June 2023 comprise the Company only. 1.2 Basis of preparation The financial statements for the year ended 30 June 2023 have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standard Board (IASB). The Company carries on the business of an investment holding company, in accordance with IFRS 10. The purpose of the Company is to earn returns through capital appreciation or investment income. The Company obtains funds from more than one investor and provides investment management services. The Company is accordingly applying the consolidation exemption for investments in subsidiaries and they will be recognised at fair value through profit and loss. The financial statements were authorised for issue by the board of directors on 18 September 2023. 1.3 Basis of measurement The financial statements provide information about the financial position, results of operations and changes in financial position of the Company. They have been prepared on the historic cost basis except for those financial instruments at fair value through profit or loss, which are measured at fair value. The financial statements are prepared on a going concern basis. 1.4 Functional and presentation currency The Company’s functional and presentation currency is United States dollars. The board has determined by having regard to the currency of the Company’s share capital and that Zeta invests in mining entities whose resources are valued in United States dollars, that United States dollars is the functional and reporting currency. 1.5 Use of estimates and judgements The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised and in any future periods affected. The key assumptions concerning the future and other key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year relate to the valuation of unquoted investments, details of which are set out in note 20 and the classification of the subsidiaries as investment entities. Details of the subsidiaries are set out in note 4. Subsidiaries that carry on business as investment entities are designated as being at fair value through profit and loss on initial recognition. Loans to subsidiaries are classified as financial assets carried at amortised cost. The loans are subject to impairment testing as debt instruments (refer note 3.7). The impairments on the loans are determined separately to the fair value of the investments in the subsidiaries as disclosed in note 4. The judgement over the tax treatment of profits generated from the sale of Bligh Resources is disclosed in note 16. 2. ADOPTION OF NEW AND REVISED STANDARDS 2.1 Standards and interpretations adopted during the year All new standards and interpretations that became effective during the 2023 financial year were adopted on their effective dates. These standards did not have a material impact on the financial statements. 2.2 New standards, amendments and interpretations effective for annual periods beginning after 1 January 2023 that have not been adopted Classification of Liabilities as Current or Non-current (Amendments to IAS 1) – effective 1 January 2023 Disclosure of accounting policies (Amendments to IAS 1) – effective 1 January 2023 Definition of accounting estimates (Amendments to IAS 8) – effective 1 January 2023 Deferred tax related to asset and liabilities arising from a single transaction (Amendments to IAS 12) – effective 1 January 2023 International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12) – effective 1 January 2023 IFRS S1 General Requirements for Disclosure of Sustainability- related Financial Information and IFRS S2 Climate-related Disclosures – effective 1 January 2024 Classification of Long-term Debt Affected by Covenants (Amendments to IAS 1) – effective 1 January 2024 The Company has chosen not to early adopt the new and revised standards affecting presentation and disclosure which have been published and are mandatory for the Company’s accounting records beginning on the dates mentioned above. Based on initial assessment, these standards are not expected to have a material impact on the Company. The Company considers that the amendments to IAS12 will not have a material impact on the Company as the Company’s revenue per its financial statements does not exceed €750 million (in at least two of the four preceding fiscal years). Therefore it is unlikely that Zeta will fall within the scope of the Pillar Two Model. 45 Annual Report for the year to 30 June 2023 NOTES TO THE FINANCIAL STATEMENTS (continued) 3. SIGNIFICANT ACCOUNTING POLICIES 3.5 Earnings per share (“EPS”) The accounting policies detailed below have been consistently applied by the Company. 3.1 Investment income Dividend income is recognised when the Company’s right to receive payment is established and is presented gross of withholding taxes. Gains or losses on the sale of investments are recorded on the trade date. Investment income also comprises unrealised gains on changes in the fair value of financial assets at fair value through profit or loss. Interest income is recognised using the effective interest rate method. 3.2 Borrowing costs Borrowing costs are recognised as an expense when incurred. 3.3 Income tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the Statement of Financial Position date. The Company invests in various jurisdictions and is subject to typical source taxation such as withholding tax on passive income (dividends, interest and royalties where applicable) and capital gains on immovable property. The Company measures uncertainty by using the most likely amount and not the expected value method. The detail of the judgements relating to the uncertain tax position is disclosed in note 16. The Company has elected to be tax exempt in terms of local Bermudian legislation. 3.4 Foreign currency Foreign currency transactions and balances Transactions in foreign currencies are translated into the respective functional currency of the Company at exchange rates at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the prevalent exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between the amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and principal payments during the period, and the amortised cost in foreign currency translated at the prevalent exchange rate at the end of the period. The foreign currency gains or losses are recognised as part of other income/(losses) in the Statement of Profit and Loss and Other Comprehensive Income. Foreign currency changes are taken into account when fair valuing the equity instruments. Basic EPS is calculated as the net resulting earnings attributable to members, adjusted to exclude costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted EPS is calculated as the net resulting earnings attributable to members, adjusted for: • • costs of servicing equity (other than dividends) and preference share dividends; the after tax effect of dividends and interest associated with potential dilutive ordinary shares that have been recognised as expenses; and • other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares divided by the weighted average number of ordinary shares and potential dilutive ordinary shares, adjusted for any bonus element. 3.6 Financial instruments Recognition and initial measurement Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the entity becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (“FVTPL”), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price. Classification and subsequent measurement Financial assets A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: • • it is held within a business model whose objective is to hold assets to collect contractual cash flows; and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets at FVTPL All investments are mandatorily measured at FVTPL. Investments are subsequently measured at fair value. Net gains and losses include foreign exchange gains and losses. Interest or dividend income are recognised in profit or loss separately. Financial assets at amortised cost Cash and cash equivalents, loans to subsidiaries and other loans meet the criteria for measurement at amortised cost. 46 Zeta Resources Limited These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Foreign exchange gains and losses, impairments and any gains or losses on derecognition are recognised in profit or loss. Financial assets are not reclassified subsequent to their initial recognition unless the entity changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model. Financial liabilities The Company has adopted the following classifications for financial liabilities: Financial liabilities are measured at amortised cost and subsequent to initial recognition, financial liabilities are measured at amortised cost using the effective interest method. Derecognition The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or when they transfer the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all the risks and rewards of ownership and does not retain control of the financial asset. The Company derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. Offsetting Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company currently has a legally enforceable right to set off the recognised amounts and it intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. 3.7 Impairment of assets The Company recognises loss allowances for Expected Credit Losses (“ECLs”) on financial assets measured at amortised cost. The Company measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured at 12-month ECLs: • debt securities that are determined to have low credit risk at the reporting date; and • other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition. Loss allowances for trade receivables are always measured at an amount equal to lifetime ECLs. Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. 12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months). The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk. The Company considers a financial asset to be performing when there is a low risk of default and no amounts are past due. The Company considers a financial asset to be underperforming when contractual payments are 30 days past due or there has been a significant increase in credit risk since initial recognition. A significant increase in credit risk is indicated by a significant decrease in the future prospects of the borrower’s operations, changes in the scope of business or changes in the organisational structure that result in a significant change in the borrower’s ability to meet its debt obligations. The Company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. Presentation ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects to receive). Measurement of ECLs Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. 3.8 Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity. 3.9 Provisions and accruals Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, for which it is probable that an outflow of economic benefits will occur, and where a reliable estimate can be made of the amount of the obligation. The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement. If the effect of discounting is material, provisions are discounted. The discount rate used is a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. 47 Annual Report for the year to 30 June 2023 NOTES TO THE FINANCIAL STATEMENTS (continued) 4. INVESTMENT IN SUBSIDIARIES At fair value Investment in Kumarina Resources Pty Limited ("Kumarina") Investment in Zeta Energy Pte. Ltd. ("Zeta Energy") Investment in Zeta Investments Limited ("Zeta Investments") Investment in Zeta Minerals Ltd ("Zeta Minerals") Investment in Horizon Gold Limited ("Horizon Gold") June 2023 US$ 4,530,826 1,700,000 1 1 21,626,910 27,857,738 June 2022 US$ 1 1 1 1 16,003,877 16,003,881 Investments in subsidiaries are held as part of the investment portfolio and consequently, in accordance with IFRS 10 are not consolidated but rather shown at fair value through profit and loss. Horizon Gold is measured using market price. Kumarina is measured using a detailed cash flow forecast based on the Murrin Murrin mining plan; in the prior year a resource multiple was used as a detailed cash flow forecast was not available. Zeta Energy is measured using its net asset value. See note 20.4. The remaining investments in subsidiaries are fair valued by the directors at a nominal value due to the fact that they hold no significant assets, nor do they have any significant value. The Company had the following direct subsidiaries as at 30 June 2023: 30 June 2023 Kumarina incorporated in Australia Zeta Investments incorporated in Bermuda Zeta Energy incorporated in Singapore Zeta Minerals incorporated in United Kingdom Horizon Gold incorporated in Australia 30 June 2022 Kumarina incorporated in Australia Zeta Investments incorporated in Bermuda Zeta Energy incorporated in Singapore Zeta Minerals incorporated in United Kingdom Horizon Gold incorporated in Australia The Company had the following indirect subsidiaries as at 30 June 2023: 30 June 2023 Pan Pacific Petroleum Pty Limited incorporated in Australia 30 June 2022 Pan Pacific Petroleum Pty Limited incorporated in Australia Number of ordinary shares Percentage of ordinary shares held 26,245,610 1,000 6,185,998 100 90,161,986 100% 100% 100% 100% 72% Number of ordinary shares Percentage of ordinary shares held 26,245,610 1,000 6,185,998 100 89,055,422 100% 100% 100% 100% 72% Number of ordinary shares 581,942,846 Percentage of ordinary shares held 100% Number of ordinary shares 581,942,846 Percentage of ordinary shares held 100% Pan Pacific Petroleum Pty Limited is an Australian oil and gas exploration and production company, owned by Zeta Energy. 48 Zeta Resources Limited 5. INVESTMENTS Financial assets at fair value through profit or loss 111,381,126 164,135,993 June 2023 US$ June 2022 US$ Equity securities at fair value Listed ordinary shares, subscription and other rights Unlisted ordinary shares, subscription and other rights Cost of equity securities at fair value Listed ordinary shares, subscription and other rights Unlisted ordinary shares, subscription and other rights 62,475,446 48,905,680 111,381,126 101,648,751 48,851,853 150,500,604 102,367,010 61,768,983 164,135,993 107,750,033 54,470,869 162,220,902 The investments fair value has declined below cost, caused mainly by Panoramic Resources Limited. Investments held by the Company at the reporting date Listed Hudbay Minerals Inc Copper Mountain Mining Corporation Alliance Nickel Limited (previously GME Resources Limited) Panoramic Resources Limited Star Royalties Limited Other investments* *Other investments comprise of less than 5% of the Company’s gross assets Unlisted Margosa Graphite Limited Koumbia Bauxite Investments Ltd Seacrest L.P Other rights June 2023 Number of shares June 2022 Number of shares 5,506,952 – 259,638,451 253,969,532 10,651,300 134,391,394 27,861,844 32,932,658 32,221,800 – 35,899,745 257,674,106 245,437,562 10,151,300 128,070,268 27,861,844 – 32,221,800 – 28,520,525 During the reporting period the Company completed a total of 245 transactions (2022: 121 transactions) in securities. See note 20.4 for disclosure of fair value determination of level 3 investments. The Company had the following associate undertakings at as at 30 June 2023: 30 June 2023 Koumbia Bauxite Investments Ltd incorporated in Bermuda Alliance Nickel Limited incorporated in Australia Margosa Graphite Limited incorporated in Australia 30 June 2022 Alliance Mining Commodities Limited incorporated in Bermuda Alliance Nickel Limited incorporated in Australia Margosa Graphite Limited incorporated in Australia Number of ordinary shares Percentage of ordinary shares held 32,932,659 259,638,451 27,861,844 39% 36% 32% Number of ordinary shares Percentage of ordinary shares held 32,932,659 257,674,106 27,861,844 37% 43% 33% The associate undertakings are held as part of the investment portfolio and consequently are carried at fair value through profit or loss. 49 Annual Report for the year to 30 June 2023 NOTES TO THE FINANCIAL STATEMENTS (continued) 6. LOANS TO SUBSIDIARIES Loan to Kumarina Loan to Zeta Energy June 2023 US$ 2,224,103 8,000,000 June 2022 US$ 1,957,423 – 10,224,103 1,957,423 The loan to Kumarina, used for working capital, is denominated in Australian dollars to the value of A$3.3 million (30 June 2022: A$2.8 million) and is interest free. There are no fixed repayment terms. The loan is still performing as no contractual breaches have occurred and the value of the assets in Kumarina is sufficient to cover all the liabilities. The loan to Zeta Energy is denominated in United States dollars and is interest free. There are no fixed repayment terms. The loan is still performing as no contractual breaches have occurred and the value of the assets in Zeta Energy is sufficient to cover all the liabilities. During June 2022, a loan to Zeta Energy of US$6,185,997, which was fully impaired, was converted to equity. 7. CASH AND CASH EQUIVALENTS Cash balance comprises: Cash at bank 8. LOAN FROM SUBSIDIARY Loan from Horizon Gold June 2023 US$ June 2022 US$ 1,759,952 106,963 June 2023 US$ – June 2022 US$ 3,743,623 The Horizon Gold loan was repaid during the year. The loan was denominated in Australian dollars (2022: A$5.4 million) and attracted interest at 5% per annum. 9. OTHER LOANS Loan from General Provincial Limited Pension Fund (“GPLPF”) Loan from Somers Limited (“Somers”) Loan from Pan Pacific Petroleum Pty Ltd ("PPP") Loan from Bermuda Commercial Bank Limited June 2023 US$ – – 377,903 2,500,000 2,877,903 June 2022 US$ 5,850,762 14,999,626 392,016 2,500,000 23,742,404 The GPLPF loan was repaid during the year. The loan was denominated in Australian dollars (2022: A$8.5 million) and attracted interest at 7.5% per annum. The Somers loan was repaid during the year. The loan was denominated in Australian dollars (2022: A$2.2 million) and Canadian dollars (2022: CA$17.4 million) and attracted interet at 7.5% per annum on the Australian dollar loan and 7.25% on the Canadian dollar loan. The PPP loan is denominated in Australian dollars to the value of A$567,169 (30 June 2022: A$567,169) and is interest free. There are no fixed repayment terms except that no repayment is due before 30 June 2024. The Bermuda Commercial Bank loan is denominated in United States dollars and currently attracts interest at Bermuda Commercial Bank’s commercial base rate + 2.75% per annum (30 June 2022: Bermuda Commercial Bank’s commercial base rate + 2.75%). At 30 June 2023 the Bermuda Commercial Bank’s commercial base rate was 3%. The remaining balance is payable on 30 September 2024. 50 Zeta Resources Limited 10. TRADE AND OTHER PAYABLES Other liabilities Amount owed to brokers Accruals June 2023 US$ 251,329 85,402 301,131 637,862 June 2022 US$ 25,607 – 389,003 414,610 The accruals are for audit, management, directors and administration fees payable. 11. SHARE CAPITAL AND SHARE PREMIUM Authorised 5,000,000,000 ordinary shares of par value US$0.00001 Issued Ordinary shares Number of shares Share capital US$ Share premium US$ Balance as at 30 June 2021 566,004,068 5,560 176,763,050 Share cancellation - share buy-backs August 2021 Share cancellation - share buy-backs September 2021 Share cancellation - share buy-backs October 2021 Share cancellation - share buy-backs November 2021 Share cancellation - share buy-backs February 2022 Share cancellation - share buy-backs May 2022 (45,000) (207,310) (27,459) (27,541) (35,000) (149,534) (1) (2) – – – (2) (11,992) (58,051) (8,405) (8,251) (11,388) (40,210) Balance as at 30 June 2022 565,512,224 5,555 176,624,753 Share cancellation - share buy-backs July 2022 Share cancellation - share buy-backs September 2022 Share cancellation - share buy-backs October 2022 Share cancellation - share buy-backs December 2022 Share cancellation - share buy-backs January 2023 Share cancellation - share buy-backs February 2023 Share cancellation - share buy-backs March 2023 Share cancellation - share buy-backs April 2023 Share cancellation - share buy-backs May 2023 (155,212) (425,254) (205,113) (70,000) (62,000) (4,000) (13,593) (571,947) (480,849) (1) (4) (2) (1) (1) – – (6) (5) (36,420) (88,488) (40,225) (13,085) (11,351) (746) (2,640) (109,431) (87,453) Balance as at 30 June 2023 563,524,256 5,535 176,234,914 At 30 June 2023 the Company held nil (2022: 155,212) treasury shares. 51 Annual Report for the year to 30 June 2023 NOTES TO THE FINANCIAL STATEMENTS (continued) 12. INVESTMENT RETURNS Revenue Dividend income Interest income Investment losses Derived from financial instruments measured at fair value Realised gains Realised losses Unrealised fair value gains on revaluation of investments Unrealised fair value losses on revaluation of investments 13. OTHER INCOME Foreign exchange gains 14. MANAGEMENT AND CONSULTING FEES Management and consulting fees June 2023 US$ June 2022 US$ 3,824 17,666 21,490 34,430,478 (4,158,425) 11,953,595 (44,934,614) (2,708,966) (2,687,476) June 2023 US$ 592,740 June 2023 US$ 805,364 19,064 16,493 35,557 4,541,992 (4,086,228) 30,581,550 (97,411,078) (66,373,764) (66,338,207) June 2022 US$ 2,501,304 June 2022 US$ 1,344,513 The Company entered into an investment management agreement with ICM Limited on 3 June 2018. Management fees are payable at a rate of 0.5% per annum, of the net tangible assets managed on calculation date (last day of quarter), payable quarterly in arrears. Performance fees are payable annually at year end on the difference between adjusted equity funds (adjusted for any dividends paid or accrued) on calculation date less adjusted base equity funds (used in the performance fee calculation when it was last payable) multiplied by 15%. Performance fee for the year ended 30 June 2023 was nil (2022: nil). Either party may terminate the agreement with six months’ notice. 15. OPERATING AND ADMINISTRATION EXPENSES Operating and administration expenses consist of: Accounting fees Audit fees Australian Securities Exchange listing fees and regulatory costs Brokerage Other expenses 52 June 2023 US$ June 2022 US$ 183,815 9,257 68,523 260,216 204,147 725,958 303,268 17,293 88,899 77,286 85,134 571,880 Zeta Resources Limited 16. INCOME TAX Taxation regarding the sale of Bligh Resources Limited June 2023 US$ 345,465 June 2022 US$ – Australian taxation was accrued in full with regards to the sale of the investment in Bligh Resources Limited in July 2019, following an assesment from the Australian Tax Authority, a reversal of US$345,465 was made to the tax liability. At 30 June 2023 US$963,266 was outstanding on the Bligh Resources Limited sale. This was paid in August 2023. The Company has not raised deferred tax assets of US$8,813,354 on potential unrealised Australian capital losses (at year-end amounting to US$29,377,846) where there are insufficient capital gains of the same nature against which to utilise those losses. There is no expiration date on losses. The Company is domiciled in Bermuda and has elected to be tax exempt in terms of local legislation. As such no tax is payable. 17. EARNINGS PER SHARE Basic and diluted loss per share June 2023 US$ (0.01) June 2022 US$ (0.12) Loss used in calculation of basic and diluted earnings per share (4,344,791) (68,542,960) Weighted average number of ordinary shares outstanding during the year used in calculation of basic and diluted earnings per share 564,563,216 565,730,980 18. NOTES TO THE CASH FLOW STATEMENT 18.1 Cash utilised by operations Loss for the year Adjustments for: Realised gains on investments Fair value loss on revaluation of investments Foreign exchange gains Dividend income Interest income Interest expense Operating loss before working capital changes Increase in trade and other receivables Decrease in trade and other payables June 2023 US$ (4,344,791) (30,272,053) 32,981,019 (592,740) (3,824) (17,666) 864,198 (1,385,857) (21,321) (228,038) (1,635,216) June 2022 US$ (68,542,960) (455,764) 66,829,528 (2,501,304) (19,064) (16,493) 2,589,664 (2,116,393) – (4,973,589) (7,089,982) 53 Annual Report for the year to 30 June 2023 NOTES TO THE FINANCIAL STATEMENTS (continued) 18. NOTES TO THE CASH FLOW STATEMENT (continued) 18.2 Liabilities from financing activities Loan from parent US$ Loan from subsidiary US$ Other loan US$ Total US$ Balance as at 30 June 2021 32,576,107 3,377,965 3,832,610 39,786,682 Changes from financing cash flows Repayment of loans (23,343,020) (7,877,976) (9,249,796) (40,470,792) Advances of loans received 5,570,571 8,401,474 14,572,100 28,544,145 Other non-cash movements Exchange rate fluctuations Loan repaid to parent Loan received from Somers Limited Interest capitalised Balance as at 30 June 2022 Changes from financing cash flow Repayment of loans Advances of loans received Other non-cash movements Exchange rate fluctuations (1,856,680) (180,535) (522,290) (2,559,505) (14,830,503) – – – - (14,830,503) 14,830,503 14,830,503 1,883,525 22,695 279,277 2,185,497 – 3,743,623 23,742,404 27,486,027 (14,540,761) (3,695,143) (19,998,110) (38,234,014) 242,583 – 13,473,982 13,716,565 (900,680) (110,010) 565,824 (444,866) Loan assigned from Somers Limited to parent 15,003,715 – (15,003,715) – Interest capitalised Balance as at 30 June 2023 195,143 61,530 97,518 354,191 – – 2,877,903 2,877,903 19. GOING CONCERN The financial statements have been prepared on a going concern basis. The majority of the Company’s assets consist of equity shares in listed companies which in most circumstances are realisable within a short timescale. The directors believe the Company will be able to cover the commitments arising in the period 12 months from the date of approval of these financial statements. The use of the going concern basis of accounting is appropriate because there are no material uncertainties related to events or conditions that may cast significant doubt about the ability of the Company to continue as a going concern. After making enquiries, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis in preparing the accounts. 54 Zeta Resources Limited 20. FINANCIAL RISK MANAGEMENT The board of directors, together with the Investment Manager, is responsible for the Company’s risk management. The directors’ policies and processes for managing the financial risks are set out below. These financial risks are principally related to the market (currency movements, interest rate changes and security price movements), liquidity and credit and counterparty risk. The accounting policies which govern the reported statement of financial position carrying values of the underlying financial assets and liabilities, as well as the related income and expenditure, are set out in note 3 to the financial statements. The policies are in compliance with IFRS and best practice and include the valuation of certain financial assets and liabilities at fair value through profit and loss. Categories of financial instruments IFRS 9 contains three principal classification and measurement categories for financial assets: at amortised cost, fair value through other comprehensive income, and fair value through profit and loss. The analysis of assets into their categories as defined in IFRS 9 is set out in the following table. The table below sets out the Company classification of each class of financial assets and liabilities. All assets and liabilities approximate their fair values: 30 June 2023 Assets Investments in subsidiaries Investments Loans to subsidiaries Cash and cash equivalents Other receivable Liabilities Trade and other payables Other loans 30 June 2022 Assets Investments in subsidiaries Investments Loans to subsidiaries Cash and cash equivalents Liabilities Loans from subsidiary Trade and other payables Other loans Financial assets mandatorily measured at fair value through profit or loss US$ 27,857,738 111,381,126 – – – 139,238,864 – – – Financial assets mandatorily measured at fair value through profit or loss US$ 16,003,881 164,135,993 – – 180,139,874 – – – – Financial assets/liabilities measured at amortised cost US$ – – 10,224,103 1,759,952 21,321 12,005,376 336,731 2,877,903 3,214,634 Financial assets/liabilities measured at amortised cost US$ – – 1,957,423 106,963 2,064,386 3,743,623 25,607 23,742,404 27,511,634 Total carrying value US$ 27,857,738 111,381,126 10,224,103 1,759,952 21,321 151,244,240 336,731 2,877,903 3,214,634 Total carrying value US$ 16,003,881 164,135,993 1,957,423 106,963 182,204,260 3,743,623 25,607 23,742,404 27,511,634 55 Annual Report for the year to 30 June 2023 NOTES TO THE FINANCIAL STATEMENTS (continued) 20. FINANCIAL RISK MANAGEMENT (continued) 20.1 Market risks The fair value of equity and other financial securities held in the Company’s portfolio fluctuate with changes in market prices. Prices are themselves affected by movements in currencies, commodity prices, interest rates and by other financial issues, including the market perception of future risks. The board of directors sets policies for managing these risks within the Company’s objective and meets regularly to review full, timely and relevant information on investment performance and financial results. The Investment Manager assesses exposure to market risks when making each investment decision and monitors ongoing market risk within the portfolio. The Company’s other assets and liabilities may be denominated in currencies other than United States dollars and may also be exposed to interest rate risks. The Investment Manager and the board of directors regularly monitor these risks. The Company does not normally hold significant cash balances. Borrowings are limited to amounts and currencies commensurate with the portfolio’s exposure to those currencies, thereby limiting the Company’s exposure to future changes in exchange rates. Gearing may be short- or long-term, in United States dollars and foreign currencies, and enables the Company to take a long- term view of the countries and markets in which it is invested without having to be concerned about short-term volatility. Income earned in foreign currencies is converted to United States dollars on receipt. The board of directors regularly monitors the effects on net revenue of interest earned on deposits and paid on gearing. Currency exposure The principal currencies to which the Company was exposed were the Australian dollar and Canadian Dollar. The exchange rates applying against the United States dollar at 30 June 2023 and the average rates for the year were as follows: AUD – Australian dollar CAD – Canadian dollar June 2023 Average 2023 June 2022 Average 2022 0.6663 0.7549 0.6727 0.7432 0.6912 0.7768 0.7256 0.7901 The Company’s monetary assets and liabilities at 30 June 2023, by currency based on the currency of denomination for loans and cash and cash equivalents, and on the currency of the primary trading market for equities, are shown below: 30 June 2023 Investments in subsidiaries Investments Cash and cash equivalents Loans to subsidiaries Other loans Net monetary assets 30 June 2022 Investments in subsidiaries Investments Cash and cash equivalents Loans to subsidiaries Loan from subsidiary Other loans Net monetary assets 56 AUD 36,758,315 51,995,374 184.484 3,338,000 (567,169) CAD – 38,891,539 1,854,928 – – 91,709,004 40,746,467 AUD 23,754,410 90,395,627 150,445 2,832,000 (5,400,000) (11,210,197) 100,522,285 CAD – 60,259,534 – – – (17,382,428) 42,877,106 Zeta Resources Limited Based on the financial assets and liabilities held, and exchange rates applying, at the reporting date, a weakening or strengthening of the United States dollar against each of these currencies by 10% would have had the following approximate effect on income after tax and on net asset value (NAV): Strengthening of the United States dollar Increase in total comprehensive income for the year ended 30 June 2023 6,169,265 3,028,277 9,197,542 Increase in total comprehensive income for the year ended 30 June 2022 7,293,897 3,387,720 10,681,617 AUD CAD Total Weakening of the United States dollar Decrease in total comprehensive income for the year ended 30 June 2023 (6,169,265) (3,028,277) (9,197,542) Decrease in total comprehensive income for the year ended 30 June 2022 (7,293,897) (3,387,720) (10,681,617) These analyses are broadly representative of the Company’s activities during the current year as a whole, although the level of the Company’s exposure to currencies fluctuates in accordance with the investment and risk management processes. Interest rate exposure The exposure of the financial assets and liabilities to interest rate risks at 30 June 2023 and at 30 June 2022 is shown below: 30 June 2023 Exposure to floating rates: Cash Other loans Within one year US$ 1,759,952 – 1,759,952 Greater than one year US$ – (2,500,000) (2,500,000) Total US$ 1,759,952 (2,500,000) (740,048) The Company is exposed to the bank’s commercial rates changes. Impact of floating rate exposures are considered insignificant. 30 June 2022 Exposure to floating rates: Cash Other loans Exposure to fixed rates: Loan from subsidiary Other loan liabilities Within one year US$ 106,963 – 106,963 (3,743,623) – (3,743,623) Greater than one year US$ – (2,500,000) (2,500,000) – (21,242,404) (21,242,404) Total US$ 106,963 (2,500,000) (2,393,037) (3,743,623) (21,242,404) (24,986,027) Exposures vary throughout the year as a consequence of changes in the make-up of the net assets of the Company arising out of the investment and risk management processes. The Company tends to limit its cash reserves and interest earned is insignificant and therefore not sensitive to interest rate changes. The majority of borrowings are at a fixed rate and not sensitive to interest rate risk. Other market risk exposures The portfolio of listed investments valued at US$84,102,356 at 30 June 2023 (30 June 2022: US$118,370,887) is exposed to market price changes. The Investment Manager assesses these exposures at the time of making each investment decision. An analysis of the portfolio by country is set out on note 22. Price sensitivity risk analysis A 10% decline in the market price of the listed investments held by the Company would result in an unrealised loss of US$8,410,235. A 10% appreciation in the market price would have the opposite effect. See note 20.4 for unlisted investment sensitivity analyses. 57 Annual Report for the year to 30 June 2023 NOTES TO THE FINANCIAL STATEMENTS (continued) 20. FINANCIAL RISK MANAGEMENT (continued) 20.2 Liquidity risk exposure The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Investment Manager reviews liquidity at the time of making each investment decision. The risk of the Company having insufficient liquidity is not considered by the board to be significant, given the amount of quoted investments held in the Company’s portfolio. The contractual maturities of the financial liabilities, based on the earliest date on which payment can be required, were as follows: 30 June 2023 Trade and other payables Other loans 30 June 2022 Trade and other payables Loan from subsidiary Other loans Three months or less US$ Three months to one year US$ 637,862 50,000 687,862 Three months or less US$ 414,610 – 430,589 845,199 – 527,903 527,903 Three months to one year US$ – 3,930,247 7,965,134 11,895,381 More than one year US$ – 2,550,000 2,550,000 More than one year US$ – – 17,499,626 17,499,626 Total US$ 637,862 3,127,903 3,765,765 Total US$ 414,610 3,930,247 25,895,349 30,240,206 20.3 Credit risk and counterparty exposure The Company is exposed to potential failure by counterparties to deliver securities for which the Company has paid, or to pay for securities which the Company has delivered. To mitigate against credit and counterparty risk broker counterparties are selected based on a combination of criteria, including credit rating, balance sheet strength and membership of a relevant regulatory body. Cash and deposits are held with reputable banks. The Company has an ongoing contract with its custodians for the provision of custody services. The contracts are reviewed regularly. Details of securities held in custody on behalf of the Company are received and reconciled monthly. Maximum exposure to credit risk The Company has loan assets totalling US$10,224,103 (2022: US$1,957,423) and bank balances totalling US$1,759,952 (2022: US$106,963) that are exposed to credit risk. None of the Company’s financial assets are past due. The Company’s principal banker is Bermuda Commercial Bank (rated by Fitch as BB+) and the Company’s principal custodian is JP Morgan Chase Bank (rated by Fitch as AA-). 58 Zeta Resources Limited 20.4 Fair values of financial assets and liabilities The assets and liabilities of the Company are, in the opinion of the directors, reflected in the statement of financial position at fair value. Borrowings under loan facilities do not have a value materially different from their capital repayment amount. Borrowings in foreign currencies are converted into United States dollars at exchanges rates ruling at each valuation date. Unquoted investments are valued based on professional assumptions and advice that is not wholly supported by prices from current market transactions or by observable market data. Valuation of financial instruments The table below analyses financial assets measured at fair value at the end of the year by the level in the fair value hierarchy into which the fair value measurement is categorised: Level 1 The fair values are measured using quoted prices in active markets. Level 2 The fair values are measured using inputs, other than quoted prices, that are included within level 1, that are observable for the asset. Level 3 The fair values are measured using inputs for the asset or liability that are not based on observable market data. The directors make use of recognised valuation techniques and may take account of recent arms’ length transactions in the same or similar investments. The directors regularly review the principles applied by the Investment Manager to those valuations to ensure they comply with the Company’s accounting policies and with fair value principles. Level 3 financial instruments Valuation methodology The board of directors have satisfied themselves as to the methodology used, the discount rates and key assumptions applied in the valuation of level 3 assets. The level 3 assets have each been assessed based on its industry, location and business cycle. Where sensible, the directors have taken into account observable data and events to underpin the valuations. The level 3 investments are split between (a) unlisted companies, (b) investments in subsidiaries and (c) investments in other rights. (a) Unlisted companies Margosa Graphite Limited (“Margosa”) - Australia incorporated The unlisted investment comprises an equity interest in Margosa, a mineral exploration and development company focused on high grade vein graphite opportunities in Sri Lanka with granted licenses to a package of highly prospective tenements. The most advanced project area is the Pathakada Graphite Project (“Pathakada Project”) for which Margosa completed a JORC-2012 resource estimate in April 2020 of 1.72 million tonnes (“Mt”) at a grade of 76.32%, implying a total graphitic content of 1.32 Mt. Valuation methodology: The market approach has been used for the valuation of Margosa in the form of precedent transactions involving Margosa shares at a price of A$0.21 per share (2022: A$0.35 per share). At year end the fair value of the investment was US$3.8 million (2022: US$6.7 million). Sensitivities: The fair value of Margosa is considered sensitive to price of precedent transactions. Possible alternative prices represent an increase of $0.04 per share, which can cause an increase of US$1 million in the fair value of Zeta Resources’ equity interest in Margosa. Koumbia Bauxite Investments Ltd (“KBI”) - Bermuda incorporated The unlisted investment comprises an equity interest in a privately-owned company that will receive commercialisation fees, from Alliance Mining Commodities Limited, over the bauxite produced and shipped from the mine (part of the Koumbia Bauxite project) located in the Republic of Guinea, West Africa. Valuation methodology: A discounted cash flow technique was used, with the expectation that production will start in July 2024, a long-term forecast aluminium price of US$2,080 per tonne and a discount rate of 13%. Commercialisation fees are expected to be received for approximately 10 years from production, according to the expected production timetable. At year end the fair value of the investment was US$44.9 million. Sensitivities: The fair value of Zeta’s equity interest in KBI is sensitive to the long-term forecast aluminium price, a change of 10% in the price, can cause a change of US$6.3 million in the value. The value is also sensitive to the discount rate used, a change of 2% in the discount rate can cause a change of US$6.3 million in the value of Zeta’s equity interest. (b) Investments in subsidiaries Kumarina Resources Pty (“Kumarina”) - Australia incorporated Kumarina is a mineral exploration company with a gold project located at Murrin Murrin in Western Australia. Kumarina’s primary focus has been the exploration and development of this project, which is located 50 km east of Leonora in the north-eastern Goldfields. Kumarina is negotiating with Pan Pacific Petroleum Pty Limited (“PPP”) to provide funding for the project. 59 Annual Report for the year to 30 June 2023 NOTES TO THE FINANCIAL STATEMENTS (continued) 20. FINANCIAL RISK MANAGEMENT (continued) 20.4 Fair values of financial assets and liabilities (continued) Valuation methodology: A discounted cash flow has been prepared using the following assumptions: a long-term forecast gold price of A$2,800 per ounce and discount rate of 12%. The forecast was done over a 15 month period, according to the expected production timetable. At year end the fair value of the project was determined to be US$8 million, with US$6.7 million attributable to Kumarina and US$1.3 million attributable to PPP. As the loan owed to Zeta Resources is US$2.2 million, the investment value at 30 June 2023 was determined to be US$4.5 million (2022: nil). Sensitivities: The fair value of Zeta’s equity interest in Kumarina is sensitive to the discount rate. A 2% change in the discount rate would cause a movement of US$200,000. The fair value is also sensitive to the gold price, a 10% change in the long-term forecast gold price could cause a US$3.3 million movement in value. Zeta Energy Pte Limited Valuation inputs: Zeta Energy is an investment holding entity located in Singapore. Its key assets are loans receivable and an investment in Pan Pacific Petroleum Pty Limited (see note 4). Valuation methodology: Zeta Resources has used a fair value valuation of net assets held by Zeta Energy to determine the value as at 30 June 2023. Zeta Energy’s value is derived from its investment in PPP. PPP holds a loan receivable from Zeta Resources (see note 9) and an interest in the Murrin Murrin project (developed by Kumarina). See Kumarina’s valuation methodology. At year end the fair value of Zeta Energy’s net assets at 30 June 2023 was determined to be $1.7 million (2022: nil). Sensitivities: Zeta Energy’s asset value is sensitive to the fair value of the investment in PPP. A possible alternative to the fair value of PPP could cause an increase of US$200,000. (c) Other unlisted investments Panoramic Resources Limited Options In the prior year Zeta Resources held 28,520,525 options with an exercise price of A$0.16. The options expired on 30 June 2023. Valuation methodology: The intrinsic value of the options was used. The share price of Panoramic Resources Limited at 30 June 2022 was A$0.195. At year end the fair value of the investment was US$689,949. Zeta Resources has further investments at fair value totalling US$200,000 (2022: nil). 30 June 2023 Financial assets Investments Investment in subsidiaries Level 1 US$ 62,475,446 21,626,910 Level 2 US$ – – Level 3 US$ 48,905,680 6,230,828 There have been no movements between the level 1 and level 3 categories. The following table shows a reconciliation from opening balances to closing balances for fair value measurements in level 3 investments of the fair value hierarchy: Balance at 1 July 2022 Acquisitions at cost Expiration of Options Capital return Total (losses)/gains recognised in fair value through profit or loss Balance at 30 June 2023 Level 3 investments US$ 61,768,983 200,000 (689,949) (2,604,973) (9,768,381) 48,905,680 Level 3 investments in subsidiaries US$ 4 – – – 6,230,824 6,230,828 60 Zeta Resources Limited 30 June 2022 Financial assets Investments Investment in subsidiaries Level 1 US$ 102,367,010 16,003,877 Level 2 US$ – – Level 3 US$ 61,768,983 4 There have been no movements between the level 1 and level 3 categories. The following table shows a reconciliation from opening balances to closing balances for fair value measurements in level 3 investments of the fair value hierarchy: Balance at 1 July 2021 Acquisitions at cost Total gains/(losses) recognised in fair value through profit or loss Balance at 30 June 2022 20.5 Capital risk management Level 3 investments US$ 76,799,153 2,189,845 (17,220,015) 61,768,983 Level 3 investments in subsidiaries US$ 449,778 – (449,774) 4 The objective of the Company is stated as being to maximise shareholder returns by identifying and investing in investments where the underlying value is not reflected in the market price. In pursuing this long-term objective, the board of directors has a responsibility for ensuring the Company’s ability to continue as a going concern. It must therefore maintain an optimal capital structure through varying market conditions. This involves the ability to issue and buy back share capital within limits set by the shareholders in general meeting; borrow monies in the short- or long-term; and pay dividends to shareholders out of current year earnings as well as out of brought forward reserves. 21. RELATED PARTIES 21.1 Material related parties Holding company The company’s holding company is UIL which held 60.9% of the company’s issued share capital on 30 June 2023. UIL is 65.4% owned by General Provincial Life Pension Fund Limited. Somers Isles Private Trust Company Limited holds 100% of General Provincial Life Pension Fund Limited. Entities controlled by these entities are considered related parties of the Company. Somers Limited is controlled by Somers Isles Private Trust Company Limited. Subsidiary companies Wholly owned subsidiaries include Kumarina, Zeta Energy, Zeta Minerals and Zeta Investments. Zeta Resources holds 72% of Horizon Gold’s issued share capital. Pan Pacific Petroleum Pty Limited is a subsidiary of Zeta Energy. Associate companies Associates include Koumbia Bauxite Investment Ltd, Alliance Nickel Limited and Margosa Graphite Limited. Key management personnel Key management personnel and their close family members and entities which they control, jointly or over which they exercise significant influence are considered related parties of the Company. The Company’s directors, as listed in the director’s report are considered to be key management personnel of the Company. 61 Annual Report for the year to 30 June 2023 NOTES TO THE FINANCIAL STATEMENTS (continued) 21. RELATED PARTIES (continued) 21.2 Material related parties transactions Nature of balances Investments in related parties: Kumarina Zeta Investments Zeta Energy Zeta Minerals Horizon Gold Loans to related parties: Kumarina Zeta Energy Loans from related parties: Somers Limited Horizon Gold PPP ICM Limited Trade and other payables: ICM Limited Directors ICM Corporate Services (Pty) Ltd Koumbia Bauxite Investment Ltd Nature of transactions Interest relates to loans measured at amortised cost: Interest charged by subsidiaries Interest charged by the parent company Interest charged by Somers Limited Interest charged by GPLPF June 2023 US$ 4,530,826 1 1,700,000 100 21,626,910 2,224,103 8,000,000 – – 377,903 – 181,767 50,000 43,576 226,644 June 2022 US$ 1 1 1 100 16,003,877 1,957,423 – 14,999,626 3,743,623 392,016 5,850,762 231,753 50,000 55,654 – June 2023 US$ June 2022 US$ 61,530 195,143 84,010 449,186 127,209 1,883,525 20,894 331,311 Capital return from Koumbia Bauxite Investment Ltd 2,604,973 – Management fees paid to ICM Limited Accounting fees paid to ICM Corporate Services (Pty) Ltd 764,812 183,815 1,263,154 303,268 Fees paid to the directors Xi Xi M Botha P Sullivan A Liebenberg All fees paid to directors are deemed short term remuneration payments. 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 62 Zeta Resources Limited 22. SEGMENTAL REPORTING The Company has five reportable segments, as described below, which are considered to be the Company’s strategic investment areas. For each investment area, the Company’s chief operating decision maker (“CODM”) (ICM Limited - investment manager) reviews internal management reports on at least a monthly basis. The following summary describes each of the Company’s reportable segments: Gold: investments in companies which explore or mine for gold Nickel: investments in companies which explore or mine for nickel Copper: investments in companies which explore or mine for copper. Mineral exploration: investments in companies which explore or mine for other minerals Administration: activities relating to financing received which does not specifically relate to any one segment as well as administrative activities Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before tax, as included in the internal management reports that are reviewed by the Company’s CODM. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the performance of certain segments relative to other entities that operate within these industries. Information about reportable segments 30 June 2023 Gold US$ Nickel US$ Copper US$ Mineral exploration US$ Admin US$ Total US$ External investment returns 11,373,887 (15,740,636) 12,977,822 (11,300,131) 1,582 (2,687,476) Interest revenue Interest expense Reportable segment (loss)/profit before tax – – – – – – – – 17,666 17,666 (864,198) (864,198) 11,301,390 (15,761,616) 12,749,282 (11,301,231) (1,678,081) (4,690,256) Reportable segment assets 29,754,333 27,063,856 25,957,813 66,708,286 1,759,952 151,244,240 Reportable segment liabilities – – – (85,402) (4,393,629) (4,479,031) Management fee expenses and foreign exchange losses arising from loans are attributed to the admin segment. 30 June 2022 Gold US$ Nickel US$ Copper US$ Mineral exploration US$ Admin US$ Total US$ External investment returns (11,398,646) 23,741,269 (61,017,720) (17,669,665) 6,555 (66,338,207) Interest revenue Interest expense 9,938 – – – – – – – 6,555 16,493 (2,589,664) (2,589,664) Reportable segment (loss)/profit before tax (11,405,787) 23,728,252 (61,052,649) (17,685,308) (2,127,468) (68,542,960) Reportable segment assets 23,878,842 38,927,525 44,271,964 75,018,966 106,963 182,204,260 Reportable segment liabilities – – – – (30,740,823) (30,740,823) Management fee expenses and foreign exchange losses arising from loans are attributed to the admin segment. During the year there were no transactions between segments which resulted in income or expenditure. 63 Annual Report for the year to 30 June 2023 NOTES TO THE FINANCIAL STATEMENTS (continued) 22. SEGMENTAL REPORTING (continued) Geographic information In presenting information on the basis of geography, segment investment returns and segment assets are based on the geographical location of the operating assets of the investment held by the Company. Investment returns Australia Canada Guinea Peru USA Sri Lanka Other countries Investment returns June 2023 US$ (49,999) 11,861,870 (6,833,912) (466,340) (196,899) (4,883,905) (2,118,291) (2,687,476) June 2022 US$ 13,400,599 (60,547,197) (9,253,698) – – (7,962,849) (1,975,062) (66,338,207) The investment gain recognised in the Canadian segment is due primarily to the increase in value of the Company’s investment in Copper Mountain Mining Corporation during the year. Assets Australia Canada Guinea Singapore Peru USA Sri Lanka Other Countries Assets June 2023 US$ 62,897,619 14,393,774 44,900,000 8,021,321 11,750,609 4,970,233 3,805,680 505,004 June 2022 US$ 77,184,818 43,382,929 54,338,886 – – – 6,740,148 557,479 151,244,240 182,204,260 23. EVENTS AFTER REPORTING DATE Hudbay Minerals Inc. Since 30 June 2023, the Company has sold its holding in Hudbay Minerals Inc. for a total consideration of CA$41.7 million. Panoramic Resources Limited rights issue In September 2023, the Company took up 200,000,000 rights in Panoramic Resources Limited’s tranche 2 institutional placement, for a total consideration of A$10 million. 64 Zeta Resources Limited SHAREHOLDER INFORMATION SUBSTANTIAL SHAREHOLDERS As at 4 September 2023 the company had received notification of the following substantial shareholdings: NAME UIL Limited General Provincial Life Pension Fund Limited UIL Limited (and associates) SHARES % OF ISSUED CAPITAL 344,573,832 187,572,396 532,146,228 61.23 33.33 94.57 TOP 20 HOLDINGS OF FULLY PAID ORDINARY SHARES AS AT 4 SEPTEMBER 2023 NAME SHARES % OF ISSUED CAPITAL J P Morgan Nominees Australia Pty Limited General Provincial Life Pension Fund Limited General Provincial Life Pension Fund Limited Peter Ross Sullivan Mr Peter Ross Sullivan HSBC Custody Nominees (Australia) Limited Mr James Noel Sullivan Hardrock Capital Pty Ltd – CGLW No 2 Super Fund A/C Ingot Capital Investments Pty Ltd Hardrock Capital Pty Ltd Cherryburn Pty Ltd – Burrows Super Fund A/C ACS (NSW) Pty Limited - ACS Family Super Fund A/C Mrs Alexandra Maree Giles Mr Stephen Alan McCabe & Mrs Janet Backhouse Nalmor Pty Ltd John Chappell Super Fund A/C Calimo Pty Ltd Rossdale Superannuation Pty Ltd – Rossdale SF A/C Citicorp Nominees Pty Limited Mr Sean Dennehy Willyama Asset Management Pty Ltd Mr Ianaki Semerdziev Total for top 20 344,973,832 180,289,790 7,282,606 4,528,132 4,528,132 1,839,058 1,765,959 1,500,000 1,409,795 900,000 752,320 593,000 483,556 474,439 324,000 246,017 225,406 218,596 210,000 200,000 193,200 61.31 32.04 1.29 0.80 0.80 0.33 0.31 0.27 0.25 0.16 0.13 0.11 0.09 0.08 0.06 0.04 0.04 0.04 0.04 0.04 0.03 552,937,838 98.26 65 Annual Report for the year to 30 June 2023 SHAREHOLDER INFORMATION (continued) DISTRIBUTION SCHEDULE OF ORDINARY SHARES HELD AT 4 SEPTEMBER 2023 HOLDING RANGES Above 0 up to and including 1,000 Above 1,000 up to and including 5,000 Above 5,000 up to and including 10,000 Above 10,000 up to and including 100,000 Above 100,000 Total NO. OF SHARES NO. OF ORDINARY SHAREHOLDERS OF ISSUED CAPITAL 43 840 163 176 30 1,252 13,517 2,219,480 1,220,112 5,126,960 554,131,053 562,711,122 0.00 0.39 0.22 0.91 98.48 100.00 The number of shareholders holding less than a marketable parcel of ordinary shares at 4 September 2023 is 180 and they hold 217,676 securities. VOTING RIGHTS All ordinary shares carry one vote per share without restriction. 66 Zeta Resources Limited COMPANY INFORMATION Zeta Resources Limited Company ARBN: 162 902 481 www.zetaresources.limited DIRECTORS (NON-EXECUTIVE) Peter Sullivan Marthinus (Martin) Botha André Liebenberg Xi Xi REGISTERED OFFICE C/- Conyers Corporate Services (Bermuda) Limited Clarendon House 2 Church Street Hamilton HM 11 Bermuda Company Registration Number: 46795 AUSTRALIAN REGISTERED OFFICE Level 9, 1 York Street Sydney NSW 2000 Australia Telephone: +61 414 224 494 CANADIAN OFFICE ICM CA Research Limited 1800-510 West Georgia Street Vancouver BC V6B 0M3 Canada Telephone: +1 604 227 0458 Email: contactca@icm.limited NEW ZEALAND OFFICE ICM NZ Limited PO Box 25437 Wellington 6140 New Zealand Email: contact@icmnz.co.nz INVESTMENT MANAGER ICM Limited 34 Bermudiana Road Hamilton HM 11 Bermuda Telephone: +1 441 542 9242 Email: contact@icm.limited SECRETARY ICM Limited 34 Bermudiana Road PO Box HM 1748 Hamilton HM GX Bermuda GENERAL ADMINISTRATION ICM Corporate Services (Pty) Ltd Alphen Estate The Great Cellar Peter Cloete Avenue Constantia, 7806 Cape Town South Africa AUDITOR Mazars Mazars House Grand Moorings Precinct Century City 7441 Cape Town South Africa DEPOSITORY JP Morgan Chase Bank NA London Branch 25 Bank Street Canary Wharf London E14 5JP United Kingdom REGISTRAR Automic Pty Ltd GPO Box 5193 Sydney NSW 2001 Australia Telephone: +61 2 9698 5414 STOCK EXCHANGE LISTING The company’s shares are quoted on the Official List of the Australian Securities Exchange. Ticker code: ZER 67 Annual Report for the year to 30 June 2023 SIGNIFICANT STAKES IN A SELECT RANGE OF KEY COMMODITY COMPANIES www.zetaresources.limited
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