ADMIRALTY RESOURCES NL. - Annual Report 2021

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Admiralty Resources NL ABN: 74 010 195 972

FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2021

Admiralty Resources NL – Annual Report 2021

CORPORATE DIRECTORY

Admiralty Resources NL ABN: 74 010 195 972

Directors: Qing Zhong Jian Barclay Bin Li

Share Registry: Boardroom Limited Level 12, 225 George Street Sydney NSW 2000 Australia

Website:

www.ady.com.au

Company Secretary: Jarrod White

Principal place of business:

C/- Traverse Accountants Suite 305, Level 3 35 Lime Street Sydney NSW 2000

Registered Office: C/- Traverse Accountants Suite 305, Level 3 35 Lime Street Sydney NSW 2000

Securities Quoted: Australian Securities Exchange Ltd (ASX) Code: ADY (shares)

Auditors: RSM Australia Partners Level 13, 60 Castlereagh Street Sydney NSW 2000

Bankers: Westpac Banking Corporation 447 Bourke Street Melbourne VIC 3000 Australia

Scotiabank Azul Av. Costanera Sur 2710 Piso 21 Torre A. Las Condes, Santiago Chile

Admiralty Resources Group Structure

Admiralty Resources NL (ACN 010 195 972) has the following subsidiaries:

Admiralty Minerals Chile Pty Ltd
Admiralty Minerals Chile Pty Ltd Agencia en Chile (Chilean branch of Admiralty Minerals Chile Pty Ltd, which owns mineral concessions in Chile)
Bulman Resources Pty Ltd (100% ownership of the Bulman lead/zinc project in the Northern Territory, Australia)
Pyke Hill Resources Pty Ltd (has a 50% ownership interest in the Pyke Hill Nickel/Cobalt resource in Western Australia subject to an exploitation agreement with Cougar Metals NL)
Admiralty Resources (Hong Kong) Limited
ADY Investments Pty Ltd (currently inactive)
- Fortune Global Holdings Corporation (currently inactive)
Servicios Admiralty Resources Chile Limitada

National Australia Bank Level 13, Tower B, 799 Pacific Highway Chatswood NSW 2067 Australia

Lawyers: Addisons Lawyers Noguera, Larraín & Dulanto Level 12, 60 Carrington Abogados Street El Golf 40, Piso 11 Sydney NSW 2000 Las Condes, Santiago Australia Chile

Admiralty Resources NL – Annual Report 2021

	Page
Chairman’s Report 2021	2
Corporate Governance Statement	3
Directors’ Report	12
Directors’ Declaration	22
Auditor’s Independence Declaration	23
Consolidated Statement of Profit or Loss and Other Comprehensive Income	24
Consolidated Statement of Financial Position	25
Consolidated Statement of Changes in Equity	26
Consolidated Statement of Cash Flows	27
Notes to the Financial Statements	28
Independent Auditor’s Report	56
ASX Additional Information	60

Admiralty Resources NL – Annual Report 2021

CHAIRMAN’S REPORT

Dear Shareholders,

This has been an exciting year for the Group with a number of events transpiring which have the potential to be transformational for the Group.

Soberana

The Company is engaged with the liquidator of Rocterra. ADY will continue to keep the market informed as progress is made during this process.

Mariposa

The existing arrangement under the Co-op Agreement saw Hainan fund and operate the Mariposa project exclusively, with the Company receiving a royalty payment on success of the project (refer to ASX Announcement of 15 February 2021 for further details).

Having reviewed the Company’s overall portfolio and in particular the strategy around the commercialisation of the Group’s Chilean mining assets, it was determined that in the current iron ore market and based on the Groups significant historical expenditure on the project, that receiving a royalty

payment was not the best commercial pathway for the Group to monetise its interest in the Mariposa project.

In renegotiating the Co-op Agreement, the Company’s focus was to restructure the arrangement such that the Company’s shareholders would receive a more significant return in consideration for reverting to being a direct participant in the development of the Mariposa project.

The effect of the Term Sheet is to terminate the existing Co Op Agreement in favour of the terms newly negotiated which mean that the Company will revert to being an operator of the Mariposa Project and that Hainan and Admiralty would jointly seek to provide the capital and resources required to develop an operating mine.

Corporate Activities

The Company continues to tightly control costs as it plans for the next development stage of its key projects.

In July 2021, the Company completed a successful capital raising of $2.6 million to institutional and sophisticated investors (the Placement) to fund the Company’s participation in a joint venture with Hainan Xinlei Mining Management Co Ltd (Hainan) on the Mariposa project.

The Placement was offered at $0.018 per share, a 14.29% discount to the last traded price and a 8.58% discount to the 5 day VWAP. The Company will issue 144,444,445 Fully Paid Ordinary Shares as a result of the Placement. These securities will be issued under the Company’s ASX Listing Rule 7.1 placement capacity.

Looking Forward to 2022

On behalf of the Directors, I would like to thank you for your ongoing support as we move into 2022 with a focus on developing our Company into a direct and indirect producer.

Yours sincerely,

Bin Li Chairperson 30 September 2021

Admiralty Resources NL – Annual Report 2021

CORPORATE GOVERNANCE STATEMENT

COMPLIANCE WITH ASX CORPORATE GOVERNANCE RECOMMENDATIONS

Introduction

The Directors of Admiralty Resources NL (the “Company”) are committed to and support the implementation of best practice in corporate governance, applied in a manner that is appropriate to the Company’s circumstances. These policies and procedures are summarised below.

The Company’s corporate governance practices and procedures are directed to provide an appropriate framework for the pursuit of this objective, while protecting the rights and interests of shareholders and ensuring that the Company conducts its business lawfully and ethically. It influences how the objectives of the Company are achieved, how risk is monitored and assessed and how performance is optimised.

The Board and management are committed to corporate governance and, to the extent that they are applicable to the Company, have adopted the Corporate Governance Principles as set out in the Corporate Governance Principles and Recommendation (4[th] Edition) as published by the ASX Corporate Governance Council, which came into effect on 1 January 2020.

The Board of Directors has put in place a framework of internal policies, procedures and guidelines for the governance of the Company, which has appropriate regard to the ASX Principles and Recommendations.

Whilst the Board has demonstrated, and continues to demonstrate, its commitment to best practice in corporate governance, it emphasises that good corporate governance is only one factor contributing to the success of the Company's operations.

The governance framework is reviewed annually by the Board with the object of achieving at all times the highest standards of corporate governance and ethical corporate behaviour.

Additional information about the Company's corporate governance practices is set out on the Company's website at www.ady.com.au .

Council Principle 1: Lay solid foundations for management and oversight

Role of the Board

The Board's primary role is the protection and enhancement of medium to long term shareholder value. To fulfil this role, the Board is accountable to shareholders and regulators for the activities and performance of the Company and has overall responsibility for the Company’s core business together with its corporate governance. The Board provides guidance to the management team that manages the business and affairs of the Company.

Responsibility of the Board

The corporate governance framework includes guidelines covering Board membership and operation that formalise the functions and responsibilities of the Board, including the nature of matters referred to the Board, and also contain guidelines for the operation and management of the Board.

The Board is collectively responsible for promoting the success of the Company by:

Overseeing the Company, including its control and accountability systems and the performance of the Managing Director;
Review and ratification of the integrity of the Company’s financial management and reporting systems and processes;
Establishment and monitoring of risk assessment and management, internal compliance and control procedures;

Admiralty Resources NL – Annual Report 2021

CORPORATE GOVERNANCE STATEMENT

Review and approval of the Company’s yearly and half-yearly financial reports and other financial reporting in compliance with the applicable accounting standards, the Listing Rules and the Australian Securities Exchange and the Corporations Act 2001;
Appointment, removal and remuneration of and delegation of authority to the Managing Director;
Appointment, removal and monitoring of the performance of the Company Secretary and the Company’s external accountants;
Appointment of, liaison with, and regular review of the effectiveness and independence of the Company’s external auditor;
Regularly receiving, reviewing and applying reports and recommendations from the Managing Director concerning significant aspects of the Company’s business and operations;
Approving and monitoring financial and other reporting;
Setting the strategic direction of the Company and monitoring the progress of those strategies;
Informing itself about and considering the implications of events and circumstances that could significantly affect the Company;
Taking responsibility for corporate governance;
Ensuring that appropriate policies and procedures are in place for sound corporate governance including compliance with continuous disclosure requirements and other legal compliance; and
Reviewing and ratifying systems for health, safety and environment management; risk and internal control and regulatory compliance for both employees and contractors.

The Board must convene regular meetings with such frequency as is sufficient to appropriately discharge its responsibilities. Between regular meetings it will also ensure that important matters are addressed by way of circular resolutions. The Board may, from time to time, delegate some of the responsibilities listed above to its senior management team.

Responsibility of the Managing Director:

Responsibility for management of the Company’s business and affairs, within the scope of the governance framework established by the Board, is delegated to the Managing Director, and subject to the oversight and supervision of the Board. It is the responsibility of the Managing Director, acting within his delegated authority, to manage the Company and its business.

The responsibilities of the Managing Director include:

developing and recommending to the Board strategies, business plans and annual budgets for the Company;
implementing the strategies, business plans and budgets adopted by the Board;
managing resources within budgets approved by the Board;
ensuring compliance with applicable laws and regulations; and
ensuring the Board is given sufficient information to enable it to perform its functions, set strategies and monitor performance.

Appointment, induction and training

In selecting new Directors, the Board must ensure that the candidate has the appropriate range of skills, experience and expertise that will best complement Board effectiveness.

The Company ensures that appropriate background checks are undertaken regarding the potential new Director’s character, experience, education, criminal record and bankruptcy history before appointing or putting forward a Director to shareholders for election as a Director.

Admiralty Resources NL – Annual Report 2021

CORPORATE GOVERNANCE STATEMENT

The Company also provides its shareholders with all material information in its possession that is relevant to their decision on whether or not to elect or re-elect a Director through the Notice of Meeting, Director Resumes and other information contained in the Annual Report and on the Company’s website.

Upon appointment, each Director will receive a written agreement which sets out the terms of their appointment. New Directors will also attend an induction program where they are briefed on the Company’s:

operations and the industry sectors in which it operates;
financial, strategic, operational and risk management position;
governance matters, policies and procedures; and
the Director and committee member’s rights, duties and responsibilities.

Directors are also provided with regular professional development opportunities to develop and maintain the skills and knowledge needed to perform their role as Directors effectively.

Company Secretary

All Directors have access to the Company Secretary. The Company Secretary is accountable to the Board, through the Chair, on all corporate governance matters.

The Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board.

The role of the Company Secretary includes:

advising the Board and its committees (as established from time to time) on governance matters;
monitoring that Board and committee policy and procedures are followed;
coordinating the timely completion and despatch of board and committee papers;
ensuring that the business at Board and committee meetings is accurately captured in the minutes; and
helping to organise and facilitate the induction and professional development of directors.

Diversity Policy

The Company is committed to ensuring an inclusive workplace that encourages and embraces diversity, but the current Board has not established a Diversity Policy due to the limited size of the Board and operations.

The respective proportions of men and women on the Board, in senior executive positions and across the Company are as below:

Company are as below:
	Men	Women
Board	33%	67%
Senior executive*	-%	100%

Managing Director

Performance Review of Directors

As part of the annual review of the performance of the Board, the appropriate size, composition and terms and conditions of appointment to and retirement from the Board are considered. The level of remuneration for nonexecutive directors is considered with regard to practices of other public companies and the aggregate amount of fees approved by shareholders. The Board also reviews the appropriate criteria for Board membership collectively.

Admiralty Resources NL – Annual Report 2021

CORPORATE GOVERNANCE STATEMENT

A formal Board review was not undertaken in the current year as the Board as the Directors have agreed to defer payment of their fees to manage working capital pressures.

Performance review of Executives

A performance evaluation of the Managing Director is conducted annually. The Managing Director is requested to provide feedback on how they feel they have performed over the 12 month period (360 degree feedback).

A formal Management review was not undertaken in the current year as the Board as the Directors have agreed to defer payment of their fees to manage working capital pressures.

Council Principle 2: Structure the board to add value

The Company considers that each Director possesses skills and experience suitable for building the Company. The skills, experience and expertise relevant to the position of each Director (who is in office at the date of the Annual Report and their term of office) are detailed in the Directors’ Report. To add value to the Company, the Board is structured to discharge adequately its responsibilities and duties in respect of the size and scale of operations.

Nomination

Due to the relatively small size of the Company and the nature of the Company’s core business, the Board has not created a Nominations Committee as these matters are considered by the Board.

The Board addresses succession issues and ensures the Board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively through regular review and assessment.

Board Skills and Experience

The length of service of each Director is set out in the Directors’ Report of the Annual Report. The skills and experience of the directors are set out in the matrix below.

Experience	Industry
• Mining investment • Mine engineering, development and management • Capital raising management • Corporate Finance	• Mining & Geology • Investment Banking • Legal • Finance and Accounting

Independent Directors

Currently, the Board does not have a majority of Directors which are considered to be independent. However, the Company believes it has the right mix of skills, independence and experience on the Board at this time, given the Company’s current business objectives and stage of growth.

At all times during the year, the Company has maintained a separation between the Chair and Managing Director roles.

Admiralty Resources NL – Annual Report 2021

CORPORATE GOVERNANCE STATEMENT

The following table provides information in relation to the independence of Directors as at year end:

Name	Position	Independent	Factors affecting independence	Length of
				Service
Bin Li	Non-Executive Chairman	Yes	Nominated by majority shareholder	6 years
			and elected as Non-Executive Director
			at General Meeting of Members on 21
			September 2014.
QingZhong	Managing Director	No	Employed in an executive capacity as	6 years,
			Managing Director.	10 months
Jian Barclay	Executive Director	Yes	There are no known factors affecting	1 year,
			independence.	4 months

Bin Li and Jian Barclay both hold shares in the company but their interests are considered to be immaterial by the Board and will not interfere with the director’s independence.

Induction and Training

When appointed to the Board, a new director will receive an induction appropriate to their experience.

Directors are encouraged to seek professional development to develop and maintain the skills and knowledge needed to perform their role as directors effectively.

Council Principle 3: Instil a culture of acting lawfully, ethically and responsibly

Core Values

Due to the size of the Board and the Company not having permanent employees, the Board has not set expressly articulated its values. However, the Board is committed to a cultivating a corporate culture whereby all directors and employees behave acting lawfully, ethically and responsibly.

Code of Conduct

The Board has adopted a Corporate Code of Conduct to establish and encourage observance of standards of ethical and responsible decision making and behaviour that is necessary to maintain confidence in the Company’s integrity. This enables Directors to recognise legal, social and other obligations and guide compliance to the Company’s shareholders and stakeholders.

All staff and employees are required to report any breach of the Code to the Board.

Directors are required to disclose to the Board actual or potential conflicts of interest that may or might reasonably be thought to exist in so far as it affects the activities of the Company. Directors are required to take actions to ensure they act in accordance with the Corporations Act. This may include taking no part in discussions or the decision making process, where a conflict exists.

Whistleblower Policy

The Board has adopted a Whistleblower Policy and all employees are encouraged to speak up about any unlawful, unethical or irresponsible behaviour within the organisation.

The Company’s anti-corruption policy is included as part of its Code of Conduct.

Admiralty Resources NL – Annual Report 2021

CORPORATE GOVERNANCE STATEMENT

Council Principle 4: Safeguard integrity in corporate reporting

Board Committees

The Board has not established an Audit Committee due to the limited size of the Board and the limited current activities of the Company.

Instead the function will be undertaken by the full Board in accordance with policies and procedures outlined in the Audit Committee Charter:

overseeing the reliability and integrity of the Company’s accounting policies, financial reporting and disclosure practices;
reviewing financial reporting, due diligence, financial systems integrity and business risks;
reviewing and monitoring the Company’s external Audit and Risk management procedures;
monitoring and reviewing the effectiveness of the Company’s internal compliance and control;
reviewing the external auditor’s qualifications and independence;
reviewing the performance of the external auditor;
assessment of whether the Company’s external reporting is consistent with Board Members’ information and knowledge and is adequate for shareholder needs; and
ensuring proper procedures for the selection, appointment or removal of the external auditor and rotation of the external audit engagement partner.

CEO Declaration under 295A of the Corporations Act 2001

The Company received from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

External Auditor

RSM Australia Partners are the appointed external auditors of the Company and were appointed at the Company’s 2015 Annual General Meeting. The performance of the external auditor is reviewed periodically and, if necessary, applications for tender of external audit services will be requested as deemed appropriate.

It is the practice of the Company to require the external auditor to attend the Annual General Meeting and be available to answer shareholders questions about the conduct of the annual audit and content of the auditor’s report.

An analysis of fees paid to the external auditors, including a breakdown of any fees for any non-audit services, is provided in Note 7 to the financial statements. The Directors are satisfied that the provision of non-audit services during the year by RSM Australia Partners is compatible with the general standard of independence as imposed by the Corporations Act. The external auditors provide an annual declaration of their independence to the Company.

Verify the integrity of any periodic corporate report it releases to the market that is not audited or reviewed by an external auditor

In the limited event where the unaudited financial information is released to the market, such information is prepared by independent qualified accountants.

Admiralty Resources NL – Annual Report 2021

CORPORATE GOVERNANCE STATEMENT

Council Principle 5: Make timely and balanced disclosure

Continuous Disclosure

All Directors have been made aware of the continuous disclosure requirements of the ASX Listing Rules and have been provided with a copy of the relevant rules and guidance notes. Continuous disclosure is included on the agenda for all formal meetings of the directors. Directors are made aware of the constraints applicable to private briefings and broker and analyst presentations.

The Directors have allocated responsibility to each director and the company secretary to alert the Board to any operational or regulatory matters respectively which they consider may require disclosure to the market under the continuous disclosure requirements of the ASX Listing Rules. The Directors then consider and approve the form of any such announcement.

All Company announcements require the approval of the board with provision for available directors to approve urgent announcements. The company secretary is responsible for communication with ASX.

All new and substantive investor or analyst presentations will be released to the ASX.

The Annual Report contains a review of operations.

Council Principle 6: Respect the rights of shareholders

Communication Policy

The Company has guidelines to promote effective communication with shareholders and encourage effective participation through a policy of open, balanced disclosure of all material information with respect to the Company’s affairs to shareholders, regulatory authorities and stakeholders. Information will be communicated to shareholders as follows:

The Annual Report is distributed to all shareholders. The Board ensures that the Annual Report includes relevant information about the operations of the consolidated entity during the year, changes in the state of affairs of the consolidated entity and details of future developments, in addition to the other disclosures required by the Corporations Act. The Annual Report is made available on the Company’s website and is provided in hard copy format to shareholder who requests it.
The Half-Year Report contains summarised financial information and a review of the operations of the consolidated entity during the year. The half-year audited financial report is prepared in accordance with the requirements of applicable Accounting Standards and the Corporations Act and is lodged with the Australian Securities Exchange. The Half-Year Report is made available on the Company’s website and is sent to any shareholder who requests it.
The Quarterly Report contains summarised cash flow financial information and details about the Company’s activities during the quarter. The Quarterly Report is made available on the Company’s website and is sent to any shareholder who requests it.
Announcements in accordance with the ASX Listing Rules and the Continuous Disclosure obligations;
A general meeting of shareholders held at least annually, including providing them with notice of meeting and proxy form; and
The Company's website is well promoted to shareholders and shareholders may register to receive updates, either by email or in hard copy.

The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the consolidated entity’s strategy and goals. Important issues are presented to the shareholders as resolutions. The Company also ensures that the audit partner attends the Annual General Meeting.

Admiralty Resources NL – Annual Report 2021

CORPORATE GOVERNANCE STATEMENT

The Company endeavours to ensure that all substantive resolutions at a meeting of security holders are decided by a poll rather than by a show of hands.

Company's Website

The Company maintains a website at: www.ady.com.au

On its website, the Company makes the following information available on a regular and up-to-date basis:

Company announcements and Latest information briefings;
Notices of meetings and explanatory materials; and
Quarterly, Half-Year and Annual Reports.

The website is being continuously updated with any information the Directors and management may feel is material. All relevant announcements made to the market, and related information, are placed on the website after they have been released to the Australian Securities Exchange.

The website also provides information about the last three years press releases / announcements including three years of financial data.

Council Principle 7: Recognise and manage risk

Oversight and Management of Material Business Risks

The Company is aware of the risks involved in an exploration and mining company and the specific uncertainties for the Company continue to be regularly monitored and reviewed by the Board. All proposals reviewed by the Board include a conscious consideration of the issues and risks of the proposal.

It has not established a separate committee to deal with these matters as the directors consider the size of the Company and its operations does not warrant a separate committee at this time.

The potential exposures associated with operating the Company are managed by the Managing Director, the Company Secretary and consultants who have significant broad-ranging industry experience, who work together as a team and regularly share information on current activities. During the year, the Managing Director has disclosed to the Board the effectiveness of the Company’s management of the material business risks.

Additionally, it is the responsibility of the Board to assess the adequacy of the Company’s internal control systems and that its financial affairs comply with applicable laws, regulations and professional practice. The Managing Director and the Company Secretary declare in writing to the Board that the financial reporting, risk management and associated compliance controls have been assessed and found to be operating efficiently and effectively.

The Managing Director and the Company Secretary make this representation prior to the Directors’ approval of the release of the annual and six monthly accounts. This representation is made after enquiry of, and representation by, appropriate levels of management.

This assessment was completed as part of the 30 June 2021 Annual Report and 31 December 2020 Half Year Report.

Internal Audit

The Company does not have an internal audit function, and due to its size and current activities the Board does not believe one is warranted at this time. The Board evaluates and monitors internal control processes to continually improving the effectiveness of its risk management.

Admiralty Resources NL – Annual Report 2021

CORPORATE GOVERNANCE STATEMENT

Material exposure to economic, environmental and social sustainability risks

This information is disclosed in Note 24 – Financial Risk Management in the Annual Report.

Council Principle 8: Remunerate fairly and responsibly

Remuneration Committee

Due to the relatively small size of the Company and its operations, the Board does not consider it appropriate, at this time, to form a separate committee to deal with executive remuneration. The Board as a whole establishes and reviews annually the remuneration of the executive directors, senior executives and employees.

The Board’s policy is to remunerate Executive and Non-Executive Directors based on external data including information published by various recruiting firms, the time commitment of Directors, the size and scale of the Company’s operations, the quantum of the tasks in the initial phases of development of the Company, market capitalisation and various other factors.

The Company distinguishes the structure of Non-Executive Directors’ remuneration from that of Executive Directors.

There are no elements of remuneration related to performance paid to Non-Executive Directors and there are currently no schemes for retirement benefits for Non-Executive Directors. Non-Executive Director’s fees are determined within an aggregate pool limit, which is periodically recommended for approval by shareholders.

The Company does not have an equity-based remuneration scheme.

Admiralty Resources NL – Annual Report 2021

DIRECTORS’ REPORT

The Directors of Admiralty Resources NL submit the Annual Financial Report of the Company for the financial year ended 30 June 2021 which comprises the results of Admiralty Resources NL and the entities it controlled during the year.

DIRECTORS

The names and details of the Directors of Admiralty Resources NL (“Company”) in office during the financial year and until the date of this report are set out below. Directors have been in office for the entire period unless otherwise stated.

Bin Li Non-Executive Chairperson/Non-Executive Director Qing Zhong Managing Director Jian Barclay Executive Director

Managing Director and Chief Executive Officer

Mrs Qing Zhong is Managing Director and Chief Executive Officer.

Company Secretary

Mr Jarrod White

BOARD OF DIRECTORS

The names and particulars of the Directors of the Company during or since the end of the financial year are:

Qing Zhong

Managing and Chief Executive Officer

Mrs Zhong is the Managing Director and Chief Executive Officer of the company and has held these positions for the entire financial year.

Mrs Zhong holds a Bachelor of Arts and is a Director of Sino Investment & Holdings Pty Ltd who is a cornerstone investor in Admiralty Resources NL. She is also a Director of a number of unlisted Australian companies that have significant investments in the property market and the mining industry.

Mrs Zhong has no special responsibilities in the company.

Bin Li

Non-Executive Chairperson

Mr Li is the Non-Executive Chairman of the company and has held this position for the entire financial year.

Mr Li holds a Bachelor of Engineering and is a senior mining engineer with over 28 years’ experience in metallurgy and a graduate of mining and metallurgy from the Jiang Xi Metallurgy University and has brought this relevant technical experience with him to the Board.

His past appointments include being Vice-Director of the Yang Shan iron mine and Mine Director at Shuang Qi Hill where he was in charge of the establishment of the metallurgical plant and gold mine in the Fu Jian Province. Other current appointments included his Chairmanship of Wan Qi Technology Limited and Xia Men Si Mai Da Investment Limited.

Mr Li has no special responsibilities in the company.

Admiralty Resources NL – Annual Report 2021

DIRECTORS’ REPORT

Jian Barclay

Executive Director

Mrs Barclay is an Executive Director of the Company and has held this position for the entire financial year.

Mrs Barclay holds a Master’s Degree in Business Management from Monash University and has been an integral part of the Admiralty team since July 2017 working closely with the Managing Director. Mrs Barclay is a director of 3D Pencil Pty Ltd and JB Admin Pty Ltd.

Mrs Barclay had no special responsibilities in the company.

Jarrod Travers White, B. Bus, CA, CTA

Company Secretary

Mr White is the Company Secretary of the company and has held this position for the entire financial year.

Mr White is a Chartered Accountant and Director of Traverse Accountants Pty Ltd. Mr White has been associated with Admiralty Resources NL since January 2014 when he was engaged as the external consultant providing corporate, financial, and taxation services to the Company.

In conjunction with his Corporate Advisory roles, Mr White has been appointed Company Secretary and Chief Financial Officer of several other listed entities that operate on the Australian Securities Exchange and London Stock Exchange and has a strong knowledge of corporate governance and compliance.

Admiralty Resources NL – Annual Report 2021

DIRECTORS’ REPORT

REMUNERATION REPORT – AUDITED

Remuneration policy for Directors and Executives

The matters of remuneration for Directors are usually dealt with by the Board of Directors and are determined according to merit and market considerations. Remuneration levels are not directly linked to the performance of the consolidated entity.

Remuneration

The Board’s policy is to remunerate executive and non-executive Directors based on external data including information published by various recruiting firms, the time commitment of Directors, the size and scale of Admiralty’s operations, the quantum of the tasks in the initial phases of development of the Company, market capitalisation and various other factors.

Director and Executive details

The Directors and executives of Admiralty Resources NL during or since the end of the financial year were:

Bin Li Non-Executive Chairperson Qing Zhong Managing Director Jian Barclay Executive Director Jarrod White Company Secretary

Principles used to determine the nature and amount of remuneration

The objective of the Company’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered.

	*Duration of* *Contract*	*Termination Notice of* *Contract*	*Termination Payment* *provided under Contract*
*Executives*
QingZhong1	N/A	N/A	NIL
*Non – executives*
Bin Li1	N/A	N/A	NIL
Hanrui Zhong1	N/A	N/A	NIL
Jian Barclay	N/A	N/A	NIL

(1) It is noted that these Directors have not been remunerated for their services in the financial year.

Non – Executive Directors

Fees and payments to non-executive Directors reflect the demands, which are made on, and the responsibilities of, the Directors. The Board reviews the fees annually and all remuneration is fixed. Non–executive Directors’ fees are determined within an aggregate Director’s pool limit, which is periodically recommended for approval by shareholders. The maximum pool currently stands at $350,000.

Short - term incentives

Remuneration packages include the key elements of wages, consulting fees and retirement benefits.

Retirement benefits

Other than statutory superannuation, there are currently no other retirement allowances for Directors.

Admiralty Resources NL – Annual Report 2021

DIRECTORS’ REPORT

REMUNERATION REPORT – AUDITED

Executive remuneration

Fees and payments to executives reflect the demands which are made on, and the responsibilities of the executive and all remuneration is fixed. The company did not engage a remuneration consultant during the year.

Elements of remuneration related to performance

There are currently no elements of remuneration related to performance.

The following table discloses the remuneration of the key Executives and Directors of the consolidated entity:

	*Salary & Fees* *Retirement* *Benefits* *Non-monetary* *Share Based* *Payments* *Consisting of* *Share Based* *Payments* *Total*
*2021*	$ $ $ % $
Bin Li1 Qing Zhong1 Jian Barclay *Total*	- - - - - - - - - - - 10,000 - - 10,000
	- 10,000 - - 10,000

(1) It is noted that the directors have not been remunerated for their services in the financial year.

	*Salary & Fees* *Retirement* *Benefits* *Non-monetary* *Share Based* *Payments* *Consisting of* *Share Based* *Payments* *Total*
*2020*	$ $ $ % $
Bin Li1 Qing Zhong1 Jian Barclay1 Hanrui Zhong1 *Total*	- - - - - - - - - - - - - - - - - - - -
	- - - - -

(1) It is noted that these directors have not been remunerated for their services in the financial year.

KMP Shareholdings

The number of ordinary shares in the Company held by each KMP of the Group during the financial year is as follows:

			Issued on
	Balance at	Granted as	Exercise of
	Beginning of	Remuneration	Options during	Other Changes	Balance at End
30 June 2021	Year	during the Year	the Year	during the Year	of Year
Bin Li	25,000,000	-	-	-	25,000,000
Qing Zhong	217,611,465	-	-	-	217,611,465
Jian Barclay	8,063,604	-	-	-	8,063,604
Total	250,675,069	-	-	-	250,675,069

Admiralty Resources NL – Annual Report 2021

DIRECTORS’ REPORT

REMUNERATION REPORT – AUDITED

30 June 2020	Balance at Beginning of Year Granted as Remuneration during the Year Issued on Exercise of Options during the Year Other Changes during the Year Balance at End of Year
Bin Li Qing Zhong Jian Barclay Total	25,000,000 - - - 25,000,000 217,611,465 - - - 217,611,465 8,063,6041 - - - 8,063,604
	250,675,069 - - - 250,675,069

(1) Opening balance at time of appointment.

Value of shares and options granted to Directors and Executives

No shares or options were issued a part of the Director’s and/or Executives remuneration in the 2021 Financial Year.

This concludes the remuneration report which is audited.

Admiralty Resources NL – Annual Report 2021

DIRECTORS’ REPORT

OPERATING AND FINANCIAL REVIEW

Principal Activities

The Consolidated Entity’s principal activities during the course of the financial year were the exploration for and development of economic mineral deposits.

Operating Results

The consolidated total comprehensive loss for the year amounted to $737,317 (2020 loss: $1,545,840).

REVIEW OF OPERATIONS

Admiralty Resources NL is a public diversified mineral exploration company listed on the Australian Securities Exchange (ASX: ADY) with mineral interests in Chile and in Australia.

Admiralty’s flagship projects are its iron ore districts in Chile: Harper South, Pampa Tololo and El Cojin. The districts are located in prime locations, with close and easy access to the Pan-American Highway (a major national route), a railway, a power line and operating shipping ports.

Chile

Harper South District

The Harper South district (“Harper South”) lies 15 km south west of the city of Vallenar in the Atacama Region of Chile, covers an area of approximately 2,498 hectares, where exploration to date has identified six targets via high-resolution ground magnetic surveys: Mariposa, Soberana, La Chulula, Negrita, Mal Pelo and La Vaca.

Harper South is the most advanced district in respect of the Company’s exploration portfolio, with the three most important projects in Admiralty’s exploration pipeline being Mariposa, Soberana and La Chulula.

Location map showing location of Admiralty’s Harper South District and the three primary targets.

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Mariposa

Mariposa is Admiralty’s most developed target showing resources, as announced on 25 January 2013. The following table shows Mineral Resource Statement quantifies the resources at Mariposa at 174.5 Mt at 24.5% Fe at a cut-off grade of 15% Fe in the Measured, Indicated and Inferred categories as follows:

Admiralty Resources NL – Annual Report 2021

DIRECTORS’ REPORT

Cut-off grade FeT %	Measured Resources (Mt)	Indicated Resources (Mt)	Inferred Resources (Mt)	Total Resources (Mt)	Average FeT (%)	Average FeMag (%)
15	43.4	7.6	123.5	174.5	24.5	18.0

Refer to ASX announcement of 25 January 2013 for full details of the updated resource estimation

In addition to the increase in the total resources for Mariposa, this Resource Evaluation recorded a maiden Measured Resource of 43.4 Mt and it measured the magnetic iron content of the resource, which is a crucial aspect for the plant design and equipment selection for a dry magnetic separation process.

Soberana

Soberana currently ranks as Admiralty’s second most developed target with a completed Scoping Study showing resources, as announced on 15 January 2013. The following table shows the inferred resource statement has been prepared by Redco Mining Engineers Ltd. (“ Redco ”), a Chilean engineering firm. The Soberana mineral resource estimate has been classified as inferred resources and was prepared in accordance with the guidelines of the JORC Code (2004) and is as follows:

Cut-off grade	Measured Resources	Indicated Resources	Inferred Resources	Total Resources	Average FeT
FeT %	(Mt)	(Mt)	(Mt)	(Mt)	(%)
15	-	-	90.2	90.2	24.5

Refer to ASX announcement of 15 January 2013 for full details of the updated resource estimation.

Dry magnetic separation process

Our magnetite iron ores in Chile requires beneficiation before shipping in order to reduce freight costs. Lack of immediately available water drives us towards using a dry magnetic separation process. Maximising the metallurgical recovery of our iron in this process is highly advantageous. Fortunately, the use of a dry magnetic separation process also delivers two other positive outcomes – low environmental impact and low capital costs.

– Favourable Environmental Qualification Soberana Project

On 13 August 2015, the Republic of Chile through the Environmental Evaluation Commission of the Atacama Region has made a favourable environmental qualification for Admiralty’s Soberana project. The Commission has certified that the project complies with the requirements of environmental nature as contained in Environmental Permits 88, 91, 93, 94, 96, 99 and 106 as listed in the items of the Regulation of the System of Environmental Impact Evaluation. The Commission assessed the project on an assumed workforce of 245 people and annual production of 540,000 tonnes of iron concentrate grading 64% FeT.

La Chulula

La Chulula is a project located 15km south of the city of Vallenar, III Region, Chile. La Chulula was marked as a high-priority target for Admiralty following the results of the 3-D inversion and interpretation of the results of the high-resolution ground magnetic survey undertaken in 2011, which showed La Chulula as the ore body with highest susceptibility and depth within Harper South.

Admiralty Resources NL – Annual Report 2021

DIRECTORS’ REPORT

Maiden Mineral Resources Estimate Update

As announced to the market on 16 April 2015 Admiralty commissioned Golder Associates S.A. (Golder) to prepare a Resource Evaluation Statement for the La Chulula project. The resource estimate is based on the results obtained from the reverse circulation and diamond drilling campaign completed in 2012 and was prepared in accordance with the guidelines of Australasian Code for Reporting Joint Ore Reserves Committee (2012). The Mineral Resources Estimate quantifies the resources at La Chulula at 96 Mt at 24% Fe for a 15% Fecut off the inferred category and is as follows.

Project Name	Measured Resources	Indicated Resources	Inferred Resources	Total Resources	Average FeT
	(Mt)	(Mt)	(Mt)	(Mt)	(%)
Mariposa	43.4	7.6	123.5	174.5	24.5
La Chulula	-	-	96.0	96.0	24.0
Soberana	-	-	90.2	90.2	24.5
TOTAL	43.4	7.6	309.7	360.7	24.4

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

Subsequent to 30 June 2021, the Group continues to monitor the impact of COVID-19 on its projects.

In July 2021 the Company has successfully completed a capital raising of $2.6 million to institutional and sophisticated investors to fund the Company’s participation in a joint venture with Hainan Xinlei Mining Management Co Ltd (Hainan) on the Mariposa project.

On 19 August 2021, Admiralty Resources NL provided an update on its negotiations with Hainan Xinlei Mining Management Co Ltd (Hainan) with respect to the binding term sheet announced on 18 June 2021.

There have been no significant events subsequent to the reporting date.

DIVIDENDS PAID OR RECOMMENDED

No dividends were paid during the year, nor are any recommended at 30 June 2021 (2020: $NIL).

FINANCIAL POSITION

The net assets of the economic entity have decreased over the financial period to $10,805,861 (2020: $11,543,178). The decrease in net assets is largely driven by the increased borrowings in the year which is based on the derivative value of the convertible notes draw downs in the financial year and the related party loan.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

During the financial year there was no significant change in the state of affairs of the consolidated entity other than that referred to in the financial statements or notes thereto.

Admiralty Resources NL – Annual Report 2021

DIRECTORS’ REPORT

MEETINGS OF DIRECTORS

During the financial year, 2 Directors’ meetings were held. Attendance at the meetings were as follows:

	*Board of Directors*	*Board of Directors*	*Audit and Risk*	*Audit and Risk*
			*Committee*
	*Held*	*Attended*	*Held*	*Attended*
Bin Li	2	1	-	-
Qing Zhong	2	2	-	-
Jian Barclay	2	2	-	-

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

The Company is re-focusing its direction to enhance shareholder value by establishing strong relationships in China and is working to build a management team suited to the new direction of Admiralty. The company plans to use new partnerships in China to enhance published resources and reserves in Chile and work increase access to infrastructure.

ENVIRONMENTAL REGULATIONS

The consolidated entity aims to ensure that the highest standard of environmental care is achieved. The Board maintains the responsibility to ensure that the consolidated entity’s environmental policies are adhered to and the consolidated entity is aware of and is in compliance with all relevant environmental legislation. There have been no environmental breaches during the 2021 financial year.

INDEMNIFICATIONS OF OFFICERS AND AUDITORS

During or since the end of the financial year, the Company has not indemnified or made a relevant agreement to indemnify an Officer or Auditor of the Company or of any related body corporate against a liability incurred as such an Officer or Auditor. The Company has paid a premium for a policy of insurance to cover legal liability and expenses in the event of any legal action against an Officer arising from their actions as Officers of the Company. The contract of insurance prohibits disclosure of the nature of liability and the amount of the premium.

ROUNDING OF AMOUNTS

The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Class Order to the nearest dollar.

Admiralty Resources NL – Annual Report 2021

DIRECTORS’ REPORT

NON-AUDIT SERVICES

The Board, in accordance with advice from the Audit and Risk Committee, is satisfied that the provision of nonaudit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the services disclosed below did not compromise the independence of the external auditor for the following reasons:

all non-audit services are reviewed and approved by the Audit Committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and
the nature of the audit services do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.

During the year, no non-audit services were provided by RSM Australia Partners, the Company’s Auditors (2020: $NIL).

AUDITORS INDEPENDENCE DECLARATION

The auditor’s independence declaration for the year ended 30 June 2021 has been received and can be found on page 25 of the Annual Report.

CORPORATE GOVERNANCE

The Directors recognise the Australian Securities Exchange Corporate Governance Council’s Principles Recommendations and considers that the Company substantially complies with those guidelines. The Corporate Governance Statement and disclosures of the Company are contained on pages 3 to 11 of the Annual Report.

Signed in accordance with a resolution of the Board of Directors made pursuant to s298 (2) of Corporations Act 2001.

On behalf of the Directors

Qing Zhong Managing Director 30 September 2021

Admiralty Resources NL – Annual Report 2021

DIRECTORS’ DECLARATION

The directors of the company declare that, in the opinion of the directors:

(a) the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including
(i) giving a true and fair view of the financial position and performance of the consolidated entity; and
(ii)complying with Australian Accounting Standards, including the Interpretations, and the Corporations Regulations 2001;
(b) the financial statements and notes thereto also comply with International Financial Reporting Standards, as disclosed in Note 1;
(c) the Directors have been given the declarations required by s.295A of the Corporations Act; and
(d) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable;

Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.

On behalf of the Directors

Qing Zhong Managing Director 30 September 2021

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RSM Australia Partners

Level 13, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T +61 (0) 2 8226 4500 F +61 (0) 2 8226 4501

www.rsm.com.au

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the financial report of Admiralty Resources NL for the year ended 30 June 2021, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.

RSM AUSTRALIA PARTNERS

G N Sherwood

Partner

Sydney, NSW Dated: 30 September 2021

THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING

RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036

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Liability limited by a scheme approved under Professional Standards Legislation

Admiralty Resources NL – Annual Report 2021

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

	Consolidated Group
Note	2021 $ 2020 $
*Revenue* Interest 2 Other income 2 Gain on financial liabilities at fair value through profit or loss 2 Gain on derecognition of convertible notes 2 *Expenses* Administration expenses Consultancy and professional expenses 3 Depreciation expense 3 Employee benefits expense 3 Exploration expenses 3 Finance costs 3 Foreign exchange gain/(loss) Tenement expenses Travel expenses Loss before income tax Tax expense 4 Loss after income tax for the year *Other comprehensive income* Items that may be reclassified subsequently to profit or loss: Exchange differences arising from foreign operations 25 Total other comprehensive income for the year Total comprehensive loss for the year *Loss after income tax attributable to:* Members of the parent entity *Total comprehensive loss attributable to:* Members of the parent entity *Earnings per share* Basic and diluted loss per share (cents) 8	- 45 66,607 29,546 1,795,648 361,725 - 582,442 (220,412) (124,062) (342,964) (453,547) (18,857) (10,055) (68,362) (84,891) - (91,255) (2,231,071) (1,703,243) 287,834 (17,261) - - (5,740) (35,284)
	(737,317) (1,545,840) - - (737,317) (1,545,840)
	- -
	- -
	(737,317) (1,545,840)
	(737,317) (1,545,840)
	(737,317) (1,545,840)
	(0.06) (0.13)

The above Consolidated statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

Admiralty Resources NL – Annual Report 2021

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2021

	Consolidated Group
Note	2021 $ 2020 $
ASSETS Current Assets Cash and cash equivalents 9 Trade and other receivables 10 Total Current Assets Non-Current Assets Property, plant and equipment 12 Exploration and evaluation expenditure 13 Total Non-Current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables 14 Borrowings 15 Total Current Liabilities Non-Current Liabilities Borrowings 15 Total Non-Current Liabilities Total Liabilities Net Assets EQUITY Issued capital 17 Reserves 25 Accumulated losses 26 Total Equity	107,946 102,897 733,203 583,096
	841,149 685,993
	185,445 204,303 22,276,237 22,151,990
	22,461,682 22,356,293
	23,302,831 23,042,286
	977,581 725,609 9,485,707 3,864,055
	10,463,288 4,589,664
	2,033,682 6,909,444
	2,033,682 6,909,444
	12,496,970 11,499,108

	10,805,861 11,543,178
	145,714,094 145,714,094 (744,934) (744,934) (134,163,299) (133,425,982)
	10,805,861 11,543,178

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes with the accompanying notes.

Admiralty Resources NL – Annual Report 2021

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2021

	Contributed Equity Foreign Currency Reserve Accumulated Losses Total Equity
Note	$ $ $ $
Balance at 1 July 2019 Comprehensive income Loss after income tax Prior period adjustment Other comprehensive income for the year 25 Total comprehensive loss for the year Transactions with owners in their capacity as owners Shares issued upon grant of share application Balance at 30 June 2020 Balance at 1 July 2020 Comprehensive income Loss after income tax Other comprehensive income for the year 25 Total comprehensive loss for the year Transactions with owners in their capacity as owners Shares issued upon grant of share application Balance at 30 June 2021	145,714,094 (744,934) (131,880,142) 13,089,018 - - (1,545,840) (1,545,840) - - - - - - - -
	- - (1,545,840) (1,545,840)
	- - - -
	145,714,094 (744,934) (133,425,982) 11,543,178
	145,714,094 (744,934) (133,425,982) 11,543,178 - - (737,317) (737,317) - - - -
	- - (737,317) (737,317)
	- - - -
	145,714,094 (744,934) (134,163,299) 10,805,861

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Admiralty Resources NL – Annual Report 2021

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

	Consolidated Group
Note	2021 $ 2020 $
*CASH FLOWS FROM OPERATING ACTIVITIES* Receipts from customers Refund from suppliers Payments to suppliers and employees Interest received Bond received Net cash outflow from operating activities 21a *CASH FLOWS FROM INVESTING ACTIVITIES* Payments for exploration expenditure on mining interests Net cash inflow/(outflow) from investing activities *CASH FLOWS FROM FINANCING ACTIVITIES* Proceeds from borrowings Proceeds from issue of shares Net cash inflow from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of financial year Effects of exchange rate changes on the translation of foreign controlled entities Cash and cash equivalents at end of financial year 9	66,607 - - 29,546 (646,612) (713,210) - 45 - 32,214
	(580,005) (651,405)
	(124,246) (773,476)
	(124,246) (773,476)
	598,300 1,413,139 111,000 -
	709,300 1,413,139
	5,049 (11,742) 102,897 114,639 - -
	107,946 102,897

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 1: SUMMARY OF ACCOUNTING POLICIES

General information and Statement of compliance

Basis of Preparation

The consolidated general purpose financial statements of the Group have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board (AASB). Compliance with Australian Accounting Standards results in full compliance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Admiralty Resources NL is a for-profit entity for the purpose of preparing the financial statements.

Admiralty Resources NL is the Group’s Ultimate Parent Company. Admiralty Resources NL is a Public Company incorporated and domiciled in Australia.

The consolidated financial statements for the year ended 30 June 2021 were approved and authorised for issue by the Board of Directors on 30 September 2021.

Except for cash flow information, the financial statements have been prepared on an accruals basis and are based on historical costs unless otherwise stated in the notes. The accounting policies that have been adopted in the preparation of the statements are as follows:

a. Principles of Consolidation

The consolidated financial statements incorporate the assets and liabilities of the entities controlled by the Company at the end of the reporting period and the results for all subsidiaries for the year ended 30 June 2021. The Company and its subsidiaries together are referred to in these financial statements as the ‘consolidated entity’. Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date of control ceases.

Where controlled entities have entered or left the Group during the year, the financial performance of those entities is included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 11 to the financial statements. In preparing the consolidated financial statements, all intragroup balances and transactions between entities in the consolidated group have been eliminated in full, on consolidation.

b. Parent entity information

In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in Note 5.

c. Operating segments

Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 1: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

d. Income Tax

The income tax expense for the year comprises current income tax expense and deferred tax expense.

Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities/ (assets) are measured at the amounts expected to be paid to/(recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses.

Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability, where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. With respect to non-depreciable items of property, plant and equipment measured at fair value and items of investment property measured at fair value, the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of the asset will be recovered entirely through sale.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

e. Current and Non-Current Classification

Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 1: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

e. Current and Non-Current Classification (Continued)

A liability is classified as current when:

it is either expected to be settled in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading;
it is due to be settled within 12 months after the reporting period; or
there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

f. Property, Plant and Equipment

Each class of property, plant and equipment is carried at historical cost where applicable, less, any accumulated depreciation and impairment losses.

Land

Freehold land is stated at revalued amounts. As no finite useful life for land can be determined, related carrying amounts are not depreciated.

Buildings

Buildings are carried at cost less accumulated depreciation.

Plant and equipment

Plant and equipment are measured on the historical cost basis and therefore carried at cost less accumulated depreciation and any accumulated impairment. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are recognised in profit or loss. A formal assessment of recoverable amount is made when impairment indicators are present.

The carrying amount of plant and equipment is reviewed annually by the Directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal.

Depreciation

The depreciable amount of all buildings, plant and equipment including buildings and capitalised lease assets, but excluding freehold land, is depreciated on a diminishing value basis over the asset’s useful life to the consolidated group commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:

Class of property, plant and equipment	Depreciation Rate
Buildings	2%
Plant and equipment	5%-25%
Office furniture and equipment	8%-33%
Motor vehicles	15%-25%

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 1: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

f. Property, Plant and Equipment (continued)

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are recognised in profit or loss in the period in which they arise.

g. Mining Interests

Mining interests are shown at historical cost, plus exploration costs to date, less impairment, if any. Ultimate recoupment of these costs is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas. Accumulated costs in relation to an abandoned area, or one considered to be of no commercial interest, are written off in full against profit or loss in the year in which the decision to abandon the area is made.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area accordingly to the rate of depletion of economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to capitalise costs in relation to that area of interest.

h. Exploration and Evaluation Expenditure

Chilean Tenements

The exploration in Chile is on highly prospective tenements, which include an existing resources statement and as such all exploration and evaluation expenditures incurred are capitalised in respect of each identifiable area of interest, as mining interests. The Directors are satisfied that the expenditure on these tenements meets the requirements of AASB 6 “Exploration for and Evaluation of Mineral Resources” in that the rights to tenure of the area of interest are current and at least one of the following conditions is met for each area of interest:

the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; and
exploration and evaluation activities in the area of interest have not at the end of the reporting period reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

i. Investments and Other Financial Assets

Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided.

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 1: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

i. Investments and Other Financial Assets (Continued)

Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off.

Financial assets at fair value through profit or loss

Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss.

Financial assets at fair value through other comprehensive income

Financial assets at fair value through other comprehensive income include equity investments which the consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition.

Impairment of financial assets

The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain.

Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.

For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss.

j. Impairment

Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 1: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

j. Impairment (continued)

Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-inuse is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

k. Foreign Currency Transactions and Balances

Functional and presentation currency

The consolidated financial statements are presented in Australian Dollars ($AUD), which is also the functional currency of the Parent Company.

Transactions and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Nonmonetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the underlying gain or loss is recognised in other comprehensive income; otherwise the exchange difference is recognised in profit or loss.

Foreign operations

The financial results and position of foreign operations, whose functional currency is different from the Group’s presentation currency, are translated as follows:

assets and liabilities are translated at exchange rates prevailing at the end of the reporting period; and
income and expenses are translated at average exchange rates for the period.

Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are recognised in other comprehensive income and included in the foreign currency translation reserve in the statement of financial position. The cumulative amount of these differences is reclassified into profit or loss in the period in which the operation is disposed of.

l. Employee Benefits

Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to the end of the reporting period. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy any vesting requirements. Those cash flows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows attributable to employee benefits.

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 1: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

m. Provisions

Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.

Contributions to defined contribution superannuation plans are expensed in the period incurred.

n. Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts.

o. Revenue and Other Income

Revenue is recognised when it is probable that the economic benefit will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.

Interest revenue is recognised using the effective interest method. All revenue is stated net of the amount of goods and services tax.

p. Trade and Other Receivables

Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit loss. Refer to Note 1(j) for further discussion on the determination of impairment losses.

q. Trade and Other Payables

Trade and other payables represent the liabilities for goods and services received by the entity that remain unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability. Due to their short term nature, they are measured at amortised cost and not discounted.

r. Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts from customers or payments to suppliers.

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 1: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

s. Earnings Per Share

Basic earnings per share is calculated by dividing the profit or loss attributable to the owners of the Group excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year.

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financial costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to the dilutive potential ordinary shares.

t. Issued Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

u. Going Concern

The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and the discharge of liabilities in the normal course of business.

As disclosed in the financial statements, the Group incurred a loss after tax of $737,317 and had net cash outflows from operating activities of $580,005 for the year ended 30 June 2021. As at that date the Group had net current liabilities of $9,622,139. The ability to continue as a going concern and realise it’s exploration assets is dependent on a number of factors, the most significant of which is to source additional funding to continue its operations and for the existing convertible note holders to convert their debt to equity, or extend the facilities. These factors indicate significant uncertainty as to whether the consolidated entity will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

The Directors believe that there are reasonable grounds to believe that the Group will be able to continue as a going concern, after consideration of the following factors:

As stated in Note 21, the Company has successfully completed a capital raising of $2.6 million in July 2021 to institutional and sophisticated investors to fund the Company’s participation in a joint venture with Hainan Xinlei Mining Management Co Ltd (Hainan) on the Mariposa project.
Shanghai Long Sheng Technology Development Co. Limited have confirmed they will not call for repayment the debt of $4,015,519 disclosed as current in note 15 as the debt was to expire in October 2020.
The director loan of $2,033,682 disclosed in note 15 will not be called for repayment should there not be sufficient funds in the company for at least 12 months from the date the financial statements have been signed.

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 1: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

u. Going Concern (continued)

The Convertible Note facilities are due for to expire on 31 December 2021. The note holders have signed a letter of intent confirming that notes will either be extended, or converted to equity. The, Directors are therefore of the opinion that the existing Convertible Note facilities disclosed in Note 15 will either be converted to equity or refinanced as required.
The Directors are of the opinion that existing shareholders and financiers will continue to fund the company in the short term, and if required additional share capital or debt funding can be sourced to develop the projects further.

Accordingly, the Directors believe that the consolidated entity will be able to continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report.

The financial report does not include any adjustments relating to the amounts or classification of recorded assets or liabilities that might be necessary if the consolidated entity does not continue as a going concern.

Accordingly, the Directors believe that the Group will be able to continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report.

v. Financial Instruments Issued by the Company

Debt and equity instruments

Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual arrangement.

Compound instruments

The component parts of compound instruments are classified separately as liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible debt. The equity component initially brought to account is determined by deducting the amount of the liability component from the amount of the compound instrument as a whole.

Transaction costs on the issue of equity instruments

Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the proceeds of the equity instruments to which the costs relate. Transaction costs are the costs that are incurred directly in connection with the issue of those equity instruments and which would not have been incurred had those instruments not been issued.

Interest

Interest is classified as an expense consistent with the classification in the Statement of Financial Position of the related debt.

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 1: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

v. Financial Instruments Issued by the Company (continued)

Issue Capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares of options are shown in equity as a deduction, net of tax, from the proceeds.

w. New and Amended Standards not yet mandatory or early adopted

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the company for the annual reporting period ended 30 June 2021. The company's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the company, are set out below.

Conceptual Framework for Financial Reporting (Conceptual Framework)

The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 July 2021 and early adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards. Where the company has relied on the existing framework in determining its accounting policies for transactions, events or conditions that are not otherwise dealt with under the Australian Accounting Standards, the company may need to review such policies under the revised framework. At this time, the application of the Conceptual Framework is not expected to have a material impact on the company's financial statements.

y. Critical Accounting Estimates and Judgements

The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group.

Key estimates

(i) Exploration and Evaluation Expenditure – Cost Allocation

Judgement is applied by management in determining when a project has reached a stage at which economically recoverable reserves exist and that development may be sanctioned. Management is required to make certain estimates and assumptions similar to those described above for capitalised exploration and evaluation expenditure. Judgement is also applied by management in determining which costs are directly attributable to the exploration assets. Critical estimates are made in respect of the percentage time that management and other employees spend in the development of the various assets. While management used their best judgement in this regard, there remains a degree of estimation uncertainty surrounding the allocation of costs to the various assets.

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 1: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

y. Critical Accounting Estimates and Judgements (Continued)

Key judgements

(i) Impairment – general

The Group assesses impairment at the end of each reporting period by evaluating conditions and events specific to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions.

(ii) Convertible Note

At 30 June 2021 the Group had a balance of $5,470,187 in respect of the convertible notes. The terms of the convertible note include:

a) Proceeds provided by the Lender are denominated in USD. The right to convert the debt into ADY NL ordinary shares, which are denominated in AUD;
b) Right to convert into ADY NL ordinary shares equivalent to 80% of the Volume Weighted Average Price per share.

Fair value measurement hierarchy

The consolidated entity is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value and therefore which category the asset or liability is placed in can be subjective.

The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include discounted cash flow analysis or the use of observable inputs that require significant adjustments based on unobservable inputs.

Estimation of useful lives of assets

The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

Impairment of non-financial assets other than goodwill and other indefinite life intangible assets

The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 1: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

y. Critical Accounting Estimates and Judgements (Continued)

Income tax

The consolidated entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The consolidated entity recognises liabilities for anticipated tax audit issues based on the consolidated entity's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Employee benefits provision

As discussed in note 1, the liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account.

Impact of COVID-19

The Group has been moderately impacted by COVID-19. Development of the Soberana project has been delayed due to travel restrictions within Chile.

The Company will closely monitor its operations with respect to COVID 19, in particular travel restrictions within Chile and internationally. At minimum, the Directors expect delays in project development and increased holding costs as a result.

NOTE 2: REVENUE AND OTHER INCOME

	Consolidated Group
	2021 2020
	$ $
Revenue from continuing operations Revenue: – Interest income - bank Other Income: – Other income – Gain on revaluation of embedded derivative financial liability to fair value net of imputed interest – Gain on derecognition of convertible notes Total revenue and other income	- 45
	- 45
	66,607 29,546 1,795,648 361,725 - 582,442
	1,862,255 973,758

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 3: OTHER EXPENSES

	Consolidated Group
	2021 2020
	$ $
Consultancy and professional expenses Depreciation expense Employee benefits expense Exploration expenses Finance costs NOTE 4: INCOME TAX EXPENSE	342,964 453,547 18,857 10,055 68,362 84,891 - 91,255 2,231,071 1,703,243
	Consolidated Group
	2021 2020
	$ $
The components of income tax expense comprise: Current tax Deferred tax Aggregate Income expense Numerical reconciliation of income tax expense and tax at statutory rate: Loss before income tax expense Tax at the statutory rate of 26% (2020: 27.5%) Tax effect amounts which are not deductible/(taxable) in calculation taxable income: Tax losses not brought to account as deferred tax asset Income tax expense The estimated deferred tax assets not brought to account: - Revenue - Capital	- - - -
	- -
	(737,317) (1,135,957) (191,702) (312,388) 113,210 121,995 78,492 190,393
	- -
	16,888,374 16,787,549 2,978,019 2,978,019
	19,866,393 19,765,568

The realisation of the above benefit is dependent upon:

The ability of the Group to derive future assessable income of a nature and of a sufficient amount to enable the benefit to be realised;
The ability of the consolidated entity to continue to comply with the conditions for deductibility imposed by law; and
No changes in tax legislation adversely affecting the realisation of the benefit from the deductions.

Legislation to allow groups, comprising the Australian parent entity and its Australian resident wholly owned entities, to elect to consolidate for income tax purposes was substantively enacted on 21 October 2002. This legislation, which includes mandatory and elective elements, is applicable to the Company.

As at the date of this report, the Directors’ have not elected to be taxed as a single entity. The financial effect of the implementation of the tax consolidation system and the Group has not been recognised in these financial statements.

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 5: PARENT ENTITY

	Consolidated Group	Consolidated Group
	2021	2020
	$	$
The following information has been extracted from the books and records	of the parent and has been prepared
in accordance with Australian Accounting Standards.
Statement of Financial Position
ASSETS
Current assets	117,882	93,566
Non-current assets	9,449,163	14,908,222
TOTAL ASSETS	9,567,045	15,001,788
LIABILITIES
Current liabilities	451,445	359,544
Non-current liabilities	1,796,716	6,967,183
TOTAL LIABILITIES	2,248,161	7,326,727
NET ASSETS	7,318,884	7,675,061
EQUITY
Issued capital	145,714,094	145,714,094
Accumulated losses	(138,395,210)	(138,039,033)
TOTAL EQUITY	7,318,884	7,675,061
Statement of Profit or Loss and Other Comprehensive Income
Loss after income tax	(356,177)	(5,300,256)
Total comprehensive loss	(356,177)	(5,300,256)

Guarantees

The Company has not entered into any guarantees, in the current or previous financial years, in relation to the debts of its subsidiaries.

Contingent Asset

Refer to Note 19 for details of contingent assets at 30 June 2021.

Contractual commitments

Payable – no later than one year Payable – later than one year but not later than two years	- - - -
	- -

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 6: KEY MANAGEMENT PERSONNEL COMPENSATION

The Directors and other members of the key management personnel of the Company during the year were:

Bin Li Executive Chairperson Qing Zhong Managing Director Jian Barclay Executive Director

a) Key management personnel compensation

	2021 2020
	$ $
Short-term employee benefits (i) Retirement benefits Total	- - 10,000 -
	10,000 -

(i) Benefits paid/ payable to personnel who classify as both a director and executive have been included in director benefits.

Refer to the Remuneration Report for details of the remuneration policy.

b) Equity instrument disclosures relating to key management personnel

The numbers of shares in the Company held during the financial year by each Director and other key management personnel of the entity, including their personally related parties, are set out below.

30 June 2021	Balance at Beginning of Year Granted as Remuneration during the Year Issued on Exercise of Options during the Year Other Changes during the Year Balance at End of Year
Bin Li Qing Zhong Jian Barclay Total	25,000,000 - - - 25,000,000 217,611,465 - - - 217,611,465 8,063,604 - - - 8,063,604
	250,675,069 - - - 250,675,069

NOTE 7: AUDITORS REMUNERATION

	Consolidated Group
	2021 2020
	$ $
Remuneration of the auditor for: RSM Australia Partners: – auditing or reviewing the financial statements of parent entity – Fees for non-audit services	46,500 40,000 - -
	46,50040,000

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 8: EARNINGS PER SHARE

	Consolidated Group
	2021 2020
	$ $
a. Reconciliation of earnings to profit or loss: Total loss after tax used in the calculation of basic and dilutive EPS b. Weighted average number of ordinary shares outstanding during the year used in calculating basic and dilutive EPS (number) c. Basic and diluted (loss)/profit per share (cents per share)	(737,317) (1,545,840)
	1,159,134,6991,159,134,699
	(0.06) (0.13)

NOTE 9: CASH AND CASH EQUIVALENTS

	Consolidated Group
	2021 2020
	$ $
Cash at bank and on hand	107,946 102,897
	107,946 102,897

NOTE 10: TRADE AND OTHER RECEIVABLES

	Consolidated Group
	2021 2020
	$ $
	171,793 25,110 561,410 557,986

NOTE 11: CONTROLLED ENTITIES

	Country of Incorporation	Percentage Owned	Percentage Owned
		2021	2020
Subsidiaries of Admiralty Resources NL:
Bulman Resources Pty Limited	Australia	100%	100%
Pyke Hill Resources Pty Limited	Australia	100%	100%
ADY Investments Pty Limited (ii)	Australia	100%	100%
Admiralty Minerals Chile Pty Limited	Australia	100%	100%
Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile (Branch)	100%	100%
Admiralty Resources (HongKong) Limited (ii)	Hong Kong	100%	100%
Fortune Global Holdings Corporation (ii)	British Virgin Islands	100%	100%
Servicios Admiralty Resources Chile Ltd (i)	Chile (Branch)	100%	100%

(i) This operation is a branch of Admiralty Minerals Chile Pty Limited (ii) Currently dormant

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 12: PROPERTY, PLANT AND EQUIPMENT

	Consolidated Group
	2021 2020
	$ $
Land and Buildings At cost Accumulated depreciation Plant and Equipment At cost Accumulated depreciation Motor Vehicles At cost Accumulated depreciation Office Furniture and Equipment At cost Accumulated depreciation	212,875 178,892 -33,982 (34,428)
	178,893 144,464
	57,168 147,735 -57,168 (97,135)
	- 50,600
	83,245 83,245 -76,693 (74,508)
	6,552 8,737
	5,210 21,009 -5,210 (20,507)
	- 502
	185,445 204,303

Movements in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year:

	Land and Plant and Motor Office	Total
	Buildings Equipment Vehicles Furniture
	$ $ $ $	$
Consolidated Group: Balance at 30 June 2019 Additions Disposals Depreciation expense Balance at 30 June 2020 Additions Disposals Reclassify assets Depreciation expense Balance at 30 June 2021	146,717 54,636 11,650 1,355 - - - - - - - - (2,253) (4,036) (2,913) (853)	214,358 - - (10,055)
	144,464 50,600 8,737 502	204,303
	- - - - - - - - 34,428 (39,638) - 5,210 - (10,962) (2,184) (5,712)	- - - (18,858)
	178,892 - 6,553 -	185,445

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 13: EXPLORATION AND EVALUATION EXPENDITURE

	Consolidated Group
	2021 2020
	$ $
Cost Additions Accumulated impairment losses Net carrying amount Movement in carrying amounts: Balance at the beginning of the year Additions Balance at the end of the year	22,733,503 22,051,282 124,247 682,221 (581,513) (581,513)
	22,276,237 22,151,990
	22,151,990 21,469,769 124,247 682,221
	22,276,237 22,151,990

NOTE 14: TRADE AND OTHER PAYABLES

	Consolidated Group
	2021 2020
	$ $
	311,952 319,801 136,325 136,102 418,304 269,706 111,000 -
	977,581 725,609

NOTE 15: BORROWINGS

	Consolidated Group
	2021 2020
	$ $
CURRENT Convertible Note – Cash Coupon Payable(i) Convertible Note – Debt Host Liability(i) Convertible Note – Derivative Liability(i) Loans from related parties(iii) NON-CURRENT Loans from related party(ii) Convertible Note – Debt Host Liability(i) Convertible Note – Derivative Liability(i)	1,242,863 624,715 3,677,091 - 550,233 - 4,015,520 3,239,340
	9,485,707 3,864,055
	2,033,682 2,033,682 - 2,529,881 - 2,345,881
	2,033,682 6,909,444

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 15: BORROWINGS (CONTINUED)

(i) During FY21, the convertible notes have been drawn down to a value of US$3,600,000. The notes bear interest of 12% and are convertible into equity using the 90 day volume weighted average price (VWAP). No other amendments were made to the facility.
(ii) This loan is at call, unsecured and is non-interest bearing.
(iii) On 21 June 2018, the Group signed a loan facility agreement with Shanghai Long Sheng Technology Development Co. Limited to provide up to AU $1,500,000, at a rate of 5% per annum, with repayment of the loan and accrued interest by 01 October 2020. An additional $1,500,000 facility was obtained in July 2019 to extend the facility to $3,000,000. The terms of the additional facility are identical.
(iv) On 25 September 2020, an agreement was completed between Admiralty Resources NL and Shanghai Long Sheng Technology Development Co. Limited to provided up to 1,500,000, at a rate of 5% per annum, with repayment of the loan and accrued interest by 1 October 2021.

NOTE 16: FAIR VALUE MEASUREMENT

The following table gives an overview of the financial instruments valued at fair value.

	Fair Value Measurements at 30 June	Fair Value Measurements at 30 June	2021 Using:
	Quoted Prices in	Significant	Significant
	Active Markets for	Observable	Unobservable
	Identical Assets	Inputs	Inputs
	$	$	$
	(Level 1)	(Level 2)	(Level 3)
Financial Liabilities
Convertible note – embedded derivative
component	-	-	550,233

Valuation Techniques

In the absence of an active market for an identical liability, the Group selects and uses one or more valuation technique to measure the fair value of the asset or liability. The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset or liability being measured.

The assessed fair values of the embedded derivative are determined using a Black-Scholes option pricing model and a revalued at conversion and/or reporting date.

Key Inputs:

Underlying share price: $0.01700
Risk free rate: 0.06%
Volatility: 58.42%
Expected term: 0.5 year
Vesting period: None

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 17: ISSUED CAPITAL

	Consolidated Group
	2021 2020
	$ $
Ordinary Shares At the beginning of the financial year Shares issued upon grant of share application Contributed equity at the end of the financial year	145,714,094 145,714,094 - -
	145,714,094 145,714,094

	2021 2020
	Number Number
Ordinary Shares At the beginning of the financial year Shares issued upon grant of share application Contributed equity at the end of the financial year	1,159,134,699 1,159,134,699 - -
	1,159,134,699 1,159,134,699

Options

The number of options on issue during the financial year was NIL (2020: NIL).

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

Capital management

The consolidated entity manages its capital to ensure that entities in the consolidated group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the consolidated entity consists of debt, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued share capital, reserves and retained earnings. Management and the Board manages the capital structure through issue of new shares, repayment of existing debt and the acquisition of new debt. The capital management strategy remains unchanged from 2015.

NOTE 18: CAPITAL AND LEASING COMMITMENTS

	Consolidated Group
	2021 2020
	$ $
a. Exploration Expenditure Commitments Payable: – not later than 12 months – between 12 months and five years	66,507 61,248 266,028 244,992
	332,535 356,480

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 19: CONTINGENT ASSETS AND LIABILITIES

There are no contingent assets or liabilities present for the Group at balance date.

NOTE 20: OPERATING SEGMENTS

The predominant activity of the Group is the exploration for mineral resources. Geographically, the Group operates in three geographical locations – Australia, Chile and Hong Kong. The head office and management activities of the Group take place predominately in Australia. Exploration, appraisal, development and production activities for mineral resources takes place in Chile and the borrowing facility is held in Hong Kong (Note 15).

a. Accounting policies adopted - Unless stated otherwise, all amounts reported to the Board of Directors, being the chief operating decision-makers with respect to operating segments, are determined in accordance with accounting policies that are consistent with those adopted in the annual financial statements of the Group. Segment revenue and expense are those directly attributable to the segments. Segment assets and liabilities include all those generated by the segments.

b. Intersegment transactions There are no inter-segment sales.
c. Business Segments – The Group operates in one business segment – mineral exploration.

d. Geographic Segments:

Revenue Revenue from continuing operations Revenue from discontinuing operations Total segment revenue Entity revenue Loss Total segment result Unallocated Operating profit before income tax Assets Segment assets Segment liabilities Segment net assets/(liabilities)	Australia HK Chile 2021 2021 2021 $ $ $ - 1,795,648 66,607 - - -	Consolidated Entity 2021 $ 1,862,255 -
	- 1,795,648 66,607	1,862,255
	(363,451) (146,806) (227,060) - - - (363,451) (146,806) (227,060) Australia HK Chile 2021 2021 2021 $ $ $ 1,533,700 10,725 21,758,406 (10,176,702) (598) (2,319,670) (8,643,002) 10,127 19,438,736
		1,862,255

		(737,317)
		-
		(737,317)
		Consolidated Entity 2021 $ 23,302,831
		(12,496,970)
		10,805,861

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 20: OPERATING SEGMENTS (CONTINUED)

Revenue Revenue from continuing operations Revenue from discontinuing operations Total segment revenue Entity revenue Loss Total segment result Unallocated Operating profit before income tax Assets Segment assets Segment liabilities Segment net assets/(liabilities)	Australia HK Chile 2020 2020 2020 $ $ $ 29,591 944,167 - - - -	Consolidated Entity 2020 $ 973,758 -
	29,591 944,167 -	973,758
	(354,516) (775,002) (416,322) (354,516) (775,002) (416,322) 1,526,503 10,725 21,505,058 (9,338,911) (598) (2,159,599) (7,812,408) 10,127 19,345,459
		973,758

		(1,545,840)
		-
		(1,545,840)
		23,042,286
		(11,499,108)
		11,543,178

NOTE 21: EVENTS AFTER THE REPORTING PERIOD

Subsequent to 30 June 2021, the Group continues to monitor the impact of COVID-19 on its projects.

On 19 August 2021, Admiralty Resources provided an update on its negotiations with Hainan Xinlei Mining Management Co Ltd with respect to the binding term sheet announced on 18 June 2021.

There have been no other significant events subsequent to the reporting date.

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 22: CASH FLOW INFORMATION

			Consolidated Group	Consolidated Group
			2021	2020
			$	$
a.	Reconciliation of Cash Flow from Operations with Loss after Income
	Tax
	Loss after income tax		(737,317)	(1,545,840)
	Non-cash flows in profit or loss:
	-	Depreciation	18,857	10,055
	-	Foreign exchange (gain)/loss	(287,834)	15,926
	-	Gain on fair value of derivative liability	(1,795,648)	(944,167)
	-	Interest expense	2,231,071	1,703,243
	-	Exploration and development costs	-	61,295
	Changes in assets and liabilities:
	-	Decrease/(Increase) in trade and other receivables	(150,106)	93,908
	-	(Decrease)/Increase in trade and other payables	140,972	(45,825)
	Cash flow used in operating activities		(580,005)	(651,405)

NOTE 23: RELATED PARTY TRANSACTIONS

The Group’s main related parties are as follows:

Sun Investments Holdings– related party of Qing Zhong
Jin Xin International Pty Ltd – related party of Qing Zhong and Hanrui Zhong
Shanghai Long Sheng Technology Development Co. Limited

	Consolidated Group
	2021 $ 2020 $
Loans from related parties: - Jin Xin International Pty Ltd - Shanghai Ying Xun Technology Pty Ltd - Shanghai Long Sheng Technology Development Co. Limited The following balances are outstanding at the reported date in relation to transactions with related parties: Jin Xin International Pty Ltd Sun Investments Holdings	50,270 50,270 1,983,414 1,983,414 4,015,519 3,239,340
	6,049,203 5,273,024
	50,270 50,270 86,435 86,435
	136,705 136,705

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 24: FINANCIAL RISK MANAGEMENT

(a) Financial risk management objectives

The consolidated entity’s principal financial instruments comprise cash and both short term borrowings. The main purpose of the financial instruments is to support the consolidated entity’s operations.

Risk management is carried out by senior finance executives (‘finance’) under policies approved by the Board of Directors (‘the Board’). These policies include identification and analysis of the risk exposure of the consolidated e,ntity and appropriate procedures, controls and risk limits. Finance identifies evaluates and hedges financial risks within the consolidated Group’s operating units. Finance reports to the Board monthly.

(b) Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expense are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1 to the financial statements.

(c) Interest rate risk

The consolidated entity’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on classes of financial assets and financial asset/liabilities, is as follows:

2021 *Financial Assets* Cash Trade and other receivables Total financial assets *Financial Liabilities* Trade and other payables Convertible Notes Loans from related parties Total financial liabilities	Weighted average Effective Interest Rate % Fixed Interest Rate $ Floating Interest Rate $ Non- Interest Bearing $ Total $
	0.00% - 107,946 - 107,946 - - - 733,203 733,203
	- 107,946 733,203 841,149
	- - - 977,581 977,581 12.00% 5,470,187 - 5,470,187 - - - 6,049,202 6,049,202
	5,470,187 - 7,026,783 12,496,970

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 24: FINANCIAL RISK MANAGEMENT (CONTINUED)

2020 *Financial Assets* Cash Trade and other receivables Total financial assets *Financial Liabilities* Trade and other payables Convertible Notes Loans from related parties Total financial liabilities	Weighted average Effective Interest Rate % Fixed Interest Rate $ Floating Interest Rate $ Non- Interest Bearing $ Total $
	0.00% - 102,897 - 102,897 - - - 583,096 583,096
	- 102,897 583,096 685,993
	- - - 725,609 725,609 12.00% 5,500,477 - 5,500,477 - - - 5,273,022 5,273,022
	5,500,477 - 5,998,631 11,499,108

(d) Credit risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at the reporting date to recognised financial assets is the carrying amount, net of any allowance for doubtful debts of those assets, as disclosed in the Statement of Financial Position and Notes to the Financial Statements.

Other than the impaired assets, the consolidated entity does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the consolidated entity.

(e) Foreign currency risk management

Other than the impaired deferred receivable, the consolidated entity is exposed to foreign currency risk as a direct result of their foreign operations in Chile and Hong Kong. Further, the consolidated entity is exposed to foreign currency risk on borrowings and loans receivable that are denominated in currencies other than Australian Dollars.

The bulk of the consolidated entity’s income and expenditure and capital commitments are denominated in United States Dollars (USD). The Board of Directors has taken the view that because of the offsetting nature of the consolidated entity’s receivables and payables that an unhedged position in relation to foreign currency exposure is the most appropriate policy. The consolidated entity maintains bank accounts in three currencies being Australian Dollars (AUD), United States Dollars (USD), Hong Kong Dollar (HKD) and Chilean Pesos (CLP) to manage receipts and payments in those currencies and to reduce and minimise currency conversion costs.

(f) Liquidity risk management

Liquidity risk arises from the possibility that the consolidated entity might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The consolidated entity manages this risk through the following mechanisms:

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 24: FINANCIAL RISK MANAGEMENT (CONTINUED)

by maintaining centralised cash balances;
by matching capital commitments to draw down of funding facilities and equity raisings;
preparing forward looking cash flow analysis in relation to its operational, investing financing activities; and
managing credit risk related to financial assets.

Cash flows realised from financial assets reflect management’s expectations as to the timing of realisation. Actual timing may therefore differ from that disclosed. The table below summarises the expected financial liability and financial asset maturities.

2021 *Financial Assets* Cash Trade and other receivables Total financial assets *Financial Liabilities* Trade and other payables Convertible Notes Loans from related parties Total financial liabilities 2020 *Financial Assets* Cash Trade and other receivables Total financial assets *Financial Liabilities* Trade and other payables Convertible Notes Loans from related parties Total financial liabilities	Within 1 year $ 1 to 5 Years $ Over 5 Years $ Total $
	107,946 - - 107,946 733,203 - - 733,203
	841,149 - - 841,149
	977,581 977,581 5,470,187 - - 5,470,187 4,015,520 - 2,033,682 6,049,202
	10,463,288 - 2,033,682 12,496,970
	102,897 - - 102,897 583,096 - - 583,096
	685,993 - - 685,993
	725,609 725,609 - 5,500,477 - 5,500,477 - - 5,273,022 5,273,022
	725,609 5,500,477 5,273,022 11,499,108

(g) Fair values

The aggregate fair values of financial assets and liabilities as at reporting date is as follows:

	2021 $ 2020 $
*Financial Assets* Cash Trade and other receivables Total financial assets	107,946 102,897 733,203 583,096
	841,149 685,993

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 24: FINANCIAL RISK MANAGEMENT (CONTINUED)

	2021 $ 2020 $
*Financial Liabilities* Trade and other payables Convertible note Loans from related parties Total financial liabilities	977,581 725,609 5,470,187 5,500,477 6,049,202 5,273,022
	12,496,970 11,499,108

The following methods and assumptions are used to determine the fair values of financial assets and liabilities:

The carrying amount for cash, trade and other receivables, prepayments and payables approximates fair value.
The fair values of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow theory.

(h) Sensitivity

Interest rate risk

The consolidated entity has considered the sensitivity relating to its exposure to interest rate risk at the reporting date. This analysis considers the effect on current year loss which could result in a change in this risk. The management processes employed to control these factors involve entering into fixed interest rate borrowings.

Foreign currency risk

The consolidated entity has considered the sensitivity relating to its exposure to foreign currency risk at the reporting date. The sensitivity analysis considers the effect on current year loss and equity due to a change in the AUD/USD, AUD/CLP and AUD/HKD rates.

The table below summarises the impact of +/- 5% strengthening / weakening of the AUD against the USD, HKD and CLP. The analysis is based on the +/- 5% movement of each foreign currency (CLP, HKD and USD) against AUD with all other factors remaining equal. A sensitivity of 5% has been used as the Board assesses this to be a probable range for foreign exchange fluctuation.

		Post Tax Loss		Equity
		2021	2020	2021	2020
		$	$	$	$
AUD/USD	+5%	226	2,928	226	2,928
	-5%	(226)	(2,928)	(226)	(2,928)
AUD/CLP	+5%	-	792	-	792
	-5%	-	(792)	-	(792)
AUD/HKD	+5%	-	-	-	-
	-5%	-	-	-	-

Admiralty Resources NL – Annual Report 2021

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTE 25: RESERVES

Foreign Currency Translation Reserve

The foreign currency translation reserve records exchange differences arising on translation of foreign controlled subsidiaries.

Equity portion of convertible notes

Due to derecognition of the First Convertible Loan facility, the equity portion has been derecognised in the reporting period.

	Consolidated Group
	2021 2020
	$ $
Foreign currency translation reserve Balance at the beginning of the financial year Exchange differences on translation of foreign controlled entities Balance at the end of the financial year Equity portion of convertible note Balance at beginning of financial year Revaluation of equity reserve – convertible note Balance at the end of the financial year Total reserves	(744,934) (744,934) - -
	(744,934) (744,934)
	- - - -
	- -
	(744,934) (744,934)

NOTE 26: ACCUMULATED LOSSES

	Consolidated Group
	2021 2020
	$ $
Movements in accumulated losses were as follows: Balance at the beginning of the financial year Prior period adjustment Net loss for the year Balance at the end of the financial year	(133,425,982)(131,880,142) - - (737,317) (1,545,840)
	(134,163,299)(133,425,982)

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RSM Australia Partners

INDEPENDENT AUDITOR’S REPORT To the Members of Admiralty Resources NL

Level 13, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001

T +61 (0) 2 8226 4500 F +61 (0) 2 8226 4501

Opinion

www.rsm.com.au

We have audited the financial report of Admiralty Resource NL (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration.

In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Group's financial position as at 30 June 2021 and of its financial performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 in the financial report, which indicates that the Group incurred a loss after tax of $737,317 and had net cash outflows from operating activities of $704,251 for the year ended 30 June 2021. As at that date the Group had net current liabilities of $9,622,139. The ability to continue as a going concern and realise it’s exploration assets is dependent on a number of factors, the most significant of which is to source additional funding to continue its operations and for the existing convertible note holders to convert their debt to equity, or extend the facilities. As stated in Note 1, these events or conditions, along with other matters as set forth in Note1, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

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THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING

Liability limited by a scheme approved under Professional Standards Legislation

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Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Materiality Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.

Key Audit Matter

How our audit addressed this matter

Carrying Value of Capitalised Exploration Expenditure Refer to Note 13 in the financial statements

The Group has capitalised exploration expenditure with a carrying value of $22.28m. We have determined this to be an area of significant risk due to the significant management judgement involved in assessing the carrying value in accordance with AASB 6 Exploration for and Evaluation of Mineral Resources, including:

Our audit procedures in relation to the carrying value of capitalised exploration costs included:

Ensuring that the right to tenure of the areas of
to the significant management judgement involved in interest was current through confirmation with the
assessing the carrying value in accordance with relevant government departments. AASB 6 Exploration for and Evaluation of Mineral  Critically assessing and evaluating
Resources, including: management’s impairment assessment of
Determination of whether expenditure can be exploration assets. associated with finding specific mineral  Through discussions with the Group’s resources, and the basis on which that management team, and review of the Group’s expenditure is allocated to an area of interest. ASX announcements and other relevant documentation, assessing management’s
Assessing whether any indicators of impairment determination that exploration activities have not
are present. yet progressed to the point where the existence
Determination of whether exploration activities or otherwise of an economically recoverable mineral resource may be determined.
Determination of whether exploration activities have progressed to the stage at which the existence of an economically recoverable mineral reserve may be determined.

Accounting for Convertible Notes

Refer to Note 15 in the financial statements

The Group has convertible note with a maximum drawdown facility of USD $3,600,000 and maturity date of 31 December 2021.

The convertible note has been treated as a compound financial instrument, with the debt component classified in the consolidated statement of financial position as borrowings $3,677,091. The conversion option was classified as a derivative financial liability $550,233 on the basis that it will be converted into a variable number of the Group’s shares.

The accounting for convertible note was considered to be an area of significant risk due to the following:

Our audit procedures in relation to the accounting for convertible note included:

Reviewing the convertible note deed of amendment to understand the revision and the related accounting considerations.
Evaluating the accounting treatment to determine whether the accounting for the convertible note issued was in compliance with Australian Accounting Standards.
Reviewing the valuation of the derivative financial liability at both inception and its subsequent measurement as at balance date, including the reasonableness of key inputs to the valuation model.

 It is a significant liability of the Group; and

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 The accounting is technically complex and  Assessing the appropriateness of the disclosures requires judgement in valuing the derivative in respect of the borrowings and the derivative financial liability. financial liability.

Other Information

The directors are responsible for the other information. The other information comprises the information included in the Group's annual report for the year ended 30 June 2021 but does not include the financial report and the auditor's report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This description forms part of our auditor's report.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 14 to 16 of the directors' report for the year ended 30 June 2021.

In our opinion, the Remuneration Report of Admiralty Resource NL, for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001.

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Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

RSM AUSTRALIA PARTNERS

G N Sherwood Partner

Sydney, NSW Dated: 30 September 2021

Admiralty Resources NL – Annual Report 2021

ADDITIONAL INFORMATION FOR PUBLIC LISTED COMPANIES

1. Shareholder Information

(a) Distribution of shareholders by class as at 28 September 2021.

Category (size of holding)	Number of Holders	Ordinary shares
1-1,000	1,403	759,155
1,001-5,000	2,020	5,432,832
5,001-10,000	865	6,590,610
10,001-100,000	1,635	57,210,169
100,001-9,999,999,999	445	1,233,586,387
Total	6,368	1,303,579,153

(b) Unmarketable Parcels

The number of unmarketable parcels holders as at 28 September 2021 is 5244 shareholders.

Under the ASX Listing Rules, any shareholding values at less than $500 is considered to be an unmarketable parcel.

*Class of Security*	*Number of Holders*
Ordinary fully paid shares	6,368

(d) Substantial holders as at 28 September 2021.

The names of substantial shareholders who have notified the Company in accordance with Section 671B of the Corporations Act 2001 are:

*Name*	*Number of* *Ordinary Fully Paid* *Share Held*	*% Held of Issued Ordinary* *Capital*
CITICORP NOMINEES PTY LIMITED	232,636,720	17.846%
BNP PARIBAS NOMINEES PTY LTD AU NOMS RETAILCLIENT DRP>	181,730,430	13.941%
SMART EAST GLOBAL LIMITED	129,675,646	9.948%
SINO INVESTMENT AND HOLDING PTY LTD	72,000,000	5.523%
SOPHIE ZHONG PTY LTD SHOPPING PROPERTY A/C>	70,501,898	5.408%

(e) Voting Rights

Every member is entitled to be present at a meeting and may vote. Options do not carry a right to vote.

On a show of hands, every Member has one vote. On a poll every member has:

one vote for each fully paid share; and
voting rights pro rata to the amount paid up on each partly paid share held by the member.

Admiralty Resources NL – Annual Report 2021

ADDITIONAL INFORMATION FOR PUBLIC LISTED COMPANIES

1. Shareholder Information (continued)

(f) 20 Largest Shareholders – Ordinary Capital as at 28 September 2021.

*Name*		*Number of Ordinary* *Fully Paid Share Held*	*% Held of Issued* *Ordinary Capital*
1	CITICORP NOMINEES PTY LIMITED	232,636,720	17.846%
2	BNP PARIBAS NOMINEES PTY LTD RETAILCLIENT DRP>	181,730,430	13.941%
3	SMART EAST GLOBAL LIMITED	129,675,646	9.948%
4	SINO INVESTMENT AND HOLDING PTY LTD	72,000,000	5.523%
5	SOPHIE ZHONG PTY LTD PROPERTY A/C>	70,501,898	5.408%
6	SINO INVESTMENT AND HOLDING PTY LTD	45,161,500	3.464%
7	MR BAOJIANG LIU	25,000,000	1.918%
8	HSBC CUSTODY NOMINEES(AUSTRALIA)LIMITED	23,975,652	1.839%
9	3D PENCIL PTY LTD <3D PENCIL SUPER FUND A/C>	18,063,604	1.386%
10	PERPETUAL PROSPERITY HOLDING PTY LTD MA SUPER FUND A/C>	16,666,667	1.279%
11	MR YIQUN FANG	16,411,688	1.259%
12	AUSTRALIAN CHILE MINING HOLDINGS PTY LTD	15,000,000	1.151%
13	ALLWAYS BORING PTY LTD A/C>	13,888,889	1.065%
14	BRAIDWOOD-WHITE PTY LTD A/C>	13,888,889	1.065%
15	XUEJUAN CHEN	13,888,889	1.065%
16	BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM	12,148,255	0.932%
17	AUSTRALIAN AUTOLINES PTY LIMITED A/C>	11,111,112	0.852%
18	GUISHENG BAI	11,111,112	0.852%
19	PERPETUAL PROSPERITY HOLDING PTY LTD MA SF A/C>	10,760,799	0.825%
20	MR DOMENIC MICHAEL MURDOCCA	10,641,692	0.816%

2. The name of the Company Secretary is:

Jarrod Travers White

3. Office details Registered Office: C/- Traverse Accountants Suite 305, Level 3 35 Lime Street Sydney NSW 2000

Admiralty Resources NL – Annual Report 2021

ADDITIONAL INFORMATION FOR PUBLIC LISTED COMPANIES

4. Share Registry Details

Boardroom Limited Level 12, 225 George Street Sydney NSW 2000 Telephone: 1300 737 760 (within Australia) +61 2 9690 9600 (International callers) Facsimile: +61 2 9279 0664

5. Stock Exchange Listing

Quotation has been granted for all the ordinary shares of the Company on the Australian Securities Exchange Limited.

6. Vendor Securities

There are no restricted securities on issue as at 29 September 2020.

7. Unquoted Securities

There were no unquoted securities as at 29 September 2020.

Appendix I - Schedule of Tenements

*Tenement Reference*	*Registered Holder*	*Country*	*Project Group*
M39/159 (50%)	Pyke Hill Resources Pty Ltd	Australia	Pyke Hill
MLN 726	Bulman Resources Pty Ltd	Australia	Bulman
MLN 727	Bulman Resources Pty Ltd	Australia	Bulman
EL 25931	Bulman Resources Pty Ltd	Australia	Bulman
EL 23814	Bulman Resources Pty Ltd	Australia	Bulman
*HARPER SOUTH*
Negrita 1-4	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Negrita Group
Leo Doce, 1-60	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Negrita Group
Soberana 1-5	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Soberana Group
Phil Cuatro, 1-16	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Soberana Group
Leo 101, 1-30	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Soberana Group
Leo Cinco, 1-60	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Mariposa Group
Leo Seis, 1-58	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Mariposa Group
Leo Ocho, 1-60	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Mariposa Group
Leo Nueve. 1-60	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Mariposa Group
Leo Diez, 1-40	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Mariposa Group
Leo Once, 1-40	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Mariposa Group
Leo Trece, 1-60	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Mariposa Group
*OTHER SECTORS*
Pampa Tololo 1-2475	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Pampa Tololo Group
Cerro Varilla 1-732	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Pampa Tololo Group
Leo 14, 1-40	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Other Tenements
Leo 105	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Other Tenements
Leo 106	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Other Tenements
Leo 107	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Other Tenements
Mal Pelo	Admiralty Minerals Chile Pty Ltd Agencia en Chile	Chile	Other Tenements

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ADMIRALTY RESOURCES NL. — Annual Report 2021

64309_rns_2021-09-29_1f8be0f3-d2ef-439c-ae10-53fbb7c095a3.pdf

CORPORATE DIRECTORY

Admiralty Resources Group Structure

CONTENTS

CHAIRMAN’S REPORT

Soberana

Mariposa

Corporate Activities

Looking Forward to 2022

CORPORATE GOVERNANCE STATEMENT

COMPLIANCE WITH ASX CORPORATE GOVERNANCE RECOMMENDATIONS

Introduction

Council Principle 1: Lay solid foundations for management and oversight

Role of the Board

Responsibility of the Board

CORPORATE GOVERNANCE STATEMENT

Responsibility of the Managing Director:

Appointment, induction and training

CORPORATE GOVERNANCE STATEMENT

Company Secretary

Diversity Policy

Performance Review of Directors

CORPORATE GOVERNANCE STATEMENT

Performance review of Executives

Council Principle 2: Structure the board to add value

Nomination

Board Skills and Experience

Independent Directors

CORPORATE GOVERNANCE STATEMENT

Induction and Training

Council Principle 3: Instil a culture of acting lawfully, ethically and responsibly

Core Values

Code of Conduct

Whistleblower Policy

CORPORATE GOVERNANCE STATEMENT

Council Principle 4: Safeguard integrity in corporate reporting

Board Committees

CEO Declaration under 295A of the Corporations Act 2001

External Auditor

Verify the integrity of any periodic corporate report it releases to the market that is not audited or reviewed by an external auditor

CORPORATE GOVERNANCE STATEMENT

Council Principle 5: Make timely and balanced disclosure

Continuous Disclosure

Council Principle 6: Respect the rights of shareholders

Communication Policy

CORPORATE GOVERNANCE STATEMENT

Company's Website

Council Principle 7: Recognise and manage risk

Oversight and Management of Material Business Risks

Internal Audit

CORPORATE GOVERNANCE STATEMENT

Material exposure to economic, environmental and social sustainability risks

Council Principle 8: Remunerate fairly and responsibly

Remuneration Committee

DIRECTORS’ REPORT

DIRECTORS

Managing Director and Chief Executive Officer

Company Secretary

BOARD OF DIRECTORS

Qing Zhong

Managing and Chief Executive Officer

Bin Li

Non-Executive Chairperson

DIRECTORS’ REPORT

Executive Director

Jarrod Travers White, B. Bus, CA, CTA

Company Secretary

DIRECTORS’ REPORT

REMUNERATION REPORT – AUDITED

Remuneration policy for Directors and Executives

Remuneration

Director and Executive details

Principles used to determine the nature and amount of remuneration

Non – Executive Directors

Short - term incentives

Retirement benefits

DIRECTORS’ REPORT

REMUNERATION REPORT – AUDITED

ADMIRALTY RESOURCES NL. Annual Report 2021