Alkane Resources — Annual Report 2021

Oct 17, 2021

==> picture [376 x 251] intentionally omitted <==

==> picture [381 x 257] intentionally omitted <==

ANNUAL REPORT 2021

Disclaimer

This report contains certain forward-looking statements and forecasts, including possible or assumed reserves and resources, production levels and rates, costs, prices, future performance or potential growth of Alkane Resources Ltd, industry growth or other trend projections. Such statements are not a guarantee of future performance and involve unknown risks and uncertainties, as well as other factors which are beyond the control of Alkane Resources Ltd. Actual results and developments may differ materially from those expressed or implied by these forward-looking statements depending on a variety of factors. Nothing in this report should be construed as either an offer to sell or a solicitation of an offer to buy or sell securities.

This document has been prepared in accordance with the requirements of Australian securities laws, which may differ from the requirements of United States and other country securities laws. Unless otherwise indicated, all Ore Reserve and Mineral Resource estimates included or incorporated by reference in this document have been, and will be, prepared in accordance with the JORC classification system of the Australasian Institute of Mining, and Metallurgy and Australian Institute of Geosciences.

Contents

Business Review	4
Chairman’s Message	5
Group Overview	6
Tomingley Gold Operatons	8
Projects & Exploraton	16
ESG	24
Financial Report	30
Directors’ Report	31
Auditor’s Independence Declaraton	51
Financial Statements	52
Consolidated Financial Statements	54
Notes to the
Consolidated Financial Statements	58
Directors’ Declaraton	94
Independent Auditor’s Report	95
Shareholder Informaton	100
Corporate
Governance Statement	101
Schedule of Mining Tenements	102

Company Information

ACN 000 689 216 ABN 35 000 689 216

Directors

I J Gandel (Non-Executive Chairman) N P Earner (Managing Director) D I Chalmers (Technical Director) A D Lethlean (Non-Executive Director) G M Smith (Non-Executive Director)

Joint Company Secretaries

D Wilkins J Carter

Registered office and principal place of business Level 4 66 Kings Park Road West Perth WA 6005 Telephone: 61 8 9227 5677

Share register

Advanced Share Registry Limited 110 Stirling Highway Nedlands WA 6009

Auditor

PricewaterhouseCoopers Brookfield Place 125 St Georges Terrace Perth WA 6000

Securities exchange listings

Ordinary fully paid shares

Australian Securities Exchange (Perth) ASX code: ALK

Contact

http://www.alkane.com.au mail@alkane.com.au

BUSINESS REVIEW

4 | Alkane Resources Annual Report 2021

BUSINESS REVIEW | CHAIRMAN'S MESSAGE

Chairman's Message

On behalf of your Board of Directors, I present the Alkane Resources Annual Report for 2021. In the past year, we have made excellent progress in our quest to become Australia’s next multi-mine gold producer, advancing projects at both Tomingley and Boda.

==> picture [220 x 219] intentionally omitted <==

We have come to the end of another strong year for Alkane, a year in which we successfully demerged Australian Strategic Materials Ltd (ASM) and the Dubbo Project, allowing us to consolidate our focus on gold. ASM has gone from strength to strength since the demerger and on behalf of the Board and Alkane shareholders I wish them every success in the future.

A key focus of Alkane for the year was progressing the approval process for development of the San Antonio and Roswell deposits that will prolong the life of the Tomingley gold mine. Updated Mineral Resources were announced and incorporated into the Tomingley life of mine plan, which now extends until at least 2031.

As required for a NSW State Significant Development, we are currently finalising the all-important Environmental Impact Statement, which is the culmination of a lot of hard work by a great number of people. On behalf of the Board, I thank our employees and the many consultants who have undertaken extensive environmental studies and community consultations, not to mention careful design of the project informed by these studies. I also thank the community and stakeholders for their positive and willing engagement. We are hoping for approval around the middle of 2022, and look forward to embarking on this next chapter at Tomingley.

I also extend thanks to our gold mining and production teams at Tomingley, who have continued to perform reliably and productively in another year of uncertainty due to the pandemic. Our production of 56,958 ounces of gold poured for the year exceeded guidance, which is testament to their diligence.

Following our major discovery of extensive gold mineralisation at Boda in 2019, our exploration team focused this past year on a large drilling program to test the dimensions of the system. There is still a long way to go, but the encouraging results continue to fuel our optimism that there is potential for a large tier-one gold-copper project. We were also delighted for Alkane to be named the NSW Minerals Council’s 2021 Explorer of the Year in May, on the back of the Boda discovery. I congratulate our Technical Director, Ian Chalmers, and our NSW exploration team on this achievement.

As we continue to focus on our two major gold projects in the coming year, I once again thank our Managing Director, Nic Earner, and the entire Alkane team, along with our strategic partners and consultants. I also extend thanks to our many shareholders and stakeholders for their ongoing support of Alkane.

Ian Gandel

Chairman Alkane Resources Ltd

Alkane Resources Annual Report 2021 | 5

BUSINESS REVIEW | GROUP OVERVIEW

Group Overview

Alkane has maintained a strong focus on gold exploration, production and investment, making significant advances towards its vision of becoming a multimine gold producer and successfully demerging Australian Strategic Materials.

About Alkane

Alkane Resources Ltd is the parent entity of the Alkane Group, and is poised to become Australia’s next multi-mine gold producer. The Group’s projects and operations are primarily located in central western New South Wales in eastern Australia.

Current gold production is from Alkane’s wholly owned subsidiary, Tomingley Gold Operations, which has been operating since 2014. The Company is currently expediting the approval pathway to develop two gold deposits immediately south of Tomingley to extend the mine’s life to at least 2031.

Alkane has an enviable exploration track record and controls several highly prospective gold and copper tenements. A major focus is the tenement area between Tomingley and Peak Hill, where a number of large resources have been defined that have the potential to provide additional ore for Tomingley’s operations.

The Company is also progressing a drill program in the Northern Molong Volcanic belt, east of Dubbo, following the discovery of extensive gold-copper porphyry mineralisation at Boda in 2019. Alkane believes Boda has the potential to be a large, tier-one gold-copper project.

Alkane’s gold interests extend throughout Australia, including holdings of ~19.8% of Genesis Minerals (ASX: GMD) and ~9.7% of Calidus Resources (ASX: CAI), both gold exploration and development companies in Western Australia. The Company continues to evaluate strategic investments in other gold exploration and aspiring mining companies, where it can contribute additional capital, expertise and operating capability, for mutual benefit.

Alkane is listed on the Australian securities exchange (ASX:ALK).

| Alkane Resources Annual Report 2021

BUSINESS REVIEW | GROUP OVERVIEW

ASM demerged

Alkane demerged its former subsidiary, Australian Strategic Materials (ASM), to realise a very large increase in combined market value in the following year.

ASM was Alkane’s holding company for the polymetallic Dubbo Project (rare earths, zirconium, niobium and hafnium). The Alkane Board judged it time for ASM to move forward independently, identifying:

The demerger was announced 20 May 2020 and passed at an Extraordinary General Meeting on 16 July 2020. ASM was first listed on the ASX on 30 July 2020. The demerger has been a resounding success, with Alkane’s market capitalisation largely unchanged over the financial year, and ASM’s market capitalisation close to $1 billion as at 30 June 2021.

• rising but diverging investor interest in gold and critical metals (particularly rare earths), and

• the need for independent strategic focus for each company, which have different markets and growth opportunities.

Highlights of the year

Tomingley mine life extended

Alkane has incorporated the San Antonio and Roswell resources into the Tomingley life of mine plan, which has been extended to at least 2031. The plan shows the production of approximately 745,000 ounces of gold and relies upon development approval being achieved.

Large-scale Boda system revealed

Alkane’s extensive drill program at Boda and surrounds continues to reveal the very large scale of the Boda system and indicates potential repeat systems of significant scale within the structural corridor.

Strategic investment

With the approval of Genesis shareholders, Alkane invested $2.2 million to maintain its holding of approximately 19.8 per cent of Genesis Minerals Ltd (ASX:GMD). The Company also invested another $7.5 million during the year for rights issues and placement, for a total investment of $9.7 million.

==> picture [94 x 52] intentionally omitted <==

oz 745,000

==> picture [81 x 81] intentionally omitted <==

Tomingley extended to

2031

Drilled 36 holes totalling

m 36,638 at Boda/Kaiser

Alkane holds

19.8% Genesis Minerals

Alkane Resources Annual Report 2021 |

7

BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS

Tomingley Gold Operations

While mining and production continued, the Company progressed consultations, finalised project design and updated Mineral Resource estimates for the Tomingley Gold Extension Project. These were incorporated into an updated life of mine plan that extends to at least 2031.

Mining and Production

Tomingley Gold Operations is a wholly owned subsidiary of Alkane, located near the village of Tomingley, approximately 50 kilometres southwest of Dubbo in central western New South Wales. The gold processing plant was commissioned in January 2014 and has been operating at the design capacity of 1Mtpa since late May 2014. Mining is currently based on the Caloma and Wyoming deposits.

Open cut mining occurred in the Wyoming One, Wyoming Three, Caloma One and Caloma Two pits from late 2013 until early 2019. Upon improved gold prices, development of a previously approved cutback in the northeast of the Caloma One open cut commenced in September 2020. Reconciliations of ore mined compared to resource estimates show the grade is higher than forecast, resulting in higher gold production.

Development of the underground mine at the Wyoming One deposit continued during the year. An additional portal was established at the base of the Caloma One pit, and that drive has connected with the underground drive from Wyoming One and Caloma Two.

The operation processed a mix of underground stope material and ore extracted from the Caloma cutback, with low-grade stockpiles processed when capacity permitted. The processing plant continues to perform very well, with recovery performing as expected. Production of 56,958 ounces for the financial year exceeded the guidance of 50,000-55,000 ounces (ASX Announcement 8 July 2021).

Total gold poured in FY2021: ounces 56,958 at an All in Sustaining Cost (AISC) of A$1,320* per ounce

Total gold sold in FY2021:

ounces 55,929 at an average of A$2,286 per ounce

*All in Sustaining Cost (AISC) comprises all site operating costs, royalties, mine exploration, sustaining capex and mine development and an allocation of corporate costs, presented on the basis of ounces sold.

8 | Alkane Resources Annual Report 2021

BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS

Tomingley Gold Extension Project

Alkane plans to extend gold mining operations at Tomingley to include the recently defined San Antonio and Roswell deposits immediately south of the existing mine.

The Company commenced the application process for this NSW State Significant Development at the beginning of the reporting period. The primary focus of the year was consultation with regulators, landholders and other stakeholders, along with detailed on-ground assessments, environmental studies and project design.

The Scoping Report was submitted to the NSW Department of Planning, Industry and Environment on 22 June 2021. Alkane plans to submit the Environmental Impact Statement by September 2021, with public exhibition expected to follow in Q4 2021. The expected timing for project approval is mid-2022.

==> picture [285 x 234] intentionally omitted <==

Project overview

Feedback from the consultation and approval process has directly informed the design of the project, which will encompass both open cut and underground mining. The open cut will comprise three pits combining the adjacent San Antonio and Roswell deposits (the SAR open cut). Underground mining will initially utilise the exploration drive originating at the Wyoming One underground operation and advancing to the north end of Roswell.

A waste rock emplacement will be established in the vicinity of the SAR open cut. The two Caloma open cuts will be backfilled, as will a portion of the SAR open cut, in time. Progressive rehabilitation will ensure all landforms are stable, productive and reside sympathetically within the environment.

Since the San Antonio and Roswell deposits are underneath the current Newell Highway, Alkane will construct a new 8.4km section of highway to bypass the development. The smaller, local Kyalite Road also needs to be realigned since it currently runs through the proposed open cut.

The Tomingley processing plant will undergo some modifications to achieve the already approved 1.5Mtpa rate, with production to be increased to 1.75Mtpa for short periods. A second residue storage facility will be constructed adjacent to the first. Permission for the first stages of the new residue storage facility was granted in May 2021 as the fifth modification to approval.

During the year, Alkane purchased seven properties (approximately 2700ha) for this project. Some of this land holds the San Antonio and Roswell deposits or is earmarked for waste rock emplacements and other supporting mine infrastructure. A number of properties are required for construction of the new section of Newell Highway, as well as biodiversity offsets. The remainder will be operated as a commercial farm.

The capital cost of approximately $87 million, to be expended predominantly in FY2023, is expected to be funded from operating cashflow and debt. The Company has commenced discussions with potential debt providers.

Alkane Resources Annual Report 2021 |

BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS

==> picture [451 x 662] intentionally omitted <==

Indicative site layout for the Tomingley Gold Extension Project

10 | Alkane Resources Annual Report 2021

BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS

San Antonio and Roswell (SAR) resource updates

Continued resource drilling at the San Antonio and Roswell deposits led to updated resource estimates for both deposits. A Mineral Resource estimation was calculated on the Roswell deposit with a nominal 20 metre drill hole spacing to depths ranging from 0mLR to -200mRL, and averaging about 350 metres below ground surface (ASX Announcement 4 November 2020). The mineralisation remains open at depth.

A Mineral Resource estimation was calculated on the San Antonio deposit with a nominal 20 metre drill hole spacing to depths ranging from 30mLR to -200mRL, and averaging about 250 metres below ground surface (ASX Announcement 16 February 2021).

Refer to p13 for the Mineral Resource tables.

==> picture [285 x 277] intentionally omitted <==

3D model of the Roswell mineralisation

==> picture [285 x 215] intentionally omitted <==

3D model of the San Antonio mineralisation

Alkane Resources Annual Report 2021 | 11

BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS

Revised Life of Mine Plan

Alkane has incorporated the San Antonio and Roswell resources into the Tomingley life of mine plan, which has been extended to at least 2031 (ASX announcement 3 June 2021). The revised life of mine plan relies upon approval for the Tomingley Gold Extension Project being achieved.

The existing underground development at the Wyoming and Caloma deposits remains open at depth and strike in several areas, with the mining schedule currently extending into 2024. Underground mining of the Roswell deposit is expected to commence in the 2023 financial year via an exploration drive starting at the existing operation. Approval for development of this exploration drive was granted in May 2020.

Open cut mining will transition from the Caloma cutback to development of the southern part of the San Antonio deposit in FY2024 (pending the Newell Highway realignment). Mining of the San Antonio deposit will occur from south to north to meet the needs of the pit backfill and progressive rehabilitation schedule. Open cut mining of Roswell is scheduled to commence in the second half of 2024.

The plan shows the production of approximately 745,000 ounces of gold for the period, with processing ramping to a 1.5Mtpa feed rate. There is substantial upside potential to extend the Roswell underground and maintain production at a rate of at least 100,000 ounces per annum.

Indicative production volume by ore source and year for Tomingley’s updated life of mine plan

==> picture [511 x 295] intentionally omitted <==

----- Start of picture text -----

120000
100000
80000
60000
40000
20000
0
FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31
Tomingley open cut Roswell underground Potential Roswell underground extension
Tomingley underground SAR open cut
----- End of picture text -----

12 | Alkane Resources Annual Report 2021

BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS

Mineral Resources and Ore Reserves

Alkane reports Ore Reserves and Mineral Resources as at 30 June 2021 in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC 2012). These estimates take into account ore depleted by mining during the 2021 financial year and were reported to the ASX on 7 September 2021. Any differences to those tables are corrections to typographical errors; the assumptions and parameters detailed in that report are unchanged. Mineral Resources are wholly inclusive of Ore Reserves.

Mineral Resources

Tomingley Gold Operations Mineral Resources (as at 30 June 2021)

==> picture [512 x 242] intentionally omitted <==

----- Start of picture text -----

MEASURED INDICATED INFERRED TOTAL
TOTAL GOLD
DEPOSIT Tonnage Grade Tonnage Grade Tonnage Grade Tonnage Grade (koz)
(kt) (g/t Au) (kt) (g/t Au) (kt) (g/t Au) (kt) (g/t Au)
Open Pittable Resources (cut-off 0.50g/t Au)
Wyoming One 573 1.8 412 1.2 135 0.7 1,120 1.4 52
Wyoming Three 86 2.0 16 1.3 33 1.4 135 1.7 8
Caloma One 801 1.6 1,070 1.2 579 1.2 2,450 1.3 105
Caloma Two 57 2.3 875 1.9 30 1.8 962 1.9 58
Sub Total 1,517 1.7 2,373 1.4 777 1.1 4,667 1.5 222
Underground Resources (cut-off 1.3g/t Au)
Wyoming One 1102 3.0 1,050 2.7 86 2.0 2,238 2.8 201
Wyoming Three 46 2.2 24 2.0 20 1.9 90 2.1 6
Caloma One 157 2.6 234 2.1 374 2.1 765 2.2 54
Caloma Two 2 3.6 699 2.5 153 2.3 854 2.5 67
Sub Total 1,307 2.9 2,007 2.6 633 2.1 3,947 2.6 328
TOTAL 2,824 2.3 4,380 1.7 1,410 1.8 8,614 2.0 550
----- End of picture text -----

Apparent arithmetic inconsistencies are due to rounding.

SAR Mineral Resources (as at 30 June 2021)

==> picture [512 x 104] intentionally omitted <==

----- Start of picture text -----

MEASURED INDICATED INFERRED TOTAL
TOTAL GOLD
DEPOSIT Tonnage Grade Tonnage Grade Tonnage Grade Tonnage Grade (koz)
(kt) (g/t Au) (kt) (g/t Au) (kt) (g/t Au) (kt) (g/t Au)
Total Resources (cut-off 0.50g/t Au)
Roswell 7,871 2.07 2,188 1.93 10,059 2.04 660
San Antonio 5,930 1.82 1,389 1.32 7,319 1.73 406
TOTAL 13,801 1.96 3,577 1.69 17,378 1.91 1,066
----- End of picture text -----

Apparent arithmetic inconsistencies are due to rounding.

Alkane Resources Annual Report 2021 |

13

BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS

Ore Reserves

Tomingley Gold Operations Ore Reserves (as at 30 June 2021)

==> picture [512 x 204] intentionally omitted <==

----- Start of picture text -----

PROVED PROBABLE TOTAL
TOTAL GOLD
DEPOSIT Tonnage Grade Tonnage Grade Tonnage Grade (koz)
(kt) (g/t Au) (kt) (g/t Au) (kt) (g/t Au)
Open Pittable Reserves (cut-off 0.40g/t Au)
Wyoming One 0 0.0 0 0.0 0 0.0 0
Wyoming Three 0 0.0 0 0.0 0 0.0 0
Caloma One 398 1.7 78 1.2 476 1.6 25
Caloma Two 0 0.0 0 0.0 0 0.0 0
Stockpiles 72 1.2 0 0 72 1.2 3
Sub Total 470 1.6 78 1.2 548 1.6 28
Underground Reserves (cut-off 1.3g/t Au)
Wyoming One 780 2.1 410 2.1 1,190 2.1 81
Caloma One 3 1.5 113 1.5 116 1.5 5
Caloma Two 519 1.8 519 1.8 31
Sub Total 783 2.1 1,042 1.9 1,825 2.0 117
TOTAL 1,253 1.8 1,120 1.9 2,373 1.9 144
----- End of picture text -----

Apparent arithmetic inconsistencies are due to rounding.

SAR Ore Reserves (as at 30 June 2021)

==> picture [512 x 155] intentionally omitted <==

----- Start of picture text -----

PROVED PROBABLE TOTAL
TOTAL GOLD
DEPOSIT Tonnage Grade Tonnage Grade Tonnage Grade (koz)
(kt) (g/t Au) (kt) (g/t Au) (kt) (g/t Au)
Open Pittable Reserves (cut-off 0.40g/t Au)
Roswell 0 0.0 3,679 1.7 3,679 1.7 202
San Antonio 0 0.0 4,188 1.6 4,188 1.6 218
Sub Total 0 7,867 1.7 7,867 1.7 420
Underground Reserves (cut-off 1.3g/t Au)
Roswell 0 0.0 1,575 2.8 1,575 2.8 142
San Antonio 0 0.0 0 0.0 0 0.0
Sub Total 0 0.0 1,575 2.8 1,575 2.8 142
TOTAL 0 0.0 9,442 1.9 9,442 1.9 563
----- End of picture text -----*

Apparent arithmetic inconsistencies are due to rounding.

• San Antonio Reserves not determined at this time.

Mineral Resource and Ore Reserve Governance and Internal Controls

The Alkane Group has put governance arrangements and internal controls with respect to its estimates of Mineral Resources and Ore Reserves, including:

• oversight and approval of each annual statement by the Technical Director;

• establishment of internal procedures and controls to meet JORC Code 2012 compliance in all external reporting;

• independent review of new and materially changed estimates;

• annual reconciliation with internal planning to validate reserve estimates for operating mines; and

• Board approval of new and materially changed estimates.

14 | Alkane Resources Annual Report 2021

BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS

Comparative Resources and Reserves

The tables below compare the total Mineral Resources and Ore Reserves as at 30 June 2021 year on year with 30 June 2020.

Tomingley Gold Operations Comparative Mineral Resources (30 June 2020 to 30 June 2021)

==> picture [512 x 205] intentionally omitted <==

----- Start of picture text -----

2020 2021
DEPOSIT Tonnage Grade Gold Tonnage Grade Gold
(kt) (g/t Au) (koz) (kt) (g/t Au) (koz)
Open Pit
Wyoming One 1,159 1.5 57 1,120 1.4 52
Wyoming Three 135 1.7 8 135 1.7 8
Caloma One 2,719 1.3 115 2,450 1.3 105
Caloma Two 902 2.0 58 962 1.9 58
Sub Total 4,915 1.5 238 4,667 1.5 222
Underground
Wyoming One 2481 2.9 228 2238 2.8 201
Wyoming Three 90 2.1 6 90 2.1 6
Caloma One 752 2 50 765 2.2 54
Caloma Two 1211 2.3 88 854 2.4 67
Sub Total 4534 2.6 372 3947 2.6 328
TOTAL 9,449 2.0 610 8,614 2.0 550
----- End of picture text -----

Apparent arithmetic inconsistencies are due to rounding.

Tomingley Gold Operations Comparative Ore Reserves (30 June 2020 to 30 June 2021)

==> picture [512 x 193] intentionally omitted <==

----- Start of picture text -----

2020 2021
DEPOSIT Tonnage Grade Gold Tonnage Grade Gold
(kt) (g/t Au) (koz) (kt) (g/t Au) (koz)
Open Pit
Wyoming One 0 0.0 0
Wyoming Three 0 0.0 0
Caloma One 569 1.6 30 476 1.6 24
Caloma Two 0 0.0 0
Stockpiles 207 0.8 6 72 1.2 3
Sub Total 776 1.4 36 548 1.6 27
Underground
Proven 573 1.9 34 783 2.1 54
Probable 1,618 2.0 106 1,042 1.9 63
Sub Total 2,191 2.0 140 1,825 2.0 117
TOTAL 2,967 1.8 176 2,373 1.9 144
----- End of picture text -----

Apparent arithmetic inconsistencies are due to rounding.

The primary differences from 2020 to 2021 are:

• Caloma One cut-back placed into the reserves

• Underground reserves depleted through mining at Wyoming One; and

• Addition of Caloma One and Caloma Two reserves.

Alkane Resources Annual Report 2021 |

15

BUSINESS REVIEW | PROJECTS & EXPLORATION

Projects & Exploration

Following the discovery at Boda in 2019-2020, Alkane embarked on a 30,000-metre drilling program at the Northern Molong Porphyry Project to progress understanding of the extensive mineralised system. The other main exploration focus was completing resource definition drilling at the San Antonio and Roswell deposits within the Tomingley Gold Project.

Northern Molong Porphyry Project (gold-copper) Alkane Resources Ltd 100%

Encompassing four exploration licences (Bodangora, Boda South, Kaiser and Finns Crossing), the Northern Molong Porphyry Project (NMPP) covers an area of 115 square kilometres, centred about 20 kilometres north of Wellington and about 35 kilometres east of Dubbo.

The project covers a section of the northern Molong Volcanic Belt, which is highly prospective for large-scale porphyry gold-copper deposits similar to the Cadia Valley deposits near Orange. Alkane’s exploration activity over the past several years has established a geological and geochemical framework for the project area and demonstrated the existence of stratigraphic and intrusive rock sequences very similar to that at Cadia. The work also shows that gold-copper mineralisation is hosted by very similar rock types at similar stratigraphic positions – notably the margins of major magnetic/intrusive complexes.

Alkane has a number of exploration prospects located adjacent to five identified magnetic/intrusive complexes (Kaiser, Boda, Comobella, Driell Creek and Finns Crossing) within a 15-kilometre northwest trending corridor.

During the 2020 financial year, Alkane discovered a significant porphyry gold-copper system at the Boda prospect, positioned at the western margin of the Boda Intrusive Complex. The Company believes Boda has the potential to be a large, tier-one gold-copper project.

Kaiser-Boda prospective corridor

During 2020-2021, Alkane’s NMPP exploration activities sought to progress understanding of the large-scale Boda mineralised system. A major RC and diamond core drilling program of approximately 30,000 metres commenced in July 2020. The program is testing the dimensions and extensions to the large low-grade mineralised envelope as well as any internal high-grade zones at Boda.

To understand the broader extent of the mineralised system, the drilling program has been extended beyond Boda. Of particular interest is the highly prospective fourkilometre corridor between the Kaiser and Duke systems (1.5 kilometres northwest of Boda) and Boda Three, which lies two kilometres to the south. Other known gold-copper mineralisation occurrences and coincident IP anomalies within the northwest-trending structural corridor between Boda and Finns Crossing (including a strong magnetic anomaly at Murga) are also being explored.

In addition to revealing the very large scale of Boda, Alkane’s drill program indicates the existence of potential repeat systems of significant scale within the structural corridor. Results of the exploration program were reported in a series of ASX Announcements on 11 November 2020, 18 December 2020, 8 March 2021, 3 May 2021 and 22 July 2021.

16 | Alkane Resources Annual Report 2021

BUSINESS REVIEW | PROJECTS & EXPLORATION

Map of the Northern Molong Porphyry Project Regional Geology

Boda and Boda Two

Drilling at Boda indicates the high-grade zone (sulphide cemented breccia) extends at least 100 metres deeper than indicated by previous drilling. The results also show extensions to the mineralised system to the south at Boda Two, approximately one kilometre from the main Boda target zone. Boda Two drill results have identified a similar broad zone of low-grade gold-copper porphyry mineralisation with a gold-enriched pyrite zone on the eastern margin.

Current results for Boda suggest a large alkalic porphyry system of 400 metres wide, over 1000 metres north-south strike length and more than 1100 metres vertically. The high-grade breccia has now been intersected by drill holes KSDD007, KSDD011, KSDD012, KSDD028, KSDD031 and KSRC033D, indicating at this early stage that the breccia is approximately 50 metres in true width, thickening up plunge. Further drilling is planned at Boda, Boda Two and Boda Three to test extensions and continue defining dimensions of the system.

Alkane Resources Annual Report 2021 |

17

BUSINESS REVIEW | PROJECTS & EXPLORATION

Kaiser and Duke

A single diamond core drilled at the Kaiser and Duke systems (KSDD027) intersected two zones of gold-copper porphyry mineralisation with grades and alteration similar to Boda. Based on earlier drilling by Alkane in 2015-2019, the Duke zone is currently interpreted to be approximately 250 metres wide, striking over 800 metres and open along strike and at depth. It is understood to run parallel to the Kaiser zone, which was the site of historic, extensive shallow drilling.

Murga

As part of the ongoing exploration program of the NMPP, Alkane conducted reconnaissance shallow air-core drilling at the Murga prospect (Finns Crossing) approximately 12 kilometres northwest of Boda. Murga is positioned within the same northwest structural corridor that hosts both the Kaiser and Boda porphyry discoveries. Targeting a large, linear magnetic anomaly at the prospect, the drilling program comprised 75 air-core drill holes totalling 1,354 metres along a strike length of two kilometres. Results confirmed the prospectivity of the target, with further exploration planned (ASX Announcement 22 July 2021).

==> picture [285 x 296] intentionally omitted <==

Cross section of mineralised core from diamond hole KSDD007 drilled at Boda, showing 2cm-thick bornite-chalcopyrite-quartz vein at 385m downhole.

==> picture [596 x 384] intentionally omitted <==

----- Start of picture text -----

Explorer of the year award
Alkane won the NSW Minerals Council’s 2021 Explorer of the Year
award for the Boda discovery.
Pictured (L-R) are Exploration Manager NSW David Meates,
Technical Director Ian Chalmers, Non-Executive Director Tony
18 | Alkane Resources Annual Report 2021 Lethlean and Chairman Ian Gandel.
----- End of picture text -----

BUSINESS REVIEW | PROJECTS & EXPLORATION

==> picture [511 x 715] intentionally omitted <==

Alkane’s drilling program in the Kaiser-Boda corridor to-date, overlaying regional magnetics

Alkane Resources Annual Report 2021 | 19

BUSINESS REVIEW | PROJECTS & EXPLORATION

Tomingley Gold Project (gold) Alkane Resources Ltd 100%

Alkane’s Tomingley Gold Project covers an area of approximately 440 square kilometres, stretching 60 kilometres north-south along the Newell Highway in central western New South Wales. The prospective belt extends from near the village of Tomingley in the north (about 50 kilometres southwest of Dubbo), through Peak Hill and almost to Parkes in the south.

The project incorporates the Company’s currently active Tomingley Gold Operations, the Tomingley Gold Extension Project, and the inactive Peak Hill Gold Mine.

Exploration for the year focused on updating the resources for the San Antonio and Roswell deposits (ASX Announcements 16 February 2021 and 4 November 2020 respectively), which have been incorporated into the life of mine plan for Tomingley – refer to the preceding section of this report.

Alkane also undertook regional exploration at the Macleans prospect north of Roswell, and the El Paso prospect south of San Antonio. Other key prospects include Glen Isla, Myalls United, Smiths, Black Snake, Trewilga and McGregors.

==> picture [285 x 321] intentionally omitted <==

Peak Hill Gold Mine

Located 15 kilometres south of Tomingley, Alkane’s Peak Hill Gold Mine operated from 1996 to 2005 as an open cut heap leach. While the site is substantially rehabilitated, it remains an active Mining Lease.

Based upon a revised gold price, an updated Mineral Resource estimate (JORC 2012), completed in October 2018, identified an initial Inferred Resource of 108,000 ounces of gold. The following Mineral Resource estimate is unchanged since 30 June 2020.

Technological advances and the gold price increases in the last two decades led Alkane to re-evaluate the economics of further development. During the reporting period, the Company completed a metallurgical test program that explored different recovery methods for the ore, which is moderately refractory in nature, unlike the Tomingley deposits. Results showed that recoveries in excess of 95 per cent are possible with bio-oxidation. Further metallurgical testing and a conceptual mining plan is in progress.

Alkane retains its Mining Lease and Environment Protection Licence for Peak Hill Gold Mine, but any further mine development would require further environmental assessment and government approval.

Peak Hill Mineral Resource (as at 30 June 2021)

==> picture [512 x 69] intentionally omitted <==

----- Start of picture text -----

Resource Tonnes Gold grade Gold metal Copper Metal
Deposit Cut-off
category (Mt) g/t (koz) (%)
Proprietary
Inferred 2g/t Au 1.02 3.29 108 0.15
Underground
TOTAL Inferred 2g/t Au 1.02 3.29 108 0.15
----- End of picture text -----

20 | Alkane Resources Annual Report 2021

BUSINESS REVIEW | PROJECTS & EXPLORATION

Map of the gold corridor between Tomingley and Peak Hill

Alkane Resources Annual Report 2021 | 21

BUSINESS REVIEW | PROJECTS & EXPLORATION

==> picture [284 x 672] intentionally omitted <==

Other Projects

Due to the extensive effort on the Tomingley Gold and Northern Molong Porphyry Projects, exploration activity on other projects was largely limited to data review for target definition.

Alkane’s other exploration projects in central western New South Wales are: Glen Isla – Gundong (gold); Armstrongs (gold); Elsienora (gold); Cudal (gold-zinc); Rockley (gold); Trangie (nickel-copper+); Mt Conqueror (gold). (All Alkane Resources Ltd 100%)

Alkane’s 100% interest in the Wellington – Galwadgere project (copper-gold) was purchased by Sky Metals Limited (ASX:SKY) in early 2021, as per the Option to Purchase Agreement with Alkane (ASX SKY 24 August 2020).

The rights and liabilities for Alkane’s 19.4% diluting interest in the Leinster Region Joint Venture (nickel-gold) have been assigned to Australian Nickel Investments Pty Ltd (ANI) under an executed deed.

The Dubbo Project is owned by Australian Strategic Materials Ltd (ASM), which demerged from Alkane in July 2020. For information about ASM and the Dubbo Project, refer to the ASM Annual Report.

22 | Alkane Resources Annual Report 2021

BUSINESS REVIEW | PROJECTS & EXPLORATION

Alkane’s projects and operations are primarily located in the vicinity of Dubbo in central western New South Wales.

Alkane Resources Annual Report 2021 | 23

BUSINESS REVIEW | ESG

ESG

Alkane strives to uphold high environmental, social and governance (ESG) standards across all its activities. The Company aims to deliver low-impact operations with openness and integrity, while providing a safe and rewarding working environment for employees and a positive legacy for local communities.

==> picture [284 x 391] intentionally omitted <==

Alkane undertakes water monitoring as part of its Environmental Management Strategy.

Environmental stewardship

Alkane’s exploration, mining, processing and rehabilitation activities are carefully designed with the smallest practical environmental footprint in mind. Environmental responsibility is embedded into the Company’s normal business practice.

Tomingley environmental performance

At Alkane’s existing gold mining operation at Tomingley, the Company’s approach to environmental management is documented in a comprehensive Environmental Management Strategy (EMS), which is underpinned by a series of site-specific Environmental Management Plans. These are implemented by a dedicated Environmental Management team to ensure site compliance with all project approvals, licenses and permits, and to minimise potential environmental impacts. Annual reporting undertaken includes:

• Annual Environmental Review (NSW DPIE)

• Annual Return (NSW EPA)

• National Pollution Inventory Reporting (NPI)

• National Emissions and Energy Report (NGER)

During the 2021 financial year, the site was subject to its three-yearly independent environmental audit for the period March 2018 to May 2021. The audit report will be submitted to the NSW Department of Planning, Industry and Environment in September 2021.

24 | Alkane Resources Annual Report 2021

BUSINESS REVIEW | ESG

No noise, dust or vibration exceedances were recorded at Tomingley during the reporting period, and no complaints were received.

One reportable incident occurred on site during the period. On 19 May 2021, a bulk diesel tanker operated by a transport company spilt diesel on site due to a malfunctioning hose joiner. The spill was fully contained within Tomingley’s internal water management system and did not impact any staff or wildlife. The incident was reported to the NSW EPA hotline and officers from the EPA attended site to investigate the incident and Tomingley’s initial response. The EPA officers were pleased with the actions taken to contain and minimise potential impacts. The EPA also approved the Remediation Action Plan prepared by a third party contractor, who coordinated removal of the contaminated soil and remediation of the contaminated area on behalf of, and at the cost of, the transport company. A completion report was submitted to the EPA and the matter is still with the EPA.

Details of Tomingley’s environmental performance can be found on the Company’s website. Documents available include:

• Annual Environmental Review

• Monthly Environmental Monitoring Reports

A team of specialist consultants undertook extensive studies spanning ecology, heritage, soils and land capability, noise and vibration, air quality, surface and groundwater, rehabilitation and final landform design, as well as potential social and economic impacts.

Rehabilitation and landform design

The Company practices progressive landform rehabilitation to ensure sites are returned to stable and productive ecosystems once mining is finished.

When designing the Tomingley Gold Extension Project, Alkane has focused on minimising ecological and agricultural impacts. Soil experts were engaged to assess soil ‘erodibility’ and model waste rock emplacement (WRE) designs based on the volume of waste rock to be moved, the quality of available topsoil, and local climate.

The new WRE will look more natural in the landscape, compared with the rehabilitated WREs near the Caloma and Wyoming deposits. Instead of stepped batters, where possible it will feature gentler contours to reside more sympathetically within the environment. It will also be rehabilitated progressively.

• Monthly Noise Monitoring Reports

• Annual Noise Compliance Report

• Environmental Management Plans

Renewable energy

Environmental impact assessments

A major focus of the 2021 financial year was progressing environmental impact assessments for the Tomingley Gold Extension Project, which is undergoing the NSW State Significant Development approval process. The Environmental Impact Statement (EIS), which is a key part of the approval process, is currently being finalised.

Alkane is currently investigating renewable energy solutions to provide a large proportion of the power requirements for the Tomingley processing plant and other site infrastructure. Feasibility of a 5MW solar installation on Alkane’s land around Tomingley is under consideration.

Alkane Resources Annual Report 2021 |

BUSINESS REVIEW | ESG

Biodiversity

Alkane focuses on protecting, nurturing and enhancing local biodiversity. Designated biodiversity offset areas around Tomingley are protected by a binding Conservation Property Vegetation Plan, signed in agreement with regional Local Land Services organisations. Activities include re-vegetation, weed control, feral animal control and protection of native species from introduced predators.

A biannual fauna monitoring report is prepared by external ecological consultants with data obtained from an extensive field assessment program. This report guides the ongoing management of native fauna around the Tomingley operations.

In accordance with Tomingley project approval, an annual rehabilitation and biodiversity monitoring report is completed and submitted to the NSW DPIE. Data for this report is obtained from the field assessment of 17 permanent transects and used to guide ongoing management of rehabilitated areas.

==> picture [284 x 303] intentionally omitted <==

Alkane has already commenced tree planting outside the projected disturbance footprint of the extension project. Members of the Company’s exploration team planted several hundred Fuzzy Box (Eucalyptus conica) seedings grown by Narromine Transplants.

One of the positive benefits of Alkane’s conservation activities has been enhancement of habitat for the Greycrowned Babbler (Pomatostomus temporalis), a species listed as vulnerable in NSW. Destocking biodiversity offset areas has enhanced the habitat value and enabled the birds that live in families of up 15 to thrive. Each family requires around 10 hectares of habitat. Ongoing management of nesting and roosting habitat areas has helped grow populations.

An interesting immigrant to the mine site has been the Australian Reed-warbler (Acrocephalus australis). This locally uncommon species has found its preferred habitat of dense vegetation alongside water in the drains within 50 metres of the Tomingley site office.

At Peak Hill Gold Mine, the Company’s rehabilitation efforts have resulted in an increasingly species-rich site, with several native and woodland bird and mammal species, not present pre-mining, now thriving. The original tree plantings from 1996 are now around 20 metres tall. They have led to natural regeneration of the woodland species on site.

==> picture [285 x 303] intentionally omitted <==

Alkane has enhanced habitat for the vulnerable Grey-crowned Babbler. Photo credit: Imogen Warren

26 | Alkane Resources Annual Report 2021

BUSINESS REVIEW | ESG

People and communities

Alkane practices safe and sustained economic development for the long-term benefit of its shareholders, employees, contractors, suppliers and local communities. The Company is most active in the Narromine Shire, Parkes Shire and Dubbo Regional Council local government areas in central western New South Wales.

Workforce

Alkane’s personnel are distributed across several office locations and operations across central western New South Wales (Orange, Dubbo, Peak Hill and Tomingley), Sydney and Perth (head office).

The largest concentration of employees is at the Tomingley gold mine, southwest of Dubbo. A full-time site supervisor maintains the Peak Hill Gold Mine leases and infrastructure during decommissioning. Alkane also maintains exploration offices in Dubbo and Orange to service the Group’s other tenements.

Alkane is committed to employing members of the local community where possible. Since the Company does not support a ‘fly-in/fly-out’ scheme, the majority of employees live in the local area.

At financial year end, the Group had 249 personnel on the payroll (including casual employees), 215 of which were at Tomingley. These included 22 women (9%), including three female managers, and 32 employees of Aboriginal and Torres Strait Islander descent (13%). A total of 23 full-time equivalent contractors were on site at Tomingley in June 2021.

Achieving a good gender balance in such an historically male-dominated industry is a challenge essential to maintaining a culture of equal opportunity. Tomingley is committed to equal-opportunity recruitment, using gender-neutral or female-positive language to encourage women to apply for all roles.

During the reporting period, Tomingley management organised for all employees to have free access to the Altius Life health and wellbeing digital platform via an integrated access point in the Company’s site EAP platform.

==> picture [285 x 185] intentionally omitted <==

==> picture [285 x 186] intentionally omitted <==

Work Health & Safety

Alkane is committed to providing a safe and rewarding workplace for all employees and contractors. Workforce conditions meet international occupational health and safety standards, with no exploitation or child labour.

Mine Safety Management and Operations Management systems are in place at Alkane’s main operation at Tomingley, with both systems subjected to a rigorous auditing and inspection regime to ensure their integrity. The site employs a dedicated Work Health and Safety (WHS) Manager; in the reporting period, the Tomingley safety team expanded to include a fulltime Safety and Training Coordinator, a six-month contracted Safety and Training Coordinator, and an additional operational training role. The site uses thorough employee safety induction program to on-board all employees and contractors.

Alkane Resources Annual Report 2021 |

27

==> picture [596 x 199] intentionally omitted <==

----- Start of picture text -----

BUSINESS REVIEW | ESG
----- End of picture text -----

During the reporting period, there were 14 recordable injuries at the Tomingley site. These consisted of three Lost Time Injuries, seven Restricted Work Injuries and four Medical Treated Injuries. For the 2021 financial year, Tomingley had a total recordable injury frequency rate (TRIFR) of 5.21 per 1,000,000 hours worked.

During the year, Tomingley Gold Operations developed a safety action plan based on evidence collected from the MI-profile Risk Leadership and Cultural Survey Engagement tool. This supports the ongoing implementation of the Social Psychology of Risk – Culture and Leadership program.

Implementation of the action plan began during the 20202021 financial year and will continue into the next year. It encompasses:

• Improving Communications and Inductions

• Maturing the Safety Management System

• Review of the Safety Management System

• Mental Health and Wellbeing – Creating a Psychologically Safe Workplace, and

• High Risk Manual Tasks – Participative Ergonomics.

The Tomingley WHS team also progressed projects in relation to:

• Development of cultural data-gathering tools to support the implementation of the safety action plan top 5 priorities

• Development and Implementation of a new safety software system to assist in the collection and management of safety-related information and data, including training information

• Document Usability Mapping, and

• Development of Critical Safety System review schedule and process to assess the system efficacy.

The Company strives for continuous improvement of its standards at the Tomingley gold mine, the Peak Hill gold mine decommissioning and closure, and for ongoing exploration and mine development. Details of WHS performance can be found on Alkane’s website.

Communities & stakeholders

Alkane is an active and engaged member of the communities in which it operates – in particular the Narromine Shire, Parkes Shire and Dubbo Regional Council local government areas in central western New South Wales. The Company aims to support the development of more resilient regional communities through the establishment of permanent infrastructure, sponsorship of local events and organisations, provision of training and career opportunities to local students and residents, and the creation of local economic opportunities for service providers.

Alkane maintains strong relationships with local communities through clear and regular communications about its operations and development activities, and actively participates on the Tomingley Gold Project Community Consultative Committee. The Company encourages community engagement and participates regularly at regional events to discuss the Group’s projects.

Alkane shares knowledge through papers and participation in selected industry forums. The Company is also an active member on the NSW Minerals Council Environment and Community Committee.

Community consultations

During the reporting period, consultants working on behalf of Alkane consulted extensively with the community and key stakeholders to gain feedback on the Tomingley Gold Extension Project. Over a period of several months, the team talked to many local residents, government agencies (local, state and federal), non-government organisations, Newell Highway users and local Aboriginal communities.

These consultations helped inform the final design of the project – such as final landforms, realigned roads, water diversions and biodiversity offsets. Of particular note, Alkane selected the more costly option for the realignment of Kyalite Road, based on community feedback.

28 | Alkane Resources Annual Report 2021

BUSINESS REVIEW | ESG

Sponsorships and funding

Governance

In September 2020, Alkane established a major new sponsorship of the Clontarf Foundation’s Narromine Academy for $300,000 over three years. The sponsorship represents Alkane’s long-term investment in capacity building for young Aboriginal and Torres Strait Islander men, and includes an annual program of student interaction, celebrations of achievements, employment pathway support, and visits between the Tomingley gold mine and the Narromine Academy.

Alkane also supports the Narromine Rotary club with several forms of sponsorship. This reporting period, the Company donated $2,000 to enable the club to register its mobile food caravan and associated truck. Tomingley management also sponsored staff lunches supplied by the van on a semi-regular basis. Over the last 12 months, this equated to approximately $14,000.

The Company also continues to support the Tomingley Gold Project Community Fund, which funds local community projects and events on a submissions basis. During the financial year, approximately $51,000 was awarded to a number of different projects, including the annual sponsorship of the Tomingley Picnic Races (traditionally held near ANZAC Day), new fencing and a shade structure to support the races event, and a new turf and irrigation system surrounding Tomingley Hall.

Engaging the next generation

During the year, Alkane nurtured its ties with Narromine High School, sponsoring the School Science Spectacular event. Representatives of Tomingley Gold Operations also attended a Rugby League “Super Training Session” hosted by Clontarf Narromine Academy at Narromine High School.

The Company also engaged two local teenagers as diesel fitter apprenticeships during the year.

Alkane employs comprehensive systems of control and accountability, and administers corporate governance with openness and integrity based on the principles and recommendations of the ASX Corporate Governance Council.

Corporate Governance Statement

The Company’s Corporate Governance Statement is available on the Alkane website, along with the Board charter and details of Board sub-committees. Also listed are key policies and procedures, including those pertaining to appointment and independence of directors, diversity, code of conduct, risk management, and anti-bribery and corruption.

htps://www.alkane.com.au/company/governance/

Risk management

Alkane is committed to the active management of risks to its operations and has a Risk Management Committee composed of directors and management to assist the Managing Director to identify, assess, monitor and manage the Company’s risks.

The Company’s Risk Management Coordinator is tasked with the responsibility of keeping the risk management policy, framework and registers updated, subject to formal approval of policy amendments by the Board. Tomingley continues to monitor and audit critical controls as part of its ongoing risk management process. A specialised software package assists with the management of the complexities for the high-level risks.

==> picture [596 x 199] intentionally omitted <==

----- Start of picture text -----

Tomingley Gold Operations sponsors the
Clontarf Narromine Academy, which hosted a
Rugby League “Super Training Session” at
Narromine High School.
Alkane Resources Annual Report 2021 | 29
----- End of picture text -----

FINANCIAL REPORT

30 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | DIRECTORS' REPORT - DIRECTORS

Directors’ Report

The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity' or the 'Group') consisting of Alkane Resources Ltd (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2021.

Directors

The following persons were directors of Alkane Resources Ltd (Alkane) during the whole of the financial year and up to the date of this report, unless otherwise stated:

I J Gandel N P Earner D I Chalmers A D Lethlean G M Smith

The Board continues its efforts to seek to appoint additional independent members who will bring complementary skill sets and diversity to the Group's leadership.

Information on Directors and Company Secretaries

Ian Jeffrey Gandel – Non-Executive Chairman LLB, BEc, FCPA, FAICD

Appointed Director 24 July 2006 and Chairman 1 September 2017.

Mr Gandel is a successful Melbourne-based businessman with extensive experience in retail management and retail property. He has been a director of the Gandel Retail Trust and has had an involvement in the construction and leasing of Gandel shopping centres. He has previously been involved in the Priceline retail chain and the CEO chain of serviced offices.

Mr Gandel has been an investor in the mining industry since 1994. Mr Gandel is currently a substantial holder in a number of publicly listed Australian companies and, through his private investment vehicles, now holds and explores tenements in his own right in Western Australia. Mr Gandel is currently non-executive chairman of Alliance Resources Ltd (appointed as a director on 15 October 2003 and in June 2016 was appointed non-executive chairman). Mr Gandel is currently non-executive chairman of Australian Strategic Materials Limited (appointed 18 March 2014). (This company was demerged and admitted to the Australian Securities Exchange (ASX) on 29 July 2020.) He is also non-executive chairman of Octagonal Resources Ltd (appointed 10 November 2010). (This company sought delisting from the ASX in February 2016 and converted to Pty Ltd status in April 2016.)

Mr Gandel is a member of the Audit Committee and a member of the Remuneration and Nomination Committees.

Alkane Resources Annual Report 2021 | 31

FINANCIAL REPORT | DIRECTORS' REPORT - DIRECTORS

Nicolas Paul Earner – Managing Director

BEng (hons)

Appointed Managing Director 1 September 2017.

Mr Earner is a chemical engineer and a graduate of the University of Queensland, with over 25 years' experience in technical and operational optimisation and management, and has held a number of executive roles in mining and processing.

Mr Earner joined Alkane Resources Ltd as Chief Operations Officer in August 2013, with responsibility for the safe and efficient management of the Company's operations at Tomingley Gold Operations (TGO) and Dubbo (Dubbo Project). Under his supervision, the successful development of TGO transitioned to profitable and efficient operations. His guidance also drove the engineering and metallurgical aspects of the Dubbo Project, prior to its transition into the separately listed Australian Strategic Materials.

Prior to his appointment as the Group's Chief Operations Officer in August 2013, he had roles at Straits Resources Ltd, Rio Tinto Coal Australia's Mount Thorley Warkworth coal mine, and BHP/WMC Olympic Dam copper-uranium-gold operations.

Mr Earner is currently a non-executive director of Genesis Minerals Limited (appointed 24 October 2019) and Australian Strategic Materials Limited (appointed 1 September 2017). (This company was demerged and admitted to the ASX on 29 July 2020.)

David Ian Chalmers – Technical Director

MSc, FAusIMM, FAIG, FIMM, FSEG, MSGA, MGSA, FAICD

Appointed Technical Director 1 September 2017. Resigned as Managing Director 31 August 2017.

Mr Chalmers, Alkane Resources Ltd's Technical Director, is a geologist and graduate of the Western Australia Institute of Technology (Curtin University) and has a Master of Science degree from the University of Leicester in the United Kingdom. He has worked in the mining and exploration industry for over 50 years, during which time he has had experience in all facets of exploration and mining through feasibility and development to the production phase. Mr Chalmers was Technical Director of Alkane until his appointment as Managing Director in 2006, overseeing the Group's minerals exploration efforts across Australia and the development and operations of the Peak Hill Gold Mine (NSW). During his time as Chief Executive he steered Alkane through the discovery, feasibility, construction and development of the now fully operational Tomingley Gold Operations; the discovery and ultimate sale of the McPhillamys gold deposit; the recent discovery of the gold deposits immediately south of Tomingley; and the porphyry gold-copper discovery at Boda. Mr Chalmers also managed the process development and global marketing effort for the Dubbo Project, advancing it to the threshold of development.

Mr Chalmers is currently a non-executive director of Australian Strategic Materials Limited (appointed 18 March 2014). (This company was demerged and admitted to the ASX on 29 July 2020.)

Mr Chalmers is a member of the Nomination Committee.

Anthony Dean Lethlean – Non-Executive Director

BAppSc (Geology)

Appointed Director 30 May 2002.

Mr Lethlean is a geologist with over 10 years mining experience, including four years underground on the Golden Mile in Kalgoorlie. In later years, he has worked as a resource analyst with various stockbrokers and investment banks including CIBC World Markets. He was a founding director of Helmsec Global Capital Limited, which seeded, listed and funded a number of companies in a range of commodities. He retired from the Helmsec group in 2014. He is also a director of corporate advisory Rawson Lewis and a non-executive director of Alliance Resources Ltd (appointed 15 October 2003).

Mr Lethlean is the senior independent Director, Chairman of the Audit Committee and Risk Committee, and a member of the Remuneration and Nomination Committees.

32 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | DIRECTORS' REPORT - DIRECTORS

Gavin Murray Smith – Non-Executive Director

B.Com, MBA, MAICD

Appointed Director 29 November 2017.

Mr Smith is an accomplished senior executive and non-executive director within multinational business environments. He has more than 35 years' experience in information technology, business development, and general management in a wide range of industries and sectors. Mr Smith has worked for the Bosch group for the past 29 years in Australia and Germany, and is current chair and president of Robert Bosch Australia. In this role Mr Smith has led the restructuring and transformation of the local Bosch subsidiary. Concurrent with this role, he is a non-executive director of the various Bosch subsidiaries, joint ventures, and direct investment companies in Australia and New Zealand. In addition, Mr Smith is the chair of the Internet of Things Alliance Australia (IoTAA), the peak body for organisations with an interest in the IoT.

Mr Smith is currently a non-executive director of Australian Strategic Materials Limited (appointed 12 December 2017). (This company was demerged and admitted to the ASX on 29 July 2020.)

Mr Smith is a member of the Audit Committee, Risk Committee and Chair of the Remuneration and Nomination Committees.

Dennis Wilkins – Joint Company Secretary

B.Bus, ACIS, AICD

Appointed Company Secretary 29 March 2018.

Mr Wilkins is the founder and principal of DWCorporate Pty Ltd, a corporate advisory firm servicing the natural resources industry.

Since 1994 he has been a director, and involved in the executive management, of several publicly listed resource companies with operations in Australia, PNG, Scandinavia and Africa. Since July 2001 Mr Wilkins has been running DWCorporate Pty Ltd, where he advises on the formation of, and capital raising for, emerging companies in the Australian resources sector.

Mr Wilkins is currently a director of Key Petroleum Limited.

James Carter – Joint Company Secretary

Appointed Company Secretary 20 May 2020.

Mr Carter is a CPA and Chartered Company Secretary with over 25 years international experience in the resources industry. He has held senior finance positions across listed resources companies since 2001.

Alkane Resources Annual Report 2021 |

33

FINANCIAL REPORT | DIRECTORS' REPORT - PRINCIPAL ACTIVITIES

Principal activities

During the financial year, the principal activities of the consolidated entity consisted of:

• mining operations at the Tomingley Gold Operation;

• exploration and evaluation activities on tenements held by the Group; and

• pursuing strategic investments in gold exploration companies.

Dividends

There were no dividends paid, recommended or declared during the current or previous financial year.

Result for the year

The profit for the consolidated entity, after providing for income tax, amounted to $55,701,000 (30 June 2020: $12,762,000) of which continued operations amounted to $33,567,000 and discontinued operations amounted to $22,134,000.

This result included a profit before tax of $57,791,000 (30 June 2020: $30,362,000) in relation to Tomingley Gold Operations.

Review of operations

Tomingley Gold Operations

Tomingley Gold Operations (TGO) is a wholly owned subsidiary of Alkane, located near the village of Tomingley, approximately 50km southwest of Dubbo in central western New South Wales. The gold processing plant was commissioned in January 2014 and has been operating at the design capacity of 1Mtpa since late May 2014. Mining is based on four gold deposits (Wyoming One, Wyoming Three, Caloma One and Caloma Two).

TGO continues to perform well and is processing underground stope material with recovery as expected. The cutback in the northeast of the Caloma pit is mining ore. Reconciliations of mined material show that the grade mined is higher than forecast.

Gold recovery of 88.8% for the period was in-line with expectations (2020: 88.1%). Average grade milled increased to 2.14g/t in the current year (2020: 1.45g/t). In the prior year, the average grade milled was lower, as a result of processing both medium and low-grade stockpiles as the operation transitioned from open cut to underground.

Production for the period was 56,958 ounces of gold (2020: 33,507 ounces of gold), with all in sustaining costs of $1,320 per ounce (2020: $1,357 per ounce). The average sales price achieved for the year increased to $2,286 per ounce (2020: $2,199 per ounce). Gold sales of 55,929 ounces (2020: 32,995 ounces) resulted in sales revenue of $127,833,000 (2020: $72,549,000).

Bullion on hand increased by 1,015 ounces from 30 June 2020 to 3,246 ounces (fair value of $7,633,000 at year end).

Alkane’s intention is to develop the Roswell and San Antonio deposits, which are located 3 – 5km south of Tomingley, as soon as possible.

Alkane has commenced the approval process for this development. Consultations with regulators, landholders and other stakeholders, as well as on ground assessments needed for the Environmental Impact statement, continue. The Environmental Impact Statement is being prepared for submission in the current September quarter. The expected timing of Project Approval is mid-2022.

34 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | DIRECTORS' REPORT - REVIEW OF OPERATIONS

The table below summarises the key operational information:

==> picture [512 x 39] intentionally omitted <==

----- Start of picture text -----

September December March June
FY FY
TGO Production Unit Quarter Quarter Quarter Quarter
2021 2020
2020 2020 2021 2021
----- End of picture text -----

Open cut
Waste mined	BCM's	-	390,159	429,443	399,177	1,218,779	50,473
Ore mined	Tonnes	-	2,755	10,953	57,638	71,347	5,331
Stripping Rato	Rato	-	243.5	67.4	13.7	32.8	9.5
Grade mined(2)	g/t	-	0.40	1.15	0.56	0.64	2.37
Underground
Ore mined	Tonnes	181,831	180,642	169,444	174,971	706,889	335,879
Grade mined	g/t	1.85	3.41	2.88	2.37	2.63	2.37
Ore Milled	Tonnes	254,423	235,217	237,455	201,437	928,531	838,743
Head Grade	g/t	1.56	2.50	2.40	2.16	2.14	1.45
Gold Recovery	%	88.4	88.1	91.0	87.1	88.8	88.1
Gold poured(3)	Ounces	11,499	15,919	16,040	13,500	56,958	33,507
Revenue summary
Gold sold	Ounces	11,945	16,613	15,844	11,526	55,929	32,995
Average price realised	A$/Oz	2,261	2,302	2,203	2,401	2,286	2,199
Gold revenue	A$M	27.0	38.2	34.9	27.7	127.8	72.5
Cost summary
Surface works	A$/Oz	-	-	-	83	17	50
Mining	A$/Oz	606	336	389	545	452	272
Processing	A$/Oz	446	290	295	398	347	517
Site support	A$/Oz	126	94	119	174	125	158
C1 cash cost(1)	A$/Oz	1,178	720	803	1,199	940	997
Royaltes	A$/Oz	63	71	70	89	73	56
Sustaining capital	A$/Oz	183	326	172	540	296	205
Gold in circuit movement	A$/Oz	66	25	(103)	(243)	(58)	-
Rehabilitaton	A$/Oz	19	19	19	22	20	26
Corporate	A$/Oz	66	41	35	62	49	73
All in sustaining cost(1)	A$/Oz	1,575	1,201	997	1,669	1,320	1,357
Bullion on hand	Ounces	1,781	1,083	1,275	3,246	3,246	2,231
Stockpiles
Ore for immediate milling	Tonnes	139,025	96,029	41,487	71,938	71,938	207,414
Stockpile grade(2)	g/t	0.74	1.43	1.23	0.95	0.95	0.83
Contained gold	Ounces	3,319	4,403	1,811	2,856	2,856	5,566

(1) All in sustaining cost (AISC) comprises all site operating costs, royalties, mine exploration, sustaining capex, sustaining mine

development and an allocation of corporate costs on the basis of ounces sold since 1 July 2020 (AISC was prepared on a production

basis using gold poured ounces in the previous period). AISC does not include share-based payments, production incentives or net

realisable value provision for product inventory.

(2) Based on the resource models.

(3) Represents gold sold at site, not adjusted for refining adjustments which results in minor differences between the movements in bullion on hand and the difference between production and sales.

Alkane Resources Annual Report 2021 | 35

FINANCIAL REPORT | DIRECTORS' REPORT - REVIEW OF OPERATIONS

Tomingley Gold Extension Project

An extensive exploration program focused on the immediate area to the south of the Tomingley mine has continued as part of the plan to source additional ore feed, either at surface or underground. On the back of strong results from exploration and resource drilling to the immediate south of Tomingley, the Company is expediting the process to move to mine development.

Alkane has commenced the approval process for development of the Roswell and San Antonio deposits located to the immediate south of TGO. Consultations with regulators, landholders and other stakeholders, as well as on ground assessments needed for the Environmental Impact Statement, continue.

Feasibility plans that include both open cut and underground mines at Roswell and San Antonio have been prepared and released as part of a Tomingley Life of Mine Plan, that shows extension of the mine life beyond 2030 (on approval).

Exploration

During the year the exploration program continued to focus on increasing the drilling density within the Roswell and San Antonio prospects, as well as testing strike and depth extensions.

Roswell infill drilling is complete and an Indicated Resource has been released. Further drilling around the Roswell resource continues. At San Antonio an Indicated Resource has also been released.

Regional drilling of the San Antonio to Peak Hill corridor focused on stratigraphy south of the El Paso target where earlier exploration had returned encouraging results.

Northern Molong Porphyry Project (gold-copper)

Initial drill testing of the Boda prospect was completed during the year and results demonstrated continuity to the south of the broad gold-copper mineralised alteration envelope.

A major RC and diamond core drilling program totalling over 30,000 metres has been completed, with received results released. A further program continues around Boda, with reconnaissance work also underway throughout the NMPP.

Corporate

In accordance with its strategy of investing part of its cash balance in junior gold mining companies and projects that meet its investment criteria, namely potential investments that have high exploration potential and/or require near term development funding, the Company continues to hold its investment in gold exploration and development companies Calidus Resources Ltd (ASX:CAI) and Genesis Minerals Ltd (ASX:GMD).

36 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | DIRECTORS' REPORT - SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Significant changes in the state of affairs

On 20 July 2020, Australian Strategic Materials Ltd (ASM) was demerged with its cash reserves and no bank debt. All interests in the Dubbo Project and associated assets (including land and water rights), together with ASM’s investment in South Korean metals technology company RMR Tech Corporation, was 100% owned by ASM following the demerger. A net gain of $22,134,000 has been recognised on demerger of the ASM business.

On 17 July 2020, Alkane Resources Ltd and Australian Strategic Materials Ltd entered into a restructure deed as part of the demerger to capitalise $113,000,000 and forgive $4,731,000 of loans to Australian Strategic Materials Ltd.

In early 2020 with the outbreak of Coronavirus Disease 2019 (“COVID-19” or “the coronavirus”), unprecedented measures put in place by the Australian Government, as well as governments across the globe, to contain the coronavirus have had a significant impact on the economy. Management continues to maintain high vigilance around COVID-19.

As at the date these financial statements were authorised, Management was not aware of any material adverse effects on the financial statements as a result of the coronavirus.

There were no other significant changes in the state of affairs of the consolidated entity during the financial year.

Matters subsequent to the end of the financial year

No matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect, the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.

Likely developments and expected results of operations

The Group intends to continue efforts at TGO to be focused on continued safe operation of the underground mine and exploration, evaluation and project approval of several of its other tenements to secure additional ore feed. Exploration and evaluation activities will continue on existing tenements, and opportunities to expand the Group's tenement portfolio will be pursued with a view to ensuring there is a pipeline of development opportunities for consideration.

Refer to the Review of Operations for further detail on planned developments.

Environmental regulation

The Group is subject to significant environmental regulation in respect of its exploration and evaluation, development and mining activities.

The Group aspires to the highest standards of environmental management and insists its staff and contractors maintain that standard. A significant environmental incident is considered to be one that causes a major impact or impacts to land biodiversity, ecosystem services, water resources or air, with effects lasting greater than one year. There were no significant environmental incidents reported at any of the Group's operations.

Alkane Resources Annual Report 2021 | 37

FINANCIAL REPORT | DIRECTORS' REPORT - MEETINGS OF DIRECTORS

Meetings of directors

The number of meetings of the Company's Board of Directors ('the Board') and of each board committee held during the year ended 30 June 2021, and the number of meetings attended by each director, were:

	Meetngs of commitees	Meetngs of commitees	Meetngs of commitees	Meetngs of commitees	Meetngs of commitees	Meetngs of commitees	Meetngs of commitees	Meetngs of commitees
	Meetngs of directors		Audit Commitee		Risk Commitee		Remuneraton and Nominaton Commitee*
	Atended	Held	Atended	Held	Atended	Held	Atended	Held
I J Gandel A D Lethlean D I Chalmers G Smith N Earner	12 12 2 2 - - - - 12 12 2 2 2 2 - - 12 12 - - - - - - 12 12 2 2 2 2 - - 12 12 - - 2 2 - -

Held: represents the number of meetings held during the time the director held office or was a member of the committee during the year.

*While the Remuneration Committee did not formally meet during the year, informal discussions between committee members were undertaken. The informal discussions resulted in recommendations which were duly implemented.

Remuneration report

The directors are pleased to present Alkane Resources Ltd's remuneration report which sets out remuneration information for the company's Non-Executive Directors, Executive Directors and other Key Management Personnel ('KMP').

The report contains the following sections:

• (a) Key Management Personnel (‘KMP’) disclosed in this report

• (b) Remuneration governance

• (c) Use of remuneration consultants

• (d) Executive remuneration policy and framework

• (e) Statutory performance indicators

• (f) Non-Executive Director remuneration policy

• (g) Voting and comments made at the Company's 2020 Annual General Meeting

• (h) Details of remuneration

• (i) Service agreements

• (j) Details of share-based payments and performance against key metrics

• (k) Shareholdings and share rights held by Key Management Personnel

• (l) Other transactions with Key Management Personnel

38 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT

(a) Key Management Personnel ('KMP') disclosed in this report

Non-Executive and Executive Directors

I J Gandel N P Earner A D Lethlean D I Chalmers G M Smith

Other Key Management Personnel

J Carter Chief Financial Officer/ Joint Company Secretary S Parsons Executive General Manager - Operations (commenced this role 19 April 2021)

(b) Remuneration governance

The Company has established a Remuneration Committee to assist the Board in fulfilling its corporate governance responsibilities with respect to remuneration by reviewing and making appropriate recommendations to the Board on:

• the overall remuneration strategy and framework for the Company;

• the operation of the incentive plans which apply to the executive team, including the appropriateness of key performance indicators and performance hurdles; and

• the assessment of performance and remuneration of the Executive Directors, Non-Executive Directors and other Key Management Personnel.

The Remuneration Committee is a committee of the Board and at the date of this report the members were I J Gandel, A D Lethlean and G M Smith, all of whom were non-executive (with Mr Smith and Mr Lethlean being independent).

Their objective is to ensure that remuneration policies and structures are fair, competitive and aligned with the long-term interests of the Company and its shareholders.

The Company's annual Corporate Governance Statement provides further information on the role of this committee, and the full statement is available at URL: htp://www.alkane.com.au/company/governance.

(c) Use of remuneration consultants

The Remuneration Committee of the Board commissioned Godfrey Remuneration Group to assist in industry benchmarking review to ensure remuneration remains market competitive.

Alkane Resources Annual Report 2021 |

39

FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT

(d) Executive remuneration policy and framework

In determining executive remuneration, the Board (or the Remuneration Committee as its delegate) aims to ensure that remuneration practices:

• are competitive and reasonable, enabling the Company to attract and retain key talent while building a diverse, sustainable and high achieving workforce;

• are aligned to the Company’s strategic and business objectives and the creation of shareholder value;

• promote a high-performance culture recognising that leadership at all levels is a critical element in this regard;

• are transparent; and

• are acceptable to shareholders.

The executive remuneration framework has three components:

• Total Fixed Remuneration (TFR);

• Short-Term Incentives (STI); and

• Long-Term Incentives (LTI).

(i) Executive remuneration mix

The Company has in place executive incentive programs which provide the mechanism to place a material portion of executive pay "at risk".

(ii) Total fixed remuneration

A review is conducted of remuneration for all employees and executives on an annual basis, or as required. The Remuneration Committee is responsible for determining Executive TFR.

(iii) Incentive arrangements

The Company may utilise both short-term and long-term incentive programs to balance the short and long-term aspects of business performance, to reflect market practice, to attract and retain key talent and to ensure a strong alignment between the incentive arrangements of executives and the creation and delivery of shareholder return.

Performance rights have been used in the current period to incentivise the Company’s executives and KMP. The performance rights plan was approved by shareholders at the 2016 Annual General Meeting.

Short-term incentives

The executives have the opportunity to earn an annual Short-Term Incentive (STI) if predefined targets are achieved.

The executive STI is provided in the form of rights to ordinary shares in the Company that vest at the end of the 12-month period, provided the predefined targets are met. On vesting, the rights automatically convert into one ordinary share each. The executives do not receive any dividends and are not entitled to vote in relation to the rights to shares during the vesting period. If an executive ceases to be employed by the Group within the performance period (the service condition), the rights will be forfeited, except in limited circumstances that are approved by the Board on a case-by-case basis.

STI awards for the executive team in the 2021 financial year were based on the scorecard measures and weighting as disclosed below. Targets were approved by the Remuneration Committee through a rigorous process to align to the Company's strategic and business objectives.

40 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT

==> picture [299 x 29] intentionally omitted <==

----- Start of picture text -----

Performance metrics Weighting
Production performance at TGO 25%
----- End of picture text -----

Performance metrics Producton performance at TGO	Weightng 25%
Cost performance at TGO	25%
Safety Performance, Environment & Social Licence	25%
Planning, Approval SAR	10%
Resource Growth	15%

The committee has the discretion to adjust short-term incentives downwards in light of unexpected or unintended circumstances.

Long-term incentives

The LTI is designed to focus executives on delivering long-term shareholder returns. Eligibility for the plan is restricted to executives and nominated senior managers, being the employees who are most able to influence shareholder value. Under the plan, participants have an opportunity to earn up to 100% of their total fixed remuneration (calculated at the time of approval by the Remuneration Committee) comprised of performance rights. In previous periods, performance rights were granted in two tranches each year. Each tranche of performance rights has separate vesting conditions, being share price growth and company milestone events, with the executives' LTI weighted more heavily to the share price growth tranche. The LTI vesting period is three years. In FY2021 LTI's were issued with vesting conditions linked to total shareholder return with a vesting period of three years.

The performance rights will be provided in the form of rights to ordinary shares in Alkane Resources Ltd that will vest at the end of the three-year vesting period, provided the predefined targets are met. On vesting, the rights automatically convert into one ordinary share each. Participants do not receive any dividends and are not entitled to vote in relation to the rights to shares prior to the vesting period. If a participant ceases to be employed by the Group within this period, the rights will be forfeited, except in limited circumstances that are approved by the Board on a case-by-case basis.

Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the plan.

Targets are generally reviewed annually and set for a forward three-year period. Performance-related targets reflect factors such as the expectations of the Group’s business plans, the stage of development of the Group’s projects and the industry business cycle. The most appropriate target benchmark will be reviewed each year prior to the granting of rights.

The Remuneration Committee is responsible for determining the LTI to vest based on an assessment of whether the predefined targets are met. To assist in this assessment, the committee receives detailed reports on performance from management. The committee has the discretion to adjust LTI's downwards in light of unexpected or unintended circumstances.

(iv) Clawback policy for incentives

Under the terms and conditions of the Company’s incentive plan offer and the plan rules, the Board (or the Remuneration Committee as its delegate) has discretion to determine forfeiture of unvested equity awards in certain circumstances (e.g. unlawful, fraudulent or dishonest behaviour or serious breach of obligations to the Company). All incentive offers and final outcomes are subject to the full discretion of the Board (or the Remuneration Committee as its delegate).

(v) Share trading policy

The trading of shares issued to participants under any of the Company’s employee share plans is subject to, and conditional upon, compliance with the Company’s employee share trading policy. Executives are prohibited from entering into any hedging arrangements over unvested rights under the Company’s employee incentive plans. The Company would consider a breach of this policy as gross misconduct which may lead to disciplinary action and potentially dismissal.

Alkane Resources Annual Report 2021 |

41

FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT

(e) Statutory performance indicators

The Company aims to align executive remuneration to the Company’s strategic and business objectives and the creation of shareholder wealth. The table below shows measures of the Group’s financial performance over the last five years as required by the Corporations Act 2001 . However, these are not necessarily consistent with the specific measures in determining the variable amounts of remuneration to be awarded to KMP. As a consequence, there may not always be a direct correlation between the statutory key performance measures and the variable remuneration rewarded.

==> picture [512 x 29] intentionally omitted <==

----- Start of picture text -----

30 June 30 June 30 June 30 June 30 June
2021 2020 2019 2018 2017
----- End of picture text -----

Revenue ($'000)	127,833	74,397	95,852	129,974	117,792
Proft/(loss) for the year atributable to owners ($'000)	55,701	12,762	23,293	24,471	(28,937)
Basic earnings/(loss) per share (cents)	5.6	2.4	4.6	4.8	(5.8)
Dividend payments ($'000)	-	-	-	-	-
Share price at period end (cents)	1.15	1.21	0.46	0.23	0.24
Total KMP incentves as a percentage of proft/(loss) for the year (%)	2.1%	8.3%	3.3%	3.0%	0.3%

(f) Non-Executive Director remuneration policy

On appointment to the Board, all Non-Executive Directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms, including remuneration, relevant to the office of Director.

Non-Executive Directors receive a Board fee and fees for chairing or participating on Board Committees. Non-Executive Directors appointed do not receive retirement allowances. Fees provided are inclusive of superannuation and the NonExecutive Directors do not receive performance-based pay.

Fees are reviewed annually by the Remuneration Committee, taking into account comparable roles and market data obtained from independent data providers.

The maximum annual aggregate directors’ fee pool limit (inclusive of applicable superannuation) is $700,000 and was approved by shareholders at the Annual General Meeting on 16 May 2013.

42 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT

Details of Non-Executive Director fees in the year ended 30 June 2021 are as follows:

==> picture [299 x 18] intentionally omitted <==

----- Start of picture text -----

$ per annum
----- End of picture text -----

Base fees
Chair*	191,000
Other Non-Executve Directors*	95,000
Additonal fees*
Audit Commitee - chair	12,500
Audit Commitee - member	7,500
Remuneraton Commitee - chair	12,500
Remuneraton Commitee - member	7,500

For services in addition to ordinary services, Non-Executive Directors may charge per diem consulting fees at the rate specified by the Board from time to time for a maximum of four days per month over a 12-month rolling basis. Any fees in excess of this limit are to be approved by the Board.

*Remuneration for directors changed on 1 October 2020. From 1 July 2020 until 30 September 2020 the Chair base fee was $129,400 and other Non-Executive Directors base fee was $77,600. From 1 July 2020 to 30 September 2020 the committee fees were for chair $7,800 and for member $5,200.

(g) Voting and comments made at the Company's 2020 Annual General Meeting

The Company received more than 99% of “yes” votes on its remuneration report for the financial year ended 30 June 2020. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.

(h) Details of remuneration

The following table shows details of the remuneration expense recognised for the directors and the KMP of the Group for the current and previous financial year, measured in accordance with the requirements of the accounting standards.

30 June 2021	Fixed remuneraton	Fixed remuneraton	Fixed remuneraton	Variable Remuneraton	Total
	Cash Salary(a)	Annual and long service leave(b)	Post- employment benefts(c)	Rights to deferred shares(d)
	$	$	$	$	$
Executve Directors N P Earner D I Chalmers	576,942 28,234 23,058 707,441 1,335,675 309,105 142,783 21,694 148,333 621,915
Other KMP D Woodall(g) A MacDonald(g) J Carter S Parsons(f)	26,344 - 2,503 - 28,847 28,769 - 2,660 29,438 60,867 362,300 17,546 25,000 244,604 649,450 87,586 11,105 5,065 39,866 143,622
Total Executve Directors and other KMP	1,391,046 199,668 79,980 1,169,682 2,840,376
Total NED remuneraton(e)	376,661 - 24,965 - 401,626
Total KMP remuneraton expense	1,767,707 199,668 104,945 1,169,682 3,242,002

Alkane Resources Annual Report 2021 | 43

FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT

30 June 2020	Fixed remuneraton	Fixed remuneraton	Fixed remuneraton	Variable Remuneraton	Total
	Cash Salary(a)	Annual and long service leave(b)	Post- employment benefts(c)	Rights to deferred shares(d)
	$	$	$	$	$
Executve Directors N P Earner D I Chalmers	484,142 28,214 23,058 748,241 1,283,655 244,645 29,443 19,255 90,312 383,655
Other KMP D Woodall(g) A MacDonald(g) D Wilkins J Carter	121,180 10,720 11,512 - 143,412 359,136 15,566 23,023 104,770 502,495 309,049 - - - 309,049 345,000 17,792 25,000 119,548 507,340
Total Executve Directors and other KMP	1,863,152 101,735 101,848 1,062,871 3,129,606
Total NED remuneraton(e)	300,419 - 20,589 - 321,008
Total KMP remuneraton expense	2,163,571 101,735 122,437 1,062,871 3,450,614

(a) Short-term benefits as per Corporations Regulation 2M.3.03(1) Item 6.

(b) Other long-term benefits as per Corporations Regulation 2M.3.03(1) Item 8. The amounts disclosed in this column represent the

movements in the associated provisions. They may be negative where a KMP has taken more leave than accrued during the year.

(c) Post-employment benefits are provided through superannuation contributions.

(d) Rights to deferred shares granted under the executive STI and LTI schemes are expensed over the performance period, which includes the year to which the incentive relates and the subsequent vesting period of the rights. Rights to deferred shares are equity-settled share-based payments as per the Corporations Regulations 2M.3.03(1) Item11. These include negative amounts for the rights forfeited during the year.

Details of each grant of share right are provided in the table in section (j). Shareholder approval was received in advance to the grant of share rights where required.

(e) Refer below for details of Non-Executive Directors' (NED) remuneration.

(f) Mr Parsons was appointed an Executive General Manager - Operations on 19 April 2021. Before this appointment he was the Group's General Manager Operations.

(g) D Woodall and A MacDonald ceased to be KMP after the demerger of ASM from Alkane Resources on the 20th of July 2020.

==> picture [513 x 29] intentionally omitted <==

----- Start of picture text -----

Cash salary and fees Superannuation Total
$ $ $
----- End of picture text -----

30 June 2021
Non-Executve Directors I J Gandel A D Lethlean G M Smith Total Non-Executve Directors	163,333 99,452 113,876	15,517 9,448 -	178,850 108,900 113,876
	376,661	24,965	401,626
30 June 2020
Non-Executve Directors I J Gandel A D Lethlean G M Smith Total Non-Executve Directors	130,045 82,366 88,008	12,355 8,234 -	142,400 90,600 88,008
	300,419	20,589	321,008

Remuneration for the directors was changed on 1 October 2020. Refer to footnote in section (f) for details.

44 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT

The relative proportions of remuneration expense recognised during the year that are linked to performance and those that are fixed are as follows:

	Fixed remuneraton	Fixed remuneraton	At risk - LTI	At risk - LTI	At risk - STI	At risk - STI
	2021 %	2020 %	2021 %	2020 %	2021 %	2020 %
Executve Directors of Alkane Resources Ltd D I Chalmers 76% 76% 14% 24% 10% - N P Earner 47% 42% 40% 58% 13% -
Other Key Management Personnel J Carter 62% 76% 26% 24% 12% - S Parsons 72% - 11% - 17% -

D Wilkins was a KMP in the prior year. However, he is not involved in decision-making activities regarding overall running of the Group in the current year. He is not an employee of the Company and therefore not eligible to participate in incentive programs. Instead, a fee for services was paid as set out previously.

Mr Parsons was appointed an Executive General Manager - Operations on 19 April 2021.

(i) Service agreements

Remuneration and other terms of employment for KMP are formalised in service agreements. Details of these agreements are as follows:

==> picture [512 x 19] intentionally omitted <==

----- Start of picture text -----

Name and Position Term of agreement TFR [(1)] Termination payment [(2)]
----- End of picture text -----

D I Chalmers - Technical Director	Ongoing commencing 1 September 2017	$330,800	6 months
N Earner - Managing Director	Ongoing commencing 1 September 2017	$600,000	see note 2 below
J Carter - Chief Financial Ofcer	Ongoing commencing 1 October 2018	$388,725	3 months
S Parsons - Executve General Manager - Operatons	Ongoing commencing 1 October 2015	$443,475	1 month

(1) Total Fixed Remuneration (TFR) is for the year ended 30 June 2021, and is inclusive of superannuation, but does not include long

service leave accruals. TFR is reviewed annually by the Remuneration Committee.

(2) Specified termination payments are within the limits set by the Corporations Act 2001. The termination benefit provision for the Managing Director was approved at the Annual General Meeting on 29 November 2017.

Mr Earner may resign with 3 months' notice; or

Alkane may terminate the Executive Employment agreement with 3 months' notice; or

Where Mr Earner resigns as a result of a material diminution in the position, Mr Earner will be entitled to payment in lieu of 12

months' notice and short-term incentives and long term-incentives granted or issued but not yet vested.

Alkane Resources Annual Report 2021 |

45

FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT

(j) Details of share-based payments and performance against key metrics

Details of each grant of share rights affecting remuneration in the current or future reporting period are set out below.

	Date of grant	Number of rights granted	Fair value of share rights at the date of grant $	Share rights at fair value $	Performance period end	Share-based payment expense current year $
Name
I Chalmers FY2019 LTI - Performance Rights - Tranche 1 21/11/2018 305,785 0.050 15,289 16/07/2020 5,096 FY2019 LTI - Performance Rights - Tranche 2 21/11/2018 65,525 0.215 14,088 16/07/2020 3,131 FY2020 LTI - Performance Rights - Tranche 1 22/11/2019 198,624 0.419 83,223 30/06/2022 27,741 FY2020 LTI - Performance Rights - Tranche 2 22/11/2019 42,562 0.623 26,519 16/07/2020 11,786 FY2021 LTI - Performance Rights 11/11/2020 174,903 0.748 130,827 31/08/2023 36,202 FY2021 STI - Performance Rights 11/11/2020 - - 101,721 11/11/2021 64,377
N Earner FY2019 LTI - Performance Rights - Tranche 1 21/11/2018 2,497,245 0.050 124,862 16/07/2020 41,621 FY2019 LTI - Performance Rights - Tranche 2 21/11/2018 535,124 0.215 115,052 16/07/2020 25,567 FY2020 LTI - Performance Rights - Tranche 1 22/11/2019 1,622,252 0.419 679,724 30/06/2022 226,575 FY2020 LTI - Performance Rights - Tranche 2 22/11/2019 347,625 0.623 216,590 16/07/2020 96,262 FY2021 LTI - Performance Rights 11/11/2020 687,346 0.748 514,135 31/08/2023 142,267 FY2021 STI - Performance Rights 11/11/2020 - - 276,750 11/11/2021 175,149
Other Key Management Personnel
J Carter FY2019 LTI - Performance Rights - Tranche 1 18/10/2018 1,841,591 0.059 108,654 16/07/2020 36,218 FY2019 LTI - Performance Rights - Tranche 2 18/10/2018 394,626 0.220 86,818 16/07/2020 19,293 FY2020 LTI - Performance Rights - Tranche 1 02/09/2019 604,146 0.236 142,578 30/06/2022 47,526 FY2020 LTI - Performance Rights - Tranche 2 02/09/2019 129,460 0.406 52,596 16/07/2020 23,376 FY2021 LTI - Performance Rights 11/11/2020 205,530 0.748 153,736 31/08/2023 42,541 FY2021 STI - Performance Rights 11/11/2020 - - 119,533 11/11/2021 75,650
S Parsons FY2020 LTI - Performance Rights - Tranche 1 02/09/2019 306,451 0.236 72,322 30/06/2022 4,755 FY2021 LTI - Performance Rights 11/11/2020 214,214 0.748 160,232 31/08/2023 10,536 FY2021 STI - Performance Rights 11/11/2020 - - 124,584 11/11/2021 24,575
A MacDonald (01/07/18-20/07/2020) FY2019 LTI - Performance Rights - Tranche 1 18/10/2018 976,601 0.059 57,619 16/07/2020 19,206 FY2019 LTI - Performance Rights - Tranche 2 18/10/2018 139,514 0.220 30,693 16/07/2020 10,231

(a) The value at grant date for share rights granted during the year as part of remuneration is calculated in accordance with AASB 2

Share-Based Payments. Differences will arise between the number of share rights at fair value in the table above and the STI and LTI

percentages mentioned in section (d) due to different timing of valuation of rights as approved by the Remuneration Committee and at grant. Refer to note 30 for details of the valuation techniques used for the rights plan.

(b) Share rights only vest if performance and service targets are achieved. The determination is usually made at the conclusion of the statutory audit.

(c) Shares for the deferred portion of the 2021 STI will be granted on 11 November 2021. The number of shares will depend on the Alkane Resources Ltd share price over the five days prior to the grant date.

46 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT

The determination of the number of rights that are to vest or be forfeited during a financial year is made by the Remuneration Committee after the statutory audit has been substantially completed. As such, the actual determination is made after the balance sheet date. Where there are rights that have vested or been forfeited, details will be included in the Remuneration Report as the relevant performance period will conclude at the end of the relevant financial year.

Performance against key metrics

On 16 July 2020 at the Extraordinary General Meeting in relation to the demerger of the ASM business, Alkane's shareholders also voted on the following changes to long-term incentives.

• a) all Alkane Performance Rights with a Dubbo Project (DP) performance condition will be cancelled with no consideration payable to the holders of those performance rights; and

• b) all FY2018 and FY2019 Alkane Performance Rights with a Total Shareholder Return (TSR) performance condition will vest in full, thereby entitling the holder to one Alkane share for each such Alkane Performance Right exercised.

The vesting and cancellation of the FY2018 performance rights was reported in the 2020 financial report.

The remaining FY2020 LTI Tranche 1 performance targets relate to share price performance growth as per below:

==> picture [512 x 18] intentionally omitted <==

----- Start of picture text -----

TSR compound annual growth rate (CAGR) % Performance rights vesting
----- End of picture text -----

Less than 10% CAGR	Nil
Above 10% CAGR up to 15% CAGR	Pro rata vestng from 0% - 50%
At 15% CAGR	50%
Above 15% CAGR up to 30% CAGR	Pro rata vestng from 50% - 100%
At 30% CAGR	100%

The STI performance metrics for the year are detailed in section (d)(iii) of the Remuneration Report.

The Company's TSR for FY2021 will be compared to the S&P/ASX All Ordinaries Gold (Sub industry) XGD (Gold Index). TSR and number of performance rights will vest as follows:

==> picture [512 x 19] intentionally omitted <==

----- Start of picture text -----

Shareholder return comparison Proportion of performance rights that vest
----- End of picture text -----

TSR is less than Gold Index TSR	-
TSR is equal to Gold Index TSR	25%
TSR is >5% and <10% to Gold Index TSR	50%
TSR is equal to or >10% to Gold Index TSR	100%

Alkane Resources Annual Report 2021 |

47

FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT

(k) Shareholdings and share rights held by Key Management Personnel

Shareholding

The number of shares in the Company held during the financial year by each director and other members of Key Management Personnel of the consolidated entity, including their personally related parties, is set out below:

==> picture [512 x 38] intentionally omitted <==

----- Start of picture text -----

Balance at Received Balance at
Disposals/
the start of as part of Additions the end of
other
the year remuneration the year
----- End of picture text -----

Ordinary shares I J Gandel A D Lethlean D I Chalmers N P Earner G Smith D Woodall A MacDonald J Carter S Parsons	136,021,143 - 14,771,363 - 150,792,506 720,086 - - - 720,086 4,671,140 1,016,745 - - 5,687,885 165,000 8,462,496 - (5,000,000) 3,627,496 331,875 - - - 331,875 35,000 - - (35,000) - 1,460,000 2,013,418 - (3,473,418) - - 1,841,591 - (1,841,591) - - 488,300 - (238,300) 250,000
	143,404,244 13,822,550 14,771,363 (10,588,309) 161,409,848

*D Woodall and A MacDonald ceased to be KMP after the demerger of ASM from Alkane Resources on 20 July 2020.

Performance rights holding

The number of performance rights over ordinary shares in the Company held during the financial year by each director and other members of Key Management Personnel of the consolidated entity, including their personally related parties, is set out below:

==> picture [512 x 38] intentionally omitted <==

----- Start of picture text -----

Balance at Expired/ Balance at
the start of Granted Vested forfeited/ the end of
the year other the year
----- End of picture text -----

Performance rights over ordinary shares D I Chalmers - Performance rights N P Earner - Performance rights J Carter - Performance rights A MacDonald - Performance rights S Parsons - Performance rights	612,496 174,903 (305,785) (108,087) 373,527 5,002,246 687,346 (2,497,245) (882,749) 2,309,598 2,969,823 205,530 (1,841,591) (524,086) 809,676 1,185,872 - (976,601) (209,271) - 965,054 214,214 (488,300) (170,303) 520,665
	10,735,491 1,281,993 (6,109,522) (1,894,496) 4,013,466

On 16 July 2020 at the Extraordinary General Meeting in relation to the demerger of the ASM business, the shareholders also voted for early vesting of the FY2019 Tranche 1, the cancellation of the FY2019 Tranche 2 performance rights, and the cancellation of the FY2020 Tranche 2 performance rights.

48 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | DIRECTORS' REPORT - INDEMNITY AND INSURANCE OF OFFICERS

(l) Other transactions with Key Management Personnel

There were no other transactions with KMP's during the financial year ended 30 June 2021.

There were no unissued ordinary shares of Alkane Resources Ltd under performance rights outstanding at the date of this report.

This concludes the remuneration report, which has been audited.

Indemnity and insurance of officers

Alkane Resources Ltd has entered into deeds of indemnity, access and insurance with each of the directors. These deeds remain in effect as at the date of this report. Under the deeds, the Company indemnifies each director to the maximum extent permitted by law against legal proceedings or claims made against or incurred by the directors in connection with being a director of the Company, or breach by the Group of its obligations under the deed.

The liability insured is the indemnification of the Group against any legal liability to third parties arising out of any directors’ or officers’ duties in their capacity as a director or officer, other than indemnification not permitted by law.

No liability has arisen under this indemnity as at the date of this report.

The Group has not otherwise, during or since the financial year, indemnified nor agreed to indemnify an officer of the Group or of any related body corporate, against a liability incurred as such by an officer.

During the year the Company has paid premiums in respect of directors' and executive officers' insurance. The contracts contain prohibitions on disclosure of the amount of the premiums and the nature of the liabilities under the policies.

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.

Alkane Resources Annual Report 2021 |

49

FINANCIAL REPORT | DIRECTORS' REPORT - AUDITOR'S INDEPENDENCE DECLARATION

Non-audit services

The Company may decide to employ the auditor on assignments additional to their statutory audit duties, where the auditor's expertise and experience with the Group is important.

The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 .

The directors, in accordance with advice provided by the Audit Committee, are of the opinion that the services as disclosed in note 24 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:

• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and

• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

Auditor's independence declaration

A copy of the auditor's independence declaration, as required under section 307C of the Corporations Act 2001 , is set out immediately after this directors' report.

Rounding of amounts

The Company is of a kind referred to in ASIC Legislative Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to the 'rounding-off' of amounts in the directors' report and financial report. Amounts in this report have been rounded off in accordance with that ASIC Legislative Instrument to the nearest thousand dollars, or in certain cases, to the nearest dollar.

This report is made in accordance with a resolution of directors.

On behalf of the directors

==> picture [244 x 39] intentionally omitted <==

N P Earner Managing Director

27 August 2021 Perth

50 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | DIRECTORS' REPORT - AUDITOR'S INDEPENDENCE DECLARATION

==> picture [511 x 758] intentionally omitted <==

Alkane Resources Annual Report 2021 | 51

FINANCIAL REPORT | DIRECTORS' REPORT - FINANCIAL STATEMENTS

Financial Statements

Consolidated Financial Statements

Consolidated statement of profit or loss and other comprehensive income 54 Consolidated balance sheet 55 Consolidated statement of changes in equity 56 Consolidated statement of cash flows 57

Notes to the Consolidated Financial Statements

Note	1. Segment informaton	58
Note	2. Revenue	59
Note	3. Expenses	59
Note	4. Income tax	60
Note	5. Discontnued operatons	64
Note	6. Cash and cash equivalents	66
Note	7. Trade and other receivables	66
Note	8. Inventories	67
Note	9. Financial assets at fair value through other comprehensive income	68
Note	10. Other fnancial assets	68
Note	11. Property, plant and equipment	69
Note	12. Exploraton and evaluaton	71
Note	13. Investments accounted for using the equity method	72
Note	14. Trade and other payables	72
Note	15. External borrowings	73
Note	16. Provisions	74
Note	17. Issued capital	75
Note	18. Reserves	76
Note	19. Retained profts	77
Note	20. Critcal accountng judgements, estmates and assumptons	77
Note	21. Financial risk management	79
Note	22. Capital risk management	81
Note	23. Key management personnel disclosures	82
Note	24. Remuneraton of auditors	82
Note	25. Contngent assets	82
Note	26. Contngent liabilites	82
Note	27. Commitments	83
Note	28. Events afer the reportng period	84
Note	29. Related party transactons	84
Note	30. Share-based payments	84
Note	31. Earnings per share	86
Note	32. Parent entty informaton	87
Note	33. Deed of cross guarantee	89
Note	34. Reconciliaton of proft afer income tax to net cash from operatng actvites	89
Note	35. Signifcant accountng policies	90

52 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | DIRECTORS' REPORT - FINANCIAL STATEMENTS

These financial statements are consolidated financial statements for the Group consisting of Alkane Resources Ltd and its subsidiaries.

The financial statements are presented in the Australian currency.

Alkane Resources Ltd is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Alkane Resources Ltd Level 4, 66 Kings Park Road West Perth WA 6005

The financial statements were authorised for issue by directors on 27 August 2021. The directors have the power to amend and reissue the financial statements.

All press releases, financial reports and other information are available at the Shareholders’ Centre on our website: www.alkane.com.au

Alkane Resources Annual Report 2021 | 53

FINANCIAL REPORT | DIRECTORS' REPORT - CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of profit or loss and other comprehensive income

For the year ended 30 June 2021

==> picture [513 x 626] intentionally omitted <==

----- Start of picture text -----

2021 2020
Note
$'000 $'000
Continuing operations
Revenue 2 127,833 72,549
Cost of sales 3 (66,341) (41,940)
Gross profit 61,492 30,609
Other income 667 141
Interest income 94 625
Net gain on derecognition of financial assets 13 2,698 -
Total revenue 131,292 73,315
Expenses
Other expenses 3 (12,219) (10,677)
Finance costs 3 (2,835) (553)
Share of loss of associates accounted for using the equity method 13 (870) (240)
Net (loss)/gain on disposal of property, plant and equipment (957) 9
Total expenses (16,881) (11,461)
Profit before income tax expense from continuing operations 48,070 19,914
Income tax expense 4 (14,503) (6,569)
Profit after income tax expense from continuing operations 33,567 13,345
Profit/(loss) after income tax benefit from discontinued
operations 5 22,134 (583)
Profit after income tax (expense)/benefit for the year attributable to the owners of Alkane Resources Ltd 19 55,701 12,762
Other comprehensive income/(loss)
Items that will not be reclassified subsequently to profit or loss
Changes in the fair value of equity investments at fair value
2,045 (251)
through other comprehensive income, net of tax
Items that may be reclassified subsequently to profit or loss
Cash flow hedges transferred to profit or loss, net of tax 21 1,017 278
Net change in the fair value of cash flow hedges taken to equity,
21 (459) (487)
net of tax
Other comprehensive income/(loss) for the year, net of tax 2,603 (460)
Total comprehensive income for the year attributable to the
58,304 12,302
owners of Alkane Resources Ltd
Total comprehensive income for the year is attributable to:
Continuing operations 36,170 12,885
Discontinued operations 22,134 (583)
58,304 12,302
Cents Cents
Earnings per share for profit from continuing operations attributable to the
owners of Alkane Resources Ltd
Basic earnings per share 31 5.64 2.44
Diluted earnings per share 31 5.60 2.37
Earnings per share for profit/(loss) from discontinued operations attributable
to the owners of Alkane Resources Ltd
Basic earnings per share 31 3.72 (0.11)
Diluted earnings per share 31 3.69 (0.10)
Earnings per share for profit attributable to the owners of Alkane Resources Ltd
Basic earnings per share 31 9.37 2.33
Diluted earnings per share 31 9.28 2.26
----- End of picture text -----

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

54 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | DIRECTORS' REPORT - CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheet

As at 30 June 2021

==> picture [513 x 29] intentionally omitted <==

----- Start of picture text -----

2021 2020
Note
$'000 $'000
----- End of picture text -----

Assets
Current assets Cash and cash equivalents 6 Trade and other receivables 7 Inventories 8 Derivatve fnancial instruments Assets of disposal group classifed as held for distributon to owners 5 Total current assets Non-current assets Property, plant and equipment 11 Exploraton and evaluaton 12 Investments accounted for using the equity method 13 Financial assets at fair value through other comprehensive income 9 Deferred tax 4 Derivatve fnancial instruments Other fnancial assets 10 Total non-current assets Total assets	18,991 1,894 11,648 521	48,337 2,940 7,647 172
	33,054 -	59,096 139,538
	33,054	198,634
	99,411 57,794 15,944 18,471 - - 11,541	62,322 32,745 14,385 - 10,947 64 8,614
	203,161	129,077
	236,215	327,711
Liabilites
Current liabilites Trade and other payables 14 External borrowings 15 Provisions 16 Other liabilites Liabilites directly associated with assets classifed as held for distributon to owners 5 Total current liabilites Non-current liabilites External borrowings 15 Provisions 16 Deferred tax 4 Other liabilites Total non-current liabilites Total liabilites Net assets	11,082 3,294 3,660 143	9,425 2,090 2,659 64
	18,179 -	14,238 26,565
	18,179	40,803
	5,922 15,363 4,737 449	4,515 14,873 - 134
	26,471	19,522
	44,650 191,565	60,325 267,386
Equity
Issued capital 17 Reserves 18 Retained profts 19 Total equity	218,079 (65,178) 38,664	258,876 3,413 5,097
	191,565	267,386

The above consolidated balance sheet should be read in conjunction with the accompanying notes

Alkane Resources Annual Report 2021 | 55

FINANCIAL REPORT | DIRECTORS' REPORT - CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of changes in equity

For the year ended 30 June 2021

==> picture [513 x 49] intentionally omitted <==

----- Start of picture text -----

Share-based
Share Other Retained
payments Total equity
capital reserves profits
reserve $'000
$'000 $'000 $'000
$'000
----- End of picture text -----

	Share capital $'000	payments reserve $'000	Other reserves $'000	Retained profts $'000	Total equity $'000
Balance at 1 July 2019 Adjustment for reclassifcaton Balance at 1 July 2019 - restated Transactons with owners in their capacity as owners: Contributons of equity, net of transacton costs (note 17) Share-based payments (note 30) Deferred tax recognised in equity Balance at 30 June 2020 Proft afer income tax expense for the year Other comprehensive loss for the year, net of tax Total comprehensive income/(loss) for the year	220,111 (922)	2,981 -	(629) -	(8,587) 922	213,876 -
	219,189 - -	2,981 - -	(629) - (460)	(7,665) 12,762 -	213,876 12,762 (460)
	39,442 - 245 -	- 1,225 - -	- - 296 (460)	- - - 12,762	39,442 1,225 541 12,302
	258,876	4,206	(793)	5,097	267,386

==> picture [513 x 48] intentionally omitted <==

----- Start of picture text -----

Share-based
Share Other Retained
payments Total equity
capital reserves profits
reserve $'000
$'000 $'000 $'000
$'000
----- End of picture text -----

	Share capital $'000 Share-based payments reserve $'000 Other reserves $'000 Retained profts $'000 Total equity $'000
Balance at 1 July 2020 Share issue transacton costs (note 17) Share-based payments (note 30) Capital distributon and demerger dividend (note 5) Transfer of gain on demerger (note 5) Deferred tax recognised in equity Balance at 30 June 2021 Proft afer income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year	258,876 4,206 (793) 5,097 267,386 - - - 55,701 55,701 - - 3,676 - 3,676
	(31) - - - (31) 2,577 (893) - - 1,684 (43,237) - (92,435) - (135,672) - - 22,134 (22,134) - (106) - (1,073) - (1,179) - - 3,676 55,701 59,377
	218,079 3,313 (68,491) 38,664 191,565

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes

56 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | DIRECTORS' REPORT - CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of cash flows

For the year ended 30 June 2021

==> picture [513 x 39] intentionally omitted <==

----- Start of picture text -----

2021 2020
Note
$'000 $'000
Cash flows from operating activities
----- End of picture text -----

Receipts from customers (inclusive of GST) Payments to suppliers (inclusive of GST) Interest received Finance costs paid Royaltes and selling costs Other receipts Net cash from operatng actvites 34 Cash fows from investng actvites Payments for investments Payments for property, plant and equipment and development expenditure Proceeds from disposal of property, plant and equipment Payments for exploraton expenditure Payments for security deposits Purchase of biological assets Proceeds from the sale of biological assets Transacton costs relatng to ASM demerger Net cash used in investng actvites Cash fows from fnancing actvites Proceeds from issue of shares 17 Cost of share issue 17 Proceeds from borrowings Repayment of borrowings Principal elements of lease payment Net cash from fnancing actvites Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the fnancial year Less cash classifed as held for distributon to owners at the beginning of the period Cash and cash equivalents at the end of the fnancial year 6	128,035 72,347 (51,879) (44,059)
	76,156 28,288 99 986 (1,614) (127) (4,047) (1,490) 522 879
	71,116 28,536
	(14,664) (8,966) (59,477) (46,122) 1,522 1 (26,642) (20,132) (2,927) (217) - (457) - 118 (538) (1,525)
	(102,726) (77,300)
	- 40,665 (31) (1,223) 8,150 7,885 (5,783) (1,264) (72) -
	2,264 46,063
	(29,346) (2,701) 66,881 69,582 (18,544) -
	18,991 66,881

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes

Alkane Resources Annual Report 2021 |

57

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 1

Note 1. Segment information

The consolidated entity is currently with one operating segment: gold operations. The ASM business has been accounted for as discontinued operations since 30 June 2020 and was previously reported in the critical metals segment. Information about this discontinued segment is provided in note 5. The operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the chief operating decision makers) in assessing performance and in determining the allocation of resources.

Costs that do not relate to the gold operating segment have been identified as unallocated costs. Corporate assets and liabilities that do not relate to the gold operating segment have been identified as unallocated. The Group has formed a tax consolidation group and therefore tax balances are disclosed under the unallocated grouping. The Group utilises a central treasury function resulting in cash balances being included in the unallocated segment.

==> picture [513 x 38] intentionally omitted <==

----- Start of picture text -----

Gold
Operations Unallocated Total
$'000 $'000
$'000
----- End of picture text -----

30 June 2021
Gold sales to external customers Interest income Segment net proft/(loss) before income tax Segment net proft/(loss) includes the following non-cash adjustments: Depreciaton and amortsaton Exploraton expenditure writen of or provided for Inventory product movement and provision Income tax expense Total adjustments Total segment assets Total segment liabilites Net segment assets	127,833 -	- 94	127,833 94
	127,833	94	127,927
	57,791 (21,028) - 3,226 -	12,413 (226) (1,331) - (14,503)	70,204 (21,254) (1,331) 3,226 (14,503)
	(17,802)	(16,060)	(33,862)
	122,856 (35,618)	113,359 (9,032)	236,215 (44,650)
	87,238	104,327	191,565
30 June 2020
Gold sales to external customers Interest income Segment net proft/(loss) before income tax Segment net proft/(loss) includes the following non-cash adjustments: Depreciaton and amortsaton Exploraton expenditure writen of or provided for Inventory product movement and provision Restructuring provision Income tax expense Total adjustments Total segment assets Total segment liabilites Net segment assets	72,549 -	- 625	72,549 625
	72,549	625	73,174
	30,362 (9,072) - 2,203 (147) -	(10,448) (79) (329) - - (6,569)	19,914 (9,151) (329) 2,203 (147) (6,569)
	(7,016)	(6,977)	(13,993)
	77,834 (30,890)	110,339 (2,870)	188,173 (33,760)
	46,944	107,469	154,413

58 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 2

Note 2. Revenue

	2021 $'000	2020 $'000
Revenue from contnuing operatons Gold sales	127,833 72,549

(a) Revenue

Revenue is recognised when control of a good or service transfers to a customer. Control is generally determined to be when the customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service.

(b) Gold Sales

Revenue from the sale of goods is recognised when the Group satisfies its performance obligations under its contract with the customer by transferring such goods to the customer's control. Control is generally determined to be when the customer has the ability to direct the use and obtain substantially all of the remaining benefits from that good.

Note 3. Expenses

==> picture [512 x 29] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
----- End of picture text -----

Cost of sales Cash costs of producton Inventory product movement Depreciaton and amortsaton Royaltes and selling costs	44,393 33,137 (3,226) (2,203) 21,028 9,072 4,146 1,934
	66,341 41,940

(a) Cash costs of production

Cash costs of production include ore and waste mining costs, processing costs and site administration and support costs. Cash costs of production include $20,401,000 of employee remuneration benefits (2020: $13,085,000).

(b) Inventory product movement

Inventory product movement represents the movement in the balance sheet inventory ore stockpile, gold in circuit and bullion on hand.

Refer to note 8 for further details on the Group's accounting policy for inventory.

Alkane Resources Annual Report 2021 | 59

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 4

(c) Inventory product provision for net realisable value

Inventory must be carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs to complete processing and to make a sale. The net realisable value provision equals the decrement between the net realisable value and the carrying value before provision.

Refer to note 8 for further details on the Group's accounting policy for inventory.

==> picture [512 x 28] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
----- End of picture text -----

	2021 $'000 2020 $'000
Other expenses Corporate administraton Employee remuneraton and benefts expensed Share-based payments Professional fees and consultng services Restructuring provision Exploraton expenditure provided for or writen of Directors' fees and salaries expensed Depreciaton Non-core project expenses	2,363 3,387 3,836 2,361 1,684 1,225 1,881 2,321 - 147 1,331 329 751 660 226 79 147 168
	12,219 10,677

(d) Finance costs

==> picture [513 x 28] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
----- End of picture text -----

	2021 $'000 2020 $'000
Finance costs Interest Expense Put Optons Other	408 177 1,906 317 521 59
	2,835 553

Note 4. Income tax

a) Income tax expense

==> picture [513 x 29] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
----- End of picture text -----

	2021 $'000	2020 $'000
Total current tax expense Income tax expense is atributable to: Proft from contnuing operatons Loss from discontnued operatons	-	-
	14,503 -	6,569 (248)
	14,503	6,321

60 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 4

(b) Reconciliation of income tax expense/(benefit) to prima facie tax payable

==> picture [513 x 38] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
Profit from continued operations before income tax expense 48,070 19,914
----- End of picture text -----

Proft/(loss) from discontnued operatons before income tax expense Proft before income tax expense Tax at the Australian tax rate of 30% (2020 - 30%) Tax benefts of deductble equity raising costs Non-deductble share-based payments Non-deductble expenses Non-assessable income Non-assessable gain on disposal of subsidiaries Other deductble expenses Movement in unrecognised temporary diferences Over/(under) Provision for Prior Year	22,134	(831)
	70,204	19,083
	21,061 (116) 505 8 (8) (6,801) (4) (126) (16)	5,725 (123) 367 112 - - - - 240
	14,503	6,321

(c) Deferred tax assets

==> picture [513 x 48] intentionally omitted <==

----- Start of picture text -----

Rehabilitation Property, R&D Tax
Tax losses Provision and plant and incentive Other Total
$'000 assets equipment credits $'000 $'000
$'000 $'000 $'000
----- End of picture text -----

Tax losses $'000 Rehabilitaton Provision and assets $'000	Tax losses $'000	Rehabilitaton Provision and assets $'000	Property, plant and equipment $'000	R&D Tax incentve credits $'000	Other $'000	Total $'000
Movements At 1 July 2019 - 3,617 - to proft or loss 7,065 (296) - direct to equity - - At 30 June 2020 7,065 3,321 Recognised deferred tax assets are atributable to: Losses and temporary diferences carried forward for contnued operatons 7,065 3,321 Losses and temporary diferences carried forward for discontnued operatons - - 7,065 3,321	- 7,065 -	3,617 (296) -	16,352 (2,888) -	1,072 179 -	1,358 150 541	22,399 4,210 541
	7,065	3,321	13,464	1,251	2,049	27,150
			12,420 1,044	1,251 -	1,934 115	25,991 1,159
	7,065 3,321		13,464	1,251	2,049	27,150

Alkane Resources Annual Report 2021 | 61

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 4

	Tax losses $'000	Rehabilitaton Provision and assets $'000	Property, plant and equipment $'000	R&D Tax incentve credits $'000	Other $'000	Total $'000
Movements At 1 July 2020 - proft or loss - directly to equity - demerger of subsidiaries As at 30 June 2021	7,065 3,321 13,463 1,251 2,050 27,150 2,343 331 (3,227) 180 544 171 - - - - (346) (346) - - (1,044) - (115) (1,159)
	9,408 3,652 9,192 1,431 2,133 25,816

(d) Deferred tax liabilities

==> picture [513 x 39] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
The balance comprises temporary differences attributable to:
----- End of picture text -----

Exploraton expenditure Property, plant & equipment Other Gross recognised deferred tax liabilites Net recognised deferred tax assets/(liabilites) are atributable to: Losses and temporary diferences carried forward for contnued operatons Losses and temporary diferences carried forward for discontnued operatons Set-of of deferred tax assets	(17,314) (11,440) (1,799)	(36,995) (4,744) (507)
	(30,553)	(42,246)
	25,816	27,150
	(4,737)	(15,096)
	(4,737) -	10,947 (26,043)
	(4,737)	(15,096)

==> picture [513 x 38] intentionally omitted <==

----- Start of picture text -----

Exploration Property, plant
Other Total
Expenditure and equipment
$'000 $'000
$'000 $'000
----- End of picture text -----

Movements At 1 July 2019 Charged/(credited) - to proft or loss At 30 June 2020 Recognised deferred tax liabilites are atributable to: Temporary diferences in respect of contnued operatons Temporary diferences in respect of discontnued operatons At 1 July 2020 Charged/(credited) - to proft or loss - directly to equity - demerger of subsidiaries At 30 June 2021	31,168 - 548 31,716 - - - - 5,827 4,744 (41) 10,530
	36,995 4,744 507 42,246
	9,795 4,744 505 15,044 27,200 - 2 27,202
	36,995 4,744 507 42,246
	36,995 4,744 507 42,246 - - - - 7,518 6,697 459 14,674 - - 836 836 (27,200) - (3) (27,203)
	17,313 11,441 1,799 30,553

62 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 4

(e) Deferred tax recognised directly in equity

	2021 $'000	2020 $'000
Relatng to equity raising costs Relatng to revaluatons of investments/fnancial instruments	106 (245) 1,073 (296)
	1,179 (541)

(f) Unrecognised temporary differences and tax losses

==> picture [512 x 28] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
----- End of picture text -----

	2021 $'000 2020 $'000
Unrecognised tax losses Deductble temporary diferences Potental tax beneft at 30% (2020: 30%)	18,378 18,378 - 513
	18,378 18,891
	5,513 5,667

The potential benefit of carried forward tax losses will only be obtained if taxable income is derived of a nature and amount sufficient to enable the benefit from the deductions to be realised. In accordance with the Group’s policies for deferred taxes, a deferred tax asset is recognised only if it is probable that sufficient future taxable income will be generated to offset against the asset.

Determination of future taxable profits requires estimates and assumptions as to future events and circumstances including commodity prices, ore resources, exchange rates, future capital requirements, future operational performance, the timing of estimated cash flows, and the ability to successfully develop and commercially exploit resources.

Tax legislation prescribes the rate at which tax losses transferred from entities joining a tax consolidation group can be applied to taxable incomes and this rate is diluted by changes in ownership, including capital raisings. As a result, the reduction in the rate at which the losses can be applied to future taxable incomes, the period of time over which it is forecast that these losses may be utilised has extended beyond that which management considers prudent to support their continued recognition for accounting purposes. Accordingly, no deferred tax asset has been recognised for certain tax losses. Recognition for accounting purposes does not impact the ability of the Group to utilise the losses to reduce future taxable profits.

Alkane Resources Ltd and its wholly owned Australian-controlled entities have implemented the tax consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the consolidated financial statements.

Deferred tax assets relating to deductible temporary differences can only be recognised to the extent that it is probable that future taxable profits will be available against which the deductible temporary difference can be utilised. Recognition for accounting purposes does not impact the ability of the Group to utilise the deductible temporary differences to reduce future taxable profits.

Alkane Resources Annual Report 2021 |

63

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 5

Note 5. Discontinued operations

(a) Demerger – ASM

ASM Group

On 17 June 2020, the Group publicly announced the demerger of Alkane's critical metals and materials business and assets (the ASM Business) from the remainder of Alkane's business.

Australian Strategic Materials Ltd (ASM) was admitted to the ASX on 29 July 2020 and will operate the ASM Business; and Alkane will continue to own and operate the remainder of Alkane's business being, principally, its Australian gold business.

Following the demerger, Alkane will be an Australian-focused gold company, with existing production from its Tomingley operations and the opportunity to grow its production base through organic exploration and discovery (including the Boda discovery) and through further strategic acquisitions. Corporately, Alkane will continue to have an experienced board and management team, the remainder of its cash position.

ASM was demerged with its cash reserves and no bank debt. All interests in the Dubbo Project and associated assets (including land and water rights), together with ASM’s investment in South Korean metals technology company RMR Tech Corporation, has been 100% owned by ASM following the demerger.

The Group recognised a net fair gain on demerger as follows:

==> picture [300 x 29] intentionally omitted <==

----- Start of picture text -----

30 June 2021
$'000
----- End of picture text -----

	30 June 2021 $'000
Fair value of ASM demerger(i) Carrying value of net assets of ASM Less transacton costs	135,672 (113,000)
	22,672
	(538)
	22,134

(i) Based on the first five trading days after the demerger date volume weighted average price (“VWAP “) of ASM ($1.14) multiplied by the number of ASM shares (119,049,778 ordinary shares). The demerger distribution is accounted for a reduction in equity, split between share capital $43,237,000 and demerger reserve of $92,435,000.

The amount treated as a reduction in share capital has been calculated by reference to the market value of Alkanes' shares and the market value of ASMs' shares post demerger. The difference between the fair value of the distribution and the capital reduction amount is the demerger dividend.

64 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 5

(b) Discontinued operation – ASM

Financial performance information

==> picture [513 x 38] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
Discontinued other income - 1,073
----- End of picture text -----

Discontnued other income	2021 $'000 -	2020 $'000 1,073
Gain on demerger Total other income Proft/(loss) before income tax expense Income tax expense Income tax beneft Gain on disposal afer income tax beneft Proft/(loss) afer income tax beneft from discontnued operatons Share of loss of Joint Venture Professional fees and consultng services General and administraton expenses Pastoral company expenses Audit fees Transacton costs Total expenses	22,672	-
	22,672	1,073
	- - - - - (538)	(10) (624) (381) (848) (41) -
	(538)	(1,904)
	22,134 -	(831) -
	-	248
	-	248
	22,134	(583)

Carrying amounts of assets and liabilities held for distribution to the owners

==> picture [513 x 29] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
----- End of picture text -----

	2021 $'000	2020 $'000
Cash and cash equivalents Trade and other receivables Consumables Biological assets Investments accounted for using the equity method Property, plant and equipment Exploraton and evaluaton assets Other non-current assets Total assets Trade and other payables Provisions Deferred tax Total liabilites Net assets	- - - - - - - -	18,544 233 5 783 1,721 27,567 90,665 20
	-	139,538
	- - -	344 178 26,043
	-	26,565
	-	112,973

The major classes of assets and liabilities of the ASM Business classified as held for distribution to the owners as at 30 June 2020 were demerged from the consolidated entity on 20 July 2020, thus nil balances on the Alkane balance sheet for the current year.

Alkane Resources Annual Report 2021 | 65

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 6

Cash flows of ASM businesses

==> picture [513 x 37] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
Operating - (222)
----- End of picture text -----

Operatng	2021 $'000 2020 $'000 - (222)
Investng Financing Cash at the beginning of the period Net cash at the end of the period	- (4,894) - (3,308) - 26,968
	- 18,544

Accounting policy for discontinued operations

A discontinued operation is a component of the consolidated entity that has been disposed of or is classified as held for distribution to owners and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the statement of profit or loss.

Note 6. Cash and cash equivalents

==> picture [513 x 29] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
----- End of picture text -----

	2021 $'000	2020 $'000
Current assets Cash at bank Reconciliaton to cash and cash equivalents at the end of the fnancial year The above fgures are reconciled to cash and cash equivalents at the end of the fnancial year as shown in the statement of cash fows as follows: Balances as above Cash and cash equivalents - classifed as held for distributon by owners Balance as per statement of cash fows	18,991	48,337
	18,991 -	48,337 18,544
	18,991	66,881

Cash at bank at balance date weighted average interest rate was 0.01% (2020: 0.67%).

Cash and cash equivalents include cash on hand and deposits held at call with financial institutions and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Note 7. Trade and other receivables

==> picture [513 x 28] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
----- End of picture text -----

Current assets Trade receivables Prepayments GST and fuel tax credit receivable	43 963 888	1,057 922 961
	1,894	2,940

66 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 8

(i) Classification as receivables

Receivables are recognised initially at fair value and then subsequently measured at amortised cost, less provision for credit losses. As at 30 June 2021 the Group has determined that the expected provision for credit losses is not material.

In determining the recoverability of a trade or other receivables using the expected credit loss model, the Group performs a risk analysis considering the type and age of outstanding receivables, the creditworthiness of the counterparty, contract provisions, letter of credit and timing of payment.

(ii) Fair value of receivables

Due to the short-term nature of the current receivables, their carrying amount is assumed to be the same as their fair value.

(iii) Impairment and risk exposure

Information about the impairment of receivables, their credit quality and the Group’s exposure to credit risk, foreign currency risk and interest rate risk can be found in note 21.

Note 8. Inventories

==> picture [513 x 28] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
----- End of picture text -----

	2021 $'000 2020 $'000
Current assets Ore stockpiles Gold in circuit Bullion on hand Consumable stores	1,571 934 2,398 1,940 4,537 2,407 3,142 2,366
	11,648 7,647

(i) Assigning costs to inventories

Costs are assigned to ore stockpiles, gold in circuit and bullion on hand on the basis of weighted average costs. Inventories must be carried at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. At balance date ore stockpiles, gold in circuit, bullion on hand and consumable stores were carried at cost.

No provision was recorded at 30 June 2021 to write down inventories to their recoverable value (2020: $nil).

Consumable stores include diesel, explosives and other consumables items. These items are carried at cost.

(ii) Amounts recognised in profit or loss

Consumable inventories recognised as an expense during the year ended 30 June 2021 amounted to $2,240,000 (2020: $6,920,000). These were included in costs of production.

Product inventory movement during the year ended 30 June 2021 amounted to an expense of $3,226,000 (2020: $2,203,000) and is disclosed as part of cost of sales in note 3.

Alkane Resources Annual Report 2021 | 67

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 9

Note 9. Financial assets at fair value through other comprehensive income

==> picture [513 x 29] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
----- End of picture text -----

	2021 $'000 2020 $'000
Non-current assets Listed securites Calidus Resources Ltd (ASX: CAI) Sky Metals Ltd (ASX: SKY)	17,811 -
	660 -
	18,471 -

Calidus Resources Ltd was reclassified from investments accounted for using the equity method during the year. Refer to note 13 for further information.

Note 10. Other financial assets

	2021 $'000	2020 $'000
Non-current assets Security deposits	11,541 8,614

The above deposits are held by financial institutions or regulatory bodies as security for rehabilitation obligations as required under the respective exploration and mining leases or as required under agreement totalling $11,541,000 for the current period (2020: $8,614,000 backed by security deposits).

All interest bearing deposits are held in Australian dollars and therefore there is no exposure to foreign currency risk. Please refer to note 21 for the Group’s exposure to interest rate risk. The fair value of other financial assets is equal to its carrying value.

68 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 11

Note 11. Property, plant and equipment

==> picture [513 x 39] intentionally omitted <==

----- Start of picture text -----

Land and Plant and Capital Mine
Total
buildings equipment WIP properties
$'000
$'000 $'000 $'000 $'000
----- End of picture text -----

Year ended 30 June 2021 Opening cost Additons Transfers between classes Disposals Net movement Closing cost Opening accumulated depreciaton and impairment - to proft or loss Disposals Net movement Closing accumulated depreciaton and impairment Closing net carrying value	22,326 - 12,206 (703)	90,060 468 11,932 (1,901)	1,687 24,662 (24,138) -	205,682 34,963 - -	319,755 60,093 - (2,604)
	11,503	10,499	524	34,963	57,489
	33,829	100,559	2,211	240,645	377,244
	(12,787) (289) -	(75,908) (6,595) 854	- - -	(168,738) (14,370) -	(257,433) (21,254) 854
	(289)	(5,741)	-	(14,370)	(20,400)
	(13,076)	(81,649)	-	(183,108)	(277,833)
	20,753	18,910	2,211	57,537	99,411

==> picture [513 x 39] intentionally omitted <==

----- Start of picture text -----

Land and Plant and Capital Mine
Total
buildings equipment WIP properties
$'000
$'000 $'000 $'000 $'000
----- End of picture text -----

Year ended 30 June 2020 Opening cost Additons Transfers between classes Assets classifed as held for distributon to owners and other disposals Net movement Closing cost Opening accumulated depreciaton and impairment - to proft or loss Assets classifed as held for distributon to owners and other disposals Net movement Closing accumulated depreciaton and impairment Closing net carrying value	40,379 - 8,403 (26,456)	80,448 - 11,445 (1,833)	3,728 18,873 (20,794) (120)	174,479 30,257 946 -	299,034 49,130 - (28,409)
	(18,053)	9,612	(2,041)	31,203	20,721
	22,326	90,060	1,687	205,682	319,755
	(12,674) (121) 8	(73,322) (3,306) 720	- - -	(162,000) (6,738) -	(247,996) (10,165) 728
	(113)	(2,586)	-	(6,738)	(9,437)
	(12,787)	(75,908)	-	(168,738)	(257,433)
	9,539	14,152	1,687	36,944	62,322

Alkane Resources Annual Report 2021 |

69

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 11

All property, plant and equipment are stated at historical cost less accumulated depreciation and impairment charges. Historical cost includes:

• expenditure that is directly attributable to the acquisition of the items;

• direct costs associated with the commissioning of plant and equipment including pre-commissioning costs in testing the processing plant;

• where the asset has been constructed by the Group, the cost of all materials used in construction, direct labour on the project and project management costs associated with the asset; and

• the present value of the estimated costs of dismantling and removing the asset and restoring the site on which it is located.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred. Depreciation is calculated using the straight-line method to allocate their cost over their estimated useful lives as follows:

Buildings	units of producton
Plant and equipment	units of producton
Mining propertes	units of producton
Ofce equipment	3-5 years
Furniture and ftngs	4 years
Motor vehicles	4-5 years
Sofware	2-3 years

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 are included in the statement of comprehensive income.

Mine properties

Mine properties represent the accumulation of all exploration, evaluation and development expenditure incurred by the Group in relation to areas of interest for which the technical feasibility and commercial viability of the extraction of mineral resources are demonstrable.

When further development expenditure is incurred in respect of a mine property after the commencement of production, such expenditure is carried forward as part of the mine property only when it is probable that the additional future economic benefits associated with the expenditure will flow to the Group. Otherwise, such expenditure is classified as part of the cost of production. Mine properties are amortised on a units of production basis over the economically recoverable resources of the mine concerned.

Commercial production of the underground mine was declared in February 2020. Amortisation of mine properties commenced with commercial production and is being charged using units of production method.

70 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 12

Note 12. Exploration and evaluation

==> picture [513 x 29] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
----- End of picture text -----

	2021 $'000 2020 $'000
Opening balance Expenditure during the year Amounts provided for or writen of Exploraton and evaluaton classifed as available for distributon to owners	32,745 103,894 27,040 17,964 (1,991) (329) - (88,784)
	57,794 32,745

(a) Amounts recognised in profit or loss

Exploration and evaluation costs are carried forward on an area of interest basis. Costs are recognised and carried forward where rights to tenure of the area of interest are current and either:

• the expenditures are expected to be recouped through successful development and exploitation of the area of interest; or

• activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant exploration and evaluation activities in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are tested for impairment when reclassified to development tangible or intangible assets, or whenever facts or circumstances indicate impairment. An impairment loss is recognised for the amount by which the exploration and evaluation assets carrying amount exceeds their recoverable amount. The recoverable amount is the higher of the exploration and evaluation assets fair value less costs of disposal and their value in use.

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mine properties under development. No amortisation is charged during the exploration and evaluation phase.

Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

There may exist, on the Group's exploration properties, areas subject to claim under native title or containing sacred sites or sites of significance to Aboriginal people. As a result, exploration properties or areas within tenements may be subject to exploration or mining restrictions.

Alkane Resources Annual Report 2021 |

71

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 13

Note 13. Investments accounted for using the equity method

==> picture [513 x 29] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
----- End of picture text -----

	2021 $'000	2020 $'000
Non-current assets Investment in associates Reconciliaton Reconciliaton of the carrying amounts at the beginning and end of the current and previous fnancial year are set out below: Opening carrying amount Additons OCI Reclassifcaton Closing carrying amount Share of proft/(loss) of equity accounted for investments Share of losses - associates	15,944	14,385
	14,385 14,663 (109) (12,995)	7,616 7,110 (341) -
	15,944	14,385
	(870)	(240)

Interests in associates

Interests in associates and joint venture are accounted for using the equity method of accounting. Information relating to the investments that are material to the consolidated entity are set out below:

		Ownership interest	Ownership interest
Name	Principal place of business / Country of incorporaton	2021 %	2020 %
Genesis Minerals Ltd (GMD) Australia 19.84% 15.51% Calidus Resources Ltd(CAI) Australia 9.65% 12.99%

On 1 April 2021, Alkane’s percentage of holding in Calidus reduced below 10% to a balance of 9.65%, which no longer gives Alkane the right to appoint one nominated director (out of five) to the Board. Calidus was reclassified to financial assets at fair value through other comprehensive income, a $2,698,000 derecognition gain resulted.

On 24 October 2019, Nic Earner (Alkane’s Managing Director) was appointed as a non-executive director to the Genesis Board. Alkane’s 20% representation on the Board out of five directors entitles the Company significant influence in policymaking processes including participation in decisions about dividends and other distributions.

Note 14. Trade and other payables

	2021 $'000	2020 $'000
Current liabilites Trade payables Other payables	2,760 8,322	4,588 4,837
	11,082	9,425

72 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 15

Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial period which are unpaid. Current trade and other payables are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented in current liabilities unless payment is not due within 12 months from the reporting date.

The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term nature.

Note 15. External borrowings

Hire purchase liabilities are secured over the assets to which they relate, the carrying value of which exceeds the value of the hire purchase liability. The Group does not hold title to the equipment under the hire purchase pledged as security.

==> picture [513 x 38] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
Current liabilities
----- End of picture text -----

Current liabilites	2021 $'000	2020 $'000
External borrowings Non-current liabilites Hire purchase liabilites	3,294	2,090
	5,922	4,515

Refer to note 21 for further information on financial risk management.

Financing arrangements

Unrestricted access was available at the reporting date to the following lines of credit:

==> picture [512 x 38] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
Total facilities
----- End of picture text -----

Total facilites	2021 $'000 2020 $'000
Bank overdraf Used at the reportng date Bank overdraf Unused at the reportng date Bank overdraf	20,000 -
	- -
	20,000 -

Accounting policy for borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

Alkane Resources Annual Report 2021 | 73

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 16

Note 16. Provisions

==> picture [513 x 38] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
Current liabilities
----- End of picture text -----

Current liabilites	2021 $'000 2020 $'000
Employee benefts Non-current liabilites Employee benefts Rehabilitaton	3,660 2,659
	232 122 15,131 14,751
	15,363 14,873

(i) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised in finance charges.

(ii) Information about individual provisions and significant estimates

Employee benefits

The provision for employee benefits relates to the Group's liability for long service leave and annual leave.

The current portion of this liability includes all of the accrued annual leave. The entire amount of the provision of $2,490,000 (2020: $1,833,000) is presented as current, since the Group does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Group does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or paid within the next 12 months.

	2021 $'000	2020 $'000
Current leave obligatons expected to be setled afer 12 months	973	595

The liability for long service leave not expected to vest within 12 months after the end of the period in which the employees render the related service is recognised in the non-current provision for employee benefits and measured at the present value of expected future payments to be made in respect of services provided up to the end of the reporting period. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period on corporate bonds with terms and currencies that match as closely as possible, the estimated future cash outflows. Where the Group does not have an unconditional right to defer settlement for any annual or long service leave owed, it is classified as a current provision regardless of when the group expects to realise the provision.

74 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 17

Rehabilitation and mine closure

The Group has obligations to dismantle and remove certain items of property, plant and equipment and to restore and rehabilitate the land on which they sit.

A provision is raised for the estimated cost of settling the rehabilitation and restoration obligations existing at balance date, discounted to present value using an appropriate pre-tax discount rate.

Where the obligation is related to an item of property, plant and equipment, its cost includes the present value of the estimated costs of dismantling and removing the asset and restoring the site on which it is located. Costs that relate to obligations arising from waste created by the production process are recognised as production costs in the period in which they arise.

The discounted value reflects a combination of management's assessment of the nature and extent of the work required, the future cost of performing the work required, the timing of cash flows and the discount rate. An increase in the provision due to the passage of time of was recognised in finance charges in the statement of comprehensive income of $59,000 (2020: $127,000).

The provisions are reassessed at least annually. A change in any of the assumptions used to determine the provisions could have a material impact on the carrying value of the provision.

Movements in rehabilitation and mine closure provision during the financial year are set out below:

==> picture [513 x 39] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
Rehabilitation and mine closure
----- End of picture text -----

Opening balance Additonal provision incurred Expenditure during the year Unwinding of discount Change in estmate	14,751 14,456 321 1,276 - (1,881) 59 127 - 773
	15,131 14,751

Note 17. Issued capital

	2021 Shares	2020 Shares	2021 $'000	2020 $'000
Ordinary shares - fully paid	595,388,800	580,033,307	218,079	258,876

Alkane Resources Annual Report 2021 |

75

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 18

Movements in ordinary share capital

==> picture [513 x 18] intentionally omitted <==

----- Start of picture text -----

Details Date Shares $'000
----- End of picture text -----

Details Date	Shares	$'000
Balance 1 July 2019 Adjustment for reclassifcaton Share issue Share issue costs Less: Deferred tax credit recognised directly into equity Balance 30 June 2020 Demerger capital distributon Shares issued on vestng of performance rights Share issue Share issue costs Less: Deferred tax credit recognised directly into equity Balance 30 June 2021	506,096,222 - 73,937,085 - -	220,111 (922) 40,665 (1,223) 245
	580,033,307 - 15,215,584 139,909 - -	258,876 (43,237) 2,416 161 (31) (106)
	595,388,800	218,079

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.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Note 18. Reserves

The following table shows a breakdown of the balance sheet line item ‘Reserves’ and the movements in these reserves during the year. A description of the nature and purpose of each reserve is provided below the table.

==> picture [513 x 28] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
----- End of picture text -----

	2021 $'000	2020 $'000
Financial assets at fair value through other comprehensive income reserve Hedging reserve - cash fow hedges Share-based payments reserve Demerger reserve	1,943 (134) 3,313 (70,300)	(101) (692) 4,206 -
	(65,178)	3,413

Financial assets at fair value through other comprehensive income reserve

The cash flow hedge reserve is used to recognise the effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges. Amounts are subsequently either transferred to the initial cost of inventory or reclassified to profit or loss as appropriate.

76 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 19

Hedging reserve – cash flow hedges

The reserve is used to recognise the effective portion of the gain or loss of cash flow hedge instruments that is determined to be an effective hedge.

Share-based payments reserve

The reserve is used to recognise the grant date fair value of shares issued to directors and KMP, as well as the grant date fair value of deferred rights granted but not yet vested.

Demerger reserve

The demerger reserve is used to recognise the gain on ASM demerger and demerger dividend. Refer to note 5 for further details.

Note 19. Retained profits

==> picture [513 x 38] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
Retained profits/(accumulated losses) at the beginning of the financial year 5,097 (8,587)
----- End of picture text -----

Retained profts/(accumulated losses) at the beginning of the fnancial year	2021 $'000 5,097	2020 $'000 (8,587)
Adjustment for reclassifcaton Transfer gain on demerger Accumulated losses at the beginning of the fnancial year - restated Proft afer income tax (expense)/beneft for the year Retained profts at the end of the fnancial year	- (22,134)	922 -
	(17,037) 55,701	(7,665) 12,762
	38,664	5,097

Note 20. Critical accounting judgements, estimates and assumptions

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Group’s accounting policies.

Carrying value of non-current assets

Non-current assets include capitalised exploration and evaluation expenditures and mine properties. The Group has capitalised significant exploration and evaluation expenditure on the basis either that such expenditure is expected to be recouped through future successful development (or alternatively sale) of the areas of interest concerned or on the basis that it is not yet possible to assess whether it will be recouped and activities are planned to enable that determination.

The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself, or, if not, whether it successfully recovers the related exploration asset through sale. The future recoverability of mine properties is dependent on the generation of sufficient future cash flows from operations (or alternately sale). Factors that could impact the future recoverability of exploration and evaluation and mine properties include the level of reserves and resources, future technological changes, costs of drilling and production, production rates, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices and exchange rates.

Alkane Resources Annual Report 2021 | 77

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 20

Estimates of recoverable quantities of resources and reserves also include assumptions requiring significant judgment as detailed in the resource and reserve statements.

An impairment review is undertaken to determine whether any indicators of impairment are present. The Group has not recorded an impairment charge or reversal against either the gold operations cash generating units in the current financial year.

Depreciation of property, plant and equipment

Non-current assets include property, plant and equipment. The Group reviews the useful lives of depreciable asset at each reporting date or when there is a change in the pattern in which the asset's future economic benefits are expected to be consumed, based on the expected utilisation of the assets. Depreciation and amortisation are calculated using the units of production method based on ounces of gold produced.

Rehabilitation and mine closure provisions

These provisions represent the discounted value of the present obligation to restore, dismantle and rehabilitate certain items of property, plant and equipment and to rehabilitate exploration and mining leases. The discounted value reflects a combination of management's assessment of the nature and extent of the work required, the future cost of performing the work required, the timing of cash flows and the discount rate. Changes to one or more of these assumptions is likely to result in a change to the carrying value of the provision and the related asset or a change to profit and loss in accordance with the group's accounting policy stated in note 16.

Net realisable value and classification of inventory

The Group's assessment of the net realisable value and classification of its inventory requires the use of estimates, including the estimation of the relevant future commodity or product price, future processing costs and the likely timing of sale.

Share-based payments

The Group measures the cost of equity settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value for share appreciation rights and performance rights component tranche 1 is determined with the assistance of an external valuer. The number of performance rights issued under the long-term incentive plan tranche 2 component are adjusted to reflect management’s assessment of the probability of meeting the targets and service condition. The related assumptions are set out in note 30. The accounting estimates and assumptions relating to equity settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity.

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.

In addition, the Group has recognised deferred tax assets relating to carried forward tax losses to the extent there are sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation authority against which the unused tax losses can be utilised. Utilisation of the tax losses also depends on the ability of the entity to satisfy certain tests at the time the losses are recouped. Refer to note 4 for the current recognition of tax losses.

78 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 21

Exploration and evaluation costs

Exploration and evaluation costs have been capitalised on the basis that the consolidated entity will commence commercial production in the future, from which time the costs will be amortised in proportion to the depletion of the mineral resources. Key judgements are applied in considering costs to be capitalised which includes determining expenditures directly related to these activities and allocating overheads between those that are expensed and capitalised. In addition, costs are only capitalised that are expected to be recovered either through successful development or sale of the relevant mining interest. Factors that could impact the future commercial production at the mine include the level of reserves and resources, future technology changes, which could impact the cost of mining, future legal changes and changes in commodity prices.

Where economic recoverable reserves for an area of interest have been identified, and a decision to develop has occurred, capitalised expenditure is classified as mine development.

To the extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the period in which the determination is made.

Note 21. Financial risk management

Financial risk management objectives

The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The Group uses derivative financial instruments including gold forward and gold put option contracts to mitigate certain risk exposures.

This note presents information about the Group's exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital.

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and manages the financial risks relating to the operations of the Group through regular reviews of the risks and mitigating strategies.

(a) Market risk

(i) Foreign currency risk

The Group's sales revenue for gold are largely denominated in US dollars and the majority of operating costs are denominated in Australian dollars, hence the Group's cash flow is significantly exposed to movement in the A$:US$ exchange rate. The Group mitigates this risk through the use of derivative instruments, including but not limited to a combination of Australian dollar denominated gold forward contracts and put options to hedge a portion of future gold sales.

The Australian dollar denominated gold forward contracts are entered into and continue to be held for the purpose of physical delivery of gold bullion. As a result, the contracts are not recorded in the financial statements. Refer to notes 27 for further information.

(ii) Commodity price risk

The Group's sales revenues are generated from the sale of gold. Accordingly, the Group's revenues are exposed to commodity price fluctuations, primarily gold. The Group mitigates this risk through the use of derivative instruments, including but not limited to Australian dollar denominated gold forward contracts.

Alkane Resources Annual Report 2021 |

79

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 21

(iii) Interest rate risk

The Group's main interest rate risk arises through its cash and cash equivalents and other financial assets held within financial institutions. The Group minimises this risk by utilising fixed rate instruments where appropriate.

Summarised market risk sensitivity analysis:

	Interest rate risk	Interest rate risk	Interest rate risk	Interest rate risk	Interest rate risk	Interest rate risk
	Impact on proft/(loss) afer tax
	30 June 2021			30 June 2020
	Carrying amount $000	+100BP $000	-100BP $000	Carrying amount $000	+100BP $000	-100BP $000
Financial assets Cash and cash equivalents Receivables* Other fnancial assets	18,991 133 (133) 48,337 338 (338) 43 - - 2,028 - - 11,541 79 (79) 8,614 60 (60)
Financial liabilites Trade and other payables	(19,956) - - (9,425) - -
Total increase/(decrease) in proft	- 212 (212) - 399 (399)

*The receivables balance excludes prepayments and tax balances which do not meet the definition of financial assets and liabilities.

There is no exposure to foreign exchange risk or commodity price risk for the above financial assets and liabilities.

(b) Credit risk

The consolidated entity has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all customers of the consolidated entity based on recent sales experience, historical collection rates and forward-looking information that is available.

In determining the recoverability of a trade or other receivable using the expected credit loss model, the Group performs a risk analysis considering the type and age of the outstanding receivables, the creditworthiness of the counterparty, contract provisions, letter of credit and timing of payment.

Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposure to customers, including outstanding receivables and committed transactions.

(i) Risk management

The Group limits its exposure to credit risk in relation to cash and cash equivalents and other financial assets by only utilising banks and financial institutions with acceptable credit ratings.

(ii) Credit quality

Tax receivables and prepayments do not meet the definition of financial assets. The Group assesses the credit quality of the customer, taking into account its financial position, past experience and other factors.

80 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 22

(c) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial liabilities as they fall due. The Group's approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. The Board of Directors monitors liquidity levels on an ongoing basis.

The Group's financial liabilities generally mature within 3 months, therefore the carrying amount equals the cash flow required to settle the liability.

Financing arrangements

Unused borrowing facilities at the reporting date:

	2021 $'000	2020 $'000
Bank overdraf	20,000 -

The facility can be drawn for periods up to 3 months prior to the final repayment date, which is 2 January 2022. The final repayment date may be extended for a further 12 months, upon request by the Company.

Hedge accounting

Movements in hedging reserves during the current and previous financial year are set out below:

==> picture [512 x 29] intentionally omitted <==

----- Start of picture text -----

Cashflow hedges
$'000
----- End of picture text -----

	Cashfow hedges $'000
Balance at 1 July 2019 Change in fair value of hedging instrument recognised in other comprehensive income Reclassifed from other comprehensive income to proft or loss Deferred tax Balance at 30 June 2020 Change in fair value of hedging instrument recognised in other comprehensive income Reclassifed from other comprehensive income to proft or loss Deferred tax Balance at 30 June 2021	779 487 (278) (296)
	692 220 (1,017) 239
	134

Note 22. Capital risk management

The Group's objectives when managing capital are to safeguard the ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may return capital to shareholders, pay dividends to shareholders, issue new shares or sell assets.

Alkane Resources Annual Report 2021 | 81

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 23

Note 23. Key management personnel disclosures

The aggregate compensation made to directors and other members of KMP of the consolidated entity is set out below:

==> picture [513 x 38] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
Short-term employee benefits 1,767 2,164
----- End of picture text -----

Short-term employee benefts	2021 $'000 2020 $'000 1,767 2,164
Post-employment benefts Long-term benefts Share-based payments	105 122 200 102 1,170 1,063
	3,242 3,451

Note 24. Remuneration of auditors

During the financial year the following fees were paid or payable for services provided by PricewaterhouseCoopers, the auditor of the Company:

==> picture [512 x 28] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
----- End of picture text -----

	2021 $'000 2020 $'000
Audit services - PricewaterhouseCoopers Audit or review of the fnancial statements Other services - PricewaterhouseCoopers Other advisory services Other assurance services	139 115
	153 175 35 -
	188 175
	327 290

Note 25. Contingent assets

The Group has entered into forward gold sales contracts which are not accounted for on the balance sheet. A contingent asset of $537,000 (2020: liability $14,178,000) existed at the balance date in the event that the contracts are not settled by the physical delivery of gold. Refer to the commitment’s disclosure note 27 for more information.

Note 26. Contingent liabilities

The Group has contingent liabilities estimated up to the value of $3,223,000 (2020: $8,330,000 including amount of $3,670,000 related to land acquisition surrounding the Dubbo Project) for the potential acquisition of several parcels.

82 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 27

Note 27. Commitments

(a) Exploration and mining lease commitments

In order to maintain current rights of tenure to exploration and mining tenements, the Group will be required to outlay the amounts disclosed in the below table. These amounts are discretionary, however if the expenditure commitments are not met then the associated exploration and mining leases may be relinquished.

	2021 $'000	2020 $'000
Within one year	941 1,505

(b) Physical gold delivery commitments

As part of its risk management policy, the Group enters into derivatives including gold forward contracts and gold put options to manage the gold price of a proportion of anticipated gold sales.

Alkane purchased gold forward sales and put options as part of a risk mitigation strategy on any potential downward price pressure while Tomingley was processing the low grade stockpiles during the year.

The gold forward sales contracts disclosed below did not meet the criteria of financial instruments for accounting purposes on the basis that they met the normal purchase/sale exemption because physical gold would be delivered into the contract. Accordingly, the contracts were accounted for as sale contracts with revenue recognised in the period in which the gold commitment was met. The balances in the table below relate to the value of the contracts to be delivered into by transfer of physical gold.

	Gold for physical delivery Ounces	Contracted gold sale price per ounce ($)	Value of commited sales $'000
30 June 2021
Fixed forward contracts Within one year	24,000 2,307 55,368
30 June 2020
Fixed forward contracts Within one year	17,770 1,836 32,619

(c) Capital commitments

Capital commitments committed for the year at the end of the reporting period but not recognised as liabilities amounted to $11,462,000 (2020: $8,787,000, including amount related to the discontinued operation of $3,200,000).

Alkane Resources Annual Report 2021 | 83

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 28

Note 28. Events after the reporting period

No matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.

Note 29. Related party transactions

Parent entity

Alkane Resources Ltd is the parent entity of the Group.

Associates

Interests in associates are set out in note 13.

Key management personnel

Disclosures relating to key management personnel are set out in note 23 and the remuneration report included in the directors' report.

Transactions with other related parties

Nuclear IT, a director-related entity, provides information technology consulting services to the Group which includes the coordination of the purchase of information technology hardware and software. These terms are documented in a service level agreement and represent normal commercial terms.

	2021 $'000	2020 $'000
Purchase of computer hardware and sofware Consultng fees and services Total	126 88 304 310
	430 398

Note 30. Share-based payments

Share-based compensation benefits are provided to employees via the Group's incentive plans. The incentive plans consist of short-term and long-term incentive plans for executive directors and other executives and the employee share scheme for all other employees. Information relating to these plans is set out in the remuneration report and below.

The fair value of rights granted under the short term and long term incentive plans is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the rights granted, which includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions.

84 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 30

Non-market vesting conditions and the impact of service conditions are included in assumptions about the number of rights that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of rights that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity.

The initial estimate of fair value for market based and non-vesting conditions is not subsequently adjusted for differences between the number of rights granted and number of rights that vest.

When the rights are exercised, the appropriate number of shares are transferred to the employee. The proceeds received net of any directly attributable transaction costs are credited directly to equity.

Under the employee share scheme, shares issued by the Group to employees for no cash consideration vest immediately on grant date. On this date, the market value of the shares issued is recognised as an employee benefits expense with a corresponding increase in equity.

The fair value of deferred shares granted to employees for nil consideration under the employee share scheme is recognised as an expense over the relevant service period, being the year to which the incentive relates and the vesting period of the shares. The fair value is measured at the grant date of the shares and is recognised in equity in the share-based payment reserve. The number of shares expected to vest is estimated based on the non-market vesting conditions. The estimates are revised at the end of each reporting period and adjustments are recognised in profit or loss and the share-based payment reserve.

Executive Directors and other executives

The Company’s remuneration framework is set out in the remuneration report, including all details of the performance rights and share appreciation rights plans, the associated performance hurdles and vesting criteria.

Participation in the plans is at the discretion of the Board of Directors and no individual has a contractual right to participate in the plans or to receive any guaranteed benefits. Participation is currently restricted to senior executives within the Group.

The following tables illustrate the number and weighted average fair value of, and movements in, share rights during the year.

	2021	2021	2020	2020
	Number of performance rights	Weighted average fair value	Number of performance rights	Weighted average fair value
Performance Rights Outstanding at the beginning of the year Issued during the year Vested during the year Lapsed/Cancelled during the year Outstandingat the end of theyear	12,092,879 $0.18 18,476,061 $0.18 1,492,626 $0.75 3,853,701 $0.37 (6,785,208) $0.06 (8,430,376) $0.24 (2,134,033) $0.32 (1,806,507) $0.34 4,666,264 $0.47 12,092,879 $0.18

The number of performance rights to be granted is determined by the Remuneration Committee with reference to the fair value of each performance right which is generally the volume weighted average price for the month preceding the start of the performance period. This will differ from the fair value reported in the table above which is determined at the time of grant.

Alkane Resources Annual Report 2021 | 85

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 31

The following table lists the inputs to the models used.

Grant date	Performance hurdle	Dividend yield %	Expected stock volatlity %	Risk free rate %	Expected life years	Weighted average share price at grant date $
18/10/2018 Services conditon and market conditon - 66% 2.14% 3.0 $0.22 21/11/2018 Services conditon and market conditon - 65% 2.14% 2.9 $0.22 02/09/2019 Services conditon and market conditon - 67% 0.69% 2.8 $0.40 22/11/2019 Services conditon and market conditon - 65% 0.73% 2.6 $0.63 11/11/2020 Services conditon and market conditon - 72% 0.19% 3.0 $1.08

Expenses arising from share-based payment transactions:

	2021 $'000	2020 $'000
Performance rights Employee share scheme	1,523 161	1,225 -
	1,684	1,225

Note 31. Earnings per share

==> picture [513 x 273] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
Earnings per share for profit from continuing operations
Profit after income tax attributable to the owners of Alkane Resources Ltd 33,567 13,345
Cents Cents
Basic earnings per share 5.64 2.44
Diluted earnings per share 5.60 2.37
2021 2020
$'000 $'000
Earnings per share for profit/(loss) from discontinued operations
Profit/(loss) after income tax attributable to the owners of Alkane Resources 22,134 (583)
Cents Cents
Basic earnings per share 3.72 (0.11)
Diluted earnings per share 3.69 (0.10)
----- End of picture text -----

86 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 32

	2021 $'000	2020 $'000
Earnings per share for proft Proft afer income tax atributable to the owners of Alkane Resources Ltd	55,701	12,762
	Cents	Cents
Basic earnings per share	9.37	2.33
Diluted earningsper share	9.28	2.26
	Number	Number
Weighted average number of ordinary shares Weighted average number of ordinary shares used in calculatng basic earnings per share Adjustments for calculaton of diluted earnings per share: Performance rights Weighted average number of ordinary shares used in calculatng diluted earnings per share	594,734,110 5,201,943	547,023,712 17,141,368
	599,936,053	564,165,080

Note 32. Parent entity information

Set out below is the supplementary information about the parent entity.

Statement of profit or loss and other comprehensive income

	Parent	Parent
	2021 $'000	2020 $'000
Proft afer income tax Total comprehensive income	15,195 14,091
	15,195 14,091

Alkane Resources Annual Report 2021 |

87

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 32

Balance sheet

==> picture [513 x 43] intentionally omitted <==

----- Start of picture text -----

Parent
2021 2020
$'000 $'000
----- End of picture text -----

Equity Issued capital Financial assets at fair value through other comprehensive income reserve Share-based payments reserve Demerger reserve Accumulated losses Total equity Total current assets Total assets Total current liabilites Total liabilites	50,669	203,910
	144,462	254,611
	3,875	2,801
	9,776	3,040
	218,077 1,945 3,313 (70,300) (18,349)	258,876 (101) 4,206 - (11,410)
	134,686	251,571

Determining the parent entity financial information

The financial information for the parent entity has been prepared on the same basis as the consolidated financial statements, except as set out below.

(i) Tax consolidation legislation

Alkane Resources Ltd and its wholly owned Australian controlled entities have implemented the tax consolidation legislation. Refer to note 4 for further details.

(ii) Share-based payments rights

The grant by the Company of rights to equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution to that subsidiary undertaking. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.

(iii) Investment in subsidiaries

Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.

Capital commitments – Property, plant and equipment

The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 (2020: $nil).

88 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 33

Note 33. Deed of cross-guarantee

The following Group entities have entered into a deed of cross-guarantee. Under the deed of cross-guarantee, each body has guaranteed that the debts to each creditor of each other body which is a party to the deed will be paid in full in accordance with the deed:

• Alkane Resources Limited (the Holding Entity)

• Tomingley Holdings Pty Ltd and Tomingley Gold Operations Pty Ltd (the wholly owned subsidiaries, which are eligible for the benefit of the ASIC Instrument)

By entering into the deed, the wholly owned entities have been relieved from the requirement to prepare financial statements and directors' report under Corporations Instrument 2016/785 issued by the Australian Securities and Investments Commission.

The above companies represent a 'Closed Group' for the purposes of the Corporations Instrument, and as there are no other parties to the deed of cross-guarantee that are controlled by Alkane Resources Ltd, they also represent the 'Extended Closed Group'.

The statement of profit or loss and other comprehensive income and balance sheet (excluding ASM business, which is separately disclosed in note 5) are substantially the same as the consolidated entity as stated in the Consolidated Statement of Profit or Loss and Other Comprehensive Income and therefore have not been separately disclosed.

Note 34. Reconciliation of profit after income tax to net cash from operating activities

==> picture [513 x 38] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
Profit after income tax (expense)/benefit for the year 55,701 12,762
----- End of picture text -----

Proft afer income tax (expense)/beneft for the year	2021 $'000 55,701	2020 $'000 12,762
Adjustments for: Depreciaton and amortsaton Net loss/(gain) on disposal of property, plant and equipment Share of loss - associates Share-based payments Investment paid for by tenement transfer Exploraton costs provided for or writen of Gain from demerger of ASM Group Finance charges Realised loss on expiry put opton derivatves Demerger costs reclassifed Gain on derecogniton of equity investment Change in operatng assets and liabilites: Decrease/(increase) in trade and other receivables Increase in inventories Increase/(decrease) in trade and other payables Increase in deferred tax liabilites Decrease in other provisions Increase/(decrease) in fair value of biological assets Net cash from operatng actvites	21,254 957 870 1,684 (660) 1,991 (22,672) 51 938 538 (2,698) 301 (4,002) 1,217 14,503 - 1,143	9,231 (9) 250 1,225 - 329 - 126 258 1,525 - (749) (3,134) 143 6,320 (81) 340
	71,116	28,536

Alkane Resources Annual Report 2021 | 89

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 35

Net debt reconciliation

This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.

==> picture [513 x 165] intentionally omitted <==

----- Start of picture text -----

2021 2020
$'000 $'000
Cash and cash equivalents 18,991 48,337
Borrowings - repayable within one year (3,778) (2,659)
Borrowings - repayable after one year (5,922) (4,515)
Net cash 9,291 41,163
Borrowings Borrowings
Cash repayable repayable after Net cash
$'000 within one year one year $'000
$'000 $'000
Opening net cash 18,991 (3,778) (5,922) 9,291
----- End of picture text -----

Note 35. Significant accounting policies

The principal accounting policies adopted in the preparation of the financial statements are set out either in the respective notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated.

New or amended Accounting Standards and Interpretations adopted

The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the consolidated entity.

Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001 , as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB').

Historical cost convention

The financial statements have been prepared under the historical cost convention, except for certain financial assets and liabilities which are measured at fair value.

Critical accounting estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 20.

90 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 35

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 32.

Tax consolidated legislation

Alkane Resources Ltd and its wholly owned Australian controlled entities have implemented the tax consolidation legislation.

The head entity, Alkane Resources Ltd, and the controlled entities in the Tax Consolidated Group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the Tax Consolidated Group continues to be a stand alone taxpayer in its own right.

In addition to its own current and deferred tax amounts, Alkane Resources Ltd also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the Tax Consolidated Group.

The entities have also entered into a tax funding agreement under which the wholly owned entities fully compensate Alkane Resources Ltd for any current tax payable assumed and are compensated by Alkane Resources Ltd for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Alkane Resources Ltd under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly owned entities financial statements.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts receivable from or payable to other entities in the Group.

Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Alkane Resources Ltd ('Company' or 'parent entity') as at 30 June 2021 and the results of all subsidiaries for the year then ended. Alkane Resources Ltd and its subsidiaries together are referred to in these financial statements as the 'consolidated entity' or the 'Group'.

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 and 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 that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.

The financial statements are presented in Australian dollars, which is Alkane Resources Ltd's functional and presentation currency.

Alkane Resources Annual Report 2021 |

91

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 35

Accounting policy for lease liabilities

A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.

Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.

Investments and other financial assets

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

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

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 mandatorily measured at fair value through other comprehensive income, the loss allowance is recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases, the loss allowance reduces the asset's carrying value with a corresponding expense through profit or loss.

92 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 35

Impairment of non-financial assets

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Finance costs

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.

Goods and Services Tax ('GST') and other similar taxes

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

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 tax authority is included in other receivables or other payables in the balance sheet.

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 tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing :

• the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares; by

• the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

• the profit attributable to owners of the Company, excluding any costs of servicing equity, and

• the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

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 Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

Alkane Resources Annual Report 2021 |

93

FINANCIAL REPORT | DIRECTORS' DECLARATION

In the directors' opinion:

• the financial statements and notes set out on pages 54 to 93 are in accordance with the Corporations Act 2001 including:

• (a) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

• (b) giving a true and fair view of the consolidated entity's financial position as at 30 June 2021 and of its performance for

the financial year ended on that date; and

• the financial statements and notes also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 35 to the financial statements;

• there are reasonable grounds to believe that Alkane Resources Limited will be able to pay its debts as and when they become due and payable.

• at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 33 to the financial statements.

The directors have been given the declarations required by section 295A of the Corporations Act 2001 .

Signed in accordance with a resolution of directors.

On behalf of the directors

==> picture [236 x 38] intentionally omitted <==

N P Earner

Managing Director

27 August 2021

Perth

94 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT

==> picture [511 x 758] intentionally omitted <==

Alkane Resources Annual Report 2021 | 95

FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT

==> picture [511 x 758] intentionally omitted <==

96 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT

==> picture [511 x 758] intentionally omitted <==

Alkane Resources Annual Report 2021 | 97

FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT

==> picture [511 x 758] intentionally omitted <==

98 | Alkane Resources Annual Report 2021

FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT

==> picture [511 x 758] intentionally omitted <==

Alkane Resources Annual Report 2021 | 99

FINANCIAL REPORT | SHAREHOLDER INFORMATION

Shareholder Information

Additional information required by Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 13 September 2021.

Distribution of Equity Securities

Analysis of numbers of equity security holders by size of holding:

	Ordinary shares	Ordinary shares
	Number of holders	Number of shares
1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over The number of equity security holders holding less than a marketable parcel of securites are:	1,715 3,001 1,557 2,646 444	1,011,540 8,630,858 12,186,438 84,510,440 489,049,524
	9,363	595,388,800
	766	189,462

Twenty Largest Shareholders

The names of the 20 largest holders of quoted ordinary shares are:

==> picture [513 x 44] intentionally omitted <==

----- Start of picture text -----

Listed ordinary shares
Number of Percentage of
shares ordinary shares
----- End of picture text -----

	Number of shares	Percentage of ordinary shares
1 IJ GANDEL 2 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 3 CHAPELGREEN PTY LTD 4 CITICORP NOMINEES PTY LIMITED 5 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 6 FYVIE PTY LTD 7 LEEFAB PTY LTD 8 BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM 9 BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD 10 BNP PARIBAS NOMINEES PTY LTD 11 NICHOLAS EARNER 12 GARRETT SMYTHE LTD 13 HOME IDEAS SHOW PTY LTD 14 AUBURNVALLEY PTY LTD 15 LILYCREEK PTY LTD 16 MAGNABAY PTY LTD 17 S MAAS HOLDINGS PTY LIMITED 18 MS JILLANNE HOMEWOOD 19 BERNE NO 132 NOMINEES PTY LTD <152417 A/C> 20 BNP PARIBAS NOMS PTY LTD	142,692,506 64,482,077 40,700,000 37,999,186 20,920,496 6,650,000 5,238,258 4,779,962 4,549,021 4,211,958 3,627,496 3,385,125 3,050,000 2,900,000 2,900,000 2,900,000 2,776,232 2,210,636 2,207,000 2,057,980	23.95 10.83 6.84 6.38 3.51 1.12 0.88 0.80 0.76 0.71 0.61 0.57 0.51 0.49 0.49 0.49 0.47 0.37 0.37 0.35
	360,237,933	60.50

100| Alkane Resources Annual Report 2021

FINANCIAL REPORT | CORPORATE GOVERNANCE STATEMENT

Substantial Shareholders

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

==> picture [512 x 27] intentionally omitted <==

----- Start of picture text -----

Number of Shares
Ian Jeffrey Gandel 147,392,506
----- End of picture text -----*

Ian Jefrey Gandel	Number of Shares 147,392,506*
Chapelgreen Pty Ltd	43,526,931
(*includes securites benefcially held by Citcorp Nominees Pty Limited)

Voting Rights

All ordinary shares (whether fully paid or not) carry one vote per share without restriction.

Unquoted Securities

At 13 September 2021, the Company had the following unlisted securities on issue:

			Holders of 20% or more of the class	Holders of 20% or more of the class
Class	Number of Securites	Number of Holders	Holder Name	Number of Securites
Employee Performance Rights LTI FY2020 3,173,638 6 Nicholas Paul Earner 1,622,252 Employee Performance Rights LTI FY2021 1,492,626 7 Nicholas Paul Earner 687,346

Corporate Governance Statement

The Company's annual Corporate Governance Statement has been published and released to the ASX separately. It is available on the Company's website at www.alkane.com.au/company/governance

Alkane Resources Annual Report 2021 |

101

FINANCIAL REPORT | SCHEDULE OF MINING TENEMENTS

Schedule of mining tenements – as at 30 June 2021

==> picture [512 x 18] intentionally omitted <==

----- Start of picture text -----

Project/Location Tenement Interest Nature of interest
----- End of picture text -----

Peak Hill, NSW	GL 5884 (Act 1904)	100%	Equity
	ML 6036	100%	Equity
	ML 6042	100%	Equity
	ML 6277	100%	Equity
	ML 6310	100%	Equity
	ML 6389	100%	Equity
	ML 6406	100%	Equity
	ML 1351	100%	Equity
	ML 1364	100%	Equity
	ML 1479	100%	Equity
	EL 6319	100%	Equity
Tomingley, NSW	ML 1684	100%	Equity through subsidiary
	EL 5675	100%	Equity
	EL 5830	100%	Equity
	EL 5942	100%	Equity
	EL 6085	100%	Equity
	EL 8676	100%	Equity
	EL 8794	100%	Equity
Cudal,NSW	EL 7020	100%	Equity
Rockley NSW	EL 8194	100%	Equity
	EL 8527	100%	Equity
Northern Molong Porphyry Project, NSW
Bodangora	EL 4022	100%	Equity
Kaiser	EL 6209	100%	Equity (subject to royalty of 2% net smelter return)
South Bodangora	EL 8887	100%	Equity
Finns Crossing	EL 8261	100%	Equity
Elsienora,NSW	EL 8550	100%	Equity
Trangie,NSW	EL 8765	100%	Equity
Armstrongs(near Parkes),NSW	EL8784	100%	Equity
Mt Conqueror,NSW	EL8940	100%	Equity
Nullagine, WA	E 46/522-I & 523-I	0%	60% retained interest in diamond potental – FMGN (FMG Nullagine Pty Ltd)
	M 46/515, 522 & 523	0%	60% retained interest in diamond potental – FMGN (FMG Nullagine PtyLtd)

102| Alkane Resources Annual Report 2021

==> picture [376 x 251] intentionally omitted <==

==> picture [381 x 257] intentionally omitted <==

==> picture [492 x 312] intentionally omitted <==

104