ARK MINES LIMITED — Annual Report 2020

Sep 1, 2021

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(Subject to a Deed of Company Arrangement) ACN 123 668 717

Annual Report For the year ended 30 June 2020

CORPORATE DIRECTORY

Directors	Antony B Corel
	Roger A Jackson
	Ian B Mitchell
Company Secretary	Ian B Mitchell
Registered office	Ian B Mitchell and Associates
	Level 9
	MLC Centre
	19 – 29 Martin Place
	Sydney NSW 2000
	Telephone: 9232 5444
Principal Place of Business	Ian B Mitchell and Associates
	Level 9
	MLC Centre
	19 – 29 Martin Place
	Sydney NSW 2000
	Telephone: 9232 5444
Share Register	Next Registries
	Level 16
	No 1 Market Street
	Sydney NSW 2000
	Telephone: 9276 1700
Auditor	Moores Australia Audit (WA)
	Level 15 exchange Tower
	2 The Esplanade
	Perth WA 6000
Solicitors	Ian B Mitchell and Associates
	Level 9
	MLC Centre
	19 – 29 Martin Place
	Sydney NSW 2000
Bankers	National Australia Bank
	Level 15
	Ernst and Young Centre
	680 George Street
	Sydney NSW 2000
Accounting Services	Professional Edge Pty Ltd
	Level 7
	1 Margaret Street
	Sydney NSW 2000
Securities Exchange Listing	Ark Mines Ltd (Subject to a Deed of Company Arrangement) shares are listed on
	the Australian Securities Exchange (ASX code: AHK)
Website Address	www.arkmines.com

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(Subject to a Deed of Company Arrangement) ACN 123 668 717

Annual Report

For the year ended 30 June 2020

Contents	Page
Directors’ Report	2
Auditor’s Independence Declaration	8
Statement of Profit or Loss and other Comprehensive Income	10
Statement of Financial Position	11
Statement of Changes in Equity	12
Statement of Cash Flows	13
Notes to the Financial Statements	14
Directors’ Declaration	28
Independent Auditor’s Report	29
Schedule of Tenements	33
Additional ASX Information	34

DIRECTORS’ REPORT

For the year ended 30 June 2020

Your Directors present their report together with the financial statements of Ark Mines Ltd (Subject to a Deed of Company Arrangement) (the “Company” or “Ark”) for the financial year ended 30 June 2020.

Review of Operations

On 30 July 2019, the Company announced that it had agreed in-principle, the terms of a joint venture (“JV”) agreement with Trendsheer Holdings Pty Ltd (“Trendsheer”) and ICA Mining Services Pty Ltd (“ICA”) to mine and produce gold dore’ from its Northern Territory (“NT”) tenements and gold rights, for treatment in an environmentally friendly gold processing hub to be established by the JV in the Frances Creek / Pine Creek area.

Trendsheer had recently purchased various mineral leases and exploration licences and associated infrastructure in the Frances Creek area from Territory Resources Pty Ltd. ICA had also secured the NT rights to the Thiosulphate gold extraction process from the CSIRO and proposed to acquire rights to build a plant utilising this technology on the Trendsheer tenements. The Company understood that ICA was well advanced in raising the necessary capital for this purpose.

The in-principle terms of the JV agreement contemplated the establishment of a JV Company in the NT that would have had exclusive access to explore, mine and process the ore mined, and sell the gold produced. Ark would have had board representation on the JV Company and executive roles and would have been entitled to 30% of JV distributions. Ark would not have been required to contribute to JV capital.

Once the gold processing plant was completed, Ark expected the JV to mine and process up to 150k tonnes of Glencoe ore in the first 12-months of operation and thereafter mine and process up to 500k tonnes of Mt Porter ore in the first 18-months of operation.

Repayment of the Company debt owed to Chan Investments Ltd (“Chan”) was expected to be made by the JV from the proceeds of gold sales.

On 25 September 2019 Chan appointed Richard Tucker and Craig Shepard of KordaMentha (“Administrators”) as Voluntary Administrators of the Company. On appointment, the powers of the Company’s Board of Directors’ (“Board”) were suspended and the Administrators assumed control of the Company’s affairs and assets.

On 4 October 2019, the first meeting of the Company’s creditors was held. This meeting provided an update on the Administration to date and allowed for creditors to vote on whether a committee of inspection be appointed and if the Administrators were to be replaced. It was determined by creditor vote that a committee of inspection would not be formed and the Administrators were not to be replaced.

On 30 October 2019, the second meeting of the Company’s creditors was held. The purpose of this meeting was to consider the Administrators’ report to creditors to determine the future of the Company and to approve the Administrators’ remuneration. At this meeting the Administrators considered it was in creditors’ best interests to adjourn the second meeting of creditors for up to 45 business days, to enable the Administrators to have sufficient time to complete negotiations with interested parties to finalise a sale of assets and/or Deed of Company Arrangement proposal and report back to creditors with sufficient information to accurately determine whether entering into a Deed of Company Arrangement provided a better return to creditors compared to winding up the Company.

On 6 January 2020, the reconvened second meeting of creditors was held. The purpose of this meeting was to consider the Administrators’ report to creditors to determine the future of the Company and to approve the Administrators’ remuneration. At this meeting the Administrators reported they had agreed terms for an asset sale agreement (“Asset Sale Agreement”) with Ausgold Trading Pty Ltd (“Ausgold”) for the sale of the Company’s mining tenements and associated assets for $4.125 million (“Asset Sale”). Under this transaction structure the Company’s mining tenements and associated assets would be sold first and transferred out of the Company, with net proceeds applied to the repayment of secured debt, following which the Company would then be recapitalised via a Deed of Company Arrangement (“DOCA”), with part of the proceeds applied to the further repayment of secured debt and unsecured creditors.

The Administrators tabled the DOCA proposals received and reported that they considered it in the creditors’ interests for the Company to accept the DOCA proposed by the Directors of the Company (“Directors”) for total consideration of $663,000, as this would result in a better return to creditors in timing, quantum, and certainty, than other DOCA proposals or if the Company was liquidated.

It was determined by creditor vote that the Company accept and execute the DOCA proposed by the Directors.

Subsequent to the reconvened second meeting of creditors, the following key events occurred.

On 28 January 2020, the Administrators executed the Asset Sale Agreement with Ausgold and executed the DOCA and from this date the Administrators became the Deed Administrators.

On 7 February 2020, a $75,000 deposit procured by the Directors from interested investors, was paid with the expectation that the DOCA would be closed within 60 days.

Under the terms of the DOCA, control of the Company was to be returned to the Directors following satisfaction of the Conditions Precedent by the Due Date (“Due Date”), initially being 31 March 2020, with the Contribution Balance of $588,000 to be paid to the Deed Administrators by 28 February 2020.

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DIRECTORS’ REPORT

For the year ended 30 June 2020

Review of Operations (cont.)

Under the DOCA, the Deed Administrators had the right to extend the Due Date to allow for the satisfaction of the Conditions Precedent. During the DOCA period the Deed Administrators granted six extensions to the Directors to allow further time for funding to be procured by the Directors to pay the Contribution Balance.

During the DOCA period, the Directors were responsible for attending to the preparation and lodgement of all required statutory returns and reports of the Company with ASIC and the ASX.

On 26 July 2020, the Directors notified the Deed Administrators of their concerns regarding the possibility that the Company would be delisted by the ASX unless its ASX reporting was brought up to date by 25 September 2021 as well as its overdue ASIC reporting requirements. The Directors advised the Deed Administrators that they were in a position to execute the DOCA immediately.

The Conditions Precedent include execution of the Asset Sale Agreement. Completion of the Asset Sale agreement has been extended by the Deed Administrators several times up to 26 March 2021.

The Directors raised the Contribution Balance and this was paid it to the Deed Administrators on 15 February 2021.

The Deed Administrator settled the claims of unsecured creditors, excluding the amounts owed to the Directors, or their associates, in the sum of $70,149 on 11 June 2021.

The Deed Administrators completed the Asset Sale Agreement. The Deed Administrators received sale proceeds of $4,150,000 and the tenements were transferred to the purchaser on 10 June 2021. Following this, the Deed Administrator transferred $2,843,173 to Chan on 15 June 2021 and the balance of settlement to Chan on 20 July 2021 in full satisfaction of the Company’s derivative gold loan liability.

On 10 June 2021 the Deed Administrators notified the Directors that the completion of the DOCA had occurred and in accordance with clause 5.2(c) of the DOCA, managerial control of the Company was now transferred to the Directors.

The Company has now signed a binding head of agreement (“HoA”) with Bmax Holdings Pty Limited (“Bmax”) to acquire 100% of the issued shares in MIJ Holdings Pty Ltd “(MIJ”) (“Acquisition”). Bmax currently holds (and is in the process of transferring to MIJ) three granted Exploration Permits; EPM26560 (Gunnawarra); EPM26464 (Mt. Jesse); and EPM26883 (Pluton), all located in the prolific Mt Garnet and Greenvale mineral field, northern Queensland. Further details of these EPMS are included in the Company’s ASX announcement of 25 August 2021.

Consideration for the Acquisition is $1.8m, to be satisfied through the issue of new fully paid ordinary shares in Ark Mines Ltd, at a deemed issue price of $0.20 per share (post a 1 for 20 consolidation) to Bmax, the vendor of MIJ, or its nominee.

Completion of the Acquisition is conditional upon, amongst other things:

• Ark obtaining all regulatory approvals in order to undertake the Acquisition, including re-complying with the admission requirements of ASX;

• Ark and Bmax each being reasonably satisfied with the due diligence performed on the other party, and / or the EPMs;

• Ark obtaining all necessary shareholder approvals prior to 25 September 2021 (or such later date as agreed by the ASX); and

Ark raising at least $4.5m in new capital by the issue of new ordinary shares (“Capital Raising”).

The Company is now in the process of seeking shareholder approval to:

• consolidate its fully paid ordinary shares on a 1 for 20 basis;

• issue up to 25,000,000 new ordinary shares (post the 1 for 20 consolidation) at an issue price of $0.20 per share to raise up to $5m new capital;

• issue 7,066,230 new ordinary shares (post the 1 for 20 consolidation) at an issue price of $0.10 with one free attaching option exercisable at $0.20 and expiring 2 years after issue, to repay loans to the Company made to fund the DOCA, including the DOCA Contribution Balance of $688,000 included in these financial statements; and

• issue 2,000,000 new ordinary shares (post the 1 for 20 consolidation) at an issue price of $0.10 repay loans made to the Company post 30 June 2021 to fund the Company prior to the Capital Raising.

Further details of the Acquisition, the EPMs and the Capital Raising are included in the Company’s ASX announcement of 25 August 2021.

The loss after income tax for the full year ended 30 June 2020 was $2,445,761 (2019: $1,569,887).

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DIRECTORS’ REPORT

For the year ended 30 June 2020

Principal Activity

The principal activity of the Company for the financial year up to the commencement of the Administration process on 25 September 2019 was the development of its Mt. Porter, Frances Creek and Glencoe projects in preparation for the mining of gold. From 25 September 2019, the principle activity of the Company was the disposal of its assets for the benefit or creditors and the execution of a Deed of Company Arrangement seeking to recapitalise the Company and secure a new exploration project.

Directors

The names of the Directors, who held office from 1 July 2019 to date of this report, unless otherwise stated, are:

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Antony B Corel – Non-Executive Independent Chairman

Dip Law, LLM

Mr Corel is a solicitor with significant corporate and managerial experience gained within and outside Australia. He has extensive legal experience advising both public and private sector organisations and managing significant commercial, corporate, regulatory and litigious matters. Since 2006 Mr Corel has, in addition to continuing his practice as a solicitor, accepted managerial roles in various private ventures, including Ark, with a view to sharing his experience in law, governance, compliance and management. Mr Corel was appointed a Director of Ark in 2008 and was instrumental in positioning the Company for public listing and was appointed Chairman of Directors.

		Antony B Corel – Non-Executive Independent Chairman Dip Law, LLM Mr Corel is a solicitor with significant corporate and managerial experience gained within and outside Australia. He has extensive legal experience advising both public and private sector organisations and managing significant commercial, corporate, regulatory and litigious matters. Since 2006 Mr Corel has, in addition to continuing his practice as a solicitor, accepted managerial roles in various private ventures, including Ark, with a view to sharing his experience in law, governance, compliance and management. Mr Corel was appointed a Director of Ark in 2008 and was instrumental in positioning the Company for public listing and was appointed Chairman of Directors.
		• Appointed. 22 September 2008 • Committee memberships. Audit & Risk, Remuneration & Nomination • Other listed Board memberships. Nil • Previous listed Board memberships. Nil for the last three years
		Roger A Jackson – Managing Director BSc, Dip Ed, Grad Dip Fin Man, FAusIMM, MAICD, FGS, MAIG Mr Jackson been actively been involved in the Mining industry for 30 years as a Mine Operator, in Mine Services and in Mineral Exploration. He has been a founding director of a number of private and public mining and mine service companies. He is currently a Director of NQ Minerals PLC. Mr Jackson has maintained a Geological and Mining Consulting business for the past 11 years whilst holding several executive roles. He has strong knowledge of gold exploration and mining. He also has a sound knowledge of base metal mining and exploration. He has developed several mining and ore processing operations in Australia and abroad. He has had significant experience in marketing gold and base metal concentrate across the globe. • Appointed. 21 October 2010 • Committee memberships. Nil • Other listed Board memberships. Nil • Previous listed Board memberships. Nil for the last three years
		Ian B Mitchell – Non-Executive Independent Director & Company Secretary BA, Dip Law Mr Mitchell is a practising solicitor of over 44 years standing. He is the Company Secretary of a number of ASX listed and non-listed public companies. He has over 32 years’ experience as a Director and Secretary of listed mining, exploration and industrial companies. His legal expertise is in commercial law, contract law and ASIC and ASX compliance. Mr Mitchell was appointed Company Secretary on 16 November 2011. • Appointed. 29 December 2010 • Committee memberships. Audit & Risk (Chairman), Remuneration & Nomination • Other listed Board memberships. Pan Asia Metals Ltd. • Previous listed Board memberships. Reliance Resources Ltd., Medical Australia Ltd.

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DIRECTORS’ REPORT For the year ended 30 June 2020

Environmental Regulations

The Company is subject to significant environmental regulations under legislation of the Commonwealth of Australia. The Company aims to ensure that it complies with the identified regulatory requirements in each jurisdiction in which it operates. There have been no known material breaches of the environmental obligations of the Company’s contracts or licences.

Dividends

No dividends have been declared in respect of the financial year ended 30 June 2020 (2019: Nil).

Events Subsequent to Reporting Date

Events subsequent to reporting date are included in Note 25 to the financial statements and within the Directors Report under Review of Operations. The Directors are not aware of any matter or circumstance not otherwise dealt with in this Annual Report or in the financial statements that has significantly or may significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company in subsequent financial years.

Remuneration Report (Audited)

This report details the nature and amount of remuneration for each Director. There are no Company executives.

Directors’ Interests

The Directors’ beneficial interests in shares as at 30 June 2020 are shown in the following table. The Company had not issued any options to Directors as remuneration as at this date.

	Shares
Director Holding type
	1 July 2019 Acquired Disposed 30 June 2020
	208,010 - - 208,010 - 333,333 - 333,333
	208,010 333,333 - 541,343
	706,262 - - 706,262 1,477,000 333,333 - 1,810,333
	2,183,262 333,333 - 2,516,595
	3,317,424 - - 3,317,424 2,530,000 - - 2,530,000

Remuneration Policy

The Board’s remuneration policy determines the nature and amount of remuneration for Board members and senior executives of the Company. The policy, setting the terms and conditions for the Executive Directors and other senior executives, was developed by the Remuneration & Nomination Committee and approved by the Board. All executives receive remuneration based on factors such as length of service and experience. The Remuneration & Nomination Committee reviews executive packages annually by reference to the Company’s performance, executive performance and comparable information from industry sectors and other listed companies in similar industries. The objective of this policy is to secure and retain the services of suitable individuals capable of contributing to the consolidated entities strategic objectives. The Board policy is to remunerate Non-Executive Directors at market rates for comparable companies for time, commitment and responsibilities.

The Company currently has no employees, including women. When the Company reaches a suitable size, it will endeavour to employ suitably qualified women to fill at least one third of its employment positions.

The Remuneration & Nomination Committee determines payments to the Non-Executive Directors and reviews their remuneration, based on market practice, duties and accountability. The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to a limit of $300,000 set by shareholders when the Company was first floated. Directors’ remuneration is fixed and no element of that remuneration is dependent on the satisfaction of a performance condition.

There were no bonuses paid or proposed to be paid for the year ended 30 June 2020 (2019: Nil).

There were no share options issued as remuneration during the year ended 30 June 2020 (2019: Nil).

Over page is a table summarising key performance and shareholder wealth indicators for the Company For the year ended 30 June 2020 and the previous 4 financial years.

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For the year ended 30 June 2020

DIRECTORS’ REPORT

Remuneration Policy (Cont.)

Period	Loss after Tax	EPS (cents per share)	Share Price
Year ending 30 June 2020	($2,445,761)	(4.68)	NA
Year ending 30 June 2019	($1,569,887)	(3.14)	$0.01
Year ending 30 June 2018	($647,007)	(1.32)	$0.07
Year ending 30 June 2017	($3,918,034)	(8.08)	$0.12
Year ending 30 June 2016	($730,506)	(1.80)	$0.14

Directors and Key Management Remuneration

Details of the remuneration of the Directors, other Key Management Personnel (defined as those who have the authority and responsibility for planning, directing and controlling the major activities of the Company) and specified executives are set out in the following table.

	Short- term Post-employment Total
	Base fee / salary $ Superannuation $ $
2020
Executive Directors
Roger A Jackson	8,500 - 8,500
Non-Executive Directors
Antony B Corel	23,610 2,243 25,853
Ian B Mitchell	14,167 - 14,167
Total Non-Executive	37,777 2,243 40,020
Total Remuneration	46,277 2,243 48,520
2019 Executive Directors Roger A Jackson Non-Executive Directors Antony B Corel Ian B Mitchell Total Non-Executive Total Remuneration	180,000 - 180,000
	99,996 9,499 109,495 60,000 - 60,000
	159,996 9,499 169,495
	339,996 9,499 349,495

Contracts of Senior Executives

The Managing Director, Mr Jackson, was previously engaged under a Consultancy Agreement which expired on 14 November 2017. Since this time, and up to the appointment of the Administrator, the Board determined, and Mr Jackson agreed, that his employment was ongoing on a month to month at a fixed rate of $15,000 per month. Mr Jackson was not entitled to any benefits on termination. As at the date of this report, Director remuneration of $1,008,259 has not been paid and is shown in the financial statements as a liability. These amounts have now been settled by the Deed Administrator as part of the DOCA and nothing further is payable by the Company.

See Note 20 for further details.

This concludes the Remuneration Report, which has been audited.

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DIRECTORS’ REPORT For the year ended 30 June 2020

Significant Changes in State of Affairs

Since the end of the financial year, the Deed of Administration was concluded and control of the Company was returned to the Directors on 10 June 2021.

Please refer to Note 25, Subsequent Events, for further details.

Directors’ Meetings

The number of Directors’ meetings and meetings of committees of Directors of Ark Mines Ltd (including by way of circular resolution) held during the year ended 30 June 2020 and the numbers of meetings attended by each Director are as follows.

	Board		Audit & Risk Committee	Audit & Risk Committee	Rem. & Nom. Committee	Rem. & Nom. Committee
	Eligible to		Eligible to		Eligible to
Director	attend	Attended	attend	Attended	attend	Attended
Antony B Corel	2	2	-	-	-	-
Roger A Jackson	2	2	-	-	-	-
Ian B Mitchell	2	2	-	-	-	-

As well as formal Directors’ meetings, Executive and Non-Executive Directors are in frequent communication by telephone, email and fax.

Likely Developments

It is anticipated that the Company will now raise additional capital and acquire a minerals exploration project, following which it proposes to apply to ASX for resumption of trading of its shares.

Please see Note 24 - Going Concern and Note 25 - Subsequent Events for further details.

Indemnifying Officers and Auditor

The Company has indemnified Directors and staff to the extent possible under the Corporations Law against any liabilities incurred by the person as an officer of the Company. The Company has also provided an indemnity to its contracted accounting staff for liabilities incurred in acting in this capacity. The Company has not indemnified the Auditor.

Non-Audit Services

The Auditor provided no other services during the financial year ended 30 June 2020.

Officers of the Company who are former Audit Partners of Moores Australia Audit (WA)

There are no officers of the Company who are former Partners of Moores Australia Audit (WA).

Auditor Independence Declaration

The Auditor’s independence declaration for the year ended 30 June 2020 has been received and a copy is reproduced on page 8. Moores Australia Audit (WA) continues office in accordance with section 327 of the Corporations Act 2001.

Proceedings on Behalf of the Company

No person has applied to the Court for leave to bring proceedings on behalf of the Company or 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 any of those proceedings. The Company was not a party to any such proceedings during the year.

Corporate Governance

The Company’s Corporate Governance Statement can be found on its web-site at www.arkmines.com.

Signed in accordance with a resolution of the Board of Directors.

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---

Antony B Corel Chairman

Sydney, 31 August 2021

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AUDITOR’S INDEPENDENCE DECLARATION For the year ended 30 June 2020

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(Subject to a Deed of Company Arrangement)

ACN 123 668 717

Financial Statements

For the year ended 30 June 2020

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STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 30 June 2020

Other Income Creditor funding of Administration Interest income Total income Less: Expenses Accounting and secretarial expenses Administration costs ASX listing fees Audit fees Computer and communications Depreciation Directors' fees Impairment of exploration and evaluation capitalised Insurance Legal fees Printing and stationery Share registry costs Title management and tenement reporting Travel and accommodation expenses Other expenses from ordinary activities Total expenses Loss from operating activities Finance costs Fair value movement on derivative liability Net foreign exchange loss Recovery of environmental bond previously written off Deposit on tenement sale forfeited by purchaser Write off of non-refundable Old Pirate deposit Loss before income tax Income tax expense Loss from continuing operations after income tax Other comprehensive income for the year Total comprehensive income for the year Earnings per share Basic - cents per share Diluted - cents per share	Note	2020 2019
		$ $ 60,000 - 147 390
	19 9 20 4 23 23
		60,147 390
		38,356 61,557 223,051 - 8,920 16,302 46,330 50,000 3,471 11,898 3,985 3,985 48,520 205,496 - 398,188 28,153 14,456 - 4,167 388 7,348 3,243 12,844 4,028 11,533 8,240 6,681 2,115 6,504
		(418,801) (810,959)
		(358,655) (810,569)
		(21,683) (90,161)
		(2,065,450) (1,129,218)
		27 61
		- 10,000
		- 500,000
		- (50,000)
		(2,445,761) (1,569,887)
		- -
		(2,445,761) (1,569,887)
		- -
		(2,445,761) (1,569,887)
		(4.68) (3.14) (4.68) (3.14)

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

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As at 30 June 2020

STATEMENT OF FINANCIAL POSITION

Current assets Cash and cash equivalents Trade and other receivables Exploration and evaluation expenditure Environmental bonds Plant and equipment Prepayments Total current assets Non-current assets Exploration and evaluation expenditure Environmental bonds Plant and equipment Total non-current assets Total assets Current liabilities DOCA contribution Asset sale agreement deposit Borrowings Trade and other payables Derivative liability Total current liabilities Total liabilities Net assets Equity Contributed equity Accumulated losses Total equity	Note	2020 2019
		$ $
	5 6 7 8 9 7 8 9 10 11 12 13 14 15 16
		40,481 1,348
		44,469 47,643
		3,134,640 -
		122,259 -
		2,989 -
		- 19,953
		3,344,838 68,944
		- 3,052,323
		- 122,259
		- 6,974
		- 3,181,556
		3,344,838 3,250,500
		100,000 -
		150,000 -
		750,000 750,000
		1,133,491 945,278
		8,920,132 6,854,682
		11,053,623 8,549,960
		11,053,623 8,549,960
		(7,708,785) (5,299,460)
		9,976,683 9,940,247
		(17,685,468) (15,239,707)
		(7,708,785) (5,299,460)

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The above statement of financial position should be read in conjunction with the accompanying notes.

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STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2020

2020 Balance at 1 July 2019 Total comprehensive income for the year Total Transactions with owners in their capacity as owners Ordinary shares issued, net of transaction costs Balance at 30 June 2020 2019 Balance at 1 July 2018 Total comprehensive income for the year Total Transactions with owners in their capacity as owners Ordinary shares issued, net of transaction costs Balance at 30 June 2019	Note	Issued capital Acc. losses Total
		$ $ $
	15 15
		9,940,247 (15,239,707) (5,299,460)
		- (2,445,761) (2,445,761)
		9,940,247 (17,685,468) (7,745,221)
		36,436 - 36,436
		9,976,683 (17,685,468) (7,708,785)
		9,876,131 (13,669,820) (3,793,689) - (1,569,887) (1,569,887)
		9,876,131 (15,239,707) (5,363,576)
		64,116 - 64,116
		9,940,247 (15,239,707) (5,299,460)

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

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	STATEMENT OF CASH FLOWS For the year ended 30 June 2020	STATEMENT OF CASH FLOWS For the year ended 30 June 2020
Cash flows from operating activities Payments to suppliers and employees Interest received Interest, finance costs and exchange losses Net cash used in operating activities Cash flows from investing activities Payment for exploration and evaluation expenditure Proceeds of security deposit released Proceeds from forfeited deposit on tenement sale Payments for environmental deposits Payments for loan repayment Net cash used in investing activities Cash flows from financing activities Proceeds from Administration funding Proceeds from DOCA contribution Proceeds from asset sale deposit Proceeds from short term advance Proceeds from share issue Payments for capital raising costs Net cash provided by financing activities Net increase in cash held Cash at beginning of financial year Cash at end of financial year
	Note	2020 2019
		$ $ (255,345) (7,999) 147 390 (21,683) (90,100)
	18 8 14 15 15 18
		(276,881) (97,709)
		(43,422) (231,458) 10,000 - - 500,000 - (1,199) - (250,000)
		(33,422) 17,343
		60,000 - 100,000 - 150,000 - 3,000 - 41,000 66,000 (4,564) (1,884)
		349,436 64,116
		39,133 (16,250) 1,348 17,598
		40,481 1,348

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

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NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2020

1. Reporting Entity

The financial report is for the entity Ark Mines Ltd (Subject to a Deed of Company Arrangement) (referred herein also as the “Company” or “Ark”) as an individual entity. Ark Mines Ltd is a company limited by shares incorporated and domiciled in Australia with its registered address at Level 9, 19 – 29 Martin Place Sydney NSW 2000. Ark Mines Ltd is listed on the ASX.

The principal activity of the Company for the financial year up to the commencement of the Administration process on 25 September 2019 was the development of its Mt. Porter, Frances Creek and Glencoe projects in preparation for the mining of gold. From 25 September 2019, the principle activity of the Company was the disposal of its assets for the benefit or creditors and the execution of a Deed of Company Arrangement seeking to recapitalise the Company and secure a new exploration project.

2. Basis of Preparation

Statement of compliance

The financial statements are general-purpose financial statements that 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-profit oriented entities. The financial statements of the Company comply with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

The financial statements were authorised for issue by a resolution of the Board dated 31 August 2021.

Basis of measurement

These financial statements have been prepared under the historical cost convention.

Functional and presentation currency

The financial report has been presented in Australian Dollars ($A) which is the functional currency of the Company.

Use of estimates and judgements

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 Company’s accounting policies. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

The Directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Company. Information about critical judgements in applying the accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes.

• Note 7 – Capitalised Exploration and Evaluation Expenditure.

• Note 24 – Going Concern.

Comparative figures

When required by accounting standards comparative figures have been adjusted to changes in presentation for the current financial year.

3. Significant Accounting Policies

The following is a summary of the material accounting policies adopted by the Company in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

Property plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation

Items of equipment have limited lives and are depreciated on a straight-line basis over their estimated useful lives.

Depreciation rates and methods are reviewed annually for appropriateness. When changes are made, adjustments are reflected prospectively in current and future periods only. Depreciation is expensed to the statement of profit or loss and other comprehensive income.

Office furniture and fittings and motor vehicles are depreciated at the rate of 20% per annum. Computer equipment is depreciated at the rate of 33⅓% per annum.

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NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2020

3. Significant Accounting Policies (cont.)

De-recognition and disposal

An item of office equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Any gain or loss on de-recognition of the asset (calculated as the difference between net disposal proceeds and the carrying amount of the asset) is included in statement of profit or loss and other comprehensive income in the year the asset is derecognised.

Capitalised exploration and evaluation expenditure

Capitalised exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Once an area of interest enters a development phase, historical capitalised exploration expenditure is transferred to capitalised development expenditure.

Accumulated costs in relation to an abandoned area are written off in the statement of profit or loss and other comprehensive income in the year in which the decision to abandon the area is made.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

Expenditure relating to pre-exploration activities is written-off to the statement of profit or loss and other comprehensive income during the period in which the expenditure is incurred.

Income tax

The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted at the reporting date.

Deferred tax is accounted for using the statement of financial position method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of profit or loss and other comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

Financial instruments

Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks and other short term highly liquid investments with original maturities of three months or less.

Payables

Payables represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. The amounts are unsecured and are generally settled between 7 days and 30 days terms.

Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.

Cash flows are presented in the statement of cash flows on a gross basis.

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NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2020

3. Significant Accounting Policies (cont.)

Interest income

Interest revenue is recognised using the effective interest rate method taking into account rates applicable to the financial assets.

Foreign currency transactions and balances

Foreign currency transactions during the year are converted to Australian currency at the rates of exchange applicable at the dates of the transactions. Amounts receivable and payable in foreign currencies at the reporting date are converted at the rates of exchange ruling at that date.

The gains and losses from conversion of short-term assets and liabilities, whether realised or unrealised, are included in the statement of profit or loss and other comprehensive income as they arise.

Contributed equity

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

Other receivables

Other receivables are recognised at amortised cost, less any provision for impairment.

Derivative financial instruments

Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at fair value through the profit and loss.

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.

New, revised or amending accounting standards and interpretations adopted

The Company has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the AASB that are mandatory for the current reporting period.

New, revised or amending accounting standards and interpretations not yet mandatory or early adopted

Australian Accounting Standards and Interpretations that have recently been issued or amended, but are not yet mandatory, have not been early adopted by the Company for the annual reporting period ended 30 June 2020.

These standards are not expected to have an impact on the Company in the current or future reporting periods and on foreseeable future transactions.

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For the year ended 30 June 2020

NOTES TO THE FINANCIAL STATEMENTS

	2020	2019
	$	$
Income Tax Expense
The prima facie tax benefit on loss before income tax is reconciled to the income	tax expense as follows:
Prima facie income tax benefit on loss before income tax at 27.5% (2019: 27.5%)	(672,584)	(431,719)
Add tax effect of:
Income on DOCA not assessable	(16,500)
Non allowable expenses	79	11,150
Add/(deduct) temporary differences not brought to
account:
Capital raising expenses	(4,894)	(5,011)
Derivative fair value adjustment	567,999	310,535
Exploration expenditure	(22,637)	45,851
Other temporary differences	11,676	56
Tax losses not recognised	136,861	69,138
Income tax expense	-	-

4. Income Tax Expense

	Opening	Movement	Closing
	$	$	$
Deferred income tax – 2020
Deferred tax assets have not been recognised in respect of the following items:
Capital raising expenses	7,754	(3,863)	3,891
Provisions	127,183	4,102	131,285
Fair value derivative liability	1,020,367	481,361	1,501,728
Tax losses	4,016,414	(89,681)	3,926,733
Total deferred tax assets	5,171,718	391,919	5,563,637
Deferred tax liabilities have not been recognised in respect of the following items:
Exploration and evaluation expenditure	839,388	(24,382)	815,006
Total deferred tax liabilities	839,388	(24,382)	815,006
Deferred income tax – 2019
Deferred tax assets have not been recognised in respect of the following items:
Capital raising expenses	12,248	(4,494)	7,754
Provisions	127,127	56	127,183
Fair value derivative liability	709,832	310,535	1,020,367
Tax losses	3,947,276	69,138	4,016,414
Total deferred tax assets	4,796,483	375,235	5,171,718
Deferred tax liabilities have not been recognised in respect of the following items:
Exploration and evaluation expenditure	885,239	(45,851)	839,388
Total deferred tax liabilities	885,239	(45,851)	839,388

The tax losses and deductible temporary differences do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not yet probable that future taxable profit will be available against which the Company can utilise the benefits.

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NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2020

5. Cash and Cash Equivalents Cash at bank 6. Trade and Other Receivables GST recoverable Other receivables Total trade and other receivables	2020 2019
	$ $
	40,481 1,348
	10,678 22,655 33,791 24,988
	44,469 47,643

7. Capitalised Exploration and Evaluation Expenditure

Balance at the beginning of the year Capitalised during the year Impaired during the year Balance at the end of the year	3,052,323 3,219,053 82,317 231,458 - (398,188)
	3,134,640 3,052,323

The ultimate recoupment of costs carried forward for exploration and evaluation expenditure is dependent on the successful development and commercial exploitation or sale of respective areas. The Company reviews annually the carrying value of the exploration and evaluation expenditure, and will capitalise the expenditure if it considers the area of interest to be prospective. Should the particular area of interest no longer be considered prospective, then the Company will make a provision in the accounts for the carrying value of the project.

Capitalised exploration and evaluation expenditure was shown as a non- current asset in the prior year.

The list of tenements the Company has an interest in is disclosed on page 31.

8. Environmental Bonds EL 23237 Frances Creek ML 23139 Mt Porter Mining Management Plan bonds ML 29679 Glencoe Total environmental bonds	5,223 5,223 80,329 80,329 36,707 36,707
	122,259 122,259

Environmental Bonds were shown as a non- current asset in the prior year.

9. Plant and Equipment

At cost Balance at the beginning of the year Balance at the end of the year Accumulated depreciation Balance at the beginning of the year Charge for the year Balance at the beginning of the year Total plant and equipment	21,727 21,727
	21,727 21,727
	(14,753) (10,768)
	(3,985) (3,985)
	(18,738) (14,753)
	2,989 6,974

Plant and equipment was shown as a non- current asset in the prior year.

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18 | P a g e

For the year ended 30 June 2020

NOTES TO THE FINANCIAL STATEMENTS

10. DOCA Contributions Received Contributions received Total DOCA contributions received	2020 2019
	$ $ 100,000 -
	100,000 -

On 6 January 2020, Creditors voted to accept a DOCA proposed by the Directors of the Company for total consideration of $663,000 as this would result in a better return to creditors in timing, quantum, and certainty than other DOCA proposals received, or if the Company was liquidated. An initial payment of $75,000 was made on 7 February 2020 and a further payment of $25,000 was made on 2 June 2020. Refer to Note 25 – Subsequent Events for the latest details of the Administration process.

11. Asset Sale Agreement Deposit Deposits received Balance at the end of the year	150,000 -
	150,000 -

The Administrators agreed terms for an Asset Sale Agreement with Ausgold Trading Pty Ltd for the sale of the Company’s mining tenements and associated assets for $4.15m. Of this amount, a deposit of $150,000 was received on 29 January 2020 and a further amount of $1.25m on 15 December 2020. Refer to Note 25 – Subsequent Events for the latest details of the Administration process.

12. Borrowings Interest bearing loan from related party Total borrowings	750,000 750,000
	750,000 750,000

On 4 February 2016, the Company entered into a loan agreement (“Loan”) with a related party of Mr Ian B Mitchell, who is a Director of the Company. The Loan was for an amount of $750,000, for an initial term of 18-months at an interest rate of 12% p.a., payable monthly. On entering into the Loan, the Directors determined that the transaction was conducted on an armslength basis and on terms no more favourable than were otherwise commercially available at the time. The Directors noted at the time that the terms of the Loan were significantly better than the terms of all competing loan or equity propositions investigated by the Company in the previous 18 months.

The term of the Loan has been extended on a number of occasions and on 18 June 2019, the lender agreed to further extend the term of the Loan to 1 July 2020. As at 30 June 2020, the Loan was repayable on demand. The Loan is secured by a second ranking charge over the Company’s Glencoe mining tenement (ML 29679) and a second ranking charge over the Company’s Mt. Porter mining tenement (ML 23839). Refer to Note25 – Subsequent Events for the latest details of the Administration process.

13. Trade and Other Payables Trade creditors Other payables – Directors’ fees Deferred Directors' fees Accruals Other payables Total trade and other payables	67,148 18,303 558,404 464,493 449,855 447,612 55,084 14,870 3,000 - 1,133,491 945,278

Directors had previously entered into a Deed of Forbearance with the Company whereby the Directors and the Company agreed that all fees due to Directors were payable at a future time to be determined by the Board, and accrued interest at an interest rate of 10% per annum until paid. Since the end of the financial year, these amounts have been settled by the Deed Administrator as part of the DOCA and nothing further is payable by the Company. Refer to Note 25 – Subsequent Events for further details of the settlement of these payables under the Deed of Company Arrangement.

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NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2020

14. Derivative Liability Balance at the beginning of the year Fair value movement Repaid in cash Balance at the end of the year	2020 2019
	$ $ 6,854,682 5,975,464 2,065,450 1,129,218 - (250,000)
	8,920,132 6,854,682

On 4 August 2016 the Company entered into a Gold Loan Facility Agreement (“Facility”) with Chan Investments Ltd (“Chan”) to fund its Mt. Porter gold mining project and surrounding exploration.

The Facility was secured by all of the current and future assets of the Company including its Mt Porter mining tenement (ML 23839) but excluding its Glencoe tenement (ML29679).

The carrying value for the Facility of $8,920,132 as at 30 June 2020 represents the fair value of the gold that would have needed to be delivered to satisfy this liability at that date, less an amount of $250,000 repaid in the 2019 financial year.

The movement of $2,065,450 from the 30 June 2019 carrying value of $6,854,682 has been charged to profit and loss as a fair value adjustment.

On 25 September 2019 Richard Tucker and Craig Shepard of KordaMentha were appointed Voluntary Administrators of the Company by Chan and later Deed Administrators following the acceptance of a Deed of Company Arrangement.

Refer to Note 25 – Subsequent Events for further details of the Administration process.

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15. Contributed Equity

52,321,175 (2019: 51,129,509) ordinary shares fully paid

	Ordinary Shares Number Balance at the beginning of the year Shares issued during the period Issued 15 August 2019 Issued 31 July 2019 Issued 30 January 2019 Balance at the end of the year Ordinary Shares Value Balance at the beginning of the year Shares issued during the period 15 August 2019 - 525,000 ordinary shares @ $0.04 31 July 2019 - 666,666 ordinary shares @ $0.03 30 January 2019 - 2,000,000 ordinary shares @ $0.033 Share issue costs Balance at the end of the year		No. No. 51,129,509 49,129,509 525,000 - 666,666 - - 2,000,000
			52,321,175 51,129,509
			$ $ 9,940,247 9,876,131 21,000 - 20,000 - - 66,000 (4,564) (1,884)
			9,976,683 9,940,247

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20 | P a g e

For the year ended 30 June 2020

NOTES TO THE FINANCIAL STATEMENTS

16. Accumulated Losses Balance at the beginning of the year Net loss attributable to members of the entity Balance at the end of the year	2020 2019
	$ $ (15,239,707) (13,669,820) (2,445,761) (1,569,887)
	(17,685,468) (15,239,707)
17. Related Party Transactions Antony B Corel LLM - legal services Interest on related party loan Total related party transactions	- 4,167 21,250 90,000
	21,250 94,167

All related party transactions have to receive Board approval in advance. All payments to related parties also receive Board approval. All transactions with Directors and their associates are conducted on an arms-length basis and in the ordinary course of business.

The Board is sufficiently knowledgeable and experienced to ensure that amounts paid for these services is in line with commercial expectations. Refer also to Note 20 for Key Management Personnel disclosures.

18. Cash Flow Information

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Reconciliation of cash

Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position

Cash at bank Reconciliation of cash flow from operations with loss from ordinary activities after income tax Loss from continuing operations after income tax Less: investment amounts included in profit and loss Creditor funding of Administration Receipt for forfeited deposit on tenement sale Less: non-cash items Depreciation Fair value movement of derivative liability Old Pirate deposit written off Impairment of tenements Less: investment amounts included in working capital Exploration and evaluation expenditure Security deposit recovered Short term advance received Add: movements in working capital (Increase) / decrease in prepayments (Increase) / decrease in trade and other receivables Increase / (decrease) in trade payables Cash flow from operations	40,481 1,348
	(2,445,761) (1,569,887) (60,000) - - (500,000) 3,985 3,985 2,065,450 1,129,218 - 50,000 - 398,188 (38,895) - (10,000) - (3,000) - 19,953 430 3,174 21,087 188,213 369,270
	(276,881) (97,709)

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NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2020

19. Auditor’s Remuneration Audit and review of the financial reports Total auditor’s remuneration	2020 2019
	$ $ 46,330 50,000
	46,330 50,000

Directors and Key Management Personnel Disclosures Directors Antony B Corel Roger A Jackson an B Mitchell	Position
	Chairman – Non-Executive
	Managing Director
	Director - Non-Executive and Company Secretary

20. Directors and Key Management Personnel Disclosures

Directors equity holdings including holdings of their personally related entities as at 30 June 2020

Fully Paid Ordinary Shares Antony B Corel Roger A Jackson Ian B Mitchell	Opening Acquired Disposed Closing
	208,010 333,333 - 541,343
	2,183,262 333,333 - 2,516,595
	5,847,424 - - 5,847,424

Short-term employee benefits compensation Directors Executive Roger A Jackson Non-Executive Antony B Corel Ian B Mitchell Total remuneration	2020 2019
	$ $ 8,500 180,000 23,610 99,996 14,167 60,000
	46,277 339,996

Mr Corel has not entered into a contract of service with the Company and Mr Jackson’s consulting agreement is now expired.

In addition to the above, Mr Corel accrued superannuation entitlements of $2,243 (2019: $9,499).

In the 2019 year, a portion of Mr Jackson’s remuneration totalling $144,000 was capitalised to Capitalised Exploration and Evaluation Expenditure.

The Company has no other Key Management Personnel.

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NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2020

21. Commitments

Under the terms of the agreement whereby the Company acquired its Glencoe tenement it is required to pay the vendor a Net Smelter Royalty of 1% up to a maximum of $1m on gold produced from this tenement.

Under the terms of the agreement whereby the Company acquired its tenements and gold rights from Arafura Resources Ltd, it is required to pay the vendor a Royalty of 2.5% on gross sales of gold from those tenements and gold rights. Please refer to the Company’s ASX release of 20 June 2016 for further details.

These commitments refer to assets that are subject to an Asset Sale Agreement being pursued by the Administrators as part of the Administration process. Refer to Note 25 – Subsequent Events for further details of the Administration process.

Exploration expenditure commitments

The Company is required to meet minimum committed expenditure requirements to maintain current rights of tenure to exploration licences. These obligations may be subject to re-negotiation, may be farmed-out or may be relinquished and have not been provided for in the statement of financial position.

A summary of the aggregate of these commitments follows:

Within 1 year More than 1 year but not later than 5 years Later than 5 years Total Commitments	2020 2019
	$ $ 34,000 10,795 - 34,000 - -
	- 44,795

These commitments refer to assets that are subject to an asset sale agreement being pursued by the Administrators as part of the Administration process. Refer to Note 25 – Subsequent Events for further details of the Administration process.

22. Financial Risk Management

The Company's financial instruments consist mainly of deposits with banks, accounts receivable and payable.

Exposure to currency risk, interest rate risk, commodity price risk, and liquidity risk arises in the normal course of the business. The Company’s overall financial risk management strategy is to seek to ensure that the Company is able to fund its business plans.

The Company uses various measures dependent on the types of risk to which it is exposed. These methods include cash flow at risk analysis in the case of interest rate and foreign exchange risk. Financial risk management is carried out by the Managing Director under policies approved by the Directors. The Directors provide written principles for overall risk management .

Financial assets Cash held in general account Cash held in US$ bank account Trade and other receivables Financial liabilities DOCA contribution received Asset Sale Agreement deposit Borrowings Trade creditors and accruals Other payables – Directors’ fees Other payables	Current Fixed Floating Non-Interest
	Note Interest rate Interest rate Interest rate Bearing Total
	$ $ $ $
	5 0.00% - 39,273 - 39,273 5 0.00% - 1,208 - 1,208 6 0.00% - - 44,469 44,469 10 0.00% - - 100,000 100,000 11 0.00% - - 150,000 150,000 12 12.00% 750,000 - - 750,000 13 0.00% - - 122,232 122,232 13 0.00% - - 1,008,259 1,008,259 13 0.00% - - 3,000 3,000

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23 | P a g e

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2020

22. Financial Risk Management (cont.)

Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company’s credit risk exposure is limited to cash and cash equivalents. Management have reduced this risk by depositing cash with financial institutions with a credit rating of AAA or higher.

Interest rate risk

The Company’s main interest rate risk arises from interest earnings on its surplus cash. The Company is exposed to interest rate risk to the extent its interest earnings may fluctuate. The impact of a 1% movement in the interest rate on the funds invested when all other variables are held constant is immaterial.

Gold price risk

The Company’s gold price risk arises from its derivative liability which is payable in a defined number of ounces of gold. The Company is exposed to gold price risk to the extent that the price of gold may fluctuate.

Exchange rate risk

The Company’s exchange rate risk arises from its cash deposited in a US dollar bank account and any requirement to repay its Chan Finance Facility in US dollars. The Company is exposed to exchange rate risk to the extent that the exchange rate between US dollars and Australian dollars may fluctuate. The Company’s objective is to minimise this risk through careful monitoring of the exchange rate and to draw down sufficient funds when the rate is favourable.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding to meet ongoing operational requirements, exploration expenditure, and small to medium sized opportunistic projects and investments, by keeping surplus cash available.

The Company’s objective is to safeguard its ability to continue as a going concern and to maintain a conservative capital structure so that management can focus on running its core business together with being an attractive company for shareholders and potential investors. The Company will consider the most appropriate use of debt and equity to maximise its returns while maintaining a low risk capital structure.

The following is a maturity analysis of the Company’s financial liabilities:

Financial liabilities Trade creditors and accruals Other payables – Directors’ fees Deferred Directors' fees Other payables DOCA Contribution Asset Sale Agreement deposit Interest bearing loans Derivative liability	Note Total Less than one year Greater than one year Maturity Details
	$ $ $
	13 122,232 122,232 - Usually payable each 30 days 13 558,404 558,404 - On Board determination 13 449,855 449,855 - On Board determination 13 3,000 3,000 - On demand 10 100,000 100,000 - On conclusion of DOCA 11 150,000 150,000 - On conclusion of DOCA 12 750,000 750,000 - On demand 14 8,920,132 8,920,132 - On demand

Fair values

The Company has a number of financial instruments which are not measured at fair value in the Statement of Financial Position. The fair values are not materially different to their carrying amounts, since the interest receivable/payable is either close to current market rates or the instruments are short-term in nature.

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24 | P a g e

For the year ended 30 June 2020

NOTES TO THE FINANCIAL STATEMENTS

23. Earnings Per Share

	Ordinary share number 2020 financial year Balance at the beginning of the year Shares issued during the period Issued 31 July 2019 Issued 15 August 2019 Balance at end of the year Ordinary share number 2019 financial year Balance at the beginning of the year Shares issued during the period Issued 31 January 2019 Balance at end of the year Total comprehensive income for the year Earnings per share Basic - cents per share Diluted - cents per share	No No
		Weighted Av.
		51,129,509 51,129,509
		666,666 613,698
		525,000 461,712
		52,321,175 52,204,919
		49,129,509 49,129,509 2,000,000 827,397
		51,129,509 49,956,906
		(2,445,761) (1,569,887)
		(4.68) (3.14) (4.68) (3.14)

24. Going Concern

On 25 September 2019 Richard Tucker and Craig Shepard of KordaMentha (“Administrators”) were appointed Voluntary Administrators of the Company by Chan Investments Ltd (“Chan”). As part of this process, on 28 January 2020 the Directors entered into a Deed of Company Arrangement (“DOCA”) with the Company and the Administrators.

Under the terms of the DOCA, control of the Company was returned to the Directors on 10 June 2021.

The financial report has been prepared on a going concern basis, which assumes continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The Directors believe it is appropriate to prepare these accounts on a going concern basis as:

• the DOCA concluded on 10 June 2021 has extinguished all previous liabilities of the Company;

• since the end of the financial year the Company has announced that subject to shareholder approval, it will equity settle certain post-administration liabilities, including the $100,000 DOCA Contribution Balance included in these financial statements;

• since the end of the financial year Company has also announced that it has entered into a binding heads of agreement to acquire three gold and other mineral projects located in Queensland (“Acquisition”) for $1.8m to be funded by the issue of 9m ordinary shares, subject to shareholder approval; and

• the Company expects to raise additional capital of at least $4.5m (“Capital Raising”), subject to shareholder approval, by 25 October 2021.

Further details of the post year end events above are included in Note 25 – Subsequent Events, and the ASX releases made by the Company on 25 August 2021.

Directors have commenced all actions necessary to ensure that the Acquisition and Capital Raising will be completed in accordance with the agreed terms and regulatory requirements and are confident that this can be achieved.

Directors also consider that a capital raising of $4.5m should be sufficient to fund the exploration and evaluation of these projects, and the working capital needs of the Company for the next two years.

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25 | P a g e

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2020

24. Going Concern (cont.)

On this basis, the Directors have prepared these Financial Statements on the going concern basis, however there remain significant risks that:

• ASX may delist the Company if it determines that the Company has failed to meet the requirements of the Listing Rules, including failure to lodge outstanding ASX reporting requirements within the time stipulated by ASX, and / or re-complying with Chapters 1 and 2 of the Listing Rules; and

• for whatever reasons the Acquisition and Capital Raising are not completed.

These risks give rise to a material uncertainty which may cast significant doubt over the Company’s ability to continue as a going concern.

25. Subsequent Events

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years except as follows.

On 26 July 2020, the Directors notified the Administrators of their concerns regarding the possibility that the Company would be delisted by the ASX unless it’s ASX reporting obligations were brought up to date by 25 September 2021, as well as its overdue ASIC reporting requirements. The Directors advised the Deed Administrators that they were in a position to execute the Directors’ DOCA immediately.

On 10 June 2021, after the Due Date of the DOCA had been extended a number of times, the Directors raised the DOCA Contribution Balance and this was paid to the Deed Administrators.

On 10 June 2021, the Deed Administrators completed the Asset Sale Agreement. The Deed Administrators received sale proceeds of $4,150,000 and the tenements were transferred to the purchaser.

On 11 June 2021, the Deed Administrator settled the claims of unsecured creditors, excluding the amounts owed to the Directors, or their associates, in the sum of $70,149.

On 15 June 2021 The Deed Administrator transferred $2,843,173 to Chan and the balance of settlement to Chan on 20 July 2021 in full satisfaction of the Company’s derivative gold loan liability.

On 10 June 2021, the Deed of Administration was concluded and control of the Company returned to the Directors.

On 25 August 2021, the Company announced that it had signed a binding head of agreement (“HoA”) with Bmax Holdings Pty Limited (“Bmax”) to acquire 100% of the issued shares in MIJ Holdings Pty Ltd “(MIJ”) (“Acquisition”). Bmax currently holds (and is in the process of transferring to MIJ) 3 granted Exploration Permits; EPM26560 (Gunnawarra); EPM26464 (Mt. Jesse); and EPM26883 (Pluton), all located in the prolific Mt Garnet and Greenvale mineral field, northern Queensland. Further details of these EPMS are included in the Company’s ASX announcement of 25 August 2021.

Consideration for the Acquisition is $1.8m, to be satisfied through the issue of new fully paid ordinary shares in Ark Mines Ltd, at a deemed issue price of $0.20 per share (post a 1 for 20 consolidation) to Bmax, the vendor of MIJ, or its nominee.

Completion of the Acquisition is conditional upon, amongst other things:

• Ark obtaining all regulatory approvals in order to undertake the Acquisition, including re-complying with the admission requirements of ASX;

• Ark and Bmax each being reasonably satisfied with the due diligence performed on the other party, and / or the EPMs;

• Ark obtaining all necessary shareholder approvals prior to 25 September 2021 (or such later date as agreed by the ASX); and

• Ark raising at least $4.5m in new capital by the issue of new ordinary shares (“Capital Raising”).

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NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2020

25. Subsequent Events (cont.)

The Company also announced that it would seek shareholder approval to:

• consolidate its fully paid ordinary shares on a 1 for 20 basis;

• issue up to 25,000,000 new ordinary shares (post the 1 for 20 consolidation) at an issue price of $0.20 per share to raise up to $5m new capital;

• issue 7,066,230 new ordinary shares (post the 1 for 20 consolidation) at an issue price of $0.10 with one free attaching option exercisable at $0.20 and expiring 2 years after issue, to repay loans to the Company made to fund the DOCA, including the DOCA Contribution Balance of $100,000 included in these financial statements; and

• issue 2,000,000 new ordinary shares (post the 1 for 20 consolidation) at an issue price of $0.10 repay loans made to the Company post 30 June 2021 to fund the Company prior to the Capital Raising.

Further details of the Acquisition, the EPMs and the Capital Raising are included in the Company’s ASX announcement of 25 August 2021.

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DIRECTORS’ DECLARATION

For the year ended 30 June 2020

In the Directors’ opinion;

• the attached financial statements and notes thereto comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;

• the attached financial statements and notes thereto comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in Note 2 to the financial statements;

• the attached financial statements and notes thereto give a true and fair view of the Company's financial position as at 30 June 2020 and of its performance for the financial year ended on that date; and

• There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

The Directors have been given the declarations required by section 295A of the Corporations Act 2001.

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

On behalf of the directors

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---

Antony Corel Director Sydney, 31 August 2021

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INDEPENDENT AUDITOR’S REPORT

For the year ended 30 June 2020

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INDEPENDENT AUDITOR’S REPORT For the year ended 30 June 2020

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INDEPENDENT AUDITOR’S REPORT For the year ended 30 June 2020

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INDEPENDENT AUDITOR’S REPORT

For the year ended 30 June 2020

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SCHEDULE OF TENEMENTS

As at 30 June 2020

Exploration licence	Title name	Location	Interest	Mineral	Grant date	Expiry date	Status
ML 29679	Glencoe	65kn N Pine Creek NT	100%	Gold	27 September 2012	26 September 2022	Current
ML 23839	Mt. Porter	15km NE Pine Creek NT	100%	Gold	2 February 2005	1 February 2030	Current
EL 23237	Frances Creek South	17km N Pine Creek NT	100%	Gold	8 December 2003	7 December 2020	Current
ELR 116	Mt. Porter	15km NE Pine Creek NT	100%	Gold	12 September 1990	11 September 2021	Current
ML 24727	Frances Creek	Frances Creek NT	100% ‐ Gold rights only	Gold	5 April 2007	4 April 2032	Current
ML 25087	Frances Creek	Frances Creek NT	100% ‐ Gold rights only	Gold	24 April 2007	23 April 2032	Current
ML 25088	Frances Creek	Frances Creek NT	100% ‐ Gold rights only	Gold	24 April 2007	23 April 2032	Current
ML 25529	Frances Creek	Frances Creek NT	100% ‐ Gold rights only	Gold	22 December 2010	21 December 2035	Current
ML 27225	Frances Creek	Frances Creek NT	100% ‐ Gold rights only	Gold	17 August 2012	16 August 2037	Current
ML 27226	Frances Creek	Frances Creek NT	100% ‐ Gold rights only	Gold	21 January 2014	20 January 2039	Current
ML 27227	Frances Creek	Frances Creek NT	100% ‐ Gold rights only	Gold	20 October 2011	19 October 2036	Current
ML 27228	Frances Creek	Frances Creek NT	100% ‐ Gold rights only	Gold	26 September 2011	25 September 2036	Current
ML 27229	Frances Creek	Frances Creek NT	100% ‐ Gold rights only	Gold	20 October 2011	19 October 2036	Current
ML 27230	Frances Creek	Frances Creek NT	100% ‐ Gold rights only	Gold	21 January 2014	20 January 2039	Current
EL 10137	Frances Creek	Frances Creek NT	100% ‐ Gold rights only	Gold	10 July 2002	9 July 2020	Current

Mineral Resources and Ore Reserves

The Company is a mining exploration entity and has no JORC Code 2012 compliant mineral resources or ore reserves.

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ADDITIONAL ASX INFORMATION

As at 31 August 2021

Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as follows. The information is current as at 31 August 2021.

Distribution of Equity Securities

Range	Number of holders		Number of	%
			shares
	20 42 92 175 64			0.01 0.27 1.63 12.29 85.80
				100.00

Since listing the Company has issued 52,321,175 fully paid ordinary shares. The number of shareholders holding less than a marketable parcel is 177.

Twenty Largest Shareholders

The names of the twenty largest holders of quoted shares are:

Nº Shareholder	Shares %
1 Solo Resources Pty Limited 2 Cobungra Holdings Pty Ltd 3 Mr Ian Burnham Mitchell 4 Dr Rebecca Mitchell 5 John Wardman & Associates Pty Ltd 6 Patrick James Walsh 7 Ichiya Co Ltd 8 Chahen Pty Ltd 9 RJ Consolidated Pty Ltd 10 Mr B L Franklin & Mrs J M Franklin 11 Mr James Rhodes Smith 12 Tempest Dawn Pty Limited 13 Mr John Christopher Slade 14 Mr Stephen Roy Webster 15 Horizon Storm Pty Limited 16 RJ Consolidated Pty Ltd 17 Mr Roger Alan Jackson 18 Mr Paul Galbraith 19 AJM Super Co Pty Ltd 20 Martin Place Securities Nominees Pty Ltd Total	6,676,000 12.76 6,327,742 12.09 3,294,984 6.30 2,510,000 4.80 2,156,475 4.12 2,000,000 3.82 1,324,072 2.53 1,175,267 2.25 1,073,333 2.05 1,031,173 1.97 1,023,960 1.96 999,790 1.91 904,648 1.73 879,298 1.68 854,189 1.63 800,000 1.53 697,000 1.33 626,262 1.20 563,500 1.08 537,650 1.03
	35,455,343 67.76

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As at 31 August 2021

ADDITIONAL ASX INFORMATION

Substantial Shareholders

Substantial shareholders and the number of equity securities in which it has an interest, as shown in the Company’s Register of Substantial Shareholders is:

Shareholder	Shares	%
Solo Resources Pty Limited	6,676,000	12.76
Cobungra Holdings Pty Ltd	6,327,742	12.09
Mr Ian Burnham Mitchell	5,804,984	11.20

Class of Shares and Voting Rights

The voting rights attached to ordinary shares, as set out in the Company’s Constitution, are that every member in person or by proxy, attorney or representative, shall have one vote when a poll is called, otherwise each member present at a meeting has one vote on a show of hands.

There are no restricted securities or securities subject to voluntary Escrow.

On market buy‐back

There is no current on‐market buy back.

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