FAR LIMITED — Annual Report 2021

Mar 29, 2021

30 March 2021

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Unaudited Financial Report for Year Ended 31 December 2020

FAR Ltd (ASX:FAR) today releases its unaudited financial accounts for the year ended 31 December 2020, attached to this announcement.

FAR is utilising the ASIC Relief and ASX Class Waiver for extended reporting deadlines and the dispatch of annual reports and will release its Annual Report including audited accounts and its Corporate Governance Statement by the extended deadline of 30 April 2021. FAR will make an immediate update announcement if there is a material difference between the unaudited accounts and the audited accounts.

A FAR shareholders meeting is being held on 15 April 2021 to consider approving the sale of FAR's interest in the RSSD project to Woodside. The outcome of this meeting will assist in clarifying the position in this regard.

ASX suspended FAR's shares from trading in September 2020 following the inclusion of a disclaimer of audit review opinion in the Company’s audited Half Year Report as at 30 June 2020. ASX has advised FAR that the trading suspension will only be lifted once there is no disclaimer of review opinion expressed in the Company’s audited accounts.

This announcement has been approved for release by the FAR Board.

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ABN 41 009 117 293
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UNAUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Expressed in United States dollars

( USD, US$ or $ ) unless otherwise stated.

Forward looking statements - This document may include forward looking statements. Forward looking statements include, are not necessarily limited to, statements concerning FAR’s planned operation program and other statements that are not historic facts. When used in this document, the words such as “could”, “plan”, “estimate”, “expect”, “intend”, “may”, “potential”, “should” and similar expressions are forward looking statements. Although FAR Ltd believes its expectations reflected in these are reasonable, such statements involve risks and uncertainties, and no assurance can be given that actual results will be consistent with these forwardlooking statements. The entity confirms that it is not aware of any new information or data that materially affects the information included in this announcement and that all material assumptions and technical parameters underpinning this announcement continue to apply and have not materially changed.

CONTENTS

OPERATING RESULTS AND FINANCIAL REVIEW	OPERATING RESULTS AND FINANCIAL REVIEW	1
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME		3
CONSOLIDATED STATEMENT OF FINANCIAL POSITION		4
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY		5
CONSOLIDATED STATEMENT OF CASH FLOWS		6
NOTES	TO THE CONSOLIDATED FINANCIAL STATEMENTS	7
1.	GENERAL INFORMATION	7
2.	ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS	7
3.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	7
4.	CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY	10
5.	SEGMENT INFORMATION	11
6.	OTHER INCOME	12
7.	LOSS FOR THE YEAR	12
8.	EXPECTED CREDIT LOSSES	13
9.	INCOME TAXES	13
10.	TRADE AND OTHER RECEIVABLES	15
11.	OTHER FINANCIAL ASSETS	15
12.	DISCONTINUED OPERATIONS	15
13.	PROPERTY, PLANT AND EQUIPMENT	17
14.	EXPLORATION AND EVALUATION ASSETS	18
15.	OIL AND GAS PROPERTIES	19
16.	TRADE AND OTHER PAYABLES	19
17.	PROVISIONS	20
18.	RIGHT-OF-USE ASSETS AND LEASE LIABILTIES	21
19.	ISSUED CAPITAL	23
20.	RESERVES	23
21.	EARNINGS PER SHARE	24
22.	CONTINGENT LIABILITIES AND CONTINGENT ASSETS	24
23.	JOINT OPERATIONS	25
24.	SUBSIDIARIES	27
25.	DEED OF CROSS GUARANTEE	28
26.	NOTES TO THE CASHFLOW STATEMENT	30
27.	FINANCIAL AND RISK MANAGEMENT	31
28.	SHARE-BASED PAYMENTS	40
29.	KEY MANAGEMENT PERSONNEL COMPENSATION	42
30.	RELATED PARTY DISCLOSURES	42
31.	PARENT ENTITY	43
32.	REMUNERATION OF AUDITORS	44
33.	DIVIDENDS	44
34.	SUBSEQUENT EVENTS	44

SHAREHOLDER INFORMATION

45 46

CORPORATE DIRECTORY

OPERATING RESULTS

The net loss of the Group for the year ended 31 December 2020 after income tax was US$75,694,730 (31 Dec 2019: US$21,144,093)

FINANCIAL PERFORMANCE

	31 Dec 2020	31 Dec 2019	Change
	Unaudited	Audited
	US$	US$	%
Profit & loss
Revenue	291,364	370,160	(21.3)
Expenses	(15,143,042)	(18,592,933)	(17.0)
Loss from discontinued operations	(60,551,688)	(2,921,320)	1,972
			8
Loss for the period	(75,694,730)	(21,144,093)	258.0
Basic EPS from continuing operations (US cents per share)	(0.16)	(0.30)	(48.7)
Basic EPS from continuing & discontinued operations (US cents per share)	(0.78)	(0.35)	121.2
Financial position
Net assets	157,671,163	129,305,580	21.9
Cash balance	25,933,571	13,752,652	88.9
Cash flows
Operating cash flow	(17,517,971)	(19,280,647)	(9.1)
Investing cash flow	(71,671,439)	(16,035,813)	346.9
Financing cash flow	100,401,916	29,731,205	237.7

Financial result

The Group reported a loss for the year ended 31 December 2020 of $75,694,730 (31 Dec 2019: $21,144,093 loss) which includes a loss from discontinuing operations of $60,551,688 relating to the Senegal asset which the Group has decided to sell. Included in the Senegal project discontinuing operations amount are a remeasurement loss on the Senegal RSSD asset of $55,760,120, exploration expenditure of $1,661,285 and financing costs of $3,097,479 including break fees and default cash call interest.

The lower loss from continuing operations for the year of $15,143,042 compared with the prior year loss from continuing operations of $18,222,773 was mainly due to lower exploration expenditure of $10,648,685 (31 Dec 2019 - $13,241,193) primarily due to lower Gambia and Guinea-Bissau project joint operation costs as a result of the impacts of COVID-19.

Financial position

Net assets increased during the year by $28,365,583 to $157,671,163 primarily due to the increased investment in oil and gas properties relating to the development of the Senegal RSSD asset which was subsequently transferred to assets held for sale, described further below.

At the beginning of the year the Senegal RSSD exploration and evaluation assets of $116,995,489 were transferred to oil and gas properties upon the approval of the Sangomar Field Development in January 2020. During the year $97,354,795 of Senegal development expenditure was incurred and a loss on remeasurement of the Senegal asset of $55,760,120 was deducted and subsequently $158,590,164 was transferred from oil and gas properties to assets held for sale to reflect the Group’s decision to sell the asset. Assets held for sale at year end including inventory were $161,361,902 and liabilities associated with those assets held for sale were $34,341,844 resulting in net assets of the disposal group of $127,018,181. This implied value is based on the Woodside sale and purchase agreement terms including the upfront purchase price of $45M plus working capital from 1 January 2020 to 31 December 2020 and excludes any contingent payments.

Whilst exploration and evaluation assets reduced significantly during the year to $5,794,184 due to the substantial reallocation of the Senegal RSSD asset described above, there were additions of $3,391,959 including Gambia well planning and preparation costs and long lead items of US$2,836,147 and Guinea-Bissau well long lead items of $555,812.

Cash at year end was $25,933,571 (31 Dec 2019: $13,752,652) with no external borrowings at 31 December 2020. During the year there were significant cash inflows and outflows. Cash reserves from the prior year together with proceeds of $107,545,810 received from the equity raise in January 2020 were largely utilised to make payments for the Senegal oil and gas development assets of $69,016,270 and exploration and evaluation assets and expenses of $15,680,321, mainly relating to the Gambia project. Other outflows included share issue cost payments incurred on the equity raise of $3,647,907 and payment of financing costs primarily relating to break fees incurred in respect to the Senegal project financing of $3,097,634.

1

DIVIDENDS

The directors recommend that no dividend be paid for the year ended 31 December 2020 nor have any been paid or declared during the year (2019: NIL).

SUBSEQUENT EVENTS

Refer to Note 34 of the accompanying notes to the unaudited consolidated financial statements.

AUDIT

This report is based on financial statements which are in the process of being audited.

2

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the financial year ended 31 December 2020

Note Continuing operations Other income 6 Depreciation and amortisation expense 7 Exploration expense 7 Finance costs 7 Corporate administration expenses Employee benefits expense 7 Business development expenses Foreign exchange gain/(loss) Expected credit losses 8 Other expenses 7 Loss before tax from continuing operations Income tax expense 9 Loss for the year from continuing operations Discontinuing operations Loss for the year from discontinued operations 12 Loss for the year Other comprehensive income/(loss), net of income tax Total comprehensive loss for the year Loss per share: From continuing and discontinued operations Basic and diluted loss (cents per share) 21 From continuing operations Basic and diluted loss a (cents per share) 21	Year ended 31 Dec 2020 Unaudited US$ Year ended 31 Dec 2019 Audited US$ 291,364 370,160 (309,999) (232,683) (10,648,685) (13,241,193) (38,280) (49,840) (1,272,782) (1,095,357) (3,663,791) (3,045,977) (245,329) (386,224) 744,460 (121,809) - 1,790,658 - (2,210,508)
	(15,143,042) (18,222,773) - -
	(15,143,042) (18,222,773) (60,551,688) (2,921,320)
	(75,694,730) (21,144,093) - -
	(75,694,730) (21,144,093)
	US Cents US Cents (0.78) (0.35) (0.16) (0.30)

Notes to the financial statements are included on pages 7 to 44.

3

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2020

	Notes	31 Dec 2020	31 Dec 2019
		Unaudited	Audited
		US$	US$
CURRENT ASSETS
Cash and cash equivalents	26	25,933,571	13,752,652
Trade and other receivables	10	1,026,242	1,379,059
Other financial assets	11	7,435	7,008
Assets held for sale	12	161,361,902	-
Total Current Assets		188,329,150	15,138,719
NON-CURRENT ASSETS
Property, plant and equipment	13	246,660	294,133
Right-of-use assets	18	339,067	610,056
Exploration and evaluation assets	14	5,794,184	119,397,714
Total Non-Current Assets		6,379,911	120,301,903
TOTAL ASSETS		194,709,061	135,440,622
CURRENT LIABILITIES
Trade and other payables	16	1,380,460	4,617,028
Lease liabilities	18	443,044	368,534
Provisions	17	782,150	689,782
Liabilities associated with assets held for sale	12	34,343,721	-
Total Current Liabilities		36,949,375	5,675,344
NON-CURRENT LIABILITIES
Lease liabilities	18	64,013	448,181
Provisions	17	24,510	11,517
Total Non-Current Liabilities		88,523	459,698
TOTAL LIABILITIES		37,037,898	6,135,042
NET ASSETS		157,671,163	129,305,580
EQUITY
Issued Capital	19	439,623,308	335,725,405
Reserves	20	4,585,205	4,422,795
Accumulated losses		(286,537,350)	(210,842,620)
TOTAL EQUITY		157,671,163	129,305,580

Notes to the financial statements are included on pages 7 to 44.

4

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the financial year ended 31 December 2020

Note Balance at 1 January 2019 Loss for the year Total comprehensive loss for the year Issue of shares 19 Share issue costs 19 Recognition of share-based payments 28 Balance at 31 December 2019 Loss for the year Total comprehensive loss for the year Issue of shares 19 Share issue costs 19 Recognition of share-based payments 28 Balance at 31 December 2020	Share capital US$ 305,669,212 -	Reserves Share-based payments reserve(i) Foreign currency translation reserve(ii) Total Reserves Accumulated losses Total attributable to equity holders of the parent US$ US$ US$ US$ US$ 7,890,201 (3,754,360) 4,135,841 (189,698,527) 120,106,526 - - - (21,144,093) (21,144,093)
	- 31,506,577 (1,450,384) -	- - - (21,144,093) (21,144,093) - - - - 31,506,577 - - - - (1,450,384) 286,954 - 286,954 - 286,954
	335,725,405	8,177,155 (3,754,360) 4,422,795 (210,842,620) 129,305,580
	-	- - - (75,694,730) (75,694,730)
	- 107,545,810 (3,647,907) -	- - - (75,694,730) (75,694,730) - - - - 107,545,810 - - - - (3,607,907) 162,410 - 162,410 - 162,410
	439,623,308	8,339,565 (3,754,360) 4,585,205 (286,537,350) 157,671,163

(i) This comprises the fair value of rights and options recognised as an employee expense.

(ii) Foreign currency translation reserve represents the foreign currency movement on the revaluation of assets and liabilities held in currencies other than the company’s functional and presentation currency.

Notes to the financial statements are included on pages 7 to 44.

5

CONSOLIDATED STATEMENT OF CASH FLOWS for the financial year ended 31 December 2020

Note CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and other Receipt of government grant and tax incentive 6 Payments to suppliers and employees Payments for exploration expensed Other – repayments from joint operations Interest paid on lease liabilities 18 Net cash used in operating activities 26(e) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 6 Payments for exploration and evaluation assets Payments for oil and gas properties Payments for property, plant and equipment 13 Proceeds from farm-out of exploration and evaluation properties Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares 19 Payment for share issue costs 19 Payment of lease liabilities Payment of finance costs related to discontinued operations 12 Net cash provided by financing activities NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at the beginning of the year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial year 26(a)	Year ended 31 Dec 2020 Unaudited US$ Year ended 31 Dec 2019 Audited US$ 8,714 388,605 68,261 - (4,868,370) (6,312,062) (12,850,373) (15,130,401) 161,922 1,823,736 (38,125) (50,524)
	(17,517,971) (19,280,646)
	216,625 355,202 (2,829,948) (18,740,582) (69,016,270) - (41,846) (73,053) - 2,422,620
	(71,671,439) (16,035,813)
	107,545,810 31,506,577 (3,647,907) (1,450,384) (398,353) (324,988) (3,097,634) -
	100,401,916 29,731,205
	11,212,506 (5,585,255) 13,752,652 19,540,172 968,413 (202,265)
	25,933,571 13,752,652

Notes to the financial statements are included on pages 7 to 44.

6

CONSOLIDATED STATEMENT OF CASH FLOWS

for the financial year ended 31 December 2020

1. GENERAL INFORMATION

FAR Ltd (the ‘Company’) is an Australian listed public company, incorporated in Australia and operating in Africa and Australia. The principal activities of the Company and its subsidiaries (the “Group”) are disclosed in the Directors Report.

FAR Ltd’s registered office and its principal place of business at the date of this report is Level 17, 530 Collins Street, Melbourne, Victoria, 3000, Australia.

2. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS

In the current period, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the “AASB”) that are relevant to its operations and effective for reporting periods beginning on 1 January 2020.

The Group has not elected to early adopt any new standards or amendments.

The directors note that the impact of the initial application of the Standards and Interpretations which have been issued but which are not yet effective is not yet known or is not reasonably estimable and is currently being assessed. At the date of authorisation of the financial statements, the Standards and Interpretations that were issued but not yet effective are listed below:

Standard/Interpretation	Effective
AASB 2020-3 Amendments to AASs – Annual Improvements 2018-2020 and Other Amendments	1 January 2022
- Amendment to AASB1, subsidiary as a First-Time Adopter
- Amendments to AASB3, Reference to the Conceptual Framework
- Amendments to AASB9, Fees in the ’10 per cent’ Test for Derecognition of Financial Liabilities
- Amendments to AASB116, Property, Plant and Equipment: Proceeds before Intended Use
- Amendments to AASB137, Onerous Contracts – Cost of Fulfilling a Contract
- Amendments to AASB141, Taxation in Fair Value Measurements
AASB 2014-10 Amendments to AASs – Sale or Contribution of Assets between an Investor and its Associates or Joint Venture	1 January 2021
AASB 2020-1 Amendments to AASs – Classification of Liabilities as Current or Non-current	1 January2023

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001 , Accounting Standards and Interpretations, and complies with other requirements of the law. The financial report comprises the consolidated financial statements of the Group. For the purposes of preparing the consolidated financial statements, the Company is a for profit entity.

Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial statements and notes of the Group comply with International Financial Reporting Standards (‘IFRS’).

The financial statements were authorised for issue by the directors on 30 March 2021.

Basis of preparation

The consolidated financial statements have been prepared on the basis of historical cost except, where applicable, for the revaluation of certain non-current assets and financial instruments.

All amounts are presented in United States dollars, unless otherwise noted.

7

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

Functional and presentation currency

The functional and presentation currency of FAR Ltd and all its subsidiaries is Unites States dollars. Transactions in foreign currencies are initially recorded in the functional currency of the transacting entity at the exchange rates prevailing at the date of the transaction. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated at the rates prevailing at that date.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by the Company and its subsidiaries (referred to as ‘the Group’ in these financial statements). Control is achieved when the Company:

• has power over the investee;

• is exposed, or has rights, to variable returns from its involvement with the investee; and

• has the ability to use its power to affect the returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

(a) Going concern

This annual financial report has been prepared on the going concern basis which assumes the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. The Group incurred a net loss after tax of USD$75,694,730 (31 Dec 2019: Loss US$21,144,093) and had a net cash outflow from operating activities of USD$17,517,971 (31 Dec 2019: US$19,280,646) during the year ended 31 December 2020. As at 31 December 2020, the Group’s current assets (including the Senegal RSSD assets held for sale of US$161,361,902) exceeded current liabilities by US$151,379,775 (31 Dec 2019: US$9,463,375) and the Group had cash and cash equivalents of US$25,933,571 (31 Dec 2019: US$13,752,652). Subsequent to 31 December 2020 the Group had unrestricted cash on hand of US$7,699,827 as at 29 March 2021 (excluding FAR’s share of restricted joint operations cash).

Default

In order to maintain the Group’s rights and interests in the Senegal RSSD joint venture, the Group is required to meet its joint operations funding obligations. The maximum default period allowed under the Joint Operating Agreement is 6 months. After this period, the Group would be required to give up its interest in the joint operations without compensation and the Group may be required to make certain payments after this with respect to obligations payable at the time of default and over the default period.

In June 2020 the Group first took the strategic decision to default on its obligations in respect of the Senegal Joint Operating Agreement and RSSD Petroleum Sharing Contract and defaulted on the June to October 2020 cash calls inclusive (initial default period). The Group cured this default on 6 November 2020 with a payment of $29,808,303 including interest. The Group re-entered default in November 2020 and defaulted on the November and December 2020 cash calls (second default period). This default was cured on 14 January 2021 with a payment of US$15,481,947 including interest. Subsequent to year end, the Group re-entered default on 18 January 2021. At the date of this report the outstanding default amount is US$55,062,715 excluding interest representing the January, February and March 2021 cash call (third default period). The April cash call of US$13,483,990 is due 19 April 2021 and the May 2021 and June 2021 cash calls are currently forecast to total US$21,138,873. The Group does not have sufficient cash on hand to exit default prior to the end of the 6 month maximum default period on 18 July 2021 unless either the asset sale to Woodside or the potential corporate activity described further below are completed or otherwise provide funding by that date. The Directors consider it likely that one of these outcomes will be achieved in the required timeframe.

Sale of Senegal RSSD Project

Under the Senegal Joint Operating Agreement and RSSD Petroleum Sharing Contract, the Group is required to fund its share of the agreed budget approved on 20 January 2020. During the period, the impact of COVID-19 and the global oil price collapse meant the Group could not complete the debt component of its planned financing strategy. As a result, in H1 2020 the Group commenced a review of strategic options for the project including a competitive sales process. On 11 November 2020 the Group announced it had executed a Sale and Purchase Agreement for the RSSD project with ONGC Videsh Vankorneft Pte Ltd (ONGC), the state oil company of India. This sale was pre-empted by Woodside Energy (Senegal) B.V. (Woodside) on 3 December 2020 and the Group executed a Sale and Purchase Agreement with Woodside on 19 January 2021 on the same terms and conditions. The Sale and Purchase Agreement included four conditions precedent and other conditions typical of a transaction of its nature. Two conditions precedent

8

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

have been met. The Woodside transaction has not been further pre-empted and The Government of Senegal’s 60 day deemed approval period has passed and FAR expects to receive written confirmation of same in due course. At the date of these unaudited financial statements two key conditions precedent remain outstanding, being FAR Ltd shareholder approval, and the termination or otherwise satisfactory resolution of a third-party agreement unless waived by Woodside. Termination of the third party agreement has not yet occurred. A General Meeting of FAR Ltd shareholders has been convened for 15 April 2021 (postponed from the original date of 21 December 2020) for the sole purpose of approving the sale to Woodside. The long-stop date for the completion of the sale is 3 June 2021. Total expected proceeds to be received on completion from the sale of the Senegal asset is US$127,018,181 (see Note 12 for further information).

Corporate Activity

On 17 December 2020 the Group announced it had received a Non-Binding Indicative Proposal from Remus Horizons PCC (Remus) to acquire 100% of shares in FAR Ltd for A$2.1c per share. At the date of this report no offer has been made to FAR shareholders from Remus. On 17 February 2021 the Group announced it had received a Non-Binding Indicative Proposal from PJSC Lukoil (Lukoil) to acquire 100% of shares in FAR Ltd for A$2.2c per share. At the date of this report no offer has been made to FAR shareholders from Lukoil. Both parties indicated that a shareholder offer, if made, would include financing arrangements for defaulted cash calls and would be conditional on the sale of the Senegal RSSD asset being voted against by FAR Ltd shareholders. In the event either of these parties were to acquire the shares in FAR Ltd, all ongoing funding commitments of FAR Ltd would be the responsibility of the new shareholder.

COVID-19

In addition to the impact of COVID-19 on the Group’s Senegal asset, throughout 2020 COVID-19 adversely affected the Group’s business and its ability to deliver work programs in the other countries in which the Group operates, including The Gambia.

The Group will continue to manage its activities and intends to put in place all such arrangements (including the sale of its Senegal asset to Woodside) to ensure that it has sufficient cash reserves to meet its existing budgeted expenditures for the next twelve months from the date of this report. For further details of future commitments refer to Note 14 and 15. In the opinion of the directors, the Group will be in a position to continue to meet its liabilities and obligations for a period of at least twelve months from the date of signing this report, because the Group believes it is likely that it will complete the sale of the Senegal asset or that a change of control of FAR will eventuate, and hence will be able to secure and execute its remaining planned activities over the same period.

The opinion of the directors has been determined after consideration of the abovementioned subsequent events, the Group’s cash position and forecast expenditures and having regard for the following factors:

• The execution of a Sale and Purchase Agreement with Woodside, and the status of outstanding conditions precedent and completion tasks subject to the key conditions described above; and

• The change of control proposals described above.

At the date of this unaudited financial report it is uncertain whether the conditions precedent in relation to the RSSD sale, which are partly outside the control of FAR Ltd, will be satisfied, and therefore whether the RSSD sale will complete in the required timeframe and whether a formal offer to FAR shareholders to acquire the shares in FAR Ltd will occur or complete. These circumstances would indicate that a material uncertainty exists that may cast doubt as to whether the Group will be able to continue as a going concern and therefore whether it will realise its assets and discharge its liabilities in the normal course of business and at the amounts stated in the financial report .

This financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

9

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

(b) Impairment of non-financial assets

At each reporting date the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cashgenerating unit) is increased to the revised estimate of its recoverable amount but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cashgenerating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

Other Significant accounting policies

Significant accounting policies are disclosed in the respective notes to the financial statements.

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, which are described in Note 3 and the financial statements, management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the Group’s accounting policies.

Significant judgements, estimates and assumption made by management in the preparation of these financial statements are found in the following notes:

Note 12 – Discontinued operations Note 13 – Exploration and evaluation assets Note 14 – Oil and gas properties Note 18 – Lease liabilities Note 28 – Share-based payments.

10

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

5. SEGMENT INFORMATION

The Group’s operating segments are identified on the basis of internal reports about components of the entity that are regularly reviewed by the Managing Director (chief operating decision maker) in order to allocate resources to the segments and to assess its performance. The Group undertook exploration for oil and gas in Australia and Africa during the year.

Segment Assets and Liabilities

The following is an analysis of the Group’s assets and liabilities by reportable operating segment:

Australia The Gambia Guinea-Bissau Kenya Senegal Other Corporate Total segment assets and liabilities from continuing operations Assets and liabilities relating to discontinued operations Total	Assets Liabilities
	31 Dec 2020 Unaudited 31 Dec 2019 Audited 31 Dec 2020 Unaudited 31 Dec 2019 Audited US$ US$ US$ US$ - - - - 4,168,271 810,629 519,455 695,429 3,202,574 2,044,055 606,102 133,360 - 224,752 - 23,071 195,357 94,799 62,009 166,628 - - - 10,387 25,780,957 15,727,071 1,506,611 1,872,709
	33,347,159 18,901,306 2,694,177 2,901,584 161,361,902 116,539,316 34,343,721 3,233,458
	194,709,061 135,440,622 37,037,898 6,135,042

Segment Revenue and Results

The following is an analysis of the Group’s revenue and results from operations:

	Revenue Year ended 31 Dec 2020 Unaudited Year ended 31 Dec 2019 Audited	Segment Loss
		Year ended 31 Dec 2020 Unaudited Year ended 31 Dec 2019 Audited
	US$ US$	US$ US$
Australia The Gambia Guinea-Bissau Kenya Other Corporate Total for continuing operations Income tax expense Loss from discontinued operations Loss after tax and discontinued operations	- - - - - - - - - - 291,364 370,160 291,364 370,160	(278,103) (391,656) (10,362,726) (9,639,245) (343,889) (1,230,035) (479,530) (201,568) - (386,224) (3,673,794) (6,374,045)
		(15,143,042) (18,222,773) - - (60,551,688) (2,921,320)
		(75,694,730) (21,144,093)

The revenue reported above represents revenue generated from external sources. There were no intersegment sales during the year.

Other Segment Information

Other Segment Information
	Depreciation and Amortisation Year ended 31 Dec 2020 Unaudited Year ended 31 Dec 2019 Audited US$ US$	Additions to Non-Current Assets
		Year ended 31 Dec 2020 Unaudited Year ended 31 Dec 2019 Audited
Australia The Gambia Guinea-Bissau Senegal Corporate Total		US$ US$ - - 2,921,832 290,535 555,812 1,084,812 - 18,043,283 41,846 947,465
	- -
	(76,602) (11,870)
	- -
	- -
	(233,397) (220,813)
	(309,999) (232,683)	3,519,490 20,366,095

11

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

6. OTHER INCOME

- Interest income - Rental income - Government grants and tax incentives – Cash flow boost payments - Other	Year ended 31 Dec 2020 Unaudited Year ended 31 Dec 2019 Audited US$ US$ 216,625 355,202 6,104 14,958 68,261 - 374 -
	291,364 370,160

Interest revenue

Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.

Government Grants

Government grants and tax incentives for COVID-19 were recognised in profit or loss as income in the period during which these were received.

7. LOSS FOR THE YEAR

Loss for the year from continuing operations includes the following expenses:

Note Depreciation and amortisation: - Property, plant & equipment 13 - Right of use asset 18 - Less reallocation to exploration expense Exploration and evaluation costs expensed: - Australia - Gambia - Guinea-Bissau - Kenya Finance costs: - Interest on bank - Interest on lease liabilities 18 Employee benefit expense: - Remuneration expense - termination benefits expense - Recharge of remuneration expense to exploration expense Post-employment benefits: - superannuation contributions - amortisation of equity-settled share-based payments - performance rights 28 - provision for leave entitlements 17 Other expenses: - Corporate finance management - Cost of international arbitration	Year ended 31 Dec 2020 Unaudited Year ended 31 Dec 2019 Audited US$ US$ (86,143) (113,049) (356,674) (273,212) 132,818 153,578
	(309,999) (232,683)
	(262,532) (391,656) (9,930,545) (11,417,934) (344,664) (1,230,034) (110,944) (201,568)
	(10,648,685) (13,241,193)
	(155) (350) (38,125) (49,489)
	(38,280) (49,839)
	(3,729,777) (3,047,720) (186,979) - 649,422 498,106 (188,749) (159,278) (162,410) (286,953) (45,298) (50,132)
	(3,633,791) (3,045,977)
	- (329,810) - (1,880,698)
	- (2,210,508)

12

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

8. EXPECTED CREDIT LOSSES

Expect credit losses(i)	Year ended 31 Dec 2020 Unaudited Year ended 31 Dec 2019 Audited US$ US$ - 1,790,658

(i) During the previous corresponding period the Group reversed amounts provided for in full in 2018 for its share of the Gambia Block A2 and A5 Joint operations receivable from joint operations participant relating to outstanding cash contributions due to the Joint operation.

9. INCOME TAXES

(a) Income tax recognised in profit or loss

) Income tax recognised in profit or loss
Tax (income) comprises: Current tax expense Tax losses not brought to account Deferred tax expense relating to the origination and reversal of temporary differences Benefit arising from previously recognised tax losses of prior periods used to reduce deferred tax expense Prior year unders/overs Utilisation of previously unrecognised tax losses Total tax expense/(income)	Year ended 31 Dec 2020 Unaudited Year ended 31 Dec 2019 Audited US$ US$ (4,136,148) (4,662,044) 4,136,148 4,662,044
	143,479 (1,541,279) (143,479) 1,541,279 1,655,957 36,280 (1,665,957) (36,280)
	- -

The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in the financial statements as follows:

Loss from operations Income tax (income) calculated at 30% Non-deductible expenses Non-assessable gains Recognition of previously unrecognised deductible temporary differences Unused tax losses and tax offsets not recognised as deferred tax assets Income tax expense recognised in loss	Year ended 31 Dec 2020 Unaudited US$ Year ended 31 Dec 2019 Audited US$ (75,694,730) (21,144,093)
	(22,708,419) (6,343,228) 19,135,174 2,105,458 - (655) (562,903) (423,618) 4,136,148 4,662,044
	- -

The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under Australian tax law. There has been no change in the corporate tax rate when compared with the previous reporting period. No tax has been assessed on its foreign projects due to the projects currently operating in the

exploration and evaluation phase and therefore not deriving production revenues.

(b) Income tax recognised directly in equity

There were no current and deferred amounts charged directly to equity during the period.

13

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

(c) Deferred tax balances

Taxable and deductible temporary differences arise from the following:

2020 Opening balance US$ Property, plant & equipment (28,505) Payables 44,960 Provisions 210,389 Total 226,844 2019 Opening balance US$ Property, plant & equipment (108) Receivables 507,004 Payables 1,066,020 Provisions 195,207 Total 1,768,123 Unrecognised deferred tax balances The following deferred tax assets have not been brought to account as assets: Deferred tax assets on temporary differences (net) Tax losses in Gambia Tax losses in Australia Capital losses in Australia	Opening balance US$ (28,505) 44,960 210,389	Recognised in income Closing balance US$ US$ 95,539 67,034 16,332 61,292 31,608 241,998
	226,844	143,479 370,324
	Opening balance US$ (108) 507,004 1,066,020 195,207	Recognised in income Closing balance US$ US$ (28,397) (28,505) (507,004) - (1,021,060) 44,960 15,182 210,389
	1,768,123	(1,541,279) 226,844
		31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ 370,324 226,844 8,209,182 5,111,305 16,255,012 18,587,107 3,891,376 74,188
		28,725,893 23,999,445

Tax consolidation

Relevance of tax consolidation to the Group

The Company and its wholly-owned Australian resident entities have formed a tax consolidated group with effect from 1 July 2007 and are therefore taxed as a single entity from this date. The Head Entity within the tax consolidated group is FAR Ltd. The members of the tax consolidated group are identified at Note 24.

Income tax

Current tax

Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).

Deferred tax

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient

taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and joint ventures except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets arising from deductible temporary differences associated with these investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which

14

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company/Group intends to settle its current tax assets and liabilities on a net basis.

Tax consolidation

The Company and all its wholly-owned Australian resident Entities are part of a tax consolidated group under Australian taxation law. FAR Ltd is the Head Entity in the tax consolidated group. A tax funding arrangement has not been finalised between Entities within the tax consolidated group. Tax expense/income, deferred tax liabilities and deferred tax

assets arising from temporary differences of the members of the tax consolidated group are recognised in the separate financial statements of the members of the tax consolidated group using the ‘stand-alone taxpayer’ approach by reference to the carrying amounts in the separate financial statements of each entity and the tax values applying under tax consolidation. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and relevant tax credits of the members of the tax consolidated group are recognised by the Company (as Head-Entity in the tax consolidated group).

10. TRADE AND OTHER RECEIVABLES

0. TRADE AND OTHER RECEIVABLES
Current Other receivables Prepayments Joint operations receivables(i)	31 Dec 2020 Unaudited 31 Dec 2019 Audited US$ US$ 217,286 722,769 347,739 539,330 461,217 116,960
	1,026,242 1,379,059

(i) includes The Gambia Blocks A2 and A5 joint operations receivable.

Other receivables are non-interest bearing and the credit period of oil and gas varies between 30 and 60 days. No receivables were past due at balance date and the Group has no significant exposure to expected credit losses. The carrying amount of trade and other receivables approximates their fair value.

11. OTHER FINANCIAL ASSETS

Current Security deposit(i)	31 Dec 2020 Unaudited 31 Dec 2019 Audited US$ US$ 7,435 7,008

(i) security bond held over the Company’s Senegal office refundable on the termination of the lease contract.

12. DISCONTINUED OPERATIONS

As noted in Note 3 the Group has executed a Sale and Purchase Agreement with Woodside to sell FAR’s entire interest in the Senegal project, and the following assets and liabilities were reclassified as discontinued operations as at 31 December 2020:

Inventories Oil and gas properties Assets held for sale Trade and other payables Liabilities associated with assets held for sale Net assets of disposal group	Note	31 Dec 2020 Unaudited US$ 2,771,738 158,590,164
	15
		161,361,902
		34,343,721
		34,343,721
		127,018,181

15

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

On 11 November 2020 FAR announced it had entered into a RSSD Sale and Purchase Agreement with ONGC Videsh Vankorneft Pte Ltd (“ONGC”) in respect of FAR’s entire interest in the Production Sharing Contract for the Rufisque, Sangomar and Sangomar Deep Offshore Blocks offshore Senegal and the relevant Joint Operating Agreement. As consideration for the sale (the “Transaction”) ONGC agreed to pay FAR US$45M at completion. In addition, ONGC agreed to reimburse FAR’s share of working capital for the RSSD project from 1 January 2020, payable on completion. The transaction also includes an entitlement to certain contingent payments capped at US$55M. The contingent payment comprises 45% of entitlement barrels (being the share of oil relating to FAR's 13.67% RSSD Project exploitation area interest) sold over the previous calendar year multiplied by the excess amount over US$58 per barrel (up to a cap of US$70 per barrel). The contingent payment terminates on the earliest of 31 December 2027, 3 years from first oil being sold (excluding any periods of zero production), or a total contingent payment of US$55 million being reached, whichever occurs first.

On 4 December 2020 FAR announced it had received notification from Woodside Energy (Senegal) B.V. that it had exercised its preemptive right to acquire FAR’s interest in the Senegal RSSD project. On 20 January 2021 FAR announced it had signed the RSSD project sale contract with Woodside on the same terms and conditions as the proposed sale to ONGC announced on 11 November 2020.

FAR’s implied value based on the Woodside sale and purchase terms including working capital from 1 January 2020 to 31 December 2020 is US$127,018,181 (excludes contingent payments). The resulting loss on the remeasurement of the carrying value to fair value less costs to sell is US$55,760,120 which has been recognised in the Group’s accounts.

The conditions of sale include the written approval of the Minister of Petroleum and Energies for the Republic of Senegal for the transfer to Woodside, FAR shareholder approval of the Transaction, Third Party Agreement Termination (Woodside has the discretion to waive this condition) and other customary provisions for a sale and purchase agreement of its type.

Recognition and measurement

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits and financial assets which are specifically exempt from this requirement. An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset is recognised at the date of derecognition. Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities classified as held for sale continue to be recognised.

The results of the discontinued operations, which have been included in the loss for the year:

Note Loss for the year from discontinued operations Exploration expense Finance costs – default period interest charge Finance costs – finance facility break fees and associated costs(i) Foreign exchange loss Loss on remeasurement of discontinued operations of oil and gas properties 15 Loss before tax from discontinued operations Income tax expense Loss after tax for the year from discontinued operations Cash flows from discontinued operations Net cash used in operating activities Net cash used in investing activities Net cash outflows	31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ (1,661,285) (2,921,320) (210,097) - (2,887,382) - (32,804) - (55,760,120) -
	(60,551,688) (2,921,320) - -
	(60,551,688) (2,921,320)
	(1,831,744) (1,258,272) (69,016,270) (15,540,782)
	(70,848,014) (16,799,054)

(i) On 30 March 2020, the Group announced that the COVID-19 pandemic combined with the precipitous fall in Brent oil price since January 2020 adversely impacted the global financial markets including the global availability of credit. Consequently, the Group ability to close the debt arrangements were compromised such that the lead banks to the senior facility confirmed they could not complete the financing in the current environment. As a result, finance facility break fees in relation to the various financing arrangement entered into by the Group have been incurred.

16

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

13. PROPERTY, PLANT AND EQUIPMENT

3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment Cost Balance at 1 January Additions Disposals Balance at 31 December Accumulated depreciation and impairment Balance at 1 January Depreciation expense Disposals Balance at 31 December Net Book Value Net carrying value – Represented By: Office furniture & equipment	Note	31 Dec 2020 Unaudited 31 Dec 2019 Audited US$ US$ 867,440 838,931 41,846 75,217 (5,040) (46,708)
		904,246 867,440
	7	(573,307) (506,966) (86,143) (113,049) 1,864 46,708
		(657,586) (573,307)
		246,660 294,133
		31 Dec 2020 Unaudited 31 Dec 2019 Audited US$ US$ 246,660 294,133

Plant and equipment are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. 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. All other repairs and maintenance are charged to the statement of profit or loss and other comprehensive income during the financial period in which they are incurred.

Except in the case of those assets which are depreciated on a straight line basis over their useful lives, all other tangible

assets have limited useful lives and are depreciated using the diminishing value method over their estimated useful lives, taking into account estimated residual values, to write off the cost to its estimated residual value, as follows: Furniture, fittings and equipment: 10-40%

Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the diminishing value method.

The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period and adjusted if appropriate.

17

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

14. EXPLORATION AND EVALUATION ASSETS

4. EXPLORATION AND EVALUATION ASSETS
Note Exploration and evaluation expenditure: Balance at 1 January Additions(i) Transferred to oil and gas properties(ii) 15 Balance at 31 December Net carrying value – By Area of interest: The Gambia Guinea-Bissau Senegal Balance at 31 December Exploration and evaluation commitments Not longer than 1 year	31 Dec 2020 Unaudited 31 Dec 2019 Audited US$ US$ 119,397,714 99,987,939 3,391,959 19,409,775 (116,995,489) -
	5,794,184 119,397,714
	3,117,827 281,680 2,676,357 2,120,545 - 116,995,489
	5,794,184 119,397,714
	31 Dec 2020 Unaudited 31 Dec 2019 Audited US$ US$ 435,437 7,657,422

• (i) Additions include The Gambia Blocks A2 and A5 exploration well planning and preparation costs of US$2,836,147, including long lead items of US$1,396,912 (31 Dec 2019: US$281,680) and Guinea-Bissau exploration well long lead items of US$555,812. In the previous corresponding period, additions included Senegal RSSD pre-development FEED and related costs US$18,043,283.

• (ii) In January 2020 the Sangomar Field Development was approved by the Senegal RSSD joint venture following the grant of the Exploitation Authorisation by the Government of Senegal and accordingly the carrying value of the Senegal asset was transferred to oil and gas properties.

Exploration and evaluation costs

Expenditure on exploration and evaluation is accounted for in accordance with the area of interest method. The Group’s application of the accounting policy for the cost of exploring and of evaluating discoveries are accounted for under the successful efforts method.

Areas of interest are based on a geographical area. All exploration and evaluation expenditure, including general permit activity, geological and geophysical costs and new venture activity costs are expensed as incurred except for the following:

• (i) where the expenditure related to an exploration discovery that, at the reporting date, has not been recognised as an area of interest, because an assessment of the existence or otherwise of economically recoverable reserves is not yet complete; or

• (ii) where the expenditure relates to a recognised area of interest and it is expected that the expenditure will be recouped through successful exploitation of the area of interest, or alternatively, by its sale.

The costs of acquiring an interest in new exploration and evaluation licences are capitalised. The costs of drilling exploration wells are initially capitalised pending the results of the well. Costs are expensed where the well does not result in the successful discovery of economically recoverable hydrocarbons and the recognition of an area of interest.

Subsequent to the recognition of an area of interest, all further evaluation costs relating to that area of interest are capitalised. Upon approval for the commercial development of an area of interest, accumulated expenditure for the area of interest is transferred to oil and gas properties.

In the statement of cashflows, those cash flows associated with capitalised exploration and evaluation expenditure, including unsuccessful wells, are classified as cash flows used in investing activities.

Exploration Commitments

The Group has exploration expenditure obligations which are contracted for, but not provided for in the financial statements. These obligations may be varied from time to time and are expected to be fulfilled in the normal course of operations of the Group.

Critical judgements in applying the Company’s accounting policies: (i) Area of interest

An area of interest is defined by the Group as an individual geographical area whereby the presence of hydrocarbon is considered favourable or proved to exists.

(ii) Impairment of exploration and evaluation assets

The 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 area of interest. To successfully develop the exploration and evaluation assets the Group is also required to meet its joint venture funding obligations. Should the Group not succeed in securing appropriate funding to meet revised joint venture funding obligations, the recoverability of capitalised exploration and evaluation assets could be impacted and may be required to be impaired.

Each potential or recognised area of interest is reviewed half-yearly to determine whether economic quantities of reserves have been found or whether further exploration and evaluation work is underway or planned to support continued carry forward of capitalised costs. Where a potential impairment is indicated, assessment is performed using a fair value less costs to dispose method to determine the recoverable amount for each area of interest to which the exploration and evaluation expenditure is attributed.

This assessment requires management to make certain estimates and apply judgment in determining assumptions as to future events and circumstances, in particular, the assessment of whether economic quantities of reserves have been found. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised expenditure under the policy, the Group concludes that it is unlikely to recover the expenditure by future exploitation or sale, then the relevant capitalised amount will be written off to the income statement

18

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the financial year ended 31 December 2020

15. OIL AND GAS PROPERTIES

Development assets Opening balance Transferred from exploration and evaluation assets Additions Loss on remeasurement of discontinued operations Transfer to Assets held-for-sale Closing balance at 31 December	Note	31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ - - 116,995,489 - 97,354,795 - (55,760,120) - (158,590,164) -
	14
	12
	12
		- -

Development assets commitments:

The Group received notification of default of its payments to the RSSD joint operation, effective from 18 January 2021. The January, February, March and April 2021 cash calls amounting to US$68,546,704 currently remain unpaid. The Group has 6 months from the date of default to make good its payments (plus accrued interest) to the joint operation to come out of default.

	31 Dec 2020	31 Dec 2019
	Unaudited	Audited
	US$	US$
Senegal – Sangomar Field Development
Not longer than 6 months	-	28,209,583
Unpaid cash calls(i)	68,546,704	-

(i) Represents January, February and March 2021 Senegal default cash calls (US$55,062,715) and April 2021 Senegal cash call (U$13,483,990) issued by the operator up to the date of this report. Not included are the May ($9,679,144 forecast) and June ($11,459,729 forecast) 2021 cash call amounts (the balance of the 6 months default period) which are expected to be issued by operator subsequent to the date of this report. Interest accrues on the default cash calls at the 1-month LIBOR for US Dollars plus 2 percentage points per annum.

16. TRADE AND OTHER PAYABLES

Current Trade payables(i) Other payables Joint operations payables(ii)	31 Dec 2020 Unaudited 31 Dec 2019 Audited US$ US$ 110,248 150,484 297,810 393,636 972,402 4,072,908
	1,380,460 4,617,028

(i) The average credit period on purchases is approximately 30 days. No interest is charged on the trade payables for the first 30 days from the date of the invoice. Thereafter, interest may be levied on the outstanding balance at varying rates. The Group has financial risk management practices in place to ensure payables are paid within the credit timeframe.

(ii) At 31 December 2020, FAR’s share of Senegal joint operation payables and accruals has been reclassified as liabilities associated with assets held for sale and subsequently disclosed in discontinued operations Note 12. In the previous corresponding reporting period, joint operation payables relating to Senegal amounted to US$3,233,458.

19

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

17. PROVISIONS

Note Movement in employee benefits provision:(i) Carrying amount at 1 January Employee benefits expense 7 Net foreign exchange differences Balance at 31 December Net carrying value – represented by: Current Non-Current Balance at 31 December	31 Dec 2020 Unaudited 31 Dec 2019 Audited US$ US$ 701,299 650,691 45,298 50,132 60,063 476
	806,660 701,299
	782,150 689,782 24,510 11,517
	806,660 701,299

(i) The above provisions for employee benefits represent annual leave and long service leave entitlements accrued by employees. Employees remunerated in Australian Dollars have been presented in US dollars and all components have been translated from AUD to US dollars using an average exchange rate.

Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event, the future outflow of economic benefits is probable, and the amount of the provision can be measured reliably.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that recovery will be received, and the amount of the receivable can be measured reliably.

Employee benefits

Short and long-term employee benefits

A liability is recognised for benefits accruing to employees in respect of wages and salaries and annual leave in the period the related service is rendered.

Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Amounts expected to settle within twelve months are recognised in current provisions in respect of employees’ services up to the reporting date. Costs incurred in relation to sick leave are recognised when leave is taken and are measured at the rates paid or payable.

Liabilities recognised in respect of long-term employee benefits are measured at the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date.

Termination benefits

Where contractual arrangements provide for a payment to a director or employee on termination of their employment, a provision for the payment of such amounts is recognised as the obligation arises.

20

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

18. RIGHT-OF-USE ASSETS AND LEASE LIABILTIES

The Group has leases which predominately relate to the Company’s head office premises and minor office equipment. Amounts recognised in the Statement of financial position and the carrying amounts of the Group’s right-of-use assets and lease liabilities and the movement during the year are as follows:

As at 1 January 2019 Additions during the year Depreciation expense Interest expense Lease payments Net foreign exchange differences As at 31 December 2019 As at 1 January 2020 Additions during the year Depreciation expense Interest expense Lease payments Net foreign exchange differences As at 31 December 2020 Net carrying value of right-of-use assets As at 31 December 2019 As at 31 December 2020	Right-of-use assets Leased Premises Office Equipment Total Lease Liabilities US$ US$ US$ US$ 104,953 - 104,953 104,953 763,847 14,468 778,315 1,062,025 (265,255) (7,957) (273,212) - - - - 49,489 - - - (364,924) - - - (34,828)	Right-of-use assets Leased Premises Office Equipment Total Lease Liabilities US$ US$ US$ US$ 104,953 - 104,953 104,953 763,847 14,468 778,315 1,062,025 (265,255) (7,957) (273,212) - - - - 49,489 - - - (364,924) - - - (34,828)
	Leased Premises Office Equipment US$ US$ 104,953 - 763,847 14,468 (265,255) (7,957) - - - - - -
	603,545 6,511	610,056 816,715
	603,545 6,511 85,685 - (350,163) (6,511) - - - - - -	610,056 816,715 85,685 85,685 (356,674) - - 38,125 - (458,479) - 25,011
	339,067 -	339,067 507,057
		US$ 610,056 339,067

Lease liabilities are presented in the Statement of financial position as:

Current Non-Current As at 31 December		31 Dec 2020 Unaudited 31 Dec 2019 Audited Lease Liabilities Lease Liabilities US$ US$ 443,044 368,534 64,013 448,181
		507,057 816,715

Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.

Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the

21

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the financial year ended 31 December 2020

Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

Significant judgement in determining the lease term of contracts with renewal options

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Group has the option, under some of its leases to lease the assets for additional terms of two to three years. The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew (e.g. a change in business strategy).

The Group did not include the renewal period as part of the lease term for leases of office premises and office equipment due to the significance of these assets in which the Group operates geographically in its current environment. These leases have a short non-cancellable period (i.e. two to three years). The renewal options for leases of office premises were not included as part of the lease term because the Group has a policy of leasing premises for not more than two to five years and hence not exercising any renewal options.

22

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

19. ISSUED CAPITAL

Fully paid ordinary shares At beginning of the year Shares allotted during the year: - shares issued on 7 May 2019 - placement - shares issued on 17 May 2019 - placement - shares issued on 24 Jan 2020 - share purchase plan - shares issued on 28 Jan 2020 - placement - shares issued on 29 Jan 2020 - placement Share issue costs Ordinary fully paid shares at end of the year	31 Dec 2020 Unaudited 31 Dec 2019 Audited 31 Dec 2020 Unaudited 31 Dec 2019 Audited Number Number US$ US$ 6,280,387,002 5,461,532,458 335,725,405 305,669,212 - 707,854,544 - 27,299,038 - 111,000,000 - 4,207,539 263,149,039 - 7,652,040 - 3,424,942,156 - 99,592,882 - 10,352,000 - 300,888 - - - (3,647,907) (1,450,384)
	9,978,830,197 6,280,387,002 439,623,308 335,725,405

In January 2020, the Company completed a US$107,545,810 placement to institutional and sophisticated investors and a Share Placement Plan (SPP) to existing eligible shareholders, both priced at AUD 4.25 cents per share. The placement was approved by shareholders at the General Meeting held 16 January 2020. US$7,652,040 was raised under the SPP.

Fully paid ordinary shares carry one vote per share and a right to dividends. Each ordinary shareholder present at a general meeting, whether in person, by proxy or by representative is entitled to one vote on a show of hands or, on a poll, one vote for each fully paid ordinary share held.

Issued capital is classified as equity and is recognised at the fair value of the consideration received by the Group. Any transaction costs arising on the issue of ordinary shares is recognised directly in equity as a reduction of the share proceeds received.

Performance rights outstanding at balance date

Refer Note 28 share-based payments for details of share performance rights outstanding at 31 December 2020.

20. RESERVES

Note Share-based payment reserve 28 Foreign currency translation reserve	31 Dec 2020 Unaudited 31 Dec 2019 Audited US$ US$ 8,339,565 8,177,155 (3,754,360) (3,754,360)
	4,585,205 4,422,795

Share-based payments reserve recognises the fair value of rights and options issued to directors and employees in relation to equitysettled share-based payments. Amounts are transferred out of reserve and into issued capital when vested rights are exercised.

The foreign currency translation reserve records exchange differences arising on translation of the financial statements of foreign subsidiaries and branches from their functional currency to the Company’s functional and presentation currency of USD. The functional and presentation currency for the Group was changed from Australian dollars (AUD) to United States dollars effective 1 January 2019 resulting in exchange differences being recognised in equity under the reserve for foreign currency translation. Consequently, there has been no change to the reserve for the year ended 31 December 2020.

23

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

21. EARNINGS PER SHARE

The Group presents basic and diluted EPS for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares for the dilutive effect, if any, of the outstanding share rights which have been issued to employees.

Basic and diluted loss per share - From continuing and discontinued operations - From continuing operations The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share are as follows: Loss for the year attributable to members of FAR Ltd Weighted average number of ordinary shares for the purposes of basic and diluted loss per share	31 Dec 2020 Unaudited 31 Dec 2019 Audited US Cents US Cents (0.78) (0.39) (0.16) (0.35)
	Year ended 31 Dec 2020 Unaudited US$ Year ended 31 Dec 2019 Audited US$ (75,694,719) (21,144,093)
	Number Number 9,698,736,849 5,992,429,394

The following potential ordinary shares are not considered dilutive as the Company recognised a loss for the year ended, and are therefore excluded from the weighted average number of ordinary shares used in the calculation of diluted EPS:

Unlisted performance rights Note FARAN 28 FARAM 28	31 Dec 2020 Unaudited Number 31 Dec 2019 Audited Number - 10,293,000 9,353,000 9,353,000
	9,353,000 19,646,000

22. CONTINGENT LIABILITIES AND CONTINGENT ASSETS

	31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ 13,000,000 13,000,000 567,811 567,811
Contingent liabilities Guinea-Bissau – contingent payment from future production(i) Guinea-Bissau – contingent withholding tax liability(ii)
	13,567,811 13,567,811

(i) In 2009, the Company entered into an Agreement to acquire an interest in three blocks offshore of Guinea-Bissau. Under the terms of the Agreement, in the event of future production from the blocks the vendor will be entitled to recover up to US$13 million in past exploration costs from the Company’s proceeds from production. Any such recovery will be at a rate of 50% of the Company’s annual net revenue as defined by the Agreement. Refer to Note 23 for further details on equity interest held.

(ii) During the year ended 31 December 2009, the Group was advised by the operator of its blocks in Guinea-Bissau that the Joint Operation partners have a contingent withholding tax liability which would become payable in the event of the Joint Operation entering the development phase of the licences. The Group’s share of the estimated contingent liability as at 31 December 2020 is US$567,811 (2019: US$567,811).

There are no contingent liabilities arising from service contracts with executives.

24

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

Contingent assets

In accordance with the Sale and Purchase Agreements with Woodside for the sale of FAR Ltd’s entire interest in the offshore blocks Rufisque, Sangomar and Sangomar Deep (RSSD) a contingent payment to FAR is payable in the future based on various factors relating to the sale of oil from the RSSD Project.

The contingent payment comprises 45% of entitlement barrels (being the share of oil relating to FAR's 13.67% RSSD Project exploitation area interest) sold over the previous calendar year multiplied by the excess (if any) of the crude oil price per barrel and US$58 per barrel (capped at US$70).

The contingent payment terminates on the earliest of 31 December 2027, 3 years from first oil being sold (excluding any periods of zero production), or a total contingent payment of US$55 million being reached, which ever occurs first.

The Operator’s most recent estimate for commencement of oil production is mid-2023. The Operator may update timelines to first oil and production targets from time to time.

23. JOINT OPERATIONS

The Group has an interest in the following material joint operations whose principal activities are oil and gas exploration

Sinapa / Esperança(i) L6(ii) Rufisque Offshore / Sangomar Offshore / Sangomar Deep Offshore – Exploitation(iii) Rufisque Offshore / Sangomar Offshore / Sangomar Deep Offshore - Exploration Block A2/ Block A5(iv)	Equity Interest Country 31 Dec 2020 Unaudited % 31 Dec 2019 Audited %
	Guinea-Bissau 21.4 21.4 Kenya - 60.0 Senegal 13.67 15.0 Senegal 15.0 15.0 Gambia 50.0 50.0

(i) In April 2017, negotiations concluded with the National Oil Company of Guinea-Bissau, Petroguin to revise the terms of both the Sinapa and Esperanca Licenses to which FAR has interests. Under the revised licence terms, FAR has a 21.43% participating interest in the permit, an increase from 15% and FAR’s paying interest remains at 21.43%.

(ii) In June 2020 FAR’s wholly owned subsidiary Flow Energy Pty Ltd the Operator of the Kenya Block L6, issued a Surrender and Termination Notice to the Kenyan Government reducing FAR’s interest to nil.

(iii) In January 2020 the Sangomar Field Development was approved by the Senegal RSSD joint venture following the grant of the Exploitation Authorisation by the Government of Senegal, delineating the blocks into Exploitation and Exploration areas. In August 2020 Petrosen, the Senegalese National Oil Company exercised its right under the Production Sharing Contract to increase its equity interest in the Joint Venture Exploitation area from 10% to 18%. Each Co-Venturer was required to reduce their equity interest share by a proportionate share of the 8%, resulting in FAR’s interest in the exploitation area reducing from 15.0% to 13.67%.

(iv) On 1 October 2019, the Company announced the Ministry of Petroleum and Energy of The Gambia approved the acquisition of an additional 10% interest in Blocks A2 and A5 giving FAR a 50% working interest and retained Operatorship.

The Groups’ interests in assets employed in the above joint operations are detailed below. The amounts are included in the financial statements under their respective assets and liability categories.

Current Assets Cash and cash equivalents Trade and other receivables Non-Current Assets Property, plant and equipment Exploration and evaluation assets Current Liabilities Trade and other payables	31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ 910,242 (82,512) 461,217 116,960
	1,371,459 34,448
	43,748 56,086 2,958,037 119,397,714
	3,001,785 119,453,800 972,402 4,072,908

25

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

Contingent liabilities and capital commitments

The capital commitments arising from the Group’s interests in joint operations are disclosed in Note 14 and Note 15.

The contingent liabilities in respect of the Group’s interest in joint operations are disclosed in Note 22.

Interests in Joint Operations

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

Under certain agreements, more than one combination of participants can make decisions about the relevant activities and therefore joint control does not exist. Where the arrangement has the same legal form as a joint operation but is not subject to joint control, the group accounts for its interest in accordance with the contractual agreement by recognising its share of jointly held assets, liabilities, revenues and expenses of the arrangement.

When a Group entity undertakes its activities under joint operations, the Group as a joint operator recognises in relation to its interest in a joint operation:

• (i) Its assets, including its share of any assets jointly held;

• (ii) Its liabilities, including its share of any liabilities incurred jointly;

• (iii) Its revenue from the sale of its share of the output arising from the joint operation;

• (iv) Its share of the revenue from the sale of the output by the joint operation; and

• (v) Its expenses, including its share of any expenses incurred jointly.

The Group accounts for its assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the AASB’s applicable to the particular assets, liabilities, revenues and expenses.

When a Group entity transacts with a joint operation in which a Group entity is a joint operator (such as a sale or contribution of assets), the Group is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the transactions are recognised in the Group’s consolidated financial statements only to the extent of other parties’ interests in the joint operation.

When a Group entity transacts with a joint operation in which a Group entity is a joint operator (such as a purchase of assets), the Group does not recognise its share of the gains and losses until it resells those assets to a third party.

26

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

24. SUBSIDIARIES

In line with the decision to sell the Senegal RSSD asset and the impact of COVID-19 the Company made the decision during the year to restructure the Group to reduce administrative costs and simplify the organisational structure. As part of the restructure multiple entities within the Group either have or currently are in the process of being voluntarily de-registered. See notes below for further information.

			Ownership	interest
		Country of	2020	2019
Name of Entity		incorporation	%	%
Parent Entity	Note
FAR Ltd	(i)	Australia
Subsidiaries
FAR Holdings 1 Pty Ltd	(ii)	Australia	100	100
FAR Holdings 2 Pty Ltd	(ii)	Australia	100	100
FAR Holdings 3 Pty Ltd	(ii)	Australia	100	100
FAR Meridian Pty Ltd	(ii)	Australia	100	100
Flow Energy Pty Ltd	(ii)	Australia	100	100
Lightmark Enterprises Pty Ltd	(ii)	Australia	100	100
FAR Gambia Ltd		Mauritius	100	100
FAR Mauritius 1 Pty Ltd		Mauritius	100	100
FAR Guinea-Bissau		Mauritius	100	100
FAR Senegal RSSD SA		Senegal	100	100
First Australian Resources Pty Ltd	(ii), (iii), (iv)	Australia	-	100
Humanot Pty Ltd	(ii) (iii), (iv)	Australia	-	100
Neptune Exploration Pty Ltd	(ii), (iv)	Australia	-	100
First Australian Resources, Inc.	(vi)	USA	-	100
Petrole Investments Group Pty Ltd	(v)	Mauritius	100	100
FAR Mauritius 2 Pty Ltd	(v)	Mauritius	100	100
FAR Kenya L6	(v)	Mauritius	100	100
FAR Senegal 1 SA	(v)	Senegal	100	100
FAR Senegal Djiffere SA	(vi)	Senegal	-	100

(i) FAR Ltd is the ultimate holding company and Head Entity within the Australian tax consolidated group.

(ii) These companies are members of the Australian tax consolidated group.

(iii) For the previous corresponding year, these wholly-owned controlled Entities were party to a deed of cross guarantee with FAR Ltd pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 and were relieved from the requirements to prepare and lodge an audited financial report. Refer to Note 25 for further details.

(iv) First Australian Resources Pty Ltd, Humanot Pty Ltd and Neptune Exploration Pty Ltd were voluntarily de-registered on 26 August 2020.

(v) The Group commenced voluntary de-registration of these Companies during the year and expects them to be completed in the early part of 2021.

(vi) On 11 March 2020, First Australian Resources Inc., and on 28 August 2020 FAR Senegal Djiferre SA respectively were voluntarily dissolved.

27

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

25. DEED OF CROSS GUARANTEE

The wholly-owned entities detailed in Note 24 have entered into a deed of cross guarantee with FAR pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 and are relieved of the requirement to prepare and lodge an audited financial report.

The effect of the deed of cross guarantee is that the Company guarantees to each creditor payment in full of any debt in the event of winding up of any of the controlled entities under certain provisions of the Corporations Act 2001 .

If a winding up occurs under other provisions of the Act, the Company will only be liable in the event that after six months

any creditor has not been paid in full. The controlled entities have also given similar guarantees in the event that the Company is wound up.

On 26 August 2020, Humanot Pty Ltd, Neptune Exploration Pty Ltd and First Australia Resources Pty Ltd were voluntarily de-registered and are no longer party to the deed of cross guarantee. The consolidated statement of profit or loss and other comprehensive income and statement of financial position of entities which were party to the deed of cross guarantee, after eliminating all transactions between parties of the deed of cross guarantee, at 31 December 2019 were:

Statement of profit or loss and other comprehensive income Interest income Depreciation and amortisation expense Impairment of intercompany loans and investments Exploration expense Finance costs Administration expense Employee benefits expense Consulting expense Foreign exchange loss Other expenses Loss before income tax Income tax expense Loss for the year Other comprehensive loss Items that may be reclassified subsequently to profit or loss Exchange differences arising on translation of foreign operations Total comprehensive loss	Year ended 31 Dec 2019 Audited US$ 365,110 (227,554) (9,053,039) (4,484,420) (42,874) (663,033) (2,589,240) (82,870) (104,136) (2,425,926)
	(19,307,982) -
	(19,307,982)
	(2,586)
	(19,310,568)

28

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

Statement of Financial Position CURRENT ASSETS Cash and cash equivalents Trade and other receivables Total Current Assets NON-CURRENT ASSETS Trade and other receivables Other financial assets Property, plant and equipment Exploration and evaluation assets Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Other financial liabilities Provisions Total Current Liabilities NON-CURRENT LIABILITIES Other financial liabilities Provisions Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY Accumulated Losses Balance at beginning of financial year Net loss for the year Balance at end of financial year	31 Dec 2019 Audited US$ 11,936,258 698,280
	12,634,538
	7,302 99 753,304 119,116,034
	119,876,739
	132,511,277
	3,795,021 654,002 330,070
	4,779,093
	417,386 11,517
	428,903
	5,207,996
	127,303,281
	335,725,405 2,379,271 (210,801,395)
	127,303,281
	31 Dec 2019 Audited US$ (191,493,413) (19,307,982)
	(210,801,395)

29

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

26. NOTES TO THE CASHFLOW STATEMENT

(a) Reconciliation of cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial year as shown in the consolidated cash flows can be reconciled to the related items in the statement of financial position as follows:

Cash and cash equivalents Deposits at call & term deposits Term Deposits Cash and cash equivalents held in joint operations	31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ 554,028 1,435,762 24,242,929 12,100,719 226,372 298,683 910,242 (82,512)
	25,933,571 13,752,652

(b) Financing facilities

The Group had no external borrowings at 31 December 2020 (31 Dec 2019: Nil).

(c) Cash balances not available for use

Cash and cash equivalents held in joint operations are not available for use by the Group.

(d) Restricted cash

The Company has US$226,372 (31 Dec 2019: US$208,716) in term deposits included in cash and cash equivalents that are not readily available for use by the Group. The term deposit is held as security over the Company’ corporate head office lease in the form of a bank guarantee.

(e) Reconciliation of loss for the period to net cash flows from operating activities

) Reconciliation of loss for the period to net cash flows from operating activities
	31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ (75,694,730) (21,144,093) 442,817 384,097 (903,376) 77,865 162,410 286,953 - 92,387 55,760,120 - 3,097,479 - 3,176 - (216,625) (355,202) - 283,710 - (1,047,856) - 1,823,735 342,896 (92,634) (573,746) 360,259 61,609 50,132
Loss for the year Adjustments for: Depreciation and amortisation of non-current assets Unrealised Foreign exchange (gain)/loss Equity settled share-based payments Exploration expensed Loss on remeasurement of discontinued operations of oil and gas properties Finance costs related to discontinued operations Loss on disposal of property, plant and equipment Interest income Lease incentive Gain on sale of exploration and evaluation assets Other – repayment of loans from joint operations (Increase)/decrease in assets: Trade and other receivables Decrease/(increase) in liabilities: Trade and other payables Provisions for employee entitlements Net cash used in operating activities
	(17,517,971) (19,280,647)

Cash and cash equivalents

Cash and cash equivalents include cash on hand, 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 on value, net of outstanding bank overdrafts.

30

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

27. FINANCIAL AND RISK MANAGEMENT

The Board has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate, risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.

The Group’s principal financial instruments are cash and short-term deposits. The Group also as other non-derivative financial instruments such as trade receivables, trade payables and lease liabilities.

The Group had no debt, and no finance facilities in place at 31 December 2020.

Financial instruments

• (i) Recognition and initial measurement

Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(ii) Classification and subsequent measurement

Financial assets

On initial recognition, a financial asset is classified as measured at:

• amortised cost;

• FVOCI - debt instrument;

• FVOCI - equity instrument; or

• FVTPL.

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt instrument is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity instrument that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.

All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

31

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

Financial assets - Business model assessment

The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

• the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;

• how the performance of the portfolio is evaluated and reported to the Group’s management;

• the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

• how managers of the business are compensated – e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

• the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Group’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

Financial assets - Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:

• contingent events that would change the amount or timing of cash flows;

• terms that may adjust the contractual coupon rate, including variable-rate features;

• prepayment and extension features; and

• terms that limit the Group’s claim to cash flows from specified assets (e.g. non-recourse features).

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

32

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

Financial assets - Subsequent measurement and gains and losses

Financial assets at FVTPL	These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
Financial assets at amortised cost	These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
Debt instruments at FVOCI	These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.
Equity instruments at FVOCI	These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

Financial liabilities – Classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

(iii) Derecognition

Financial assets

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised.

Financial liabilities

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.

33

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

(iv) Impairment

Financial assets

Financial instruments and contract assets

The Group recognises loss allowances for expected credit losses (ECLs) on:

• financial assets measured at amortised cost;

• debt instruments measured at FVOCI; and

• contract assets.

The Group also recognises loss allowances for ECLs on lease receivables, which are disclosed as part of trade and other receivables.

The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured at 12-month ECLs:

• debt securities that are determined to have low credit risk at the reporting date; and

• other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowances for trade receivables (including lease receivables) and contract assets are always measured at an amount equal to lifetime ECLs.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment, that includes forward-looking information.

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The Group considers a financial asset to be in default when:

• the debtor is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); or

• the financial asset is more than 90 days past due.

The Group considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood definition of ‘investment grade’. The Group considers this to be Baa3 or higher.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

Measurement of ECLs

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).

ECLs are discounted at the effective interest rate of the financial asset.

Credit-impaired financial assets

At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities at FVOCI are creditimpaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

34

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

Evidence that a financial asset is credit-impaired includes the following observable data:

• significant financial difficulty of the debtor;

• a breach of contract such as a default or being more than 90 days past due;

• the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise;

• it is probable that the debtor will enter bankruptcy or other financial reorganisation; or

• the disappearance of an active market for a security because of financial difficulties.

Presentation of allowance for ECL in the statement of financial position

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognised in OCI.

(v) Write-off

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For individual customers, the Group has a policy of writing off the gross carrying amount when the financial asset is 180 days past due based on historical experience of recoveries of similar assets. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

(vi) Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

35

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

Financial Assets and financial liabilities

The following table disclose the carrying value amounts of each category of financial assets and financial liabilities at year end:

Year ended 31 Dec 2020 - Unaudited Financial assets Cash and cash equivalents Trade and other receivables – current and non-current Other financial assets – current and non-current Total Financial assets Other financial liabilities Trade and other payables - current Liabilities associated with assets held for sale Lease liabilities – current and non-current Total Financial liabilities Year ended 31 Dec 2019 - Audited Financial assets Cash and cash equivalents Trade and other receivables – current and non-current Other financial assets – current and non-current Total Financial assets Other financial liabilities Trade and other payables - current Lease liabilities – current and non-current Total Financial liabilities	Amortised Cost US$ Fair Value through profit or loss US$ 25,933,571 - 231,396 - 7,435 -	Fair Value through OCI US$ Total US$ - 25,933,571 - 231,396 - 7,435
	26,172,402 -	- 26,172,402
	1,380,460 - 34,343,721 507,057 -	- 1,380,460 34,343,721 - 507,057
	36,231,238 -	- 36,231,238
	13,752,652 - 839,728 - 7,008 -	- 13,752,652 - 839,728 - 7,008
	14,599,388 -	- 14,599,388
	4,617,028 - 816,714 -	- 4,617,028 - 816,714
	5,433,742 -	- 5,433,742

Fair values

In estimating fair value of an asset or liability, the group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is in accordance with accounting standard

In addition, for financial reporting purposes, fair value measurements are categorised into level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the

inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

36

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the financial year ended 31 December 2020

The Directors consider that the carrying amounts of the financial assets and liabilities recorded at amortised cost in the financial statements approximate their fair value and are categorised as Level 2 measurements.

Financial assets Cash and cash equivalents Trade and other receivables – current and non-current Other financial assets – current and non-current Total Financial assets Other financial liabilities Trade and other payables - current Liabilities associated with assets held for sale Lease liabilities – current and non-current Total Financial liabilities	Carrying Amount Fair Value 31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ 31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ 25,933,571 13,752,652 25,933,571 13,752,652 231,396 839,728 231,396 839,728 7,435 7,008 7,435 7,008
	26,172,402 14,599,388 26,172,402 14,599,388
	Carrying Amount Fair Value 31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ 31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ 1,380,460 4,617,028 1,380,460 4,617,028 34,343,721 - 34,343,721 - 507,057 816,714 507,057 816,714 36,231,238 5,433,742 36,231,238 5,433,742

(a) Capital risk management

The Group manages its capital to ensure that it will be able to continue as a going concern and as at 31 December 2020 has no debt or finance facilities in place. The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the parent comprising issued capital, reserves and accumulated losses.

(b) Financial risk management objectives

The Group’s management provides services to the business, co-ordinates access to domestic and international financial markets, and manages the financial risks relating to the operations of the Group.

The Group does not trade or enter into financial instruments, including derivative financial instruments, for speculative purposes. The use of financial derivatives is governed by the Group’s policies approved by the Board of directors.

The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates, interest rates, liquidity risk and commodity price risk. The Group does not presently enter into derivative financial instruments to manage its exposure to interest rate and foreign currency risk.

37

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

(c) Foreign currency risk

The Group has certain financial instruments denominated in AUD which differs from the Group’s functional currency which is denominated in USD. Consequently, the Group is exposed to the risk that the exchange rate of the USD relative to the AUD may change in a manner which has a material effect on the reported values of the Groups assets and liabilities which are denominated in AUD.

As at 31 December 2020, there were no foreign exchange hedge contracts in place. (31 Dec 2019: Nil)

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities that are denominated in a currency other than the functional currency of the entity that holds the financial assets or financial liabilities at the reporting date is as follows:

Financial assets Cash and cash equivalents Trade and other receivables – current and non-current Total Financial assets Other financial liabilities Trade and other payables – current Other financial liabilities – current and non-current Total Financial liabilities	Consolidated 31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ 20,661,363 1,867,018 90,742 111,540
	20,752,105 1,978,558
	249,430 261,415 431,338 747,455
	680,768 1,008,870

Foreign currency risk sensitivity

At the reporting date, the following summarises the sensitivity arising in respect of financial assets and liabilities , to a 10% movement (2019:10%) in the exchange rates if the Australia dollar had increased/decreased by 10% against the US dollar the Group’s, with all other variables held constant net profit after tax would increase/decrease by:

		31 Dec 2020	31 Dec 2019
		Unaudited	Audited
		US$	US$
AUD/USD –	10% increase/(decrease)	1,998,287	96,969

(d) Commodity price risk management

The Group does not currently have any projects in production and has no exposure to commodity price fluctuations.

(e) Interest rate risk management

The Group is exposed to interest rate risk as it earns interest at floating rates from a portion of its cash and cash equivalents. The Group places a portion of its funds into short-term fixed interest deposits which provide short-term certainty over the interest rate earned.

Interest accrues on the default cash calls at the 1-month LIBOR for US Dollars plus 2 percentage points per annum.

As at 31 December 2020, there were no interest rate hedging in place. (31 Dec 2019: Nil)

Interest rate sensitivity analysis

If the average interest rate during the year had increased/(decreased) by 100 basis points the Group’s net profit after tax would increase/(decrease) by US$2,166 (2019: US$3,551).

38

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

(f) Credit risk management

The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The credit risk on liquid funds and financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The carrying amount of financial assets recorded in the financial statements, net of any provisions for expected losses, represents the Group’s maximum exposure to credit risk.

The Group applies the simplified approach to providing or expected credit losses prescribed by AASB9, which permits the use of the lifetime expected loss provision for all trade receivables. Under this method, determination of the loss allowance provision and expected loss rate incorporates past experiences and forward-looking information, As the expected loss rate at 31 December is Nil (31 Dec 2019: Nil), no loss allowance provision has been recorded at 31 December 2020.

(g) Liquidity risk management

The Group manages liquidity risk by maintaining adequate reserves by monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

Liquidity and interest risk tables

The following tables detail the Group’s remaining contractual maturity for its non-derivative financial assets and liabilities. The tables have been prepared based on the undiscounted cash flows expected to be received/paid by the Group.

31 December 2020 - Unaudited Financial assets: Non-interest bearing Variable interest rate Fixed interest rate Financial liabilities: Non-interest bearing Interest bearing – lease liabilities(i) 31 December 2019 - Audited Financial assets: Non-interest bearing Variable interest rate Fixed interest rate Financial liabilities: Non-interest bearing Interest bearing – lease liabilities(i)	Less than 1 month US$	1-3 months US$	Maturity 3 months to 1 year 1-5 years US$ US$	Total US$
	1,695,666 24,242,929 -			1,695,666 24,242,929 226,372
		-	7,435 -
		-	- -
		226,372	- -
	25,938,595	226,372	7,435 -	26,172,402
	1,364,241 47,482			1,380,460 551,982
		6,488	9,731 -
		95,393	345,094 64,013
	1,411,723	101,880	354,825 64,013	1,932,442
	2,192,326 12,101,371 -			2,192,326 12,101,371 298,683
		-	- -
			- -
		298,683	- -
	14,293,697	298,683	- -	14,592,380
	4,577,291 28,793			4,617,028 816,715
		15,895	23,842 -
		59,437	280,304 448,181
	4,606,084	75,331	304,146 448,181	5,433,743

(i) There are no financial liabilities that are longer than 5 years

39

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

28. SHARE-BASED PAYMENTS

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.

received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

Employee performance rights plan

The shareholders of the Company approved the Performance Rights Plan (PRP) at the annual general meeting held on 13 May 2016, prior to then the Company did not have a PRP. In accordance with the provisions of the approved plan, the board at its discretion may grant performance rights to any full-time or permanent part-time employee or officer, or director of the Company. All performance rights issued to directors are granted in accordance with a resolution of shareholders. Each Performance Right converts to one Ordinary Share on exercise.

Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods and services

The following share-based payment arrangements were in existence during the current and prior reporting periods:

Unlisted performance rights Grant date Vesting date Expiry date FARAN(i) 31-May-17 31-Jan-20 31-Jan-22 FARAM(ii) 14-Jun-18 31-Jan-21 31-Jan-23	Exercise price A$ No. of performance rights on issue 31-Dec-20 No. of performance rights on issue 31-Dec-19 - - 10,293,000 - 9,353,000 9,353,000
	- 9,353,000 19,646,000

• (i) On 31 January 2020, the 3 year performance period for performance rights (FARAN) lapsed. Due to the share price decreasing by 3.7 cents over the performance period none of the 10,293,000 performance rights vested. The base price at the beginning of the performance period was 7.8 cents. The share price on 31 Jan 2020 (Test date) was 4.1 cents.

• (ii) On 31 January 2021, the 3 year performance period for performance rights (FARAM) lapsed. Due to the share price decreasing by 7.2 cents over the performance period none of the 9,353,000 performance rights vested. The base price at the beginning of the performance period was 8.3 cents. The share price on 31 Jan 2021 (Test date) was 1.1 cents.

The performance rights are subject to the following vesting conditions:

Performance Period, which is then computed into an equivalent per annum return.

• Absolute TSR: a measure of the TSR (share value plus dividends) achieved over the Performance Period; and

• Relative TSR: a measure of the achieved over a given time period relative to the TSR return over the same time period for a comparable set of companies.

• Continuous service until the performance expiry date

Absolute TSR

50% of the Performance Rights will be subject to an absolute TSR hurdle over the Performance Period and will be tested at 31 January ( Test Date ), 3 years after the start date. A TSR equal to a Compounded Annual Growth Rate (CAGR) of at least 15% per annum over the Performance Period is required in order for any of the Performance Rights to vest. The TSR is calculated by comparing the Base Price against the share price on the Test Date plus any dividends paid throughout the

For the purposes of the Absolute TSR test, the Board have elected to set the Base Price of FAR Shares as at 1 February, which is the 20-day VWAP preceding 1 February. Absolute TSR performance:

• Above 25% CAGR, 50% of the performance rights granted will vest.

• Between 15% and 25% CAGR, pro-rata 25%-50% of the performance rights granted will vest.

• At 15% CAGR, 25% of the performance rights granted will vest.

• Less than 15% CAGR, no performance rights will vest.

Relative TSR

The remaining 50% of the Performance Rights will be subject to a Relative TSR hurdle over the three year Performance Period to 31 January and will be tested at the end of this period. The TSR performance of FAR Shares will be compared to the TSR performance of all other shares in a comparator group, being the S&P/ASX Energy 300 Index, and

40

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

Performance Rights will vest only if FAR’s TSR performance is at least at the 50th percentile.

• At 50th percentile, 25% performance rights granted will vest.

• Below 50th percentile, no performance rights will vest.

The Performance Rights also contain other provisions including the ability for the Board at its absolute discretion to determine that no relative TSR Performance Rights will vest if the Company’s TSR performance is negative, change of control events and good and bad leaver provisions relating to unvested Performance Rights.

Relative TSR performance:

• At or above the 75th percentile, 50% of the performance rights granted will vest.

Valuation of performance rights

Performance rights issued are measured at fair value at the date of grant and are expensed where there are no vesting conditions and in cases where a vesting restriction exists, recognised over the vesting period. In accordance with Australian Accounting Standards, fair value is determined using a generally accepted valuation model.

• Between 50th percentile and 75th percentile, pro-rata 25%-50% performances rights granted will vest.

Fair value of performance rights granted under the Performance Rights Plan

The performance rights were priced using the Monte Carlo pricing model with the following inputs:

	FARAN-16	FARAN	FARAM
Grant date	20-May-16	31-May-17	14-Jun-18
Share price at grant date	8.7 cents	7.9 cents	9.5 cents
Base Price	7.8 cents	7.8 cents	8.3 cents
Fair value	5.5 cents	4.5 cents	5.3 cents
Performance period start date	1-Feb 16	1-Feb-17	1-Feb-18
Performance period end date	31-Jan-19	31-Jan-20	31-Jan-21
Expiry date	31-Jan-21	31-Jan-22	31-Jan-23
Exercise price	A$0.0	A$0.0	A$0.0
Volatility	60%	47%	37%
Dividend yield	-	-	-
Risk free interest rate	1.63%	1.65%	2.7%
Total life of performance rights	2.7 years	2.7 years	2.67 years

The fair value of the performance rights as at the date of grant are summarised as follows:

Performance rights Performance Measure No. of performance rights Price per performance rights Fair value at grant date Fair value at grant date – (USD)	FARAN-16 FARAN FARAM
	Absolute Relative Absolute Relative Absolute Relative 10,712,500 10,712,500 5,418,500 5,418,500 5,603,500 5,603,500 A$0.047 A$0.063 A$0.0358 A$0.0536 A$0.0412 A$0.0641 A$503,487 A$674,888 A$193,965 A$290,426 A$230,920 A$358,947 US$362,159 US$485,447 US$144,504 US$216,367 US$172,652 US$268,374

Movement in the number of performance rights issued under the Performance Rights Plan

The following reconciles the outstanding performance rights on issue at the end of the financial year:

Balance as at 1 Jan 2019 Forfeited during the year(i) Balance at 31 December 2019 Balance as at 1 Jan 2020 Forfeited during the year(i) Balance at 31 December 2020	FARAN-16 18,049,000 (18,049,000)	FARAN FARAM(ii) 10,293,000 11,207,000 - (1,854,000)
	-	10,293,000 9,353,000
		10,293,000 9,353,000 (10,293,000) -
		- 9,353,000

(i) Performance rights that did not vest due to performance conditions not being met lapsed during the year.

(ii) On 31 January 2021, the 3-year performance period for performance rights (FARAM) lapsed.

No performance rights were granted or exercised during the period.

41

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

Share-based payment expense

Share-based payments expenses are included under employee benefits expense in the statement of profit or loss and other comprehensive income and relate to the performance rights component of equity-settled share-based payments transactions issued to a director, executives and other participants over the vesting period.

Unlisted performance rights FARAN-16 FARAN FARAM Employee benefits – amortisation of performance rights	Consolidated 31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ - 18,606 10,898 128,314 151,512 140,033
	162,410 286,953

29. KEY MANAGEMENT PERSONNEL COMPENSATION

The aggregate compensation of the KMP of the Group and the Company is set out below:

Short-term employee benefits Post-employment benefits Share-based payment Other long-term benefits Total	31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ 1,976,561 1,933,768 94,232 67,598 64,912 164,912 31,173 34,189
	2,266,878 2,200,467

The amounts disclosed are the amounts recognised as an expense during the reporting period related to key management personnel.

30. RELATED PARTY DISCLOSURES

Equity interests in related parties

Equity interests in subsidiaries Details of the percentage of ordinary shares held in subsidiaries are disclosed in Note 24 to the financial statements.

Equity interests in associates and joint operations

Details of interests in joint operations are discussed in Note 23.

42

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

31. PARENT ENTITY

• (a) Financial position

Assets Current assets Non-current assets Total Assets Liabilities Current liabilities Non-current liabilities Total Liabilities Equity Issued Capital Reserves - Share-based payments reserve - Foreign currency translation reserve Accumulated losses Total Equity (b) Financial performance Loss for the year Other comprehensive loss Total comprehensive income/(loss) (c) Contingent liabilities of the parent entity	31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ 25,575,332 12,634,538 133,478,644 119,876,741
	159,053,676 132,511,279
	2,081,412 4,779,093 3,084,356 428,903
	5,165,768 5,207,996
	439,623,308 335,725,405 8,339,565 8,177,156 (5,795,299) (5,795,299) (288,279,379) (210,803,979)
	153,888,196 127,303,283
	Year ended 31 Dec 2020 Unaudited US$ Year ended 31 Dec 2019 Audited US$ (77,475,400) (19,310,568) - -
	(77,475,400) (19,310,568)
	31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ 13,000,000 13,000,000 567,811 567,811
Contingent liabilities Guinea-Bissau – contingent payment from future production Guinea-Bissau – contingent withholding tax liability Refer to Note 22 for further details. (d) Commitments for capital expenditure entered into by the parent entity Exploration and evaluation assets Not longer than 1 year Exploration expenditure commitments – By Area of interest: Guinea-Bissau Senegal
	13,567,811 13,567,811
	31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ - 4,074,162 - 203,585 - 3,870,577
	- 4,074,162

On 2 April 2020, FAR Ltd transferred its entire interest in the Senegal RSSD asset to its wholly owned subsidiary, FAR Senegal RSSD SA. As such, there were no further exploration expenditure commitments by the parent entity at the end of the period.

43

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the financial year ended 31 December 2020

32. REMUNERATION OF AUDITORS

Amounts paid or due to be paid in respect of: Auditor of the Parent Entity – Deloitte Touche Tohmatsu: Audit or review of the financial report Audit of joint operation financial statements Audit of subsidiaries Non-audit services Total remuneration of audit and other assurance services Network firms of Deloitte Touche Tohmatsu: Audit of review of the financial statements Audit or review of the financial statements Total remuneration of network of firms of Deloitte Touche Tohmatsu Total auditors’ remuneration	31 Dec 2020 Unaudited US$ 31 Dec 2019 Audited US$ 94,793 59,737 11,870 10,639 27,612 10,604 - -
	134,275 80,980
	8,505 8,510 12,640 15,750
	21,145 24,260
	155,420 105,240

The auditor of the Group is Deloitte Touche Tohmatsu. The auditor did not receive any other benefits.

33. DIVIDENDS

The directors recommend that no dividend be paid for the year ended 31 December 2020 nor have any been paid or declared during the year (2019: NIL).

34. SUBSEQUENT EVENTS

On 8 January 2021 FAR deferred the scheduled shareholder meeting set for 21 January 2021 to consider approving the proposed sale by FAR of its interest in the RSSD project to Woodside Energy (Senegal) B.V. (Woodside Sale). This would allow shareholders further time to see if the Remus Proposal to acquire 100% of the shares of FAR at A2.1c cash per share eventuates, and if so assess its merits and consider the Woodside Sale on the basis of more detailed information.

On 20 January 2021 FAR announced the FAR Group had executed a Sale and Purchase Agreement with Woodside in relation to the Woodside Sale on the same terms and conditions as the previously announced sale to ONGC Videsh Vankoreft Pte Ltd.

On 17 February 2021 FAR announced a conditional non-binding indicative proposal from PJSC Lukoil to acquire 100% of the shares of FAR at A$2.2c cash per share (“Lukoil Proposal”). FAR cautioned it was not a legally binding offer, that it was subject to targeted and timely corporate due diligence, Lukoil board approval and that there is no certainty that the Lukoil proposal will necessarily eventuate. Lukoil stated that the Lukoil proposal is conditional (amongst other things) on the FAR shareholder meeting to consider approving the sale of the RSSD project to Woodside be rescheduled (now scheduled to 15 April 2021) and obtaining minimum acceptances of 50.1% of shares and a FAR board recommendation.

On 12 March 2021 FAR announced the reconvening of the shareholder meeting to approve the Woodside Sale to 15 April 2021 and updated the market that the Remus Horizons PCC Limited and the PJSC Lukoil non-binding indicative proposals remained incomplete at that time.

The Directors are not aware of any matters or circumstances, other than those referred to in this report, that haven’t significantly affected or may significantly affect the operations, the results of operations or the state of affairs of the Group in subsequent financial years.

44

SHAREHOLDER INFORMATION

Pursuant to the Listing requirements of the Australian Securities Exchange the following additional information for Listed Companies as at 25 March 2021.

Number of holders of equity securities

Ordinary Shares

The issued capital comprised of 9,978,830,197 ordinary shares held by 11,607 holders.

Unlisted performance rights

There were no unlisted performance rights on issue at the date of this report.

Distribution of shareholder numbers

1 1,000 1,001 5,000 5,001 10,000 10,001 100,000 100,001 and over Total Holding less than a marketable parcel	Number of Holders 597 497 838 5,088 4,587 11,607	Number of Units % of Total Issued Capital 239,827 0.00 1,629,613 0.02 7,033,100 0.07 239,707,168 2.40 9,730,220,489 97.51
		9,978,830,197 100.00
	0	0 0

Substantial Shareholders

The names of substantial shareholders of the Company as disclosed in substantial holding notices given to the Company as required by section 671B of the Corporation Act are:

	Number of	% of Issued
	shares held	Capital
Meridian Capital	1,913,146,327	19.17
Allan Gray Australia Pty Ltd	1,227,603,986	12.30
Farjoy Pty Limited	515,522,060	5.17

Twenty largest shareholders – ordinary shares as at 25 March 2021.

Citicorp Nominees Pty Ltd J P Morgan Nominees Australia Pty Limited HSBC Custody Nominees (Australia) Limited Farjoy Pty Ltd City Securities Ltd CS Fourth Nominees Pty Limited National Nominees Limited BNP Paribas Noms Pty Ltd Mr Oliver Lennox-King Nero Resource Fund Pty Ltd < Nero Resource Fund A/C> Toad Facilities Pty Ltd BNP Paribas Nominees Pty Ltd < IB AU NOMS RETAILCLIENT DRP> HSBC Custody Nominees (Australia) Limited – A/C 2 Netwealth Investments Limited Treasury Services Group Pty Ltd Mr Matthew James Knox N&P Superannuation Pty Limited CS Third Nominees Pty Limited Knox Enterprise International Pty Limited Floteck Consultant Limited

Number of shares held % of Issued Capital 2,799,946,458 28.06 773,336,724 7.75 523,806,722 5.25 514,463,236 5.16 307,030,654 3.08 192,511,650 1.93 144,676,663 1.45 84,725,926 0.85 75,647,869 0.76 75,000,000 0.75 68,528,589 0.69 66,134,974 0.66 54,921,329 0.55 46,777,021 0.47 43,000,000 0.43 39,000,000 0.39 35,380,087 0.35 35,090,482 0.35 32,005,882 0.32 30,000,000 0.30

5,941,984,266 59.55

Voting rights

Voting rights of members are governed by the Company’s constitution. In summary, each member present at general meeting in person or by proxy shall have one vote and, upon a poll, every such attending member shall be entitled to one vote for every ordinary share held.

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CORPORATE DIRECTORY

DIRECTORS

Nicholas Limb (Chairman) Catherine Norman (Managing Director) Reginald Nelson (Non-Executive Director) Timothy Woodall (Non-Executive Director)

COMPANY SECRETARY

Elisha Larkin

REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS

Level 17, 530 Collins Street Melbourne Victoria 3000 Australia Telephone: +61 (0) 3 9618 2550 Facsimile: +61 (0) 3 9620 5200 Website: www.far.com.au Email: info@far.com.au

BANKERS

Westpac Banking Corporation 150 Collins Street Melbourne Victoria 3000 Australia

Standard Chartered Bank Gambia Limited 8 Ecowas Avenue Banjul, The Gambia

SOLICITORS

Baker & McKenzie Level 19, 181 William Street Melbourne Victoria 3000 Australia

AUDITORS

Deloitte Touche Tohmatsu Tower 2, Brookfield Place 123 St Georges Terrace Perth Western Australia 6000 Australia

SHARE REGISTRY

Computershare Investor Services Pty Ltd Yarra Falls 452 Johnston Street Abbotsford Victoria 3067 Australia Telephone: +61 (0)3 9415 4000 Facsimile : +61 (0)3 9473 2500 Website: www.computershare.com.au

STOCK EXCHANGE LISTINGS

Australian Securities Exchange ASX Code: FAR

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