GENESIS RESOURCES LIMITED — Interim / Quarterly Report 2020

Mar 12, 2020

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Level 7, 333 Collins Street, Melbourne, Victoria, Australia, 3000 Tel: +61 3 8622 3354 www.genesisresourcesltd.com.au

GENESIS RESOURCES LIMITED ABN 22 114 787 469 and its controlled entities

INTERIM FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2019

Lodged with ASX under Listing Rule 4.2A This information should be read in conjunction with 30 June 2019 Annual Report

Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

TABLE OF CONTENTS

	Page
Directors’ Report	1
Auditor’s Independence Declaration	10
Financial Report for the half-year ended 31 December 2019
Consolidated Statement of Profit or Loss and Other Comprehensive	11
Income
Consolidated Statement of Financial Position	12
Consolidated Statement of Changes in Equity	13
Consolidated Statement of Cash Flows	14
Notes to the Financial Statements	15
Directors’ Declaration	22
Independent Auditor’s Review Report	23

Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

Directors’ Report

The Directors present their report together with the interim financial report of Genesis Resources Limited ( Genesis or the Company ) , for the six months ended 31 December 2019 ( Half Year ) and independent auditor’s review report thereon. This financial report has been prepared in accordance with Australian Equivalents to International Financial Reporting Standards.

Directors

The names of Directors who held office during or since the end of the Half Year and until the date of this report are as below:

Name	Position	Period of directorship
		6 March 2009 – present
Mr Eddie Lung Yiu Pang	Managing Director / Executive Chairman	(Chairman 1 December 2013 – 27 September 2015; and
		26 November 2015 – present)
		11 December 2009 – 26 November
Mr Deric Wee	Non-Executive Director	2012; and
		16 January 2013 – present
Mr Kim Heng Lim	Non-Executive Director	31 May 2016 – present
Mr Chin Niap Mah	Non-Executive Director	31 May 2016 – present
Mr James Patterson	Non-Executive Director	24 October 2016 – present
Mr Yau Young Lim	Non-Executive Director	21 November 2016 – present

The Company Secretary is Ms Alyn Tai.

The Chief Financial Officer is Ms Patricia Wong.

Principal Activities

The principal activities of the Group during the period were exploration for and evaluation of gold, manganese and base metals. There was no significant change in the nature of the Group’s activities during the period.

REVIEW OF OPERATIONS

PLAVICA AU-AG-CU PROJECT

Mining, Metallurgical and Geotechnical studies are continuing in preparation for a Mining Study to be submitted to the North Macedonian Government as per North Macedonian Mining legislation. Metallurgical Studies include the testing of gold oxide ore using thiosulphate to extract gold. Results are pending.

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

PLAVICA HIGH SULPHIDATION EPITHERMAL GOLD-COPPER-SILVER PROJECT

(Figure 1)

Following the granting of the 30-year Exploitation Licence at Plavica in May 2015, drilling was completed in 2017 at Plavica and Maricanski Rid prospects with a focus on the oxide gold potential.

As announced to the market on 24 November 2017, an updated JORC 2012 compliant resource was released for the Plavica project. The total Measured, Indicated and Inferred Mineral Resources as at November 2017 are estimated at 37.4 million tonnes (MT) at 0.77 grams per tonne of gold (ppm Au) containing 926,000 ounces of gold and 7.7 M ounces of silver.

Fieldwork during the current half year period consisted of the ongoing monitoring of water from bores and surface sites and reading dust monitoring sites throughout the project area. An ESIA for the Government of North Macedonia is being completed. Mining, Metallurgical, hydrogeological, infrastructure and Geotechnical studies are continuing, as per Macedonian Mining legislation.

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Figure 1 Location of Plavica Gold-Copper-Silver Project, Republic of North Macedonia.

Metallurgical testing is now being undertaken on oxide ore samples at CMC in Romania. The test work will extract gold using thiosulphate rather than sodium cyanide. Recent test work by CMC on the Rosia Montana and Sturec Gold Deposits in Europe has shown slightly higher recoveries using thiosulphate and at a lower processing cost (Figure 2)

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

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Figure 2 (above) Gold recoveries using cyanide and thiosulphate from a number of other deposits in Europe.

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Figure 3 Location of Australian Projects.

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

AUSTRALIA

ARLTUNGA PROJECT: (EL25238) Copper, Gold, (GES 100%)

The Arltunga Gold Project consists of Exploration License EL25238 covering 95.2 sq km, is located approximately 110 km northeast of Alice Springs (Figure 3) in the vicinity of the Arltunga Goldfield. Thirty three historical gold mines and prospects are known in the license area.

A Licence Renewal Application was lodged on the 1 November 2019 requesting a further two year period. This application is pending. The current expiry date is the 7 November 2019. EL25238 covers 31 sub blocks.

The 13 Annual Technical Report was lodged on the 11 November 2019. The Variation of Conditions (VOC) was approved on the 4 December 2019.

An Application to the Aboriginal Areas Protection Authority (AAPA) for an Authority Certificate was made on the 14 November 2019.

An extension of the Central Land Council Sacred Site Clearance Certificate was approved on the 6 September 2019. The new expiry date is the 31 December 2020.

A full review of all available data is currently underway, with the aim of defining targets for Reverse Circulation drilling in early 2020.

No field work was carried out during the current Quarter.

ALICE SPRINGS PROJECT: (EL24817) Copper, Gold, Iron (GES 100%)

The Alice Springs Project consists of Exploration License EL24817 covering 372.59 sq km, is located approximately 110-155 km northeast from Alice Springs in the Northern Territory (Figure 3) .

An Application to the Aboriginal Areas Protection Authority for an Authority Certificate was made on the 14 November 2019.

The 13 Annual Technical Report was lodged on the 18 April 2019.

The Mining Management Plan (MMP) update was lodged on the 25 February 2019 and approved on the 4 April 2019.

A Licence Renewal Application was lodged on 9 April 2018 requesting another two-year period. This Application was approved on the 9 October 2018. The new expiry date is the 17 April 2020. All 118 sub-blocks were retained. The Variation of Conditions (VOC) was approved on the 19[th] June.

An extension of the Central Land Council Sacred Site Clearance Certificate was approved on the 6 September 2019. The new expiry date is the 31 December 2020.

No field work was carried out. In addition a full review of all available data is underway to define targets for RC drill testing during early 2020.

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

GLADSTONE PROJECT: (EPM15771) Manganese (GES 100%)

The Gladstone-Mount Miller Project consists of Exploration License EPM15771 covering 24.35sq km and is located approximately 15 km by road from the port of Gladstone on the east coast of central Queensland (Figure 3).

The largest mine on the tenements controlled by Genesis was at Mount Miller. The mine opened in 1895 and operated intermittently until 1916 and then from 1958 to 1960. A total of 21,785 tonnes of ore was mined with a grade which ranged from 71% to 75% MnO2.

A Licence Renewal Application was lodged on the 14 February 2019. This application was approved on the 3 September 2019, the new expiry date is the 19 June 2021.

A Partial relinquishment report was lodged on the 16 April 2019 requesting the surrender of 3 sub blocks. 4 sub blocks will be retained. The Environmental Authority Partial Surrender Report was approved on the 21 May 2019.

Reconnaissance mapping was carried out during the quarter ending 30 September 2019. A mall pit of manganese was discovered to the southwest of Mt Millar. A small outcrop of quartz breccia was also discovered to the west of the Mt Millar mine. This was assayed for Au and base metals with no significant results.

No field work was carried out during the Quarter.

PIONEER PROJECT: (EPM15619) Gold (GES 100%)

The Pioneer Project consists of one granted Exploration Permit Mineral EPM15619 covering 6.23 sq km approximately 70 km by road from Bundaberg via the Bruce Highway in Queensland (Figure 3) .

The project lies within the Gaeta Goldfield and has undergone previous exploration for gold, uranium and base metals, with numerous historical gold workings located throughout the area. Historical mining was primarily focused on the Pioneer Reef which was the largest producer, but mining activities also included several other reefs including Gympie, Lord Nelson, West Yorkshire and Happy Jack.

The 13 Annual Technical Report was lodged on the 6 August 2019.

A Licence Renewal Application was lodged on 9 April 2018 and approved on the 31 July 2018 for a further two year period. The new expiry date is the 2 August 2020. The 2 sub blocks were retained.

Reconnaissance mapping was undertaken in August 2019. A number of pegmatites were sampled for Lithium plus Au and base metals. Results were disappointing.

Prospect scale mapping was conducted at Pioneer during the December Quarter. Due to the drought in SE Australia, the grass was at a minimum resulting in maximum exposure of outcrop. As a result a number of previously unmapped old workings and quartz veins were discovered (Figure 4). Planned work now includes Pole dipole IP and ground magnetics to help define targets prior to drilling.

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

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Figure 4 (above) Interpreted Geology at Pioneer following December 2019 mapping program

MCARTHUR RIVER PROJECT: (EL24814) Manganese (GES 100%)

The McArthur River project consists of Exploration License EL24814 covering 380.88 sq km and is located approximately 850 km south-east of Darwin in the Northern Territory and 450 km north-west of Mount Isa in Queensland (Figure 3) .

The project area contains the Masterton No 2 manganese occurrence.

The 13 Annual Technical Report was lodged on the 18 April 2019.

The Mining Management Plan Update was lodged on the 14 November 2019.

A Licence Renewal Application was lodged on 9 April 2018 requesting another two-year period. This Application was approved on the 9 October 2018. The new expiry date is the 17 April 2020. All 116 sub-blocks were retained. The Variation of Conditions (VOC) was approved on the 19[th] June.

No field work was carried out. A full review of all data available is underway to guide further exploration on the tenement.

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

LAURA RIVER PROJECT: (EMP15242) Gold, Iron (GES 100%)

The Laura River project consists of Exploration License EPM15242 covering 39.68 sq km is centered on the Cape York Peninsular township of Laura, 210km north-west of Cairns and 88km west of Cooktown in North Queensland (Figure 3) . The area is prospective for gold. Several historical alluvial workings are found in the vicinity of the Laura River and tributaries.

A Licence Renewal Application was lodged on the 11 May 2018 requesting another two-year period. This application was approved on the 3 September 2019. The new expiry date is the 22 August 2020.

A Partial relinquishment report was lodged on the 2 September 2019 requesting the surrender of 13 sub blocks. This application was approved on the 4 September 2019 - 12 sub blocks were retained. The Environmental Authority Partial Surrender Report was lodged on the 3 September 2019.

Reconnaissance mapping was carried out over 4 days in August 2019. A number of samples were collected both of in-situ basement schists and quartz veins plus quartz gravels. All samples returned less than detection for Au and Ag and had very low levels of base metals.

The 12 Annual Technical Report was lodged on the 16 September 2019.

COMPETENT PERSON

The information in this report that relates to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by James Patterson, a Competent Person who is a Member of the Australian Institute of Geoscientists.

James Patterson is a Director and exploration consultant of Genesis Resources Limited. James Patterson has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. James Patterson consents to the inclusion in the report of the matters based on his information in the form and context of which it appears.

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Financial Report for the half-year ended 31 December 2019

Genesis Resources Limited

TENEMENTS AS AT 31 DECEMBER 2019

PROJECT TENEMENT NUMBER COMMODITY COMPANY’S BENEFICIAL INTEREST CURRENT AREA (KM2) CURRENT HOLDER COUNTRY/ STATE	PROJECT TENEMENT NUMBER COMMODITY COMPANY’S BENEFICIAL INTEREST CURRENT AREA (KM2) CURRENT HOLDER COUNTRY/ STATE
Alice Springs	EL24817 Copper-Iron- Gold 100% 372.59 Genesis NT
Arltunga	EL25238 Gold-PGE 100% 95.2 Genesis NT
Laura River	EMP15242 Gold-PGE 100% 39.68 Genesis QLD
Pioneer	EPM15619 Gold 100% 6.23 Genesis QLD
McArthur River	EL24814 Manganese- Base Metals 100% 380.88 Genesis NT
Gladstone	EPM15771 Manganese 100% 24.35 Genesis QLD
Plavica &CrnVrv	19-6648/1 Gold-Silver- Copper 62% 16.85 Silgen Resources North Macedonia

All tenements noted above are Exploration Licences except Plavica in Macedonia which is an Exploitation Licence.

Results

The loss of the Group for the period ended 31 December 2019 was $986,769 (31 December 2018: loss of $984,761).

Matters subsequent to the end of the Half Year

• i. On 10 February 2020, the Company secured a loan of $40,000 which was drawn down in February 2020. The interest rate is 10% per annum and is repayable 10 business days after the date that Genesis has cleared funds from capital raising.

• ii. On 25 February 2020, the Company secured a loan of $40,000 which was drawn down in February 2020. The interest rate is 10% per annum and is repayable 10 business days after the date that Genesis has cleared funds from capital raising.

• iii. On 9 March 2020, the Company secured a loan of $100,000 which was drawn down in March 2020. The interest rate is 10% per annum and is repayable 10 business days after the date that Genesis has cleared funds from capital raising.

• iv. On 9 March 2020, the Company secured a loan of $190,000 which was drawn down in March 2020. The interest rate is 10% per annum and is repayable 10 business days after the date that Genesis has cleared funds from capital raising.

Other than the above, no matter or circumstance has arisen since 31 December 2019 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

Auditor’s Independence Declaration

The lead auditor’s independence declaration is set out on page 10 and forms part of the directors’ report for the period ended 31 December 2019.

This report is made in accordance with a resolution of directors, pursuant to section 306(3)(a) of the Corporations Act 2001.

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Eddie Pang Managing Director 13 March 2020

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AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the financial report of Genesis Resources Limited for the half-year ended 31 December 2019, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• (ii) any applicable code of professional conduct in relation to the audit.

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RSM AUSTRALIA PARTNERS

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J S CROALL Partner

Dated: 13 March 2020 Melbourne, Victoria

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2019

Other income Employee costs Administrative and other expenses Finance income Finance expenses (Loss) / Profit on foreign exchange Loss before income tax Income tax expense Loss for the half-year Attributable to non-controlling interests Attributable to owners of the Genesis Group Other comprehensive income Exchange differences arising on translating foreign operations Other comprehensive loss for the half-year, net of tax Total comprehensive loss for the half-year Attributable to non- controlling interests Attributable to owners of the Genesis Group Earnings per share Basic loss per share (cents per share) Diluted loss per share (cents per share)	31 Dec 2019 31 Dec 2018 $ $ 198 211 (302,446) (321,401) (405,578) (387,874) 162,076 87 (416,997) (286,829) (24,022) 11,045
	(986,769) (984,761) - -
	(986,769) (984,761)
	(1,227) (197) (985,542) (984,564)
	(8,521) (2,505)
	(8,521) (2,505)
	(995,290) (987,069)
	(1,227) (197) (994,063) (987,069)
	(0.13) (0.13) (0.13) (0.13)

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

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019

Notes Assets Current Assets Cash and cash equivalents Trade and other receivables Other financial assets Total Current Assets Non-Current Assets Other financial assets Property, plant and equipment Right-of-use of asset 5 Exploration and evaluation assets Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Borrowings 6 Lease liability 7 Derivative liability Total Current Liabilities Non-Current Liabilities Lease liability – non current 7 Total non-current liabilities Total Liabilities Net Assets Equity Share capital 4 Reserves Accumulated losses Total equity attributable to members of Genesis Group Non-controlling interests 8 Total Equity	31 Dec 2019 30 June 2019 $ $ 179,247 115,669 49,350 23,291 118 237
	228,715 139,197
	98,734 98,731 65,059 39,979 59,324 - 21,488,694 21,275,474
	21,711,810 21,414,184
	21,940,525 21,553,381
	1,853,451 1,484,459 6,398,799 5,392,417 31,092 - - 53,228
	8,283,342 6,930,104
	29,195 -
	29,195 -
	8,312,537 6,930,104
	13,627,987 14,623,277
	32,317,746 32,317,746 (272,450) (263,929) (18,385,876) (17,400,334)
	13,659,420 14,653,483 (31,433) (30,206)
	13,627,987 14,623,277

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

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2019

	Issued Capital	Accumulated (Losses)	Reserve	Non- controlling interests	Total equity
	$	$	$	$	$
Balance at 1 July 2019	32,317,746	(17,400,334)	(263,929)	(30,206)	14,623,277
Loss for the period	-	(985,542)	-	(1,227)	(986,769)
Foreign currency translation	-	-	(8,521)	-	(8,521)
Total comprehensive income for
the period	-	(985,542)	(8,521)	(1,227)	(995,290)
Transactions with owner in their
capacity as owners	-	-	-	-	-
Issued during the year net of
transaction costs	-	-	-	-	-
Balance at 31 December 2019	32,317,746	(18,385,876)	(272,450)	(31,433)	13,627,987
	Issued Capital	Accumulated (Losses)	Reserve	Non- controlling interests	Total equity
	$	$	$	$	$
Balance at 1 July 2018	32,317,746	(15,591,303)	(256,858)	(28,716)	16,440,869
Loss for the period	-	(984,564)	-	(197)	(984,761)
Foreign currency translation	-	-	(2,505)	-	(2,505)
Total comprehensive income for
the period	-	(984,564)	(2,505)	(197)	(987,266)
Transactions with owner in their
capacity as owners	-	-	-	-	-
Issued during the year net of
transaction costs	-	-	-	-	-
Balance at 31 December 2018	32,317,746	(16,575,867)	(259,363)	(28,913)	15,453,603

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

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2019

Cash Flows from Operating Activities Receipts from customers and suppliers Payments to suppliers and employees (inclusive of goods and services tax) Interest (paid) /received Net cash used in operating activities Cash Flows from Investing Activities Payments for property, plant and equipment Payments for investment in related entities Payments of exploration and evaluation expenditure Net cash used in investing activities Cash Flows from Financing Activities Proceeds from issue of ordinary shares Proceeds from long term borrowings Net cash from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at 1 July Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at 31 December	31 Dec 2019 31 Dec 2018 $ $ 198 211 (582,220) (677,224) 76 87
	(581,946) (676,926)
	(34,496) (10,648) - - (213,220) (131,912)
	(247,716) (142,560)
	- - 925,782 360,000
	925,782 360,000
	96,120 (459,486) 115,669 493,752 (32,543) 8,540
	179,246 42,806

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

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2019

Note 1. Basis of preparation of half-year report

The consolidated interim financial report for the half-year ended 31 December 2019 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

The consolidated interim financial report does not include all the notes of the type normally included in an annual financial report of Genesis Resources Limited (“GES”) and its controlled entity (the “consolidated entity” or the “Group”). Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2019 and any public announcements made by GES during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated.

New or amended Accounting Standards and Interpretations adopted

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

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

The following Accounting Standards and Interpretations are most relevant to the consolidated entity:

AASB 16 Leases

The consolidated entity has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for lessees eliminates the classifications of operating and finance leases. Except for shortterm leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results improve as the operating expense is now replaced by interest expense and depreciation for profit or loss. For classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the lease payments are separately disclosed in financing activities. For lessor accounting, the standard does not substantially change how a lessor accounts for leases.

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

Note 1. Basis of preparation of half-year report (continued)

Impact of adoption

AASB 16 was adopted using the modified retrospective approach and as such the comparatives have not been restated.

The impact of adoption on opening retained profits as at 1 July 2019 was as follows:

	1 July 2019
	$
Operating lease commitments as at 1 July 2019 (AASB 117)	61,888
Right-of use asset recognised for extension option	21,643
Operating lease commitments discount based on the weighted
average incremental borrowing rate of 6.8%	(3,363)
Short term leases not recognised as a right-of use asset	(7,186)
Right-of-use assets (AASB 16) as at 1 July 2019	79,708
Lease liabilities - current (AASB 16) as at 1 July 2019	(21,135)
Lease liabilities - non-current (AASB 16) as at 1 July 2019	(58,573)
Movement in opening retained profits as at 1 July 2019	-

Right-of-use assets

A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.

Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.

The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.

Lease liabilities

A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.

Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

Note 1. Basis of preparation of half-year report (continued)

Principles of consolidation

The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by GES at the end of the reporting period. A controlled entity is any entity over which GES has the power to govern the financial and operating policies so as to obtain benefits from the entity’s activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are also considered.

When controlled entities have entered or left the Group during the year, the financial performance of those entities are included only for the period of the year that they were controlled.

In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the consolidated group have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity.

Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are shown separately within the Equity section of the consolidated Statement of Financial Position and Statement of Comprehensive Income. The non-controlling interest in the net assets comprise their interest at the date of the original business combination and their share of changes in equity since that date.

Note 2. Going concern

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

As disclosed in the financial statements, the consolidated entity incurred a loss of $986,769 and had net cash outflows from operating activities of $581,946 and from investing activities of $247,716 for the halfyear ended 31 December 2019. As at that date the consolidated entity had net current liabilities of $8,054,627.

These factors indicate a material uncertainty which may cast significant doubt over the ability of the consolidated entity to continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The Directors believe that there are reasonable grounds to believe that the consolidated entity will be able to continue as a going concern, after consideration of the following factors:

• The consolidated entity’s ability to delay spending on exploration and evaluation activities dependent upon cash flow holdings and financial options at any given time, subject to meeting its minimum expenditure requirements described in Note 10;

• As described in Note 11, Subsequent Events, a total of $370,000 in loan facilities have been secured and drawn down post balance date;

• Loan liabilities totalling $5,898,799 with related parties are not repayable until the company obtains sufficient funding through a capital raise; and

• The directors will seek further capital through equity funding, which, based on previous history, they believe is likely to be successful.

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

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

Note 2. Going concern (continued)

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

Note 3. Segment information

The Group has reportable segments, as described below, which are the Group’s business units. The two business units are managed separately because they are regulated under different authorities. For each of the business units, the Group’s Board of Directors, which acts as the Chief Operating Decision Maker, reviews internal reports on at least a quarterly basis. The following summary describes the operations in each of the Group’s reportable segments:

• Australia: includes copper, iron, gold, manganese and other base metal exploration projects in the Northern Territory and Queensland.

• North Macedonia: includes a gold, silver and base metal exploration project.

Information regarding the results of each reportable segment is included below. As both segments are in the early stages of exploration, there is no associated segment profit or loss, as expenditure is capitalised in accordance with the company’s accounting policy. Comparative segment information has been presented in conformity with the requirements of Accounting Standard AASB 8 Operating Segments.

Other income Operating expenses Reportable segment net loss before income tax Exploration and evaluation assets Total segment assets Total segment liabilities

Australia North Macedonia Head Office Total 31 Dec 2019 31 Dec 2018 31 Dec 2019 31 Dec 2018 31 Dec 2019 31 Dec 2018 31 Dec 2019 31 Dec 2018 $ $ $ $ $ $ $ $ - - 198 221 - 77 198 298 - - (208,433) (129,394) (778,534) (855,665) (986,967) (985,059) - - (208,235) (129,173) (778,534) (855,588) (986,769) (984,761) 31 Dec 2019 30 Jun 2019 31 Dec 2019 30 Jun 2019 31 Dec 2019 30 Jun 2019 31 Dec 2019 30 Jun 2019 $ $ $ $ $ $ $ $ 2,062,273 2,061,801 19,426,420 19,213,673 - 257,907 21,488,694 21,275,474 2,062,273 2,061,801 19,426,420 19,213,673 - 257,907 21,488,694 21,275,474 - - - -8,312,537 6,930,104 8,312,537 6,930,104

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

Note 4. Share capital

ote 4. Share capital
	31 Dec 2019		30 Jun 2019	31 Dec 2019		30 Jun 2019
	No. of Shares	No. of Shares			$	$
Balance at beginning
of period	782,841,294		782,841,294	32,317,746		32,317,746
Transactions during
the period
Issue of shares	-		-		-	-
Rights issue	-		-		-	-
Transaction costs	-		-		-	-
Balance at end of
period	782,841,294		782,841,294	32,317,746		32,317,746
nissued ordinary shares of the Company under options at the end of the					reporting period are:
Expiry date	Exercise price	($)	Options on 31 Dec	issue as 2019 Options on issue at 30 Jun 2019
-	-		-			-
ote 5. Right-of-use assets
				31 Dec	2019	30 Jun 2019
				$		$
Right-of-use assets					79,708	-
Less : Accumulated depreciation				(20,384)		-
TOTAL					59,324	-
ote 6. Lease liability
				31 Dec	2019	30 June 2019
				$		$
Current					31,092	-
Non-current					29,195	-
TOTAL					60,287	-

Unissued ordinary shares of the Company under options at the end of the reporting period are:

Note 5. Right-of-use assets

Note 6. Lease liability

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

Note 7. Equity – Non-Controlling interest

Issued Capital Foreign currency translation Accumulated Loss TOTAL	31 Dec 2019 30 June 2019 $ $ 2,836 2,836 - - (34,269) (33,042)
	(31,433) (30,206)

The non-controlling interest has a 38% (2018: 38%) equity holding in Silgen Resources International Ltd.

Note 8. Contingent Assets and Liabilities

There have been no changes of a material nature in contingent liabilities or assets since the last annual reporting date.

Note 9. Related party transactions

Related parties of the consolidated entity consist of Key Management Personnel.

Loans from related parties*	31 Dec 2019 30 Jun 2019 $ $ 5,898,799 5,092,417
	5,898,799 5,092,417

Note 10. Commitments

In order to maintain current rights of tenure to exploration permits, the Company is required to perform minimum exploration work to meet minimum expenditure requirements. These obligations may vary over time, depending on the Company’s exploration program and priorities. These obligations, which include a portion relating to rent, are not provided for in the financial report and are payable as follows:

Note Within one year One to five years Later than five years	31 Dec 2019 30 Jun 2019 $ 743,516 747,706 742,346 - 746,536
	1,491,222 1,488,882

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Genesis Resources Limited

Financial Report for the half-year ended 31 December 2019

Note 11. Events after balance date

• i. On 10 February 2020, the Company secured a loan of $40,000 which was drawn down in February 2020. The interest rate is 10% per annum and is repayable 10 business days after the date that Genesis has cleared funds from capital raising.

• ii. On 25 February 2020, the Company secured a loan of $40,000 which was drawn down in February 2020. The interest rate is 10% per annum and is repayable 10 business days after the date that Genesis has cleared funds from capital raising.

• iii. On 9 March 2020, the Company secured a loan of $100,000 which was drawn down in March 2020. The interest rate is 10% per annum and is repayable 10 business days after the date that Genesis has cleared funds from capital raising.

• iv. On 9 March 2020, the Company secured a loan of $190,000 which was drawn down in March 2020. The interest rate is 10% per annum and is repayable 10 business days after the date that Genesis has cleared funds from capital raising.

Other than the above, no matter or circumstance has arisen since 31 December 2019 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.

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Financial Report for the half-year ended 31 December 2019

Genesis Resources Limited

DIRECTORS’ DECLARATION

In the opinion of the directors of Genesis Resources Limited, (“the Company”):

1. the financial statements and notes set out on pages 11 to 21 are in accordance with the Corporations Act 2001 , including:

2. a. complying with Accounting Standards, the Corporations Regulations 2011 and other mandatory professional reporting requirements, and

3. b. giving a true and fair view of the consolidated entity’s financial position as at 31 December 2019 and of its performance for the half-year ended on that date, and

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

This declaration is made in accordance with a resolution of the Board of Directors.

Eddie Pang

Managing Director 13 March 2020

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Independent Auditor’s Review Report To the Members of Genesis Resources Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Genesis Resources Limited which comprises the consolidated statement of financial position as at 31 December 2019, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year.

Directors’ Responsibility for the Half-Year Financial Report

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

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2019 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Genesis Resources Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations act 2001 , which has been given to the directors of Genesis Resources Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Genesis Resources Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2019 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001 .

Material Uncertainty Related to Going Concern

Without modifying our conclusion, we draw attention to Note 2 in the financial report, which indicates that the consolidated entity incurred a loss of $986,769 and had net cash outflows from operating activities of $581,946 and investing activities of $247,716 and had net current liabilities of $8,054,627 as at 31 December 2019. These conditions, along with other matters as set forth in Note 2, indicate the existence of a material uncertainty which may cast significant doubt about the consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business.

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RSM AUSTRALIA PARTNERS

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J S CROALL Partner

Dated: 13 March 2020 Melbourne, Victoria

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